Charlottesville, Va., Sept. 4, 2007 – In a recently completed study, the authors of many widely-acclaimed articles on Federal Reserve policy and security returns show that Fed rate changes are associated with strong patterns in equity returns. According to the rotation strategy, a more aggressive posture is advocated following decreases in the Fed discount rate and a more defensive posture is recommended following a rate increase. On the heels of the recent Federal Reserve discount rate cut, this timely study seeks to provide some direction to investors.

For their next trick, they will demonstrate that investors who buy low do better than investors who buy high... From the CFA Institute.