Word: ranson
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Dates: during 2000-2009
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...Funds rate has inched up 1.75%, to 6.50%, since June of last year. David Ranson of Wainwright Economics in Boston looked at 45 years of data and discovered that after a period when the Fed raised rates at least 1%, the market did not respond well for the next year. The Standard & Poor's 500 index has had an average gain of about 13% since 1955. Yet historically the year after the Fed has raised rates, the S&P actually produces below-average returns of about 8%. Then the market gets a big boost the second year out--assuming...
...Ranson agrees that a defensive investment strategy--which would include large-cap tech and drug stocks--is best if you're planning to stay in the market. But he advises being very cautious as the recent rate hikes filter down. With the Dow down for the year, NASDAQ basically flat and the S&P up only 2.5%, Ranson says investors may get better overall returns from cash rather than stocks. His suggestion: wait until 2001 to invest more heavily, or at least until there's solid evidence that the Fed's moves have actually succeeded in cooling the economy...
...Matthew H. Ranson...