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Today’s question belongs to that last category. In this column, we’ve written many times about how to guide clients through
For almost two years, the bad news for investors has been the relentless rise in interest rates. Since March 2022, the Federal Reserve has raised rates
Then, this week, a glimmer of light emerged at the end of the monetary tunnel: On Wednesday, the Fed announced not only that it was holding rates steady for now, but that it would probably cut them three times in 2024.
“It could just be … that the economy is normalizing and doesn’t need the tight policy,” Fed chairman Jerome Powell said.
The stock market’s response was sensational. On Wednesday, the Dow Jones, S&P 500 and Nasdaq
Clearly, to many investors, the announcement was extremely good news. It not only raised hopes for stocks and profits in 2024, but signaled that the Fed thinks inflation is now largely under control — and we got here without tipping into a recession.
What does this mean for financial advisors? Many clients will likely be overjoyed by these developments. Could their excitement cause bad decisions? What challenges do hopes of a soft landing pose for wealth managers?
To find the answers, I took a turn asking my own “Ask an Advisor” question. Here’s what I wrote:
Yesterday the Fed gave investors an early Christmas present: It announced that it’s likely done raising interest rates — and may lower them three times next year.
Suddenly, 2024 looks a whole lot brighter. No one — not even Jerome Powell — can predict the future, and the economy can still change in unexpected ways. But fundamentally the Fed’s announcement seems to bring something that had long been a distant hope a lot closer to reality: a soft landing.
My question for you is twofold: First, what do you think this news means for the economy in 2024? And second, what does it mean for your practice? How do you expect clients to react — or how have they reacted already? How do you plan to advise them?
Hopeful by the Hudson
And here’s what financial advisors wrote back: