Selling On The Fed's Rate Cut

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Selling On The Fed's Rate Cut
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Generally, rate drops are positive for the economy, but the market did not seem to be overly excited by the outcome. Wayne Himelsein, one of my top managers, says when it comes to the Fed the old adage buy on the rumor and sell on the news applies.

WASHINGTON, DC - SEPTEMBER 18: Federal Reserve Board Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on September 18, 2019 in Washington, DC.The Fed cut rates 25 basis points last week. Generally, rate drops are positive for the economy, but the market did not seem to be overly excited by the outcome.

In even simpler terms, we are willing to risk $1 to make $2 but would be quite silly to risk $2 in order to only make $1. To this end, the lean of the asymmetry , should play a great role in our investment decision.: That makes perfect sense. And that’s exactly what I look for in a manager, where over the course of time, they make far more than they lose. In fact, whenever my clients look at a single down month of a manager, my comment is always to judge it relative to the magnitude of run ups.

At that point, investors might actually be fearful, thinking “what’s so wrong so as to motivate such a big move?” With that in mind, we very interestingly might get to an almost 50/50 odds of an upside move. In the prior article, the latest data point that I addressed was “the big surge upward on August 19th” and how much I liked that new level. It had made a large gap up that day and then, per my take, was in a new territory, ready to climb to new heights off this big move.: I very much recall that discussion. And yet since that time has not necessarily done so. I do see that it made a new high just two weeks later, but then retracted back down.

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