Fast Money Blog- 3/5/2021

This week we saw stock markets in the U.S. and Europe react negatively to the U.S. government’s $1.9 trillion stimulus package.

Why would markets pull back on U.S. stimulus news?

Here's the answer:

When the U.S. decides to pump $1.9 trillion into the economy within a 10 to 15 day period, this will cause inflation.

Inflation refers to the general increase in prices and fall in the purchasing value of money. If the U.S. economy receives this injection of capital the Federal Reserve, whose principle job is to manage the U.S. economy, will be forced to raise interest rates to slow down inflation. When institutions fear a rapid rise in interest rates, stocks will sell off in the short term.

It’s important to note that the lifespan of most pull backs is 45 days or less.

This is usually followed by a sharp period of retracement in both Dow and growth stocks that have sequential top -line revenue growth both quarterly and annually.

Your job is to stay in discipline and follow the Wealthy Investor allocation strategy.

Important Note: During a bull market when you load up on growth stocks and use more than 50% of your margin, you are OUT of discipline.

Stay patient! Stay positive!

Always stay in discipline!

Tyrone Jackson, The Wealthy Investor