Fed’s intervention doesn’t change investment fundamentals

Joan Lappin

Just think about the varying markets that have been thrown at us in the last 15 months. We began with the Robinhood/Reddit contingent enticing first-time stock buyers into variations of what has always been known as pump and dump. Some couldn’t believe their good fortune but then gave it all back as the year progressed.

About a thousand new companies did Initial Public Offerings or went public through Special Purpose Acquisition Companies in which the SPAC would raise money and first decide what business to enter with that cash. Many had no earnings and no real track record. No wonder that group lost 65% of its value by year end.

Throughout 2021, the Federal Reserve was insisting inflation was not really a problem while outspoken investment firms were stating forcefully that the Fed was behind the curve. Finally last week, the Fed announced its plan to raise interest rates 0.25% per month for the rest of the year. Now just a week later, as the price of everything is zooming into the great beyond, Fed Chair Jerome Powell is accelerating his plan and says they need to raise by .50% per month. That is bad news yet the markets have soared.


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