The etf's seem to be exponentially hit. CIM, CRF, OXLC are all way over 30% down.

Although I own few ETFs I have VDE which was about 94 in 2/22 and today was 124.

vde??

A simple Google search would indicate that it’s a Vanguard energy fund.

Vanguard Mutual Fund Profile | Vanguard

Does anybody else think the Fed is myopic and has been for the past 20+ years of too low interest rates?

When the housing crisis hit, the Fed had been lowering rates and propping up unqualified buyers for overpriced houses.

This time, buyers were more qualified, but the housing market had a nutty emotional component brought on by one of the two Black Swan events. (Covid) I never thought Covid would sell houses, but it sure did.

I don’t think housing prices are going to tank like they once did, but the market will slow. Supply and demand issues are going to be with us for a while. The frenzy is probably coming to an end across the country, but people are still buying houses.

As people see their overall net worth shrink with the market, many might decide to sit tight in their current house for a while. Others will jump right in with a now-or-never philosophy and decide to put some money into buying a house, a hard asset, to be seen every day and enjoyed.

But these draconian interest rate increases are putting me in mind of a neighbor who used to holler at his kids, “STOP IT OR I AM GOING TO GROUND YOU FOR A YEAR — OR EVEN LONGER!”

Boomer

Yes! Interest rates were held foolishly low for way too long. I hope mortgage rates moderate at their historic averages and we do not replicate the 1970s and 1980s..

In the early 1980s I had an incredible opportunity to buy a commercial property due to the owner having a variable rate mortgage on it when the interest rate he was paying hit 21%!

"The Federal Home Loan Mortgage Corporation, more commonly known as Freddie Mac, began tracking average annual rates for mortgages starting in 1971. In the first few years of recording, rates started out between 7% and 8%, but by 1974, they climbed up to 9.19%. We finished out the decade by finally entering double digits with 1979’s annual average of 11.2%.
As we headed into the 80s, it’s important to note that the country was in the middle of a recession, largely caused by the oil crises of 1973 and 1979. The second oil shock caused skyrocketing inflation. The cost of goods and services rose, so fittingly, mortgage rates did too. To jumpstart a flailing economy, the Federal Reserve increased short-term interest rates. Thanks to their efforts, more people were saving money, but that meant it was also more expensive to buy a home than at any point in recent time.
The annual rate reached 13.74% in 1980, and in 1981, the 16.63% rate was and still is Freddie Mac’s largest recorded figure. Luckily, we’ve generally been on a downward trend ever since that fateful year. The rest of the 80s were a steep hike down from the decade’s peak. We rounded out the 80s just under the last recorded rate of the 70s at a hefty 10.32%."

From: A History of Mortgage Rates

I regularly record Consuelo Mack's show "Wealthtrack" and watched this interview yesterday. He makes some good points about the history of the stock market with its up and downs, how far it went each way and how long the trends lasted. Of course his professional history is mostly managing fixed income portfolios but he makes some good points about having treasuries in one's portfolio, especially for seniors. THE FINANCIAL MARKETS ARE PERILOUS, WARNS ROBERT KESSLER : WealthTrack

Always amazed how fast the market can move. Stock futures shot up this morning on lower CPI. See what happens after Powell's talk tomorrow.

And here we are — the day after…….

Powell was appointed Head of the Fed in 2018. Since then we have seen two Black Swans (Covid and the War in Ukraine) and a housing market that was out of control to the point of pure insanity.

In my not-an-economist opinion, money has been too cheap for most of this entire century and now we are all caught in a catch-up game.

I am not naive enough to think that prices will go down on everyday purchases and services any time soon — or ever.

Why didn’t the Fed get a hold on what was happening before now? It has been like the Fed has been asleep at the switch for years and now it’s a mess they’ve got us in…..with no right answers. (I hope I’m wrong.)

Boomer

You are definitely correct in saying that "money has been too cheap" but I don't think for "most of this entire century". Remember, we came out of the closest thing to the depression back in 2008-2009. The fed DID need to make money accessible and cheap. However, they pulled back