Don't Fight the Fed

And yet another one of Consuelo Mack's guests with the cogent advice of "Don't Fight the Fed!"  

Don't Fight the Fed!  

April 27, 2023

Dear WEALTHTRACK Subscriber,

“Don’t fight the Fed” is a classic piece of investment advice that has been remarkably helpful to investors over the years. As regular WEALTHTRACK viewers know, it’s a phrase coined by Martin Zweig, a legendary technical analyst and investor who predicted the 1987 market crash to the day and was the author of the 1970 investment classic, Winning on Wall Street.

Zweig wrote that “the monetary climate - primarily the trend in interest rates and Federal Reserve policy - is the dominant factor in determining the stock market’s major direction.”   

On the face of it, it makes sense. When the Fed raises interest rates, making money more expensive, business slows down and stocks become less attractive. Conversely when the Fed lowers interest rates, borrowing becomes cheaper, business picks up and stocks become more attractive. If only it were that simple!   

We seem to be in a world where the economy and businesses haven’t yet absorbed the full brunt of the Fed’s historically aggressive pace of interest rate hikes over the last year. And the market can’t seem to make up its mind. 

This week we are bringing you part 2 of our interview with Ed Yardeni, who has been closely following the Fed during his 40-year investment career. Yardeni is head of his own global investment strategy firm, Yardeni Research, which he launched in 2007. He is a PhD economist, strategist and Fed Watcher. He has a comprehensive “Fed Center” on his website which has just about everything you want to know about Fed history, policy, statistics and research.     

Yardeni is also the author of several books including Fed Watching for Fun and Profit: A Primer for Investors which we discussed at length with him a couple of years ago in an interview available on WEALTHTRACK.com. He writes: “To do this job well, I've learned that nothing is more important than to anticipate the actions of the Federal Reserve system’s Federal Open Market Committee (FOMC) which sets the course for monetary policy in the United States.”     

In this week’s episode we will discuss why he believes the Fed is done hiking interest rates for now and if “Don’t fight the Fed” still works as an investment strategy.  

In this week’s EXTRA feature, Yardeni, who writes a weekly movie or TV review on his website, recommends his favorite streaming series of the last year.

If you miss the show on public television, you can watch it on our website over the weekend, along with our past programs and our guests’ One Investment recommendations.  You can also find the WEALTHTRACK podcast on Stitcher and SoundCloud as well as iTunes and Spotify.

Have a great weekend and make the week ahead a healthy, profitable and productive one!

Best regards,

Consuelo