“Don’t fight the Fed”
“Don’t fight the tape” (meaning to follow the trend; stock quotes used to be received on tickertape) is a Wall Street adage that was popularized in the 1950s. “Don’t fight the Fed” (Federal Reserve) is a similar Wall Street adage that was popularized in the early 1980s by American financial analyst Martin E. Zweig (1942-2013).
Financial journalist Louis Rukeyser wrote in a 1983 newspaper column:
“Zweig’s two basic rules are ‘Don’t fight the tape’ (follow the trend) and ‘Don’t fight the Fed’ (be careful when the Federal Reserve tightens credit).”
Rukeyser wrote in 1991:
“A long time ago, before he became such a household name among the financial crowd, I wrote about Dr. Martin E. Zweig in this column, noting that his two inviolate rules for investing success were ‘Don’t fight the Fed’ (in other words, the interest-rate trend is likely to be decisive for stocks) and ‘Don’t fight the tape’ (in other words, the market always has the last word itself—and sitting around complaining that it’s ‘wrong’ is an excellent way to keep losing money).”
Not everyone agrees that you can’t fight the Fed; some observers in the 2010s held the belief that the Fed was out of control. However, most financial observers have followed Zweig’s advice that the Fed is too powerful to fight, so the path of least resistance is to follow the Fed’s moves.
“Dread the Fed” is another saying about the Federal Reserve.
Wikipedia: Federal Reserve System
The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907. Over time, the roles and responsibilities of the Federal Reserve System have expanded, and its structure has evolved. Events such as the Great Depression in the 1930s were major factors leading to changes in the system.
The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve’s dual mandate. Its duties have expanded over the years, and as of 2009 also include supervising and regulating banks, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions.
Wikipedia: Martin Zweig
Martin Edward Zweig (July 2, 1942 – February 18, 2013) was an American stock investor, investment adviser, and financial analyst. According to Forbes magazine, he was renowned for his “eccentric and lavish lifestyle” as well as having had the most expensive residence in the United States at the time, atop The Pierre on Fifth avenue in Manhattan. It was listed on the New York City real estate market in 2004 for $70 million and in March 2013 for $125 million. His particular investing methodology was based on selecting growth stocks that also have certain value characteristics, through a system that uses both fundamental analysis and market timing. He died in 2013 at the age of 70.
17 July 1983, Gazette Telegraph (Colorado Springs, CO), “Leading newsletter writer always worried” by Louis Rukeyser, pg. D4, col. 4:
Zweig’s two basic rules are “Don’t fight the tape” (follow the trend) and “Don’t fight the Fed” (be careful when the Federal Reserve tightens credit).
Google News Archive
5 March 1991, Lodi (CA) News-Sentinel, “Money & You: Don’t fight bullish economy” by Donald C. Bauder (Copley News Service), pg. 10, col. 5:
Don’t fight the tape. Don’t fight the Fed. Don’t fight the herd—the institutions such as pension and mutual funds that dominate the market.
Google News Archive
14 April 1991, Observer-Reporter (Washington, PA), “Marty Zweig isn’t worried anymore” by Louis Rukeyser, pg. B-8, col. 5:
A long time ago, before he became such a household name among the financial crowd, I wrote about Dr. Martin E. Zweig in this column, noting that his two inviolate rules for investing success were “Don’t fight the Fed” (in other words, the interest-rate trend is likely to be decisive for stocks) and ‘Don’t fight the tape” (in other words, the market always has the last word itself—and sitting around complaining that it’s “wrong” is an excellent way to keep losing money).
Google Books
Futures: Fundamental Analysis
By Jack D. Schwage
New York, NY: Wiley
1995
Pg. 574:
This chart clearly demonstrates the wisdom of the old Wall Street adage, “Don’t fight the Fed.”
Google Books
February 1997, Kiplinger’s Personal Finance Magazine, pg. 27, col. 2:
It’s not for nothing that many traders live by the watchword “Don’t fight the Fed.”
OCLC WorldCat record
Don’t fight the Fed - You just might win
Author: J Bougearel
Publisher: [Cedar Falls, Iowa : Commodities Magazine, c1983-
Edition/Format: Article Article : English
Publication: Futures. 30, Part 11 (2001): 50-53
Database: ArticleFirst
OCLC WorldCat record
‘Don’t fight the Fed’ back in fashion
Author: Ben Joyce; BMO Nesbitt Burns.; BMO Capital Markets.
Publisher: Toronto : BMO Nesbitt Burns, 2006.
Series: Portfolio strategy
Edition/Format: Print book : English
CNBC.com
‘Don’t Fight the Fed’ Has Worked for 20 Years: Analyst
Patrick Allen
Thursday, 14 Jul 2011 | 6:23 AM ET
“Money Never Sleeps” was the title of the sequel to Oliver Stone’s “Wall Street” and the phrase has never been so relevant according to Philippe Gijsels, the Head of Research at BNP Paribas Fortis Global Market in Brussels.
(...)
“The famous saying ‘do not fight the Fed’ has worked for the last 20-odd years. Still, it is clear that it is not a healthy situation that each time when the printing presses stop, trouble starts and the Fed has to turn them on again,” he said.
“Will the ultimate price to pay be a loss of credibility in the Fed and/or run-away inflation? The jury is still out,” Gijsels added.
Casey Research
Published January 29, 2014
Don’t Fight the Fed
Doug French
Contributing Editor
Don’t tug on Superman’s cape. Don’t spit into the wind. And most definitely, don’t fight the Fed. That’s what they say on Wall Street. When the central bank is printing, get your money in stocks. When the PhDs at the Eccles Building take away the punchbowl, turn out the lights and sell your stocks—the party’s over. Don’t believe it? Google “Don’t fight the Fed,” and you’ll get 468 million results.
Before the late Martin Zweig was a legendary investor who never fought the tape, he was teaching finance at Baruch College and Iona College, and his byword was, “Don’t fight the Fed.”
OCLC WorldCat record
Don’t Fight the Fed: Be Fed-Ready Instead Rather than be pushed through the regulatory door, banks should walk through of their own accord-with the CRO leading the team
Author: J Bugalla; J Kallman; K Narvaez
Edition/Format: Article Article : English
Publication: RMA JOURNAL, 96, no. 9, (2014): 42
Database: British Library Serials
CNBC.com
Cramer: Why it doesn’t pay to fight the Fed
Abigail Stevenson | @A_StevensonCNBC
Friday, 12 Jun 2015 | 6:20 PM ET
(...)
Most importantly, Cramer does not want investors to think that when the Fed is raising rates it is a better time for the stock market than when rates are being cut. The best course of action in his opinion is not to fight the Fed.
When Cramer says “don’t fight the Fed,” he means even when the Fed is cutting rates, investors still have a tailwind on their back. And if you are too negative, then you could lose money in the market too.