What Will Happen to the Market If the Fed Increases Interest Rates?
There is a lot of talk about when the Fed will increase interest rates. There is also a lot of talk on how this will impact the economy and the stock market. To put this in perspective, which situation would you rather have: The economy is bad and there is nothing the Fed can do OR the Fed says the economy is improving and interest rates will increase? From a historical perspective, when the Fed has increased interest rates to bring us back to some sense of normalcy, the stock market has improved. With that said, the stock market generally does not like the unknown, such as not knowing what the Fed will do and when. This in turn creates volatility.
My question to you is, what do you believe will happen to the stock market when the Fed eventually does increase interest rates? And, is your portfolio positioned to take advantage of expected increases in volatility? But more importantly, how will this impact your personal financial security? To answer that question, I recommend having a stress test performed on your portfolio.