Already, higher interest rates are wreaking havoc, but this is like the unknown warm-up band that plays its heart out for 45 minutes before Aerosmith takes the stage – it’s always fun to see it, but it’s not the reason you came.
At 2%, the Fed Funds Rate is certainly not zero anymore, like it has been for years, but it’s not enough to convince money managers to move to bonds. What they’re doing is parking in cash, for the time being, waiting for a slight dip, so they can resume buying shares in U.S. equities, while CEOs keep buying shares as well, creating a snowball effect, just like in 2015 and 2016.
The one main difference being that the central bank itself isn’t buying anymore.
So, unlike the 2009-2017 era, when the largest currency monopoly on the planet was helping stocks go higher, now it’s down to the legitimate players to figure out the price of equities.
As I have said before, there are still, even nine years into this bull market, cheap, quality companies, trading below fair value that can be bought right now.
This is why my personal outlook differs from that of many other prominent figures, which forecast a tumultuous market crash, the likes of which we’ve never seen before.
Portfolio Wealth Global isn’t that dramatic, yet.
Our philosophy and strategy doesn’t rely on one possible scenario, regardless. In other words, we do not invest according to what we assume the future holds, but ONLY according to what the present offers.
As an investor, you and I have two primary roles:
- Decide the level of concentration we want in a portfolio, knowing that fewer assets mean deeper research on each holding.
The more advanced level of thought also considers the diversification among various asset classes, such as bonds, cash, private lending, art and collectibles, real estate, of course, or owning private businesses.
- Determine, according to the present alone, which assets offer the widest margin of safety below their intrinsic value and historical averages.
Don’t live your entire life with the annoying feeling that the USD is toast; therefore, you need to wait for the entire global system of banking, which comprises of 3 billion participating people, to collapse, to confidently place orders and own stocks.
This way of way, while always exciting, isn’t the blueprint for wealth.
The world, as a whole, continues to astound us with ways to enjoy radical wealth. In the past three months, while I toured Central America, I met many people, who envy what Americans take for granted or even despise about their country.
Remember, while the government is a plague, it is made up of people, who grew up in our own cities. These are not aliens from out of space, but people, who shaped their thoughts toward corruption and power, using values they saw in our society.
It is what it is, so our job isn’t to “fix” the world; we can only lead by example.
Right now, I’m focusing on building a database of dividend-payers, with more than an 8% yield, to invest in, as oil prices go up. This database will be comprised of securities called MLPs.
On top of that, I’m getting ready for Canada’s cannabis legalization and, finally, I’m looking at the zero-income-tax states, to see which ones are ideal for real estate investments, at the moment.
Remember, Millennials are just beginning to enter the higher brackets of salaries, buying homes, and putting money in the stock market.
Research Partner, PortfolioWealthGlobal.com