HIGHER INTEREST RATES FOR LONGER, IS THE STOCK MARKET ABOUT TO CRASH?
Hey everyone, this article is for everyone that follows me. Over 1300 of you here in tiger. Sorry for the clickbait
title, but there's a lot of clickbait at the moment. So I wanted to address the topic of a crash rationally, plus discuss what I'm doing about it.
So I'm the emotional investor. This is actually an antonym. Meaning Im the absolute opposite of emotional when it comes to investing. My philosophy with investing is that I cannot help people that feel, I can only help people that want to think.
With that said, let's think. We will begin with the US fed raising interest rates by 0.25 basis points and a potential for them to raise again by another 0.25 basis points prior to the end of the year. So that would bring the risk free rate to about 5.5% by the end of the year, so yeh why invest in shares when you take on way more perceived risk?
Well because buying a US ten year bond yielding 5.5% is killing your buying power long term. Oh but wait, if the CPI is only 3% inflation your ahead right? Wrong Maybe. The CPI calc in America can be the headline CPI, or the core CPI the latter excludes food and fuel prices, and healthcare, so the core CPI is nonsense For most of us. Which figure is being quoted? when I do my own calculations, and I will not bore you with the details, it's just power, fuel, food, phone/broadband and accommodation. That's more like 9% inflation annually. So sorry a ten year treasury bond at 5.5% is rubbish.
We work hard for our money, we need to work just as hard with the money we put aside. America has a $40 trillion debt, at 4% the interest expense is not pleasant, at 5.5% it's nasty. Then there's the oil crisis, inflationary pressures caused by REAL increased cost. So basic items, like food cost more, luxury items, dun burger.
So the fed just settled hmmm, $450 last week, and refinanced from 3% to 5%. Unclear if they printed money to do it, but that's definitely coming.
But I'm ranting. And picking that you all just want the secret sauce.
So the USA is bankrupt, but it will fiddle the books. New words will be created, big words, that will require a university degree to "understand"
I'm buying gold. Not physical gold, definitely not paper gold. They give no dividends.
Ok need to make dinner, I can explain more tomorrow, just tell me idk in a response. Was going to explain the pic below, but I'm hungry. Xx
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