Today before the open you know that the Federal Reserve is going to do an interest rate cut today, because this has been the most anticipated and talked about Federal Reserve rate cut perhaps in our lifetime.
The last Federal Reserve rate cut happened in 2008. That interest rate cutting cycle began though in the Fall of 2007 and of course after it began the stock market went into a vicious bear market that culminated in a crash.
In the rate cutting cycle before that after the Fed cut rates in January of 2001 in an emergency cut the stock market fell for a year and a half, although it already had fallen really bad in the final four months of 2000.
These rate cuts of course did not cause the stock market to drop and this is indeed a different time, but what is important to realize is that today is going to be a key turning point for the years to come.
But today all people will be focusing on when it comes to CNBC and the trading websites is what the stock market does today and whether or not one should buy AAPL or Facebook or NVDA or some other fad stock.
Yes there will be gold websites where people will be talking about buying gold or mining stocks – and rightly so – but all of the focus will be on the daily gyrations.
No I do not think the stock market is on the verge of collapse or will crash like it did in 2008.
But I do think we are now beginning a new easy money cycle that is going to define the next decade much as stagflation defined the 1970’s, corporate raiders marked the 1980’s, internet stocks symbolized the 1990’s, and bankrupt mortgages defined the 2000’s – and sharebuybacks defined this decade – something game changing is starting today.
The Federal Reserve is lowering rates in order to keep the system going, but is doing so from an already low level.
This means that when the next recession really does come they are going to have to resort to emergency money printing measures.
The trillion dollar deficits will make it a necessity.
It is this coming Federal Reserve easy money cycle that is going to define the next decade.
That’s why gold and silver are going up.
And it’s why it might be best today for you to just step back from the daily news cycle and the daily gyrations and think about the big picture and where things ultimately are going.
The best thing I can recommend that you today is read Ray Dalio’s recent piece on just this topic titled Paradigm Shifts.
Is anyone you know thinking about what is coming in the next decade?
Thinking about it is how YOU gain an advantage in this market.
It isn’t by trying to buy an AAPL earnings gap up or watching some guy yelling at you to get into a gamble trade for “action.”
It’s by using your OWN brain and THINKING FOR YOURSELF.
Check out this article as I think you’ll find it as interesting and useful as I did when I read it:
https://www.linkedin.com/pulse/paradigm-shifts-ray-dalio
-Mike
