Look at the relationship between short-term interest rates and the stock market from 2003 and 2007. This was the time when Mr. B was raising relentlessly interest rates from 1% to .... Well, he kept going and going and going to 5%.
Again, if you look at the charts, the system started to crack when short-term interest rates went above 3%. My point is that Mr. B should have probably stopped when the fed funds rate was 3%. After all, we were just coming out of a period when we endured a major destruction of wealth -- the implosion of the 2000-2002 tech bubble.
But then, who am I to judge Mr. B, the chairman of the Fed who probably triggered the Great Recession?
To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/ where you can review The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific money management needs.
I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes.
George Dagnino, PhD
Editor, since 1977
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