Comments on: A Look at Bonds, Stocks, and the Fed Rate Cuts http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/ Helping traders overcome fears and emotions in trading Thu, 09 Feb 2012 14:53:15 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: The 10-Year Relationship Between the SP500 and Fed Funds Rate | Afraid to Trade.com Blog http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-213589 The 10-Year Relationship Between the SP500 and Fed Funds Rate | Afraid to Trade.com Blog Thu, 29 Apr 2010 15:51:45 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-213589 [...] 2004 at the first Rate hike and rallied in August 2007 at the first Rate Cut.  I posted on the rate cuts and the relationship between bonds and stock at this time (February [...] [...] 2004 at the first Rate hike and rallied in August 2007 at the first Rate Cut.  I posted on the rate cuts and the relationship between bonds and stock at this time (February [...]

]]> By: A Look at the Yield Curve at Market Tops and Bottoms | Penny Stock Trading System Blog http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-211754 A Look at the Yield Curve at Market Tops and Bottoms | Penny Stock Trading System Blog Mon, 28 Dec 2009 05:21:00 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-211754 [...] February 19, 2008:  A Look at Bonds, Stocks, and the Fed Rate Cut [...] [...] February 19, 2008:  A Look at Bonds, Stocks, and the Fed Rate Cut [...]

]]> By: A Look at the Yield Curve at Market Tops and Bottoms | Afraid to Trade.com Blog http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-211752 A Look at the Yield Curve at Market Tops and Bottoms | Afraid to Trade.com Blog Mon, 28 Dec 2009 01:52:03 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-211752 [...] February 19, 2008:  A Look at Bonds, Stocks, and the Fed Rate Cut [...] [...] February 19, 2008:  A Look at Bonds, Stocks, and the Fed Rate Cut [...]

]]> By: adam http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-34870 adam Thu, 21 Feb 2008 00:58:50 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-34870 The rate cut on August 17th was not the O/N Fed Funds rate cut but a discount rate cut. The real O/N Fed funds rate cutting began on 9/18 (50BP) and then 25 on 10/31, followed by 25 on 12/10. While cutting the discount rates on 8/17 the FED indicated its "accodmodative" stance, which set up a temporary rally in equities, but marked the beginning of a huge rally in gold, commodities, oil, Ag etc which is still unfolding! The rate cut on August 17th was not the O/N Fed Funds rate cut but a discount rate cut. The real O/N Fed funds rate cutting began on 9/18 (50BP) and then 25 on 10/31, followed by 25 on 12/10. While cutting the discount rates on 8/17 the FED indicated its “accodmodative” stance, which set up a temporary rally in equities, but marked the beginning of a huge rally in gold, commodities, oil, Ag etc which is still unfolding!

]]> By: BP http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-34122 BP Tue, 19 Feb 2008 20:57:30 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-34122 The only thing I would add is that typically market valuations at the point in time of Fed rate cuts were reasonable even with a declining "E". But there was really no saving the gigantic bubble that emerged from the fed rate cuts of early 2000 when the Nasdaq doubled. I believe that criticism of the effects of rate cuts in post dot com era are misguided and simplistic. They fail to take into account the massive rally in Value stocks which were largely ignored in the late 90's that lasted till 2006. In sum, how does any stimulus save a stock market that was selling over 40x earnings? That period was more the exception than the rule. Brad The only thing I would add is that typically market valuations at the point in time of Fed rate cuts were reasonable even with a declining “E”. But there was really no saving the gigantic bubble that emerged from the fed rate cuts of early 2000 when the Nasdaq doubled.

I believe that criticism of the effects of rate cuts in post dot com era are misguided and simplistic. They fail to take into account the massive rally in Value stocks which were largely ignored in the late 90’s that lasted till 2006.

In sum, how does any stimulus save a stock market that was selling over 40x earnings?

That period was more the exception than the rule.

