Investors Are Supposed to Be Rewarded for Risk, Right?
As the Fed raises rates, stock pickers ignore that the premium they should be paid for their loyalty to equities is shrinking.
Where did the premium go?
Photographer: Eric Piermont/AFP/Getty Images
After the Federal Reserve raised the federal funds rate as expected on Wednesday, investors are no doubt watching how longer-term interest rates respond. But the stock market’s moves will be just as revealing.
U.S. stocks have been on a historic run since the 2008 financial crisis. The S&P 500 Index has returned 18 percent annually from March 2009 through August, including dividends, making it one of the best decades for stocks since 1926. It’s also the second-longest stretch without a bear market, as defined by a decline of 20 percent or more.