Is there a relationship between CD interest rates and the Stock Market?

[WeOffThat]

Don't know if that's a newbie question but is there? I have a theory strategy in my head of keeping most of my invest-able assets in stocks when CD rates are low then selling stocks and buying CD's when the interest rate is above 5%. This allows me to have cash on hand when a stock market crashes... allowing me to invest heavily when prices are attractive.

[cheerio]

no, the cd rates are usually controled by the fed rate and/or the prime rate at which banks can borrow

[WeOffThat]

dont the rates of the fed have to deal with the state of the economy

[jIM_Ohio]

2 issues with your plan

If it were fool proof, people would be doing it already. It has a flaw built into it...

the 2nd issue is that rates do not move inverse to stock market, but rates do move opposite inflation. Meaning when rates are high (like 5%) then inflation will probably be higher. In addition in the Bull of thew late 90's the market was going up and rates were high (higher than they are now)- which would you choose?

a 3rd flaw also implies you are buying after you see market go up... that is not the best way to make money.

[disneysteve]

I have a theory strategy in my head of keeping most of my invest-able assets in stocks when CD rates are low then selling stocks and buying CD's when the interest rate is above 5%.

Market timing doesn't work, no matter what theory of market timing you use.