The Federal Reserve had the last day of its most recent meeting on March 18. The decision was to leave the federal funds rate unchanged, in a range of 3.5% to 3.75%. Furthermore, the central bank’s dot plot, which shows officials’ expectations (anonymously) of short-term interest rates, is now pointing to just one rate cut before the end of 2026.
The market tends to give the Federal Reserve a lot of attention. And this can influence some investors to think they need to make portfolio moves. That thinking is understandable.
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But here are two reasons why long-term investors might just be better off not doing anything.
One obvious way to improve investment success is to only stick to high-quality businesses. Over an extended time horizon, these companies have the key ingredients, like growth potential and sustainable competitive advantages, that allow them to perform at a high level. That will inevitably lead to good returns for patient investors.
The best companies also tend to be in solid financial shape, with strong profitability and robust balance sheets. For example, look at Apple (NASDAQ: AAPL). It had $54 billion in net cash on the balance sheet at the end of 2025. And in its fiscal 2026 first quarter (ended Dec. 27, 2025), it reported $42.1 billion in net income, translating to a fantastic net margin of 29%. That strong balance sheet means Apple is far less concerned about what the Federal Reserve does than your typical tech growth stock.
Investors who try to predict what direction the Federal Reserve will go with interest rates are going to fail, for reasons similar to trying to time the market. It’s best to avoid trying to figure out what the central bank will do at any given meeting. Also, it’s extremely difficult to know how the market will react to whatever move (or inaction) occurs.
Feeling like you should predict is understandable. Investors hate uncertainty. And they want to prepare for what might come. Given the overwhelming attention Fed Chair Jerome Powell and the rest of the Federal Open Market Committee (FOMC) get, investors are primed to think that their decisions are of the utmost importance. I don’t believe this is true.
The reality of markets and the economy is that we are always in a state of uncertainty. Inflation, unemployment, supply chains, geopolitics, and technological innovation, for example, are persistent variables that might push investors to take actions that can do more harm to their portfolios than good. It’s best to avoid paying too much attention to all this uncertainty.
