Fed Rate Cuts to Pump Up Votes for Harris?

And how lower interest rates will impact the stocks we’re investing in… Published By Prosperity Research September 23, 2024 Published By Prosperity Research September 23, 2024 Huckabee’s Daily Bible Verse Let all your things be done with charity. ~1 Corinthians 16:14 Fed Rate Cuts to Pump Up Votes for Harris? Prosperity Insider Nation, For the first time since the pandemic hit in 2020, the Federal Reserve finally announced a cut in interest rates. Rates will be lowered by a half a percentage point. That doesn’t sound like much, but it’s a pretty big drop all at once by normal standards. Americans have been suffering for nearly four years from the one-two punch of galloping inflation and ratcheted-up interest rates, which were imposed to force inflation down. While the rate cut is certainly welcome for people who are being crushed by mortgage and debt payments, it came under criticism for its suspicious timing, coming just 50 days before a close election. Some accused the Fed of trying to give the economy an artificial boost and paint economic conditions as better than they really are to help elect Kamala Harris. Others noted that we’re being told the economy is great, yet the Fed is doing an emergency-level interest rate cut. Trump said, “Assuming they’re not just playing politics, I guess it shows the economy is very bad to cut it by that much.” Meanwhile, some Democrats like Sen. Elizabeth Warren complained that the cut wasn’t big enough, even though economists fear that with inflation still above the 2% target, deeper cuts will reignite it. You can read more [economic details here](. The most important thing to remember, though, is that you don’t have to jack up interest rates to cool inflation if you don’t spark inflation in the first place by spending trillions of dollars we don’t have. That apparently didn’t occur to Harris when she was casting the tie-breaking vote for those massive spending bills, like the “Inflation Reduction Act.” I asked Charles how lower interest rates would impact the stocks we’re investing in. His answer brought a big smile to my face. See it below. [Gov. Mike Huckabee]( Director, Prosperity Research Research Alert: [Proof this Election is Rigged? [Must-See]]( [Turn On Your Images.]( In 2016, surveys were giving Hillary Clinton more than 99% chance of winning right up until election night.  But former advisor to the CIA, the Pentagon and the White House Jim Rickards predicted Trump would win.  And you won’t believe [what he’s predicting now](.  [Click here to see his SHOCK]( election prediction.]( Timing Your Investments with the Fed is a Losing Game [Charles Mizrahi headshot] By [Charles Mizrahi]( Founder, Alpha Investor Before last week’s Fed meeting, I was having coffee with some friends while they debated how the upcoming rate cut would affect the stock market. The big question wasn’t whether the Fed would cut rates but by how much. Each friend had their own strategy. One was selling bank stocks to buy small caps, another was loading up on cyclical and consumer discretionary stocks. Another was going off their [broker's list of stocks]( expected to benefit from the rate cut. I stayed quiet, sipping my coffee, as they exchanged opinions. After about 15 minutes, someone turned to me and said, “Charles, you’ve been investing since the Reagan era … What’s your take?” What I told them wasn’t what they were expecting. I said, “I’m doing nothing.” Here’s why: I see stocks as pieces of a business, not as a wiggle and jiggle on a chart. I don’t need to focus on interest rates or anything other than the business. Over the long haul, stock prices follow how the business performs — not the other way around. Then, I went back to sipping my coffee while they resumed their debate about consumer discretionary versus utility stocks in a rate-cut environment. What I didn’t mention is that we had this same conversation back in March 2022, except it was about the Fed raising rates. At that time, everyone was talking about selling off their stocks. I hope none of them followed through with that. Despite the Fed raising rates 11 times, the stock market actually rose 34%! Rate cuts are far from a guarantee that the stock market will surge. In fact, based on data from PinPoint Macro Analytics, over the past 50 years, the stock market has only gained less than 5% on average one year after the first rate cut. It's hardly the kind of performance that gets investors excited. [Turn Your Images On] Source: [www.visualcapitalist.com]( [(Click here to view larger image.)]( Trying to time the market rarely pays off. The Real Key to Beating the Market I don’t waste time trying to convince people that stocks aren't just wiggles and jiggles on a chart — they represent real pieces of a business. Either investors understand that from the start, or they never will. Most would rather bend the facts than change their thinking. In over 40 years of professional investing, I’ve never met anyone who beat the stock market by trying to time interest rates, politics or economic shifts. Not one. But I do know plenty of people who’ve outperformed the S&P 500 by sticking to the basics. They didn’t need to know where interest rates were headed. Instead, they focused on businesses they understood, led by great CEOs and bought those stocks at the right price. Then, they let time do the rest. Charlie Munger calls it “sit on your ass investing.” And it works. Regards, [Charles Mizrahi's Signature] Charles Mizrahi Founder, Alpha Investor [Turn Your Images On]( (c) 2024 Prosperity Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Prosperity Research. 702 Cathedral Street, Baltimore, MD 21201. 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