BRSP - Don't Fight The Fed Earn 10% Or More!
2024-04-14 07:35:00 ET
Summary
- "Don't fight the Fed!" is a common investor rallying cry.
- We agree it's not good to battle the Fed, but we don't have to care about it at all.
- My portfolio is fine-tuned to generate income regardless of Fed intervention.
Co-authored by Treading Softly.
We all love an underdog, don't we? It seems to be built into the psyche of humanity to want to believe that the underdog can rise up against all odds and beat the giant. We have books, movies, and songs that cover this concept. It's common to feel like we're the underdog fighting against a world that is better equipped, trained, and capitalized. Naturally, our belief is that if someone else can do it, then we can do it, too. What we often forget is that for every underdog that succeeds, countless others get smothered and destroyed. The reason why stories like David and Goliath are memorable is that they are exceptions to the rule, not the norm.
When it comes to the market, many investors will advise you not to fight against the Fed. This is a reference to the Federal Reserve, a powerful institution that has the ability to influence interest rates and other aspects of the economy. I agree that managing a portfolio that works against the Federal Reserve can feel like a Herculean task. Many sectors suffer greatly when the Federal Reserve switches gears, while others benefit. Instead of constantly trying to predict the Fed's moves and adding complexity to my portfolio, I choose to invest for income. I have a portfolio that is heavily diversified across over 42 different holdings; some of them benefit when the Fed takes certain actions, while others benefit from different ones. Instead of trying to follow the Federal Reserve and mirror their actions, I have been able to benefit without fighting them....
Don't Fight The Fed, Earn 10% Or More!