The Valuation : Value Investing Through Valuation

A Crucial Week for Global Markets

This week holds significant weight for participants across global financial markets, as the FOMC (Federal Open Market Committee) is set to announce its latest rate decision.

The Federal Reserve’s monetary policy direction directly impacts not only U.S. assets but also global markets—stocks, bonds, currencies, and even cryptocurrencies can all be shaken by its ripple effects.

Many investors appear confident that this meeting will deliver a 25bp (0.25%) rate cut, and markets have already priced in much of that expectation.

Asset prices are elevated, and the optimism over lower rates is already embedded.

But one critical reminder remains: there is no such thing as 100% certainty in the market.

The Fed’s stance may diverge from market expectations. Moreover, Chair Powell’s comments and the dot plot (FOMC members’ projections for future rates) could send powerful signals to the market—sometimes more impactful than the actual rate decision itself.

Priced-In Good News Is No Longer Good News

There’s an old saying in markets: “Good news is priced in.”

This isn’t just a proverb—it accurately describes how markets operate.

If the majority of participants have already bet on a rate cut, then when the event materializes, asset prices may actually correct rather than climb.

That’s why now is not the time to chase momentum blindly. Instead, it’s a time to manage risk calmly and strategically.

Cash Is a Weapon

Personally, I plan to maintain a cash position of over 40%.

When markets become overheated ahead of a major event, cash serves as an invaluable weapon.

Holding cash is not merely about waiting for the right buying opportunity. It also acts as insurance, preventing emotional decisions during downturns.

Excessive leverage or impulsive positioning just before a major event can result in devastating losses.

Why Profits Should Be Taken When Markets Are Strong

Many investors tend to overextend when markets are strong, only to scramble for liquidity when prices start falling.

By then, it’s already too late.

Realizing some profits during bullish conditions and holding part of the portfolio in cash provides the psychological stability needed to face big events.

Being able to step back from greed and observe the market from a position of safety is, in itself, already half the victory.

Final Thoughts

What truly matters in this FOMC meeting is not just whether the Fed cuts rates, but what it signals about the policy path ahead.

Issues already priced into the market no longer serve as catalysts. In such environments, cash not only provides emotional stability but also positions investors to seize opportunities when they arise.

Ultimately, building profits during favorable conditions and holding reserves is the mindset of a true investor.