Fed raising rates
Are any clubs concerned with the probable raising of rates? If so what strategy to you have in mind going forward
Thanks
Russell Ward
Pennies 2 Dollars
Of course we are concerned. We also worry about all the doomsayers out there who expect a big correction. Bank stocks are a good hedge. Also low beta stocks so hopefully they do not dip as far. We have 60 members and a rather large investment portfolio, but we prefer to stay fully invested and ride out any downturn. If people start to panic it is a problem. Stop-loss orders can be useful for volatile stocks.
Linda
Pointe Players
From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Russell Ward
Sent: Sunday, June 14, 2015 6:22 PM
To: CLUB_CAFE@bivio.com
Subject: [club_cafe] Fed raising rates
Are any clubs concerned with the probable raising of rates? If so what strategy to you have in mind going forward
Thanks
Russell Ward
Pennies 2 Dollars
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If the evidence is any indication, there is only a 50/50 chance that the impact of rates increases will negatively affect stocks.
Short-term investors will be hurt. However, long-term investors might realize consistent compounding opportunities.
The following link shows the last interest rate cycle low from the 1940's to the top in 1980 ( found here: http://www.newlowobserver.com/2014/09/utility-stocks-and-rising-interest-rates). It examines the most vulnerable stocks (in the Dow Jones Utility Average) and shows quite the opposite of what most institutional investors claim about markets and rate increases.
The most popular argument against the above article is that those were different times and are not relevant to today's modern economy. However, a rate increase from near zero levels to double digits should have wiped out investors.
Suffice to say, the complex dynamics that are at play could mean significant losses for stocks, especially in the short term. However, the evidence suggests that long-term investors should remain focused on compounding income.
T. Benton
On Sunday, June 14, 2015, Russell Ward <russdward@gmail.com> wrote:
On Sunday, June 14, 2015, Russell Ward <russdward@gmail.com> wrote:
Are any clubs concerned with the probable raising of rates? If so what strategy to you have in mind going forwardThanksRussell WardPennies 2 Dollars
Since we are in for the long haul I am not worried about it. I just look at it as buying opportunities. A few weeks ago a read an article (It is somewhere here in my mess on my desk) about buying inverse S&P 500 ETFs. There are several different ones with different outcomes that they mentioned. I will personally do it but I don't know whether my club will go along.
John
On Sunday, June 14, 2015 5:11 PM, Toucalit Benton <toucalit@newlowobserver.com> wrote:
If the evidence is any indication, there is only a 50/50 chance that the impact of rates increases will negatively affect stocks.
Short-term investors will be hurt. However, long-term investors might realize consistent compounding opportunities.
The following link shows the last interest rate cycle low from the 1940's to the top in 1980 ( found here: http://www.newlowobserver.com/2014/09/utility-stocks-and-rising-interest-rates). It examines the most vulnerable stocks (in the Dow Jones Utility Average) and shows quite the opposite of what most institutional investors claim about markets and rate increases.
The most popular argument against the above article is that those were different times and are not relevant to today's modern economy. However, a rate increase from near zero levels to double digits should have wiped out investors.
Suffice to say, the complex dynamics that are at play could mean significant losses for stocks, especially in the short term. However, the evidence suggests that long-term investors should remain focused on compounding income.
T. Benton
On Sunday, June 14, 2015, Russell Ward <russdward@gmail.com> wrote:
On Sunday, June 14, 2015, Russell Ward <russdward@gmail.com> wrote:
Are any clubs concerned with the probable raising of rates? If so what strategy to you have in mind going forwardThanksRussell WardPennies 2 Dollars