The Federal Reserve has raised interest rates. More increases are expected in 2016. Barron’s reports. Liz Ann Sonders of Charles Schwab says to expect uncertainty at the start of the coming year. Despite a stated preference for good new, people often choose to read bad news headlines first. Jim Parker of DFA warns investors of the dangers of acting too quickly when the news is alarming.
The Federal Reserve Raises Interest Rates. The Federal Reserve delivered on its promise to raise interest rates in 2015, voting Wednesday to hike short-term rates. It’s the first rate change since rates were lowered exactly seven years ago. Barron’s reports.
What Was, What Is, and What May Be. It’s been a “running to stand still” market this year, with US stocks breaking all-time records for the number of times they crossed above and below the flat performance line for the year. The start of 2016 looks to continue that grinding phase. Many global economies—including the United States—have become bifurcated; with manufacturing and commodities still struggling, but consumer and services sectors looking healthy. Investors should stick with their long-term allocations and not look to be either overly aggressive or defensive at this stage, given policy-related uncertainty. Liz Ann Sonders and her team at Schwab review the current market and what to expect in early 2016.
Second-Hand News. Why don’t the media run more good news? One view is bad news sells. If people preferred good news, the media would supply it. The danger can come when the emotions generated by bad news prompt them to make changes to their portfolios, unaware that the news is likely already built into market prices. But markets don’t see news as necessarily good or bad, rather in terms of what is already built into prices. Jim Parker of DFA explains in this article.
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