To The Moon

If interest rates stay higher for longer, I would not sit entirely in cash waiting for the “perfect” entry. I would adjust my allocation, keep investing, and make higher yields work in my favour.

The latest Fed decision reinforces this scenario. In September, the Fed raised the federal funds target range to 3.75–4.00%, while its median projection puts the policy rate at 4.1% at the end of both 2026 and 2027. Inflation is also projected to remain above the 2% target for some time.

If I had $10,000 to deploy today, my allocation would look roughly like this:

📈 $5,000 – Global/U.S. equities

I would continue accumulating diversified ETFs rather than trying to time the bottom. Within equities, I would favour profitable, cash-generative companies with strong balance sheets. Higher borrowing costs make me more cautious about highly leveraged or speculative growth companies.

💵 $3,000 – Cash and short-term fixed income

When risk-free yields are attractive, cash is no longer “dead money”. Short-duration government securities or money-market instruments can provide income while preserving capital and giving me ammunition for market corrections.

🪙 $1,000 – Gold

I see gold primarily as portfolio insurance against inflation, geopolitical uncertainty and concerns surrounding fiscal sustainability, rather than something I expect to outperform equities indefinitely.

🏦 $1,000 – Financials/dividend equities

Higher rates can support interest income for some financial institutions, although I would be selective because funding costs and credit losses matter too.

The biggest lesson from past market cycles for me is not to make an all-or-nothing macro bet. “Higher for longer” does not automatically mean bearish for stocks. It means the hurdle rate for every investment becomes higher.

If equities fell 10–15% without a major deterioration in long-term fundamentals, I would gradually deploy some of my cash rather than trying to identify the exact bottom.

My approach would therefore be: stay invested, earn yield while waiting, maintain liquidity, and buy progressively when volatility creates better valuations.

Higher rates create risks, but they also give patient investors something we did not have when rates were near zero: attractive alternatives to equities.