The Beginner's Playbook: How To Invest Safely On FOMC Day
If you are a new investor, you do not need to hide under the bed until the FOMC meeting is over. You just need to trade your fragile sports car for an armoured financial vehicle.
Here is how to navigate tomorrow's rate hike:
Avoid the Siren Song of Catching Falling Knives: When a famous tech stock like $Tesla(TSLA.US)may drop 5% on Thursday, don't rush. In a rising interest rate environment, expensive stocks can get a whole lot cheaper before they find a true floor. Let the market digest the Fed Chair Kevin Warsh's words first.
Build an Unshakeable Cash Cushion: Parking your money in high yield cash vehicles or short term Treasury bills like $iShares 0-3 Month Treasury Bond ETF(SGOV.US)allows you to earn a steady yield while you wait for the storm to clear.
Anchor in Low Volatility Index ETFs: Instead of betting on single companies, spread your risk across broad index ETFs engineered for defence.
Look for funds like $Ps S&P Low Vol(SPLV.US)or $SPDR S&P 500 Val(SPYV.US). These track stable, cash rich companies in healthcare, utilities and consumer staples that keep making money regardless of what the Fed does.
As the legendary investor Benjamin Graham beautifully noted:
"The essence of investment management is the management of risks, not the management of returns" .
Take a deep breath, embrace the bumpy ride and focus on protecting your capital first!
Good luck to all my Longbridge friends.🥰🥰🥰🍀🍀🍀
