Thursday, October 16, 2014

INSIGHTS: HOW MODERN GOVERNMENT POLICY COULD AFFECT LONG-TERM INVESTORS by MCC Guest Blogger Greg Blank, President, Blank Financial Group

In 1994 the Federal Reserve increased its discount rate from a then-record low of 3% to 6% – equivalent to a 100% increase in rates – in response to inflation fears. Expectedly, bonds followed suit. According to Morningstar, the total bond market dropped by over 4.5%. Investors, who had been enjoying yields from bonds in excess of 6-7%, got spooked. Between the rising rates and the sell-off in bonds, the stock market went berserk.

So what’s different now?



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