One week before the Federal Reserve Board’s expected interest rate hike, an economic advisor from Putnam Investments warned that using the history lesson given by previous "tightening cycles" as a guideline might not be a smart move. Investors may not suffer as badly as they expect.

Dr. David Kelly said that typically, the Fed’s "first tightening" in the cycle is not preceded by long-term interest rate hikes. But, over the past three months, he points out that 10-year treasury yields have inflated by a whole percentage point, the most drastic rise in pre-tightening cycle long-term interest rates in the last 50 years.

"There are some problems with using history as a guide in the summer of 2004," Kelly wrote. He added that the current inflation rate is not as bad as it usually is before a tightening cycle, and that the Fed seems concerted to rise the rate slowly and steadily, rather than rapidly.

So while he admitted that long-term investors have not fared well during past tightening cycles, Kelly offered some hope that survival may be easier this time.

"History has not been kind to this expectation, but the tightening cycle that should commence at the end of this month may offer the best chance yet of such a positive outcome for long-term investors," said Kelly.

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