[Time to cut? Time to add?]
Jerome P has made his speech and from the looks of the markets, it seems that a larger bull run might be occurring.
Time to cut
However, there's been at least 3 points in history where a cut in rates led to a drop in market prices. The infamous one that I remember is the 2008 credit crisis. Everyday was red on the screen. It was a nightmare for some.
Some indicators might point to fair valuation also for some stocks. Or worse still over valuation. If I have to base on that, cutting seems rationale.
For example$Apple(AAPL)$ seems slightly overvalued now.
With a GF value of $183, a $226 price is about 20% overvaluation, which supports the rationale why Warren Buffett made a sizable cut.
Aside, macroeconomic Black swans like the Ukraine-Russia war can escalate, Israel Iran can blow up oil prices and the Kamala Trump elections can all increase volatility. Plus unemployment figures are on the rise in the US.
Time to add
The opposite holds true as well.
A reduction in interest rates is stimulating and would mean that business get to borrow at a cheaper rate. I believe the Magnificient 6 (or 7 if you believe$Tesla Motors(TSLA)$ is magnificent) can compound faster in a lower interest environment.
With a longer time horizon on hand, we are probably around the beginning or mid of a bull market.
So how?
Well I would ask you to relook at your objectives, look honestly at your own financial situation and decide which path forward works best for you.
For me, I will continue to DCA into index and funds that give me a wide coverage as I ride up the bull run.
I will also be loading my gun powder separatelg to take advantage of any possible corrections or even a recession should it occur.
What will you do? [Grin]
Like, share and comment.
Thanks!
Meanwhile I think I need to cut my carbs and add on more healthier Protein and Vegetables. [LOL]
@CaptainTiger @MillionaireTiger @TigerStars
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