Jay Powell took the mic in Jackson Hole three weeks ago and a few minutes into his speech stocks began to surge. They haven’t looked back. The trigger: a strong hint that rates would be cut.

I have some problems with this. First, Powell’s speech was riddled with qualifying words (could, might, potentially, maybe, should, possibly, data dependent, etc.). What happened to the Fed’s two percent target? Inflation has stopped declining and is one uptick away from starting with a 3 handle. Still, investors piled on and expect several rate cuts.

Investors and especially traders overreacted. They bought with abandon. They should go slowly. In the real world earnings and interest rates over time determine stock prices. Earnings will grow next year by an estimated ten percent, down from this year’s 15 or so. The big-cap tech stocks with earnings will make it so. Forecasting interest rates is another matter. Any number of factors will come into play. Inflation for sure, GDP growth, the demands for credit, deficits, etc. The Fed, with all its economists, is no better at it than we are.

When the Fed cuts rates the media often declare that mortgage rates will fall. Not so fast. The Fed controls short-term rates so money market yields will fall. But mortgage rates are tied to the 10-year Treasury and the market determines that rate. If a Fed rate cut is seen as inflationary or if more bonds are offered to finance the deficit than what investors want then long-term rates will rise.

Interest rate trends typically don’t last long. When rates were high and bond prices rock bottom some investors acted as if rates would never fall. When rates were low and bonds sky high some acted as if rates would never rise. Some of the best opportunities were created at those turning points. Moderate results carried the day.

The market — Higher stock prices are still in the cards provided the Fed will follow through with rate cuts. Not just one rate cut. If they don’t cut more than once capital that came in quickly will leave quickly. What will cash-heavy investors do with their trillions as rates fall? Some will pay too much for too little while others will sit it out and watch. There are always bottom fishers. There is no right or wrong here. Know your needs and risk appetite. And as rates fall don’t overlook better-yielding stocks as alternatives to bonds and income vehicles. They have worked well for my clients.

David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.