It is the time of the year again as the world awaits US Federal Reserve (Fed)’s decision on Wed whether to raise interest rates. Although the majority view is that Fed would not raise interest rates at this meeting, the consensus was not so clear this time last month. I was busy wondering whether the economic implications of an interest rate rise would hold (i.e. stocks would fall) or the investor psychology of buying after a bad news would happen (i.e. stocks would rise). You can refer to A Jittery September for the thinking going on prior to the last Fed meeting. In the end, an event that happened 25 years ago settled the argument in favour of the latter.

It was 2 Aug 1990. Iraq had just invaded Kuwait, its oil-rich neighbour to the south. Oil prices promptly shot up from US$17 per barrel in Jul until …