The Fed announced hike rates by 75 basis points. Here's why it's not all doom and gloom for investors:
In a widely expected move on Wednesday, the Federal Reserve wrapped up its two-day policy meeting bya third consecutive 75-basis-point interest rate hike, raising borrowing costs to their highest level since the Great Recession.
What does it all mean for investors? In short, not much if they're thinking about a long term outlook. “While the long term odds are becoming more favorable in terms of stocks coming down to better valuations, the near-term odds favor high-risk” as the Fed keeps raising rates, with “stormy seas” still ahead, says James Stack, president of InvesTech Research and Stack Financial Management.
“At this point in the tightening process, we think the ceiling is much more important than the pace – the market wants to know where the Fed is going, not how fast it plans to get there,” says Adam Crisafulli, founder of Vital Knowledge. While markets may continue to struggle through the end of the year, “history shows improved market performance following midterm elections, so we encourage investors to maintain targeted allocations,” says John Lynch, chief investment officer for Comerica Wealth Management.
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