Interest Rates Went Up: What Is Next for Investing?

Interest Rates Went Up:
What Is Next for Investing?
By www.ProfitableInvestingTips.com

http://profitableinvestingtips.com/stock-investing/interest-rates-went-up-what-is-next-for-investing
The long, often boring and
sometimes painful wait for the
U.S. Federal Reserve to raise
interest rates is over.

On December 16, 2015
the Federal Reserve raised a
key interest rate for the first time
in almost ten years.

Before We Continue…
Click the links below to get your
FREE training materials.
Free Weekly Investing Webinars
Don’t miss these free training events!
http://www.profitableinvestingtips.com/free-webinar
Forex Conspiracy Report
Read every word of this report!
http://www.forexconspiracyreport.com
Get 12 Free Japanese Candlestick Videos
Includes training for all 12 major candlestick signals.
http://www.candlestickforums.com

The Washington Post covered
the story.

The Federal Reserve voted
Wednesday to raise interest rates
and begin pulling back its
unprecedented support for the
American economy, ending an
era of easy money that helped
save the nation from another
Great Depression but has yet to
produce a full-throttled recovery.

The unanimous decision will
nudge the central bank’s
benchmark interest rate up from
near zero by a quarter of one
percent to a range of 0.25 to 0.5
percent.

The move is small, but it amounts
to a vote of confidence that the
American economy — dogged by
volatile oil prices, a slowdown in
China and weak global growth –
will stand resilient.

But the Fed also pledged to wean
the nation off its stimulus slowly,
an acknowledgement that further
progress is not guaranteed and
that the central bank is operating
in uncharted territory.

The Federal Reserve under its
previous chairman, Ben
Bernanke, was largely
responsible for not only rescuing
the U.S. economy from the worst
recession since the Great
Depression but also preventing a
slide into financial chaos.

Due to the fragility of the U.S.
and global economy the Fed has
been cautious about raising rates
for fear of choking off the
recovery.

However, as the U.S. economy
strengthens there is the risk of
inflation and thus the Fed intends
to raise interest rates sufficiently
to stem inflation while still not
damaging the economy.

So, interest rates went up. What
is next for investing?

Interest Rates and the
U.S. Dollar

The U.S. dollar has gained in
value against most global
currencies in the last five years
due to the increasing strength of
the U.S. economy while Europe,
Asia and much of the developing
world have struggled.

Bloomberg Business shows
the BCWIUSD:IND, the U.S.
dollar versus a basket of
currencies over the last five
years.

The index has risen from 90 to
120, a one third increase for the
U.S. dollar.

Unfortunately, in the world of
currencies no good deed goes
unpunished.

A stronger dollar brought on by a
strong economy made U.S.
manufactured goods paid for with
local currencies more expensive
throughout the world.

Coupled with economic problems
from China to Brazil to Russia to
the EU this has slowed U.S.
manufacturing.

Higher interest rates commonly
lead to a more valuable currency.

However, it appears as though
the increase in value of the dollar
has been priced into the Forex
market in anticipation of the rate
increase.

Where to Invest

The U.S. dollar is riding high so
there might be a temptation to
invest offshore.

However, the U.S. stock market
rose after the announcement that
interest rates went up.

What is next for investing in the
U.S.A. and offshore?

The old saying attributed to
Baron Rothschild is to invest
when there in blood in the
streets, namely invest when
things are at their worst.

Thinking of this advice, Brazil,
China, Russia and the U.S.
energy sector come to mind.

One can invest directly, invest via
a fund or invest via a company
that does business there.

Chaos in regions across the
world can get worse instead of
better but crude oil and natural
gas can only go just so low.

Thus our vote for bottom feeding
is the energy sector.

Investor Place writes about oil
stocks to load up on for 2016.

I’m terrible at predictions so will
refrain. I do know that some of
the calmer, more experienced
observers like the CEOs of
Chevron (CVX), Conoco Phillips
(COP) and Saudi Aramco all think
oil will be higher in 2016.

T. Boone Pickens is still
predicting $70 next year, but
admits that while he is usually
right on direction, his timing can
be off.

The three suggested stocks are
WPX Energy, Tidewater and
Diamond Offshore Drilling.

The author’s advice is to keep
your positions small to limit
losses and count on a huge
turnaround to insure profits.

As always do your own
homework before investing.

Interest Rates Went Up: What Is Next for Investing?

Recommended

Recommended

More Related Content

More from InvestingTips

More from InvestingTips (20)

Recently uploaded

Recently uploaded (20)

Interest Rates Went Up: What Is Next for Investing?