Original link: https://tumutanzi.com/archives/16936
Three days ago, I curiously searched for the data on interest rate hikes by the Federal Reserve, and posted a circle at that time:
The market’s previous predictions of the Fed’s interest rate resolution meeting are only wrong (underestimated) on June 16, 2022. The next time, that is, at 2:00 a.m. on November 3, Beijing time, should also have a high probability of 4.0% . Smart, what are you going to do?
I deliberately threw a question for everyone to think about, of course the answer was already in my mind.
At 2:00 a.m. yesterday evening, the Federal Reserve’s FOMC (Federal Open Market Committee) meeting opened, and it really raised interest rates by 0.75 percentage points. The current interest rate has reached 4.0% per year.
But don’t underestimate the Fed rate hike. As soon as it raises interest rates, it means that the cost of capital in the US dollar increases, that is, the strengthening of the US dollar, which means that the cost of capital is high for companies that need capital, and the cost of business operations increases. By the same token, all kinds of assets denominated in dollars have depreciated relative to each other – at least on paper, and to be more specific, futures, bonds, stocks, cryptocurrencies will all fall, at least in the short term.
The U.S. dollar is the de facto global currency, and even a little bit of interest rate hike will have a strong effect on the global asset market, especially for bulk assets .
Looking at the previous interest rate hikes, there are two characteristics:
- All previous predictions, the market has basically predicted right;
- After each rate hike, the stock market saw a short 1-2% drop—at least in the hours to days after the news.
This presents opportunities for speculators. The simplest operation idea is to sell stocks, cryptocurrencies and other assets with strong liquidity and strong correlation with the U.S. dollar interest rate hike on the eve of the interest rate hike. Inside the diving, then buy. Sell high and buy low, so that there are more assets.
Science and technology are changing, but human nature is basically the same. I guess a lot of smart people are taking advantage of this trend to make money. It should be noted that there is a difference between making money and earning money. The former is shell + cum, making money with money, while the latter is hand + fighting, relying on both hands to win some money.
Speculation is not advisable, but speculation and gambling based on probability and reason are completely different.
Finally, a reminder, don’t be greedy, you can’t sell at the highest point, buy at the lowest point, you can make a profit if you don’t lose money.
Risk Warning: This article does not constitute any investment advice.
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