Gekko

WE’RE coming up to the time of year when the markets have tended to hand out some brisk reminders that there is a force of gravity. For the past several months, investors have been able to tell themselves that however high the market, bear markets haven’t started until after interest rates go up. So buying on the dips in both the bond and the stock markets has been a pretty good strategy. But what happens when the Fed, along with market-driven interest rates, starts raising the cost of money? Would that matter any more, now that my self-indulgent boomer cohort has turned into big savers?

First off, let’s dispose of the notion, now popular in CNBC commercials, that we’ve turned into a nation of savers. The savings rate is at a near historic low, below 5 per cent of disposable income. Of course, who needs to save when the stock market is doing your saving for you? Instead of buying generic toothpaste and eating at home, you just have to look up your mutual fund on its Internet page.

JD

About the Author

John Dizard

Featured Tags

WE’RE coming up to the time of year when the markets have tended to hand out some brisk reminders that there is a force of gravity. For the past several months, investors have been able to tell themselves that however high the market, bear markets haven’t started until after interest rates go up. So buying on the dips in both the bond and the stock markets has been a pretty good strategy. But what happens when the Fed, along with market-driven interest rates, starts raising the cost of money? Would that matter any more, now that my self-indulgent boomer cohort has turned into big savers?

First off, let’s dispose of the notion, now popular in CNBC commercials, that we’ve turned into a nation of savers. The savings rate is at a near historic low, below 5 per cent of disposable income. Of course, who needs to save when the stock market is doing your saving for you? Instead of buying generic toothpaste and eating at home, you just have to look up your mutual fund on its Internet page.