Fed model

The Fed Model is a way of thinking about the stock market. It's named after the Federal Reserve, the U.S. central bank. In the Fed Model, investors compare the returns from investing in stocks to the returns from investing in bonds. Bonds are a type of investment that pays a fixed rate of interest over a pre-determined period of time. The idea is that a portfolio of stocks (or other investments) should provide returns that are higher than the returns from bonds, otherwise it isn't a good investment. The Fed Model helps investors decide if stocks are a good investment by looking at the current level of interest rates and the expected return from stocks. If the expected return from stocks is higher than the current level of interest rates, then the Fed Model suggests stocks may be a good investment.