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Federal Reserve Bank – NOT a Punishing God

In short order the Equity markets have declined some 10 percent from their highs. Why? Because the Federal Reserve Bank is very likely to raise interest rates. There is fear that these higher rates will then significantly affect the economy, which will then negatively affect stock prices.

It is very important to keep in mind that the Fed is NOT a punishing God. Its role is to promote growth and stability.  Though it has made policy errors in the past – like most humans do – it does not have an agenda to put the economy into a recession.

What also needs to be kept in mind is that interest rates are currently so low that they would have to almost triple or quadruple from their current level before they begin to be in competition with the stock market.

Our advice: Use the current dip to buy into the stock market. Throughout history it has been shown that most corrections are an opportunity to add to one’s holdings, and we feel strongly that the current correction is no exception.

Please do reach out to us if you would like to discuss this further.

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