I Don't Care!

All day long, financial reports, news and social media posts about whether the Fed is going to cut interest rates by 0.25 or 0.5 percentage points. Annoying. What's more, there's always talk of "25 basis points". Where every non-financial person asks themselves: "Basis what?"

I confess that I had some interest in the topic, as a Chief Investment Officer you can't completely ignore it. But all the fuss got too much for me. It inspired me to write the title of this newsletter and a social media post.

And lo and behold, my head wasn't torn off. The reactions were along the lines of: "Same here!" and "I agree." Interestingly, also from the market commentators, who were still eagerly reporting on what was likely to happen. They're usually in positions where it's hard to escape the things you think you have to do. Part of the game and all that.

Expectations and strategies

Yes, the decisions of the central banks have an influence on the markets and all of our behavior with regard to money, investment and consumption. Anyone with a variable loan will be happy to see lower interest rates and therefore lower loan installments. And the interest rate landscape naturally also influences savings behavior and the attractiveness of bonds.

If you read the reports, you actually think that the central bankers have our fate in their hands. And to top it all off, they are accused of knowing the future. Yet they act just like us "mere mortals". They observe and interpret the data and try to make the best of it. Just as we investors pursue our investment discipline, they have a strategy and expectations of the results.

In the end, the US Federal Reserve lowered interest rates by half a percentage point. That was more than expected. But it did not shake up the financial markets. The stock markets shrugged their shoulders briefly and share prices climbed to new highs for the year.

Once again, it confirmed: never put too much energy and emotion into a guessing game. It is better to think about your own investment strategy, refine it and implement it in a disciplined manner.

Disclaimer: This is a marketing communication. Investments in financial instruments are exposed to market risks. Past performance does not predict future returns. Forecasts are not a reliable indicator of future performance. Tax treatment depends on each client's personal circumstances and may change in the future. Bank Gutmann AG hereby explicitly points out that this document is intended solely for personal use and for information only. Publishing, copying or transfer shall not be permitted without the consent of Bank Gutmann AG. The contents of this document have not been designed to meet the specific requirements of individual investors (desired return, tax situation, risk tolerance, etc.) but are of a general nature and reflect the current knowledge of the persons responsible for compiling the materials at the copy deadline. This document does not constitute an offer to buy or sell or a solicitation of an offer to buy or sell securities. The required data for disclosure in accordance with Section 25 Media Act is available on the following website: https://www.gutmann.at/en/about-gutmann