Peak Rates and Asset Returns
(All data in today's podcast is courtesy of FactSet).
More economists are suggesting that the FED is done raising interest rates. While it's important to note that past returns do not indicate future results, today, we look at some historical data to form an opinion of what might happen after interest rates have peaked. Alex and Ed sent a note out to clients outlining what the performance of the stock and bond markets in the 12 months following the last six rate hike cycles. They also discussed 4 periods of very high stock returns over the last 15 years that many "market timers" missed.
You can request a copy of this note by emailing Alex and Ed below, and we break it down in today's podcast.
Alex mentions that after 5 of the last 6 rate hike cycles, The S&P 500 generated a positive return, averaging 20.6%. And immediate term bond returns made money in all six of these periods, averaging 14.6%. Again, this does not guarantee future returns, but it's important to look at historical data.
Ed then covers 4 recent unexpected high stock return periods. These all occurred in different environments: March 2009 during the Great Recession, October 2011 amid economic uncertainty overseas, late 2019 after a very bad Christmas Eve, and of course most recently during the pandemic in March 2020.
Why does the market rise in such times of negativity? Ed explains the psychological conditions at play here, that we've seen play out historically.
As always, Alex and Ed preach the values of diversifcation and a long term plan. And trying to "time the market" can often be catastrophic for your financial future.
You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.
Or visit them on the web at https://www.birchrunfinancial.com/
Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536
Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.
You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.
Or visit them on the web at https://www.birchrunfinancial.com/
Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536
Any opinions are those of Ed Lambert and Alex Cabot and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The examples throughout this material are for illustrative purposes only. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional. Diversification and asset allocation do not ensure a profit or protect against a loss. Past performance is not indicative of future returns. CDs are insured by the FDIC and offer a fixed rate of return, whereas the return and principal value of investment securities fluctuate with changes in market conditions. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. Birch Run Financial is not a registered broker/dealer and is independent of Raymond James Financial Services. Birch Run Financial is located at 595 E Swedesford Rd, Ste 360, Wayne PA 19087 and can be reached at 484-395-2190.
Any rating is not intended to be an endorsement, or any way indicative of the advisors abilities to provide investment advice or management. This podcast is intended for informational purposes only.
