Quote:
Originally Posted by retiredguy123
I never try to time the stock market because I admit that I don't understand it. I have always been a buy and hold investor and have done well. They say that the stock market responds to predictions of future events. If that is so, then why is the market going down now when everything that has happened with interest rates and the economy was totally predictable at least 6 months ago? Also, they say that owning stock means that you actually own part of a profitable company. So, if I own shares in McDonald's, that sells millions of hamburgers every day at a profit, why does the stock value decline when other stocks decline in a single day? Just because some stocks go down, should have no effect on the number of hamburgers that McDonald's sells that day, and the value of the company. Can one of you stock market timers explain these things?
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Interest rates were NOT "totally predictable at least 6 months ago". Many thought inflation would peak and even start to decline giving the Fed an easy out of their aggressive rate hiking policy. Even if inflation stayed constant, many smart Wall Street people thought the Fed would at least communicate the possibility of pausing in the near future and actually, when they might even LOWER rates. Basically, many thought the Fed would revert back to their extremely accommodative rate policy that is IMO, 70% of the reason we are on the brink of another financial crisis. Surprisingly, the Fed has stayed the course and continues to not only raise rates in significant chunks but more importantly and speaks to your "predictions of future events", they continue to communicate that fighting inflation is still their #1 goal and that they need to see consecutive points of data that suggest inflation has been controlled and that might take 3-6 months. Remember the Fed proclaiming inflation is "transitory"? Well, they were dead wrong. Inflation is sticky and infectious. Companies are raising prices not only because THEIR input prices are also rising but BECAUSE THEY CAN.