Interest rate rise will trigger market crash / correction Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Interest rate rise will trigger market crash / correction

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Peter R Smith who wrote ()	3/28/1997 7:12:00 AM
From: Robert Scott	of 52

The problem with a rise in interest rates is that like a pass in football out of three possibilities, 2 are bad - except that with a rise in interest rates only the 2 bad possibilities are possible near term: 1. It is effective with a few increases - slows the economy - hurts earnings - but is medium term good unless slows economy too much. 2. It is not effective - more interest rate rises until slowdown is believed to be underway. If you were to simply be invested fully when interest rates begin downticks and uninvested or low invested when they begin upticks, i think history shows you would be way ahead over time. I think the recent run began in early 1995 when Fed cut rates after a series of increases in 1994. In 1994 the increase brought the rates from 3% to 6% and the martket over the entire year only corrected a few percentage points. I believe this was a unique situation because the rates were so low to begin with. At 5.25% vs 3% at the start of an uptick is a huge difference and interest on short term rates and bonds over 7% can compete with equites now or soon.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next