Brad

]]> By: Corey Rosenbloom http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-34092 Corey Rosenbloom Tue, 19 Feb 2008 18:35:09 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-34092 I agree that the time period is shorter than expected, but it's taking into account the most recent 10 year period. I will look beyond this time period and compare periods in an upcoming post for a broader picture. As a caveat, I'm certain that market prices would be far lower if the Fed had not cut rates at all during this period - that's definite as well. Thank you for the clarification. I agree that the time period is shorter than expected, but it’s taking into account the most recent 10 year period.

I will look beyond this time period and compare periods in an upcoming post for a broader picture. As a caveat, I’m certain that market prices would be far lower if the Fed had not cut rates at all during this period – that’s definite as well.

Thank you for the clarification.

]]> By: BP http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-34067 BP Tue, 19 Feb 2008 17:43:35 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-34067 Short sighted post with cherry picked short term data: If you look back to fed rate cuts and market performance to time periods predating 2000 you get completely different results. Market performed on average of 19% per annum from 1960-1998 when the fed was cutting. Data from "The Role of Monetary Policy in Investment Management" Jensen, Johnson and Mercer. Published by AIMR November 2000 Short sighted post with cherry picked short term data: If you look back to fed rate cuts and market performance to time periods predating 2000 you get completely different results. Market performed on average of 19% per annum from 1960-1998 when the fed was cutting.

Data from “The Role of Monetary Policy in Investment Management” Jensen, Johnson and Mercer. Published by AIMR November 2000

]]> By: Stock Market » A Look at Bonds, Stocks, and the Fed Rate Cuts http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-34061 Stock Market » A Look at Bonds, Stocks, and the Fed Rate Cuts Tue, 19 Feb 2008 17:16:15 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-34061 [...] Corey Rosenbloom wrote an interesting post today on A Look at Bonds, Stocks, and the Fed Rate CutsHere’s a quick excerptContinuing the thought from my last post asking whether Fed Rate Cuts are Actually Good for the Market, I thought I’d compare the 2 Year Treasury Note, 30 Year Treasury Bond, and the S&P 500 and overlay the recent Fed Rate Cuts on the … [...] [...] Corey Rosenbloom wrote an interesting post today on A Look at Bonds, Stocks, and the Fed Rate CutsHere’s a quick excerptContinuing the thought from my last post asking whether Fed Rate Cuts are Actually Good for the Market, I thought I’d compare the 2 Year Treasury Note, 30 Year Treasury Bond, and the S&P 500 and overlay the recent Fed Rate Cuts on the … [...]

]]> By: Education » A Look at Bonds, Stocks, and the Fed Rate Cuts http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/comment-page-1/#comment-34059 Education » A Look at Bonds, Stocks, and the Fed Rate Cuts Tue, 19 Feb 2008 17:11:18 +0000 http://blog.afraidtotrade.com/a-look-at-bonds-stocks-and-the-fed-rate-cuts/#comment-34059 [...] Afraid to Trade.com Blog - Overcoming Stock Market Fears wrote an interesting post today on A Look at Bonds, Stocks, and the Fed Rate CutsHere’s a quick excerpt Continuing the thought from my last post asking whether Fed Rate Cuts are Actually Good for the Market, I thought I’d compare the 2 Year Treasury Note, 30 Year Treasury Bond, and the S&P 500 and overlay the recent Fed Rate Cuts on the comparison chart. Let’s see what happened: The chart begins in June, 2007, when the Fed announced that it would likely stop raising interest rates for a period, and in fact, may begin cutting soon. The Fed cut rates .50 basis points on August 17th, an [...] [...] Afraid to Trade.com Blog – Overcoming Stock Market Fears wrote an interesting post today on A Look at Bonds, Stocks, and the Fed Rate CutsHere’s a quick excerpt Continuing the thought from my last post asking whether Fed Rate Cuts are Actually Good for the Market, I thought I’d compare the 2 Year Treasury Note, 30 Year Treasury Bond, and the S&P 500 and overlay the recent Fed Rate Cuts on the comparison chart. Let’s see what happened: The chart begins in June, 2007, when the Fed announced that it would likely stop raising interest rates for a period, and in fact, may begin cutting soon. The Fed cut rates .50 basis points on August 17th, an [...]

]]>