The Fed and My Investments-Will They Go Up or Down?
Whispers abound that the Fed intends to lower interest rates. Even a hint of declining interest rates can cause the stock market to rise. Learn about how interest rate movements can impact your investments.
Investing is both science and art. One can do everything right and still watch their investments fall. That is because as much as we might believe to the contrary, investors are not completely rational. Read any behavioral finance book and you will see multiple examples of investor stupidity. Remember the dot-com bubble bursting in 2000? What about the mortgage melt down a few years later? Many investors bought into the stock market after a big run up or sold at the bottom.
In fact, abundant research shows that investors tend to buy as stocks are hitting market peaks – submitting to following the crowd. And after a market drop, many investors get scared and sell, near market bottoms. Buying high and selling low isn’t the best way for investment success.