1. Last week we talked about risk and how investors tend to focus on sensational risks that may never happen.
2. Newsletters, the media, pundits constantly argue about the possibility of some dramatic event that will collapse stock prices.
3. That’s because fear sells and it keeps the subscriptions and ad dollars flowing.
4. It’s all part of the 24 hour news cycle that portrays an unsettled and unpredictable landscape that paints a picture of a very uncertain world.
5. That said, not every event or headline, no matter how sensational, is relevant to the market.
6. Watch the markets’ reaction to a headline/event. Many times something will happen and the market doesn't blink. Other times there will be a sharp reaction.
7. Currently the stock and bond markets are focused on Federal Reserve interest rate policy.
8. Just when the Federal Reserve will begin raising rates is the focus of intense speculation.
9. Interest rates are central to the cost of capital, doing business, and have a huge effect on the actions of consumers.
10. In the near future, the direction of interest rates is the major risk investors have to be concerned about.If you have any questions about this don't be afraid to reach out at 775-673-1100.