Investing Insights Should You Hold Cash Investments After the Fed Cuts Interest Rates?
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Sep 19, 2025 In this engaging discussion, Amy Arnott, a portfolio strategist at Morningstar Inc., highlights the advantages of cash for short-term investing, especially in light of anticipated Fed interest rate cuts. She warns about the risks of long-duration bonds while offering practical strategies for investors. Dan Kemp, Chief Research and Investment Officer at Morningstar Investment Management Europe, analyzes Oracle's impressive AI-driven transformation and its implications for future market dynamics, urging investors to explore beyond mainstream tech names.
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What Counts As Cash
- Cash includes very short-term, safe, liquid assets like money market funds and savings accounts.
- Officially cash has a maturity of three months or less and avoids price moves from rate changes.
Don't Chase Yield With Long Bonds
- Avoid swapping short-term Treasury bills for very long-duration bonds just to chase rate-cut gains.
- Long-duration bonds can produce big losses if rates move the other way, as in 2022.
Forecasts Often Miss The Mark
- Market consensus on Fed moves is often wrong and forecasts change materially.
- Misreading rate paths can significantly harm investment results.