Fed Raises Interest Rates, First Time Since 2018

[FREE866]

I was expecting a little more substance to your explanation. Or even an explanation of any sort of how higher interest rates drive equity prices up.

You know, the crowing rooster before sunrise does not cause the sun to rise.

I never claimed "higher interest rates drive up equity prices"


I simply posted a graph showing that they definitely don't automatically result in lower equity prices, which a lot of people tend to believe.

 

[FREE866]

Don't know much about the guy except from the all the obnoxious ads, so I'd say he's done well with marketing. Edward Jones probably has a lot of investment money, too, and most members here would not take their advice (or pay their fees).

The Fed members are supposedly experts in economic forecasting and one politician recently said their forecasts have the same credibility as "those late-night psychic hotlines". It doesn't seem to be much of an exact science.

haha I definitely believe what you wrote in the 2nd paragraph! There is actually a funny saying that goes something to the effect of "economists have predicted nine of the past five recessions"


I've been following Ken Fisher for decades. He used to write very informative articles in Forbes back in the day. If you read any of his 11 books or read his Twitter feed you will see he has great insight into how markets work and quite frankly following his advice for the last 20 years investing allowed me to retire early.



Earlier in this thread I posted an article from his firm, but mistakenly said the article was written by Mr Fisher, for that I apologize. I then posted videos of him explaining his take on the yield curve , but it seems people couldn't look past my initial mistake of saying the article was from him. I actually deluded myself into thinking I'd be able to have a constructive conversation about this, but the internet rarely allows that.

 

[FREE866]

https://www.logicallyfallacious.com/logicalfallacies/Ad-Hominem-Abusive
https://www.logicallyfallacious.com/logicalfallacies/Argument-by-Repetition
https://www.logicallyfallacious.com/logicalfallacies/Appeal-to-Definition

I remain unconvinced of any of your assertions, especially the one in posts #36 and #38 of this thread stating that Mr. Fisher wrote that article.

You aren't really even coming close to convincing me, and I doubt I'm likely to convince you. Since this is likely an unproductive discussion, I am going to disengage.

The irony in this post is hilarious


I mistakenly said the article was written by Mr Fisher, for that I apologize. I then posted videos of him explaining his take on the yield curve ,but you couldn't move past that one. I actually deluded myself into thinking I'd be able to have a constructive conversation about this, but the internet rarely allows that.

 

[Magus]

The article is written by Ken Fisher who is CEO of the firm that manages over 100 billion dollars. He's also written over 10 books about markets and investing. His commentary is very applicable to markets. I appreciate your economics background, but most economists I read aren't very good at predicting markets and most don't manage money.



That said, you seem to be very knowledgeable so I'm open to learning---





Here are 2 videos by him on this topic....do you not agree with these?

The article is from the "editorial board." That firm is nothing special - again I have several hundred conversations a year with firms just like this one, except up to 40x larger, and meet with investment bankers 3-4 times a quarter. and chat with major research analysts from all the major banks. I agree Economics is a bit wobbly at times, but investment managers have at least as bad a track record as economists, which is ironic since they have access to management teams like me whereas the average joe and smaller investment firms do not (or not nearly as much). They make bad calls all the time, underperform the market and their benchmark the overwhelming majority of the time and only reason they aren't taken to the woodshed is the stock market going up 8-9% a year hides a lot of poor performance from most folks with a non-discerning eye.

I've already given you multiple reasons why only looking at the very short end of the yield curve doesn't make sense. I'm not going to write a dissertation. And again for the last time, it doesn't matter what you or one person believes - the overall market - of which Fischer (with 4000 employees to manage this money, not one) is less than 0.2% of the total pie, does not look at it so narrowly. I'm glad you like that guy - I could care less - I have talked to thousands of guys like him in the last 10 years - in person and on phone calls.

