In a New York Times column last Tuesday, Nobel Prize-winning economist Paul Krugman predicted interest rates would return to virtually nothing once the inflation fight is over.
Krugman predicted a return to near-zero interest for two reasons.
First, long-term rates have a delayed effect and advanced economies central banks have raised rates this year from near zero to 3.25% with suggestions that there could be more to come.
Second, Krugman also pointed out that job openings are greater than the number of available workers.
“This was the best economic news I’ve seen for a long time,” he stated.
The two are strong evidence of a cooling economy. Ultimately, Krugman claims that this would cause interest rates to return the near-zero pre-pandemic levels. Looking for better returns, investors would get back into the market, pushing it upward.
The Monday Morning approach to investing ignores market movements in either direction. We don’t have money we will need in the next few years in the market. When it rises, we take profits and when it drops, we buy bargains to maintain our personal asset allocation, which for most of our members, is 50/50.
Luck hardly matters with the habits of that Monday Morning.