At 2 a.m. on March 21, Beijing time, the Federal Reserve announced that it will continue to keep the federal funds rate unchanged in the range of 5.25% to 5.5%. This is the fifth time in a row since September last year that interest rates have remained stable. This decision is in line with general market expectations. At the press conference that followed, Federal Reserve Chairman Powell sent a mild signal, suggesting that current interest rates may be close to cyclical highs, and believes that it is appropriate to start cutting interest rates at some point during the year, even though the current level of inflation is still high.
According to its newly released economic forecast bitmap, the Federal Reserve plans to cut interest rates by a total of 75 basis points within this year, which means it may cut 25 basis points each time in three installments to gradually relax monetary policy.
Figure: Interest rate bitmap comparison
Judging from historical data, in the 11 cycles of interest rate hikes and interest rate cuts experienced by the Federal Reserve since 1982, the S&P 500 index and the NASDAQ index usually showed strong average returns during the six-month period after the first interest rate cut, close to 10%. This means that markets often respond positively to monetary policy easing.

Faced with the potential market benefits brought about by expectations of interest rate cuts, investors may ask: How to choose the right investment portfolio among the many options?
Buffett has already given an answer to this question:
“I think the best way for most people is to have an S&P 500 index fund.”
“People spend a lot of money to buy stock suggestions, but they don't need them. If you bet on the US,...