 

[FREE866]

And for all those deeply offended when I said my initial article was written by Ken Fisher......this is an article written by Ken Fisher reiterating all the points on the yield curve in the initial article and in the videos I posted...


https://www.usatoday.com/story/mone...ing-because-yield-curve-flattening/802985002/

 

[Magus]

If someone manages over 100 billion dollars I think it’s pretty safe to say they’ve done well with investing so yeah they probably have a pretty good handle on how economics and how they affect investments

Again, he does not manage 100 billion. He has a firm with 4,000 people that manage that money. He's actually making very few investment decisions and probably spends the overwhelming majority of his time trying to figure out how to increase revenue to his firm (including promotional video to retail clients like you), which as a CEO he should be doing. The overwhelming majority of money managers are not special in any way, believe me. There is a reason passive index funds have grown massively over the last 20 years. And firms like this that cater to retail investors like you and I are even worse than average.

 

[FREE866]

Again, he does not manage 100 billion. He has a firm with 4,000 people that manage that money. He's actually making very few investment decisions and probably spends the overwhelming majority of his time trying to figure out how to increase revenue to his firm (including promotional video to retail clients like you), which as a CEO he should be doing. The overwhelming majority of money managers are not special in any way, believe me. There is a reason passive index funds have grown massively over the last 20 years. And firms like this that cater to retail investors like you and I are even worse than average.

Fair enough and I agree about indexing..thats what I do with my money.....I posted the videos and the usa article where he talks about the yield curve to get your take........

 

[pb4uski]

My banks must be extra stingy then. Either way the interest rate on a bank savings account would have to be much higher than TBills for me to take on that extra risk. Default risk for banks is much higher than for the Treasury. At these levels it would have to be 2%+ to even consider fdic products.

The default risk for FDIC and UST are the same... both are full faith and credit.

FDIC deposit insurance enables consumers to confidently place their money at thousands of FDIC insured banks across the country, and is backed by the full faith and credit of the United States government.

https://www.fdic.gov/resources/depo...e their money,of the United States government.

 

[MichaelB]

<mod note> The bickering and name calling is unbecoming of our forum. Let’s all please remember our best Dale Carnegie and disagree without being disagreeable.

 

[Chuckanut]

And Bill Gates dropped out of college yet founded one of the greatest companies in the world!

Yet he often demanded that his software engineers have a degree in computer science. Go figure.

Nobody knows for certain, though one would think that the interest rates on CD's and other such investments will have to rise. But, I suspect that this will be like the price of gasoline but in reverse. Bank interest rates paid on savings go down fast, will go up slower.

In the meantime I would not be anxious to lock in 2.2% for 5+ years as I saw offered yesterday. Not so good, IMO

 

[Montecfo]

I never claimed "higher interest rates drive up equity prices"


I simply posted a graph showing that they definitely don't automatically result in lower equity prices, which a lot of people tend to believe.

I agree with the data for the table. But I think your interpretation of it lacked nuance at best.

There is little more to say but I was hoping you would come around to what I see as a fuller understanding of what it is really saying.

I know I am perhaps too optimistic at times but I consider that a minor fault.

Thanks for the discussion.

 

[AmieVA]

Has anyone looked at Treasury Direct Series I savings bonds? They are currently paying 7.12%, up from less than 2% a year ago. The rate will change in April-I would not be surprised if it went up. The rate changes semi-annually, and you have to leave them in for 1 year. Much better than a bank and just as safe.

 

[Linney]

Has anyone looked at Treasury Direct Series I savings bonds? They are currently paying 7.12%, up from less than 2% a year ago. The rate will change in April-I would not be surprised if it went up. The rate changes semi-annually, and you have to leave them in for 1 year. Much better than a bank and just as safe.

Yes! We have a lengthy discussion going on in this thread:

https://www.early-retirement.org/forums/f28/i-bond-rate-11-2021-a-111509.html

The next rate change announcement is on May 1st (not April).

 

[Gearhead Jim]

I'm somewhat surprised by the Fed rate hike. Or perhaps just skeptical that they will stay the course.
Raising their rates increases their borrowing costs and (hopefully) reduces the inflation which devalues the debt that the Govt owes to everyone. Slows the economy and reduces tax income. Our national debt is huge and growing, I suspect that they will be forced to inflate their way out of much of it.
Hoping I'm wrong.

 

[aja8888]

The fun will start when the FED starts QT to reduce their balance sheet. Who will be buying the Trillions ($$$$$$$$) in treasuries and MBS they will need to get off the books?