If the Fed's Next Move Shakes Up the Market, History Says Investments in This 1 Type of Stock Usually Hold Up Best During Times of Volatility
While federal funds rate reductions this year were once viewed as a lock, how the Fed will manage its benchmark interest rate from here is now anyone's guess.
Overview
It's not uncommon for stocks to react with sharp unease whenever the Federal Reserve signals or executes on a new policy adjustment. The current macroeconomic environment features elevated inflation as well as new leadership at the central bank. These are conditions that can unsettle investors.
Luckily, history offers some guidance for navigating this turbulence. The one type of investment that has consistently held up during periods of uncertainty or outsized volatility is low-beta stocks. These are stocks whose price movements register a beta coefficient below 1.0 relative to the broader market. This financial jargon simply means these stocks tend to fluctuate in value less sharply than the market as a whole.
Details
Let's explore how low-beta stocks have consistently displayed greater stability during periods when monetary policy decisions have rattled the broader market.
Source
Originally published at www.fool.com.
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