Short-term trading is based on human nature! Long-term investment depends on economic expectations! The Fed's policies often become tools for capital hedging!
As the title suggests, during the expectations and process of interest rate hikes, US stocks may not necessarily fall. Any declines are only seen in industries highly sensitive to interest rates. Even the decline in the stocks of these industries is limited to a rapid bottoming out at the end of the rate hike cycle! Expectations during a rate cut cycle lead to rapid recovery and even new highs!
This is the basis of short-term trading based on human nature. Next, entering a rate cut cycle will not bring new highs to the stock market, but rather a rapid short-term adjustment until the end of the rate cut cycle. From a trading perspective, this is the exploitation of human nature and the necessity for low-cost capital entry! Therefore, institution's bullish stance brings about a stock market with 'buys' and 'sells,' the US dollar's weakness not leading to gold's strength. Instead, a similar trend appears between the US dollar and gold during the rate hike cycle! Both weaken together!
With the restructuring of the global industry chain and the capital restructuring after the US dollar's rate hike cycle, the trend indicates that the US economy will continue to improve, and corporate profits will further enhance! This is like the correction of history and the historical corrections, not simply repeating and deferring! This explains well why long-term trends are dependent on economic expectations!
All of this is achieved through the institutions' bold actions! However, to profit, one must understand the stages through which they use policy tools for hedging!
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