Ignore the Fed!

 Ignore the Fed! by Jeff Holland{Read in 1:50 minutes} The federal government—”the Fed”—is interesting. It’s fun to talk about, much like a sporting event or celebrity gossip or the latest health scare. And it is just as much the subject of daily headlines as those news items.

Financial journalists love to report the Fed’s every financial movement, trying to make it relevant to investment. Some advisors play along, pretending they can predict markets based on the Fed, in hopes of attracting investors and motivating them to keep making transactions. Some say that the interest rates move and the Fed follows.

The reality is that no one can outguess the Fed—and even if they could, it would be irrelevant. While the Fed is certainly a part of the economic system, it’s not a predictable or reliable part. You cannot pull profit from it; you cannot forecast it. The markets are still full of surprises; businesses still require a return on their capital.

Whatever the Fed does, you still want to own good global businesses. Why worry about what you cannot control? Instead, focus on what you can control: diversification and a long-term plan.

Honestly, most investors are their own biggest detriment. They keep darting in and out, they look for reasons to rationalize their poor decisions—and the Fed provides a great scapegoat. But successful investing means ignoring that noise and keeping your eye on the ball. Every day that you let something draw you away from your plan, you lose that day’s expected rate of return.

What have your experiences been like with the market? Do you look to the Fed or do you follow your long-term plan? Visit our website for further information.

Jeff Holland

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