After the Fed Hiked Rates, Should Stocks Go on Offense or Stay on Defense? Former Government Fund Manager Huang Feng-kai Explains

On Wednesday, September 16, the Federal Reserve lifted its policy rate by a quarter point to a target range of 3.75% to 4.00%. It was the first hike since July 2023, taken by a unanimous 12-0 vote under Chair Kevin Warsh, who said inflation has stayed too high for too long and signaled that one more increase before year end is likely.

The ground had been building for weeks. A hawkish Jackson Hole speech from Warsh, Brent crude climbing to $109, the 10-year Treasury yield pushing back above 5% and a run of firm inflation prints had cornered policymakers. By the time the decision arrived, the bond market had already moved yields higher, with several strategists arguing the Fed was essentially following the market.

The initial reaction was a sell-off. The Dow shed 631 points, down 1.21% to 51,461, the S&P 500 slipped 0.44% to 7,552, while the Nasdaq ended almost flat. The 2-year yield jumped to 4.73%, the 10-year touched 5.02% and the 30-year neared 5.36% as traders priced additional tightening.

The next day the picture flipped. On September 17 the Dow rose 0.71% to 51,828, the S&P 500 gained 1.13% to 7,636 and the Nasdaq surged 1.62% to 26,399. Treasury yields eased back to 4.95% on the 10-year and 5.30% on the 30-year, WTI briefly dipped below $100 and Brent eased to about $102.90, while initial jobless claims unexpectedly improved and supported risk appetite.

Confidence was the driver of that rebound. The unanimous vote was read by firms such as BMO and UBS as confirmation that the economy remains resilient, with consumer spending, employment and corporate balance sheets still solid. For technology, spending by hyperscalers such as Alphabet, Amazon, Microsoft and Meta was expected to continue, and UBS noted that across 16 hiking cycles since 1954 the S&P 500 gained on average 10.8% in the year after the first increase.

The guest on the program, Huang Feng-kai, spent more than two decades inside Taiwan's institutional circuit, including stints as an outsourced manager for the government's four major pension funds, head of research and spokesperson for a listed company, and portfolio manager at firms such as Desin, KGI and Hua Nan. After publishing a stock-picking manual in 2023, he has been teaching multi-direction strategy classes at the Business Today Academy, focusing on the information gap between institutions and the country's more than 11 million retail accounts.

Huang describes his approach as the "giant wave and bunker" filter in two layers. The first layer is formation: are the 10-, 20- and 60-day moving averages all pointing up in a stepwise advance. The second layer is institutional flow: foreign investors carry the long wave, investment trusts drive short momentum. When both accumulate in the same name in the same direction, he sees higher probability, and argues the efficient path for individuals is not to research every company from scratch but to screen within the pool institutions already favor.

To the video's central question of offense versus defense, Huang offers a graduated answer. Even with rate pressure, offense can mean scaling slowly into growth and AI-supply-chain names where formation holds, flow persists and sector tailwinds remain. Defense means shifting weight toward durable dividend payers and lower-beta compounders and preserving cash when yield and oil pressure stay elevated and visibility is low.

Risks have not disappeared. Futures pricing via the CME FedWatch tool put the chance of another hike at the October meeting near 53%, up from about 27% a week earlier. The 10-year yield still hovers near 5%, Brent trades around 101 to 103 and the risk that a prolonged oil shock seeps into broader prices remains. A higher-for-longer backdrop continues to pressure borrowing costs, valuations and especially smaller companies.

Huang's translation for individuals is therefore behavioral. Few can dissect dozens of balance sheets deeply, so leveraging institutional research and writing a personal rulebook is more realistic. He warns against chasing consecutive rebounds in overheated phases, advises taking profit when formation breaks, and cautions not to dump positions at the lows in a panic.

In the end, the Fed's unanimous message showed a council that had been split in July now aligned on inflation, which reduced uncertainty for a day and the market celebrated the following session. Yet the door to more tightening stays open and volatility is likely to persist. In Huang's framework the task is not a one-time all-in or full retreat, but continuously calibrating the offense-defense mix by price, averages and flow and building a routine anchored in institutional behavior rather than headlines.