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A weekly review of trends, facts and tips for journalists
- Christopher Burdick discusses the Fed’s fund rate pause and the thought-provoking twists it faces as it strives to maintain its dual mandate of maximum sustainable employment and price stability.
- Diversification is key to controlling excessive investment risk. Mark Riepe provides tips on how investors should think about diversification and how to properly apply it to their investment strategies.
FED PAUSES: INTERESTING TWISTS AHEAD
Christopher Burdick, director, economic analysis, Schwab Center for Financial Research 
By a vote of 9 to 1, the Federal Open Market Committee (FOMC) left its target for the federal funds rate unchanged at 2 percent, marking the first pause since the Aug. 7, 2007, meeting. Voting against was Richard W. Fisher, who preferred an increase in the target for the federal funds rate.
KEY EXCERPT FROM THE STATEMENT
"Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased." Read the full statement.
WHAT’S NEXT?
We believe the Fed is on hold, but faces thought-provoking twists as it strives to maintain its dual mandate of maximum sustainable employment and price stability. The Fed seems to be caught between the opposing risks of recession and inflation. What happens to energy prices, the dollar, wages and housing could be pivotal when the central bank ponders what to do next and with rates: hike, cut or pause.
Media Contact:
Lara Edge
415-636-3386 or 415-636-5454
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DIVERSIFICATION IS KEY
Mark Riepe, senior vice president, Schwab Center for Financial Research 
Whenever you invest, you take on a certain amount of risk. However, successful investors only take on the level of risk that they need to, and no more. Diversification is an excellent tool that you can use to control excessive risk-taking. In fact, according to Schwab’s Investing Principles, diversification is the second most important factor in reaching goals.
PUT YOUR EGGS IN MORE THAN ONE BASKET
One example of proper diversification is to make sure that the fate of your portfolio doesn’t rely too heavily on what happens to a single stock or bond that you may hold.
If you invest in individual stocks, just think of the damage to your financial future if you hold mostly one company’s stock. If you think the collapse of a company is an isolated instance or a fluke, it isn’t. Because there are so many things that can go wrong with a particular company, we believe it just doesn’t make sense to have more than, let’s say, 10 percent of your portfolio in any one stock.
Media Contact:
Lara Edge
415-636-3386 or 415-636-5454
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IMPORTANT DISCLOSURES
This information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice or an offer or solicitation to purchase or sell any particular security. It is not intended to be a substitute for specific individualized tax, legal or investment planning advice. The strategies mentioned may not be suitable for everyone. Each investor needs to review investments and strategies in light of his or her own particular situation. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA and/or attorney. Data contained here is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.
All expressions of opinion are subject to change without notice. All research has been compiled from publicly available, proprietary and/or licensed data. Past results are not indicative of future performance.
Charles Schwab & Co., Inc. (Member SIPC) is a subsidiary of The Charles Schwab Corporation. The Schwab Center for Financial Research is a part of Charles Schwab & Co., Inc.
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