If you recall back in 2013, the Philippine Stock Exchange went on a record-breaking tear as it broke through the 7,000 for the first time and then went through steep correction. The main culprit: Then FED Chairman Bernanke’s statements regarding the end of Quantitative Easing. Interestingly, once Quantitative Easing did end, equities resumed their upward trend.
This week, current FED Head Yellen is expected to discuss when they will raise U.S. interest rates. The concern is that if she indicates that the rate increase can be as early as this June, then equities will most likely drop in the short term. (Boooooo!!!)
However, since the underlying reason behind the rate hike is the supposed improvement of the U.S. economy as a whole, then the medium to long term prognosis for equities should still be positive. (Hooray!!!)
In fact you may want to take a look at any drop as a potential entry point into currently expensive stocks rather than as a reason to leave equities altogether.