August 31, 2024
Brace as Volumes Rise & Interest Rates Fall
Dear Subscriber,
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| By Jim Nelson |
Now that August is closing out and the kids are back in school, the real trading can start anew.
Market volumes always pick up after the summer break, when vacations are over.
But this year, we have an even bigger welcome back to the market.
In less than three weeks, the Federal Reserve will hold its September meeting. As I shared last week, the market is already pricing in a 100% chance of a rate cut at that meeting.
To get you ready for that, Nilus Mattive broke down why that might not necessarily be as bullish for stocks as many believe:
“Here’s a little history lesson …
The stock market tends to DROP SHARPLY once the Fed begins cutting rates.
According to research from Morgan Stanley, there have been nine different interest rate cycles over the past 50 years. And the stock market fell after the first rate cut during seven of them. The average decline was 23%.
What’s more, a closer look at the two periods when stocks didn’t fall after the first rate cut — in 1989 and 1995 — shows that both had normal yield curves.
That means short-term rates were substantially lower than longer-term rates, which is just about the polar opposite of the conditions we’ve been seeing this time around.
Hey, maybe this time really will be different.
And maybe my house will be worth a billion dollars five years from now.
Or …
Maybe there’s a reason that an experienced, level-headed investor like Warren Buffett is sitting on his biggest cash pile since 2004 …
And maybe we’ll still end up with an ACTUAL market crash that brings prices back to more reasonable levels.”
Of course, no matter what happens as we begin this new rate-cut cycle, we’ll be able to navigate it.
In fact, this week, several of your experts have started to chart that path already:
The ‘EZ’ Way to Invest in ETFs
With wild swings in individual stocks, you might want to consider adding an exchange-traded fund or two to your portfolio. Gavin Magor walks you through how to select the best ones AND how to analyze them.
My Secret Weapon in Picking the Best Oil Stocks
The big banks on Wall Street are wrong about oil. Sean Brodrick shows you why … and how to turn their error into your gain.
Take a Shot at This Off-Wall Street Asset
Since Gavin covers a way to add diversification away from single stocks, Nilus is back to share an even more alternative route to off-Wall Street profits.
The Promise of Big Podcast Profits
Podcasts are about to celebrate their 20th anniversary. And a lot has changed since their conception. Michael A. Robinson has a perfect way to play their future growth.
That’s all for this week. Have a great holiday weekend!
Jim Nelson
Managing Editor, Weiss Ratings Daily
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