Wed. Sep 18th, 2024

CNBC had an eye catching headline, “Stock market losses wipe out $9 trillion from Americans’ wealth” and we encourage you to read the article. Essentially since the market’s highs, many high flying stocks are down and we think that as the Federal Reserve keeps raising interest rates, we will see more stock market carnage.

Our fourth post on this blog November 7, 2021 was entitled, “Safe Harbor Ahead – US Treasury I-Bonds at 7.1%” and we were already moving money into US Treasurys because we knew high inflation meant the Federal Reserve would be raising interest rates. We also knew stocks would sell off and we nibbled at the stock market in some key defensive stocks but have been patiently waiting for the Fed to announce they will not be raising rates so we can take a hard look at equities again.

In the meantime, we are laddering T-Bills, CDs, and other liquid short term instruments given the rates for these investments are now yielding 3% to 4%. As the Fed continues to hike, we will continue to climb the interest rate ladder.

Image courtesy: Photo by Jason Leung on Unsplash

There is little to do now except wait and continue to do research and analysis and prepare to invest accordingly. In an upcoming post, we’ll talk about how to leverage the extremely strong US Dollar into option plays on foreign currencies. The US Dollar is strong because the Fed keeps raising rates however this won’t last forever so now is the time to start positioning for a fall in the US dollar and re-balancing of foreign currencies like the Euro, Yen, and British Pound. In the meantime, we will continue to do our analysis so stay tuned and stay solvent…