With summer winding down, kids back in school and life happening in all directions, now is NOT the time to take your eye off the ball with respect to the FED, Interest Rates, and the stats being released this week. The big kahuna is on Friday when the August jobs numbers are announced as they impact the Fed decision.
Rates have been on the floor for 7 years and you can debate if that helped or hurt the economy, but what matters is the here and now. Last week the Fed and all the big shots (don’t forget to dot the “i”) had their annual Jackson Hole meeting. Fed Chairwomen Yellen hinted at an increase and apparently it all hinges on the data due out this week.
Specifically the Fed looks at jobs created, inflation, wages, work week hours, retail sales, along with other data that is considered less relevant to the decision to hike interest rates. Why should you care? Is a quarter percent hike REALLY going to impact your life? Let’s delve deeper into the weeds:
Higher interest rates make money more expensive. Think auto loans, mortgages, student loans and servicing our huge debt, as examples. Some will be priced out of the home or auto they wanted and forced into a less expensive alternative. Is it the end of the world? Hardly! The more damaging impact is how people allow the negative aspects to affect their psyche. Here I am referring specifically to the mentality of investors. After all, markets are nothing more than a reflection of human psychology or behavior.
As yet the decision is unknown and may not be until December since the Fed is not likely to raise rates so close to the election. This creates an air of uncertainty and if there is one thing markets loath it’s uncertainty. The old saying is “lie to me if you must; just don’t say you don’t know!”
The bottom line is: Maintain your discipline! Stick to the plan and protect your capital. Do NOT rely on someone else because no one will take better care of your money than you. Use BuySellIQ to know when it’s time to sell and then TRUST the DOT.