Monday, 14 September 2015

As investors wait for Fed decision, sharp market losses may already be "baked in cake"

MarketWatch reports that US stocks rose last week, with the Standard & Poor's 500 Index gaining 2.1 percent.

“At this point, everyone is fixated on the Federal Reserve’s policy meeting, and until the meeting, volatility will remain high,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.

While many investors may indeed be fixated on the Fed's monetary policy meeting, John Hussman says that in reality, "the correlation between central bank policy rates and subsequent GDP growth is next to nothing".

And for investors specifically, Hussmans says that "poor stock market returns and the likelihood of 40-55% market losses from the recent peak are already baked in the cake".

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