At the start of each year, I put together a list of predictions made by gurus (and often repeated by investors, who hear about these forecasts through the financial media). It’s sort of a consensus of things “sure” to happen in the upcoming year. We keep track of these “sure things” with a review at the end of each quarter. With the turn of the calendar into April, it’s time for our first check of 2016. As is our practice, we’ll give a score of +1 for a forecast that came true, a score of -1 for one that was wrong and a 0 for one that was basically a tie.
Fed Holds Back On Interest Rates
Our first sure thing was that the Federal Reserve will continue to raise interest rates in 2016. That frequently leads to the recommendation that investors limit their bond holdings only to the shortest maturities. After seven years of the most accommodative monetary policy in U.S. history, on Dec. 16, 2015, the Fed, as widely expected, approved a quarter-point increase in its target funds rate from 0% to 0.25% to 0.25% to 0.5%. It has remained there since then. Score: -1.
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