Are you concerned about Interest rates?

I think rising rates are a good thing, most of my life they have been artificially high.

I think a big contributing factor as to why USD inflation hasn't skyrocketed is because it's the petro dollar. Depending how things go with BRICS I think things could get tough for a lot of people.

What am I doing? keeping debt and buying things that are real and have real value. The system is broken. I don't see any solutions unless we get rid of privatly own Central Banks with governments sanctioning their endless printing of money. As far as I know about it privatly owned Central Banks like the Fed print money and exchange for assets like binds or whatnot. Who are the shareholders of the Fed? Who is benefiting from this? When will enough be enough?

I don't believe the Fed will let up until the numbers start to print good. Powell repeatedly affirms this position. The Bulls, on the other hand, keep choosing to believe in their Fed Pivot fantasy.

Depending on the sector...............the market is a giant buffet at present. If you're thick skinned, with long horizons, it's Buy Baby Buy.

If rates do actually put a lid on inflation, while concurrently driving the market into the basement, it's a win win for equity investors. If we actually do slip into recession next year, it's back up the truck time.

While current conditions are a bonanza for short term momentum traders, it's a heartache for buy and hold investors with low risk tolerance. Now is not the time to sell. (I have huge sympathy for retirees who are just now punching their tickets, they're suffering huge devaluations in their equity nest eggs)

The conditions, post Pandemic(although it really hasn't gone away) were not good for investors who weren't nimble enough to take advantage. Passive index investing was a total disaster..........but.......you get what you pay for.

This, of course, depends on your strategy. Personally, I would rather preserve capital, than go out on a limb for riskier gains. I'm a huge fan of Regional Banks, and health based Equity Riets(forget mRIET's, they're on tap to do poorly). Since the GFC in 2008, the banks have been forced to clean up their act. This makes them better stewards of their balance sheets. This translates to safer dividends, and lower risk that in-house investments will bring the bank down. Find yourself some low Beta, high yield, low payout ratio, banks to hunker down in. Total return is not as sexy as the high flyers, but you don't suffer the huge pain when your speculative buys go South on ya. The trick was to rotate into these stocks when they were stilll beaten up. Nimble........something index investing does not offer. You have to be a stock picker to ride this one out.

The 2021 Party is over. Look at any chart of the major indices, and you'll see that we're correcting to pre Pandemic norms. Water seeks its own level.

High interest rates might take a while to show full effect. The big companies loaded up on debt when money was cheap.

Sadly, the average wage earner is going to be the most affected by this mess. Higher finance rates, higher borrowing rates for short term credit card debt...........................and so it goes. And, if the Fed has its way...............higher unemployment.

Wall Street loves inflation when it bloats corporate bottom lines. They hate inflation when high rates depress the market. Well boys..........you can't have it both ways.

Price levels, at present, are unsustainable. While painful, I believe you'd better hope that the Fed continues to do its best to reign it all in.

IMHO.

farmersamm said:

Since the GFC in 2008, the banks have been forced to clean up their act. This makes them better stewards of their balance sheets. This translates to safer dividends, and lower risk that in-house investments will bring the bank down.

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Except for:
"As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions." https://www.federalreserve.gov/monetarypolicy/reservereq.htm

To be honest I don't know how their balance sheets have changed since this change but to me this seems to opens up the doors for an even bigger scandal than what happened in 08.

goldenfab said:

Except for:
"As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions." https://www.federalreserve.gov/monetarypolicy/reservereq.htm

To be honest I don't know how their balance sheets have changed since this change but to me this seems to opens up the doors for an even bigger scandal than what happened in 08.

Click to expand...

Hell, I dunno either. You'd have to do a deep dive into how the now-excess funds are being used. Yeah, I gather that it frees up funds for increased lending........but what are the required standards applied to those loans?

I own some BDC's which pay extraordinarily high dividends, but their loans are risky as Hell. I expect them to perform poorly in a bad economy. But anyways, back to the subject................BDC's seldom disclose the true value of loans, in terms of risk.

You can find loan loss reserves on the Bank's balance sheet, but your comment leads me to another question.

Granted that a loan loss ratio is real data...............just how accurate is the loan loss reserve? Just how subjective is it?

I know that BDC loan valuations are highly subjective.

I have to really read up on this. Thanks for putting that out there.

Demon69 said:

, I am after all an anti vaxing conspiracy theorist



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More likely saw you were the OP and decided not to waste the time reading a thread you started

Like Bob, I remember when I was paying a mortgage at over 10% interest. So even the "high" rates today dont seem all that high to me.
On the other hand, real estate prices back then were much much lower- I paid $95k for a house in Los Angeles with that high interest rate. I sold it a long time ago, but right now that same tiny house is worth $800k to a million- not a loan I would or could take now.
If you are buying a house, then the rise in interest rates is scary.
If, like me, you have a current fixed rate mortgage at a pretty low rate, nothing to worry about.
And I am past my house buying days...
My kids, on the other hand, may never be able to afford to buy.
One lives in Brooklyn, average price of a 1 bedroom condo is a cool million bucks right now.
The other lives in Seattle, average price for a house is $815,000.
Young people today are screwed.

Look for the FOMC to raise rates Wednesday ........no surprise. The question is how much..........
Bulls might light a fire under the market if the increase is 50bps,or less. Pundits repeatedly say that the rate increase is baked into the market.......... Not necessarily. Emotions determine price action. It could go either way.
The day will be a good day to submit limit orders should the market turn at around 2:30ET. Depending on your flavor.............lowball/highball, then walk away. Limit orders take emotion out of trades.

After the announcement, the market briefly fell 400 points. 7 of 9 buy orders executed......all limit orders. Quick check, and back to work. Some orders were changed during the quick checks.

It's not always a win. You factor in the losses. The Fund(what I call it) is down 5% on the year(unrealized loss). Total returns are keeping it in the green. It's a tough market right now.

Santa Rally.................I dunno.........I'm calling it a bust, but then............I don't have a crystal ball.

I dearly love the market. I figure retirement, right around the corner, is gonna be good. You can spend hours observing the market action, and dipping your fingers into the stream as it flows by.

Boring stocks-serendipity............Sexy stocks-migraines. IMHO

Anyways, I figure most folks find this boring. I'll make this the last post on the subject.

On a personal level I’m not terribly concerned.
I got 2 mortgages totalling 300,000 with an asset value of $500,000(today)
And about $200,000 in the bank.
Both are locked for 4 more years at 2.09%.
I hope to pay the off entirely in that time even if I need to sell the small rental

It’s interesting that now a savings account may outperform my mortgage cost.
I need to start looking at using that nest egg I build.
Went full time one man band a few years back and I’ve had a hard time letting go of wanting a big cushion for the ebb and flow of paycheques.

From a business standpoint I’m not entirely sure what to expect. I owe nothing. Have lots (excess) inventory of my products in case supply chains get wavy. Really I need to get the marketing boots on now.

The world does not seem to follow what is practical so it’s hard to predict.
I’m just gonna keep playing it safe ish and see. Maybe there will be some great deals on property and equipment coming up. Maybe not.

Canada’s all friggered up right now.
Our government of financially illiterate and only cares about virtue signalling.
If we got a competent government in that got the ball rolling things would be more predictable