Stockmarket comes out to play as Fed calms bond market nerves

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The dash for trash that the Fed unleashed is justified by a dampening of interest rate volatility. Beware, it could reemerge.

Precisely one decade ago, I was fortunate enough to be in the audience at Columbia University’s annual value investing conference, where several legendary investors recounted their investment journeys., he and his team had an idea to sift through all the beaten up tech stocks to identify which ones traded below their net cash balances and buy them.

These moves follow a strong month for all things speculative from Bitcoin, to Cathie Wood’s ARK Innovation exchange-traded fund, to Tesla, all of which are up sharply so far this year.Those moves have scorched short sellers and served as a reminder that while markets can indiscriminately sell, they can also engage in indiscriminate buying. For the time being, there is no reward for doing one’s research.

But what is perhaps underappreciated is that it is the volatility in interest rates, rather than the absolute level, that has been the most destructive force for asset prices.

 

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US stocks lower as Fed decision awaitedShares in New York were lower in morning trade amid broad selling. US interest rate decision expected at 6am AEDT. ASX futures slip.
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