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Stock Ideas Investors Daily Edge Don't Bank On That Rally
Stock Ideas Investors Daily Edge Don't Bank On That Rally 
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Profit From the Fed's P&B Campaign Agnico-Eagle Mines (AEM:NYSE) Printing & Bailing R Us -- that's the new name for the Federal Reserve. As they ramp up the presses and bail out the banks, one thing is for sure: Gold prices will soar. |
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| Don't Bank On That Rally |
| Thursday, 20 September 2007 | ||||||||
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Like today, stocks were close to all-time highs – the blue chips anyway – people were starting to worry about recession, and the Fed had held interest rates on a high plateau (6.5%) for the preceding seven months. When the news hit the market, investors celebrated with a 300-point rally in the Dow. Yesterday, Ben Bernanke surprised the market with his own 50-basis point rate cut, and investors celebrated with another 300-point rally in the Dow. This could be the start of a new rate-cutting campaign from the Fed. But don't assume stocks have to rise if the Fed does keep cutting rates...
After his 50-basis point cut in January 2001, Greenspan continued cutting rates for the next two years, moving them from 6.5% to 1%... Three days after Greenspan's surprise rate cut, the Dow was already trading below its pre-rate cut level... and 19 months later, the Dow had lost 30%... -Tom Dyson
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