1Q2015: Value Matters


Wall Street has been obsessed with the actions of the Federal Reserve for at least as long as the older of us has been investing. On Thursday afternoons in the 1970’s, everyone watched the Dow Jones news wire for the money supply report that might hold clues about the Fed’s next policy move. More recently, the Fed has been extraordinarily “accommodative” in the six years since the financial crisis, and there is considerable investor anxiety about how stocks will react to a return to “normal” interest rates. It is almost comical to watch the stock market rally or swoon in response to every small bit of economic data. The logic seems to be that a sign of economic strength (good news) is “bad” because it might encourage the Fed to abandon its “zero interest rate policy” (ZIRP). Conversely, a sign of economic weakness often triggers a rally since it may discourage the Fed from tightening.

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