This Last Week of December 2022 Thoughts
Updated: Feb 17
Fed Fund Watch:
The FED is off for the holidays, but our 10-year bond yield is on the rise. I am starting to buy into bonds…look to hear from me.
There is a good chance that the RMD age will be increased
to 75, bringing chaos to those of us who have been using 72!
Get with me if you want to take charitable contributions from your IRA in 2023. our Risk Assessment!
IRMAA: don’t lose sight of your Medicare Premiums, or you will pay!
While I may have sent you Harry and David treats to celebrate the holidays and the end of this rather unpleasant year… the real treat that I’ll be bringing to your portfolio is the gift of confidence and peace of mind.
Whether it is next week, next month, or next year…the tide could / should / hopefully WILL turn. The other gift I bring is “tactical asset allocation:” investing based on the business and market cycle to reduce volatility. Here are 2020-2021 darlings:
I like this chart: it makes me happy. Happy that today is often a repeat of yesterday. Happy that we’ve seen ugly years…but ugly doesn’t hang around forever, when it comes to stocks and bonds. Happy is knowing that ugly usually doesn’t stay ugly forever.
Why does it matter to you? Over the last few years, most clients have asked why we had so much cash when the market was roaring. I would jokingly say; “Oh, you want me to lose some of it for you?” I could see the waning end to the market cycle. We now have what Brett Kramer used to call “dry powder.” Money to spend just when you need it. The tide has gone out on those darlings…and nary a bathing suits to see.
Here is a history of purchasing bonds prior to the last rate hike, going back to 1981:
Why does it matter to you? History has shown us that during difficult years, investors may become totally fatigued by headlines and poor performance, but now is not the time to put your monthly statements in the shredder. Now is the time to start paying attention. Now is the time to know that investing when you don’t want to is often just what we need to do. And please know…I am here to help you have confidence that we are doing just what we need to.
Why is Wall Street so freaked out about rising interest rates? There are many reasons, but none tells, or should I say, shows you, the bottom line like this chart: profits go down.
Why does it matter for you? Rising interest rates increase the cost of debt. The chart above demonstrates the positive impact on corporate profits of four-decades of declining interest rates. The dramatic rise in rates since the Fed began tightening policy will have the opposite effect on earnings. This is what Wall Street is dreading: profits going down in 2023.