Don’t ever, ever, ever fight the Fed in the short-run

Don’t ever, ever, ever fight the Fed in the short-run

One of the best pieces of investment philosophy is “do not fight the Fed”. This means, do not put your portfolio in a position that will be harmed by the actions of the Federal Reserve. For the past year the Fed has made it clear that they intend to raise interest rates as long as it can be done without substantially harming the overall economy. Rising interest rates bode poorly for bonds. A Fed bent on raising rates each time the equity market appears to be able to withstand it bodes poorly for equities. So what is an investor to do?
My best estimate is that, absent some dramatic events, interest rates are likely to remain below normal levels for many years to come. But even modest increases in long term interest rates in the short run could cause substantial declines in long term bond prices.
Biltmore Capital Advisors is NOT an accounting firm.  For specific advice regarding taxes, please consult your tax advisor.

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