Game of Trades: A Once In a Lifetime Financial Event Is Here

For the past 40 years, interest rates have generally moved in one direction – down. Over the past year and a half, however, that’s changed. Rates are on the rise. And interest rates stand at their highest level in 15 years.

They’re still below their average level from the post-World War II era. But today, many see interest rates moving down again in the next year as inflation fears ease.

While that’s the current scenario the market is moving around, another trend could play out. That’s the trend of the period just before interest rates peaked in 1980. The trend? Continually rising interest rates.

The last rising interest rate cycle started around 1945 and took decades to play out. And the inflation of the 1970s wasn’t in a straight line. It moved higher, then lower, before surging higher again.

Investors should be aware that historic cycles often repeat. And at some point in the next few years, conditions could set up for a similar surge higher inflation again. Possibly as soon as 2024.

Should that happen, the economy will likely move to a recession to adjust. And stock valuations will drop to reflect the damage done by inflation.

If the 1970s taught investors anything, it was to invest in short-term bonds.

Maturing bonds could be reinvested at higher rates. And the decade was a boom time for commodities, thanks in part to oil surging over ten-fold over the decade.

To watch the full historical analysis, click here.