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Obsession du Jour


Everybody knows that “Wall Street is always climbing a Wall of Worry.”  We sometimes forget that it is a series of Walls.  For most of this year, Wall Street worried about a Greek default.  This summer, Wall Street fretted about slowing growth in China.  Now, we are fixated on the Fed raising interest rates this week.

Since the Fed has long said it will only raise rates when the economy was strong enough, you would think comments by the Fed, that the economy was actually good, would be bullish on Wall Street.  After all, if they said the economy was weak, it would be bearish on Wall Street.

I don’t know if the Fed will raise rates this Thursday or not.  I seriously doubt it but hope they do, just to get this behind us.  There are many people on Wall Street who cannot even remember the last time that interest rates were increased nine years ago.  It is an irrational fear of the unknown.

I do know that the economy is strong enough to survive a quarter-point rate increase.  Wall Street knows that as well.  The real fear is that the Fed is launching a series of rate increases to eventually get interests rates up to 3%, which is often called the “terminal point.”

This irrationality is why most long-term investors encourage other investors to ignore the “bear-bumps” along the way and hold onto their stocks forever.

Oh, did I mention there will be yet another government shutdown at the end of this month?  It must be time to start fretting about that as well!

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