Navigating the AI Dip and FOMC Uncertainty: Why I'm Staying Calm and Focusing on Dividends
Hey everyone, hope you are having a productive week! The market had a bit of a shake-up recently when the Anthropic CEO suggested slowing down AI development.
Tech stocks took a slight hit, but the S&P 500 only dropped about 0.48% and the Nasdaq 0.56%. The bleeding stopped mostly because Trump posted on Truth Social, arguing that slowing down AI is just a massive conspiracy that only benefits rivals like China.
Right now, US bond yields are climbing, which naturally pushes bond prices down. All eyes are on the upcoming FOMC meeting. The big question in the market is whether they will freeze rates or raise them to finally crush inflation.
Looking back at the high oil price era of 1978, raising rates didn't immediately kill the stock market. Actually, the real crash usually happens when rates peak and start to drop, mostly because the Fed cuts rates in a panic to stimulate a weakening economy.
If you are worried about a massive AI tech stock crash, just keep an eye on corporate bond credit spreads. Right now, they aren't spiking anywhere near the subprime mortgage crisis levels, so it doesn't look like a total meltdown season yet. As a long-term retirement investor, market dips are just waiting periods to accumulate dividend growth ETFs like SCHD and real estate ETFs like VNQ at a discount. Building a stable portfolio means you can just live your daily life comfortably without constantly checking the charts.
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