Eileen's picks

Fed's interest rate cut and me

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I had read persuasive arguments for no cuts (Ken Kam's for example), a medium cut and a large cut. Because my strategy calls for balancing, I was prepared to take action whether the market went way up in joy or plummeted in disappointment at the Fed's decision.

As it turns out, my portfolios (real and SLO) have benefited enormously from the large interest rate cut. My biggest SLO holdings (RIO, AMX, BAM and IWP) have all risen dramatically, and because I purchased RIO and AMX when prices were low, they've received an even bigger bounce than if I'd purchased them at the beginning of the competition or more recently.

Because the surprise was on the up side, I will rebalance at the end of the month as originally planned. Had the surprise been on the down side, some or all of my limit orders would have triggered, and I would have purchased stocks at what would - hopefully - have been bargain prices. With those purchases incorporated, I would then have rebalanced and made additional purchases.

But the biggest impact of the Fed's decision has been for me personally. Because the Fed's rate cut was big enough and because the real investments in the real family trust (including shares of RIO purchased when the price was at its nadir) have soared, instead of borrowing money from the trust as planned, we're borrowing from the bank.