I don’t normally tell readers to do this.
This morning, I want you to save this email. Or print it – stick it somewhere you’ll see it.
Because if there are three things you need to know to be a better investor, I believe it’s this (the last one is my favourite).
Here goes…
- I believe the stock market is heavily influenced by short-term interest rates
Think of the stock market like a bathtub. The individual stocks are the floating rubber boats. When interest rates drop, water gets filled into the bathtub and lifts all rubber boats.
However, when interest rates go up, water in the bathtub gets drained into the drain plug. The rubber boat drops along with a falling water line.
For the last 15-20 years, interest rates stayed near zero. Easy money poured into the stock market that lifts all rubber boats. However, when the interest rate cycle changes, the stock market cycle changes....
