The Federal Reserve has dominated the financial media cycle the past several years and we have seen the rise of crafted axioms to solicit online views, clicks and an increase in trading activity. You’ve likely heard of “Don’t fight the Fed” and now the latest is “Fear the Fed”. That’s because last Friday two stories surrounding Fed-speak (supposedly) sparked a sharp decline in the stock market. So with September here, is it really time to “fear the Fed?”
Doug Short of AdvisorPerspectives.com, recaps the last weeks market moves with this helpful chart. Notice how flat the week was, and the sharp selloff on Friday.
The funny thing is, the “Fed news” was attributed to two things:
- Comments from Boston Fed President Eric Rosengren. But all he did was repeat a speech he made in August that said “gradually removing accommodation was the best way to extend the duration of the recovery.”
- Fed member Lael Brainard announced he was going to give a speech that was not planned. This is not the norm, as most of the speeches are scheduled well in advance. But those two items caused a 400 point decline? This is a classic case of the financial media filling a 24-hr news cycle with non-stories.
The bottom line for you and me?
The sharp pullback reminds us that markets climb a wall of worry. They never move in a straight line up or down. It’s imperative that your investments match your goals and timeline, and that is one of our primary roles we play. We are here to decode the financial noise so you get insight for your life you can actually benefit from.
We are always available if you have any questions or would like to see how this impacts your specific plan.
Cheers to a balanced life,