I'm going to keep posting indications that inflation is rolling over...until that isn't true anymore.
if inflation *does* keep rolling over...this very instant will have been a remarkable buying opportunity for stocks and bonds.
CPI #inflation (green) is rolling over alongside inflation expectations from Umich (5-10y, blue) and 5y5y inflation swaps (orange) … note different axes pic.twitter.com/wAMjWoxcYU
Yeah maybe, but I suppose I don’t expect so. If they are, I will be buying.
My own belief is that GIC rates may get slightly higher over the next few months and then start coming back down.
Of course that’s a guess, but it’s my guess and the basis for my personal wagers with my retirement funds.
I dunno. Inflation running at over 8% in America and far higher in many other western nations.
If Bonds do start paying say 7%, don't want to be holding 4% bonds that are long term. Can't sell them without taking a bath and if you hold you are stuck getting 4% when you could be getting 7%.
To be conservative, I buy nothing that has a term of over one year
I dunno. Inflation running at over 8% in America and far higher in many other western nations.
If Bonds do start paying say 7%, don't want to be holding 4% bonds that are long term. Can't sell them without taking a bath and if you hold you are stuck getting 4% when you could be getting 7%.
To be conservative, I buy nothing that has a term of over one year
I hear you on inflation, it is running very hot all over the place, and it's the biggest risk to my (and maybe most people's) savings and investment objectives. I was a young adult in the 80s when inflation (and rates) were sky high, and that experience is burned into my soul. I don't personally expect we are heading for ten years of increasing / high rates, but it could happen. My own naive belief is that we are seeing a shock to the system produce an acute but not chronic impact, and that inflation will be low again in 2 to 5 years. But that's just my guess, and I could be totally wrong.
I have not been buying bonds. Risk-free investments (e.g., GICs) are paying better than high-quality bonds, and are, well, risk-free. That said, I get your point about potentially being "stuck" with subpar investments. But isn't that always the case with any investment? My intent is to keep some money in cash (or like-cash, like in power paying cashable GICs), ready to take advantage of better opportunities, and to ladder them across timeframes to have cash coming free at regular intervals, either for reinvestment or to fund my extravagant retirement plans. :-)
Lower paying, not power paying, stoopid autocorrect...
And GICs are not our sole (current or planned) holdings; there is also some money exposed to equity markets, but not much of it in the US markets, which frighten me at the moment. Also a healthy chunk (healthy is relative; we are not rich) in RE, although we are looking at maybe making a change there to reduce exposure to increasing interest rates.
I dunno. Inflation running at over 8% in America and far higher in many other western nations.
If Bonds do start paying say 7%, don't want to be holding 4% bonds that are long term. Can't sell them without taking a bath and if you hold you are stuck getting 4% when you could be getting 7%.
To be conservative, I buy nothing that has a term of over one year
I hear you on inflation, it is running very hot all over the place, and it's the biggest risk to my (and maybe most people's) savings and investment objectives. I was a young adult in the 80s when inflation (and rates) were sky high, and that experience is burned into my soul. I don't personally expect we are heading for ten years of increasing / high rates, but it could happen. My own naive belief is that we are seeing a shock to the system produce an acute but not chronic impact, and that inflation will be low again in 2 to 5 years. But that's just my guess, and I could be totally wrong.
I have not been buying bonds. Risk-free investments (e.g., GICs) are paying better than high-quality bonds, and are, well, risk-free. That said, I get your point about potentially being "stuck" with subpar investments. But isn't that always the case with any investment? My intent is to keep some money in cash (or like-cash, like in power paying cashable GICs), ready to take advantage of better opportunities, and to ladder them across timeframes to have cash coming free at regular intervals, either for reinvestment or to fund my extravagant retirement plans. :-)
I recall getting like 12% or more on my money market in the early 1980s.
I recall getting like 12% or more on my money market in the early 1980s.
I remember interest rates on mortgages and loans being around 20% in the mid-80s. That scarred me, and every single mortgage we've ever taken since our first house in '92 we've locked in with fixed rates over 5-year terms. And every single time we did that except for the last, it turned out to be a bad idea. :-)
We renewed the mortgage on an investment property in 2019 at 1.77% for 3 years. That turned out, in hindsight, to be the most (maybe only) brilliant financial decision I've made as an adult. I only wish we'd taken that rate for 5 years instead of 3. The floating rate we have on the HELOC on our home (which we haven't touched much) is ~ 5.5%, and heading upward...