Why Does the Stock Market Drop When the Fed Raises Rates?

Why Does the Stock Market Drop When the Fed Raises Rates?

There's a great deal of conversation happening now about the Federal Reserve's intention to raise interest rates. If you've heard about these announcements or even all of the speculation leading up to them, you may be wondering what it means to you. It's perfectly fine to be concerned about these changes especially if you notice the value of your portfolio changing in the short term. But, it also helps to understand the connection between the Federal Reserve and the stock market? How does one relate to the other?

What You Need to Know About the Fed

The Federal Reserve is the big bank in the U.S. The decisions this bank makes impact a great deal of financial matters within the country. In fact, the Fed's job is to help keep the country on a path towards financial stability. There are plenty of politicians that will tell you how corrupt it is. There are others that will tell you it is not. The bottom line is, the Fed's decisions will impact what happens to your portfolio because they directly impact the stock market's investors.

The stock market is not directly impacted by the Fed.

Read More

Market Timing: Risk vs. Reward

Market Timing: Risk vs. Reward
For first-time investors, putting money into the stock market may seem like an intimidating task. You may be asking yourself, what happens if you put your money in at the wrong time? How do you know when to take money out or switch to treasury bills? While at first glance it may seem, in order to successfully turn a profit in the stock market, necessary to anticipate when stocks will rise and fall, and either sell or buy accordingly. This practice is what’s known as Market Timing--attempting to anticipate how stocks will react and adjusting your investments accordingly in order to maximize gains and minimize losses. But Market Timing is not only an extremely stressful and work-intensive practice, it’s also highly impractical. Here‘s why.
Read More