Notes from July 2004 Money

I didn't find a lot of useful information in the July 2004 Money magazine. But here are a few of the interesting points...

• Stocks historically do well after an initial rate hike, at least in the short term. Since 1928 the S&P 500 index rose 9% in the year following the Fed's first rate hike.
• Growth stocks do well in the early stages of a period of rising rates. When the 30-year bond yield rises 10%, the best perfoming stocks are from growth industries.
• In the last four rising-rate periods, short term bonds gained ground, while long-term bonds tanked. A difference of at least 9% in each case was observed.
• Many investment pros recommend investing some of your money in REITs because they don't move in sync with stocks and bonds. This allocation can reduce the volatility of your portfolio.