Comments by "Curious Crow" (@CuriousCrow-mp4cx) on "Here's What Happens to the Stock Market After the Fed Cuts Rates" video.
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Aswath Damodaran just dropped a video entitled "Fed Up With Fed Talk? Central Banks And Interest Rates: Fairy Tales And Facts", where he lays out his data analysis of the impact of the Fed on interest rates and the S & P 500. He concludes:
"There is an ancient story about a rooster named Chanticleer. Chanticleer was anointed the ruler of the farmyard that he lived in, because the other barnyard animals believed that it was his crowing every morning that caused the sun to rise, and that without him, they would be destined for a lifetime of darkness. That belief came from the undeniable fact that every morning,
Chanticleer's crows coincided with sun rise and daylight. The story now takes a dark turn, when one day, Chanticleer sleeps in and the sun rises anyway,
revealing his absence of power.
¨ The Fed (and every other central bank) in my view is like Chanticleer, with investors endowing it with powers to set interest rates and drive stock prices,
since the Fed's actions and market movements seem synchronized.
¤ As with Chanticleer, the truth is that the Fed is acting in response to changes in markets rather than driving those actions, and it is thus more follower than leader.
¤ That said, there is the very real possibility that the Fed may start to believe its own hype, and that hubristic central bankers may decide that they set rates and drive stock markets, rather than the other way around."
He has a link to download his analysis, if anyone wants to look at his evidence. Aswath Damodaran teaches Financial Valuation at NYU Stern, and is an investor himself.
I remember Jeff when you made your case that the Fed is in reality a janitor attempting to clean up after the mess created by others, and cannot proactively prevent their mistakes. This video is just restating that view, and you are not alone in your view. You've been validated by an investor who knows how to value companies and invest wisely in the Stock Market.
Keep going. Ignore the bot farms and the naysayers.
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