Christmas Arrives Early On Wall Street As Fed Cuts Big

I’m sure you’ve heard the news by now that the Federal Reserve cut the Fed Fund rate by 50 basis points. The stock markets all rallied on the news, including the homebuilders.

The Fed cut does nothing to help the housing market. It’s not going to allow people who took out 4% teaser loans two years ago to refinance back into a 4% loan. The crisis has to do with credit tightening, not the cost of the mortgages. Unless the banks suddenly decide that people earning $50,000 a year can once again buy a $450,000 house, the mortgage crisis is not going to go away.

But, I digress.

If you own stocks, which I’m hoping everyone reading this does, today was a great day for you. Nearly everything went up, up, up.

Enjoy it.

At the same time, crude was hitting record highs and gold was at 27 year highs. These are two ominous indicators but as an investor you can take advantage of them.

Buy energy.

Buy natural resources.

Both are soaring and companies in both areas will make gobs of money off of this inflationary environment.

To say I’m disappointed in the Fed is an understatement. But as investors we can still make money off their crazy decision. The global economy is still strong. Employment, unless it is housing related, is still very strong (shortages of nurses, accountants and others still plague the US). Buy companies that will benefit.