The surprising case for investing when the Fed’s raising rates

The key takeaway is that historically, stocks have performed better in the 1- to 3-year periods following Fed rate hikes than after rate cuts. This counterintuitive finding stems from the fact that the Fed typically raises rates during periods of strong economic growth, which also supports corporate profitability.

The article suggests that rather than fearing rate hikes, investors might consider them opportunities. A hypothetical analysis shows that consistently investing during Fed tightening cycles yielded significantly better results than a simple buy-and-hold strategy. The Fed's current tightening path may not necessarily lead to an economic downturn, as inflation expectations appear contained and job growth is modest.

What remains to be seen is whether the Fed will be forced to hike rates to a level that genuinely derails economic growth. The article stresses that it's often the *last* rate hike, not the first, that marks the end of an economic cycle.