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© 2023 by Troy Springer

Interest Rates... Conspiracy vs Realism

June 21, 2019

What I dislike most when talking about interest rates is that most people view on interests rates seem to be driven by how much of a conspiracy theorist they are-- whether or not they are inclined to think markets are a rigged game. 

 

I try to be a centrist with my opinions on anything, or at least try to be objective.  I'm generally an optimist and believe that he government, the fed or any other large organizations are filled with smart people who have our best interests at heart. 

 

While it may be pretty easy to look around the market and see signs of excess (like fake meat companies trading at 70x sales), I am not going to be the one to call the game a rigged system because the Fed is not chomping at the bit to raise rates. For one, inflation seems to be in control which according to traditional macroeconomic theory may suggest that interest rates are fine where they are. GDP growth is only about 2% which is certainly not in excess. But those metrics should be taken with a gain of salt, like everything else. I also think it is completely reasonable to think the long term interest rate should remain lower as we have better financial technology and access to information and thus better risk mitigation to warrant lower rates. Maybe 2% is the new 3% ? 

 

It is a strange phenomenon, however, to think the Fed would lower rates as stocks hit all times highs, but it is as strange to think that the stock market wants to trade higher on news that the economy is weaker than expected. That sentiment leads me to believe we may be tipping toward to greed side of the fear and greed index.  

 

I wont let interest rate opinions change how I am investing in equities right now, which is tilting toward value and not fake meat companies. 

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