Let’s Talk… the Fed and Interest Rates!!

So the Fed is raising rates and, what I’m hearing, is that growth doesn’t do well in this type of environment. History has taught us something very different. 

From 1994-2001 the Fed raised rates a total of 14x (not consecutively). Some rate hikes were to “keep the economy healthy”. The growth-heavy Nasdaq hit an all-time high of around 4200 right before Sept 11 2001. In January of 1994, it was at 774. 

Here are some things to consider with regard to the Fed raising interest rates:

• First, you may want to consider keeping the fixed income portion of your portfolio short. 
• Second, if companies are paid on the cash piles that they have accumulated, that interest is gravy to the company’s bottom line, so you may want to look for companies that have cash on their balance sheet along with good cash flow. 
• Third, Jerome Powell isn’t out to ruin the economy by raising rates too fast. It’s my belief that this is going to be slow and measured. 
• Lastly, the Fed is raising rates because the economy is doing well. Just because they are moving off of zero isn’t a cause for alarm for me as long as it’s done methodically and with precision.

The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.