Timing the market is a game that investors shouldn’t seek to play, especially new investors who might think it’s so easy to buy low and sell high, as many other emotionally driven, momentum-hungry investors wind up doing the opposite.
Indeed, it has been a mixed September thus far, with some pretty sizeable road bumps and bounce-backs. If you sold in the heat of the panic when the U.S. Federal Reserve hiked interest rates (it was an expectation, but nevertheless, it made for a very turbulent day of trading), odds are you missed out on the next-day rally, which pretty much reversed the losses to be had in prior sessions. This goes to show the dangers of trading events such as Fed decisions.

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Last week was all about the Kevin Warsh rate hike
Even if you knew what would happen or the remarks of Fed chairman Kevin Warsh, what the reaction would be in the markets is unknown. The same could go for quarterly earnings reports and the release of jobs numbers.
Instead of wasting time trying to trade the Fed, earnings, or anything else, I think it makes more sense to buy and own undervalued pieces of companies for several years at a time. It’s less effort, and you won’t stand in the way of compounding, especially when markets do fluctuate, as they have in the past week. Fed rate decision weeks are probably going to continue to be volatile, and I’d not look to hit the panic button either way. Instead, it might make more sense to buy any mini-moments of panic once the Fed actually does announce a rate hike.
Even if it’s expected, there can be moments of emotionally driven trading and for long-term thinkers, that’s a fantastic thing, especially if it means shares of a company on one’s radar get marked down by 2–3% or more on any given day. The first interest-rate hike since 2023 might sound concerning at first, but given the many variables involved, letting such near-term-focused commentary dictate your investment strategy, I think, is a bad move.
The relief rally on Thursday happened really fast
If anything, overweighting the negative Fed-related commentary might be counterproductive for a long-term investor who’s just trying to keep things simple by buying stocks when they’re cheap and selling them (or holding) when they’re fully priced or even a tad on the pricey side.
In any case, Thursday’s relief rally can be attributed to investors coming to terms with the rate hike and efforts made by Warsh to stomp out inflation before it has a chance to get any worse. In my view, that’s a good thing for markets over the long run. Also, the rate hike should get rid of the narrative that Kevin Warsh is any kind of “sock puppet.”
Given Warsh’s determination to control inflation, I think the global markets had every right to feel comforted by last week’s rate hike. The Vanguard FTSE Canada Index ETF (TSX: VCE) spiked by close to 1% in a single day, helping the index stay in the gray on the week, while the TSX Index itself actually closed the week up around 0.6%.
In my view, it signals an independent Fed that’s doing its best to fight inflation while also keeping employment (which was strong in the U.S., by the way) in check.
It’s a move that should give investors confidence, and I think Canadian stocks might have what it takes to give the S&P 500 a run for its money, as high oil prices, a weakening loonie, and the Bank of Canada’s lack of action (at least relative to the Fed) on rates and inflation come into play. Though tariffs remain a huge unknown.