We have seen some wild financial turmoil in England in the past few days. Last week, the new Prime Minister over there announced big tax cuts and money payments to help business and people who are suffering from high energy prices. In the past, such news would make a market go up and help an economy, but instead the British pound fell, its stock market dumped, and the Bank of England this week is talking about raising rates by 2% in order to protect the nation’s currency. In other words it’s a total mess. Ray Dalio made a series of Tweets today about the importance of this event and expressed hopes that policy makers around the world won’t make the same mistakes. The thing is, though, that these type of policies worked in the past. They just aren’t working now, and that is a big key lessons investors need to understand, whether they are buying into the stock market or bond market. This is a big reason why this current bear market is trading differently than the last two cycles did.
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