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The myth that lower interest
rates are BULLISH for stocks and higher interest rates are BEARISH,
is perhaps the single greatest lie of all time. As illustrated here, the
Fed raised rates from 3.5% in 1927 up to 6% in 1929 and the Dow Jones
DOUBLED. The Fed responded quickly to the debacle of 1929 and
lowered rates from 6% to 1.5% within less than 2 years while the Dow
Jones collapsed by 70%. In the 1994, interest rates were at the low. The
Fed raised rates 8 TIMES between 1994 and 1998 and the Dow Jones
again DOUBLED! Now that the Fed is lowering rates, take a look at the
above chart one more time just for the hell of it. Ask yourself, Did the
Fed lower rates in 1929 because of problems? Is the Fed lowering rates
now because of problems?
Mitch Ryder
Ynos@xxxxxxxxxxxx
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