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Understanding the stock market and the Fed

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Jonathan Citrin, Founder and Executive Chairman of Citrin Group in Birmingham provides the following information about the Federal Reserve and how it effects your stocks. 

CitrinGroup | (248) 569-1100

Understanding the Fed

The Federal Reserve = interest rates + bond buying. 

Stock markets must STOP watching the Fed.   A few weeks ago we saw a huge sell off in stock markets for several days when the Fed announced it may stop some of its stimulus.  It is clear that stock markets are watching the Fed very closely.  This is very timely.  The Fed is buying $85 billion in treasuries and mortgage backed securities every month. This brings interest rates down and has  resulted in higher stock prices. Jonathan Citrin believes the market should NOT be watching the Fed--only borrowers should.

Borrowers be-aware.  The only people who should be watching the Fed are borrowers (those looking for a mortgage, or  investing in an education or business through borrowing.)  Actually, this is the intent of what the Fed is doing in keep rates low but also warning that they may rise sooner than originally expected - they are trying to get people to be nervous about inflation so people buy (homes, etc) sooner than later.·

No one  knows the future.  -- It is important to  realize the reality around rates, the Fed, and markets - that no one knows (despite pontifications) where things will go.   Remember one essential thing- stop listening to those who claim to know!!  Listen to someone humble enough to admit that markets are unpredictable.

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