Doug Fabian

ETFs and the Music of the Markets, Part II

One of the beauties of exchange-traded funds (ETFs) is that they allow us to hear the “music of the markets” playing out in real time. This week, we’ll look at that music a bit, especially in light of today’s “dovish hike” by the Federal Reserve.

This is Part II of our series on ETFs and the Music of the Markets, so let me remind you what I said last week in Part I. First, we used the great Ray Charles’ words, as he once said that if you want to make the right music, “You just gotta take the time out to play the right notes…”

Simple enough, right? Only, not so much.

Still, when applied to investing, we can say that the music of the market also dictates that we “take the time out to play the right notes.”

Fortunately, the proliferation of ETFs in recent years has made playing the right notes a lot easier. Today, we can literally get portfolio exposure to just about any segment of the market by tapping on the computer keyboard right underneath our fingers.

Last week, I also told you that part of our mission here in the Weekly ETF Report is to help you acquire the knowledge and the skill to be able to play the right notes in your portfolio.

Well, today we had what may have been the most important Federal Reserve Open Market Committee meeting (FOMC) in recent memory, as today’s Fed decision will likely set the playing field for stocks and bonds going forward.

Before the meeting, the smart money was betting on (i.e. pricing in) what’s called a “dovish hike” by the central bank. This is a situation where the Fed hikes interest rates by 25 basis points, but also make the statement “dovish” enough that it doesn’t cause long-dated Treasury bond yields to rise… and that’s precisely what happened today.

Click here to read the full article, “ETFs and the Music of the Markets, Part II.


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