"One of the oldest sayings on Wall Street is "Don't fight the Fed."
This saying has meaning in both directions, when the Fed is easing and when it is tightening.
A glance at these charts shows why.On the positive side, the Fed's tightening phases have often lasted a year or two before stock prices peaked and began to drop.
So even if you're convinced that sustained Fed tightening now will likely lead to a sharp stock-price pullback at some point, the bull market might still have a ways to run.
So those are three reasons why the stock market could experience much more than a garden-variety "correction" — price, profit margins, and Fed tightening.
None of this means for sure that the market will crash or that you should sell stocks (I own stocks, and I'm not selling them.)
It does mean, however, that you should be mentally prepared for the possibility of a major pullback and lousy long-term returns.
So if the recent stock weakness turns out to be the start of a major pullback, don't say you weren't warned!"
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