2015 Stock Strategy: Sell in June and Go Away?

For stocks, two big dynamics are in play right now: A stalling of corporate earnings growth and the anticipation of higher interest rates as the Federal Reserve prepares its first policy tightening cycle since 2004. You’ve likely heard that already, from me or from others, but you may not recognize the potential significance for your portfolio: These two major factors could keep a lid on price gains well into 2016 — which is when it'll become clear whether or not the U.S. economy is strong enough to handle the Fed's higher interest rates. Credit Suisse researchers went back and looked at the trends around the start of the Fed's last three rate hike cycles in 1994, 1999 and 2004. Credit Suisse found that valuation multiples came under pressure in a window ranging from six months before a rate hike right until action was taken.

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