coach d wrote:
This is a chart that LizAnn Sonders posted two months ago:
If rising interest rates were a stimulus, don't you think things would get even better in a fast tightening cycle so we could get more of that stimulus more quickly?
Would you care to explain how much money I made in Hovnanian in the next two years after the FED's second hike at the end of 2004? It went up for 6 months. Then HOV went from 72 to less than 1 in early 2008. I remember that because I had HOV (and NVR and RYL) and had to bail in the second half of 2005 when the whole housing market collapsed...and that was the thing that led to the whole (world) economy collapsing. There was more to it than housing (unregulated over-the-counter derivatives), but it was the FED that started the ball rolling downhill. What happened in 2008 is something those of us invested in housing saw happening much earlier.
I think you will have a very difficult time coming up with a quote from an economics or financial analysis text that rising interest rates are a stimulus for asset prices or economic growth.
D, you're like Bad Wigins - sometimes you post really interesting things...and then sometimes you are positively leaden.
1) I never meant or said rising interest rates are a stimulus to asset prices or economic growth. What I wrote is that when interest rates rise off a low base in a low inflationary period, stocks tend to do VERY well for a couple years at least. ok? Can you just read that a few times and then if you want to reply, reply to THAT assertion, not some other assertion I didn't make.
2) You seem incapable of understanding that I am talking about raising rates from a low base. Again, repeat that, write it on a chalkboard, do whatever it takes, but pls don't reply to some other thing than that. No examples from other economic times, ok?
as for your HOV trade - rates were high, they went higher. THen a once in a lifetime financial crisis hit. Your example means nothing. because...you get it now! I'm only talking about when rates rise off a low base! There you go! You got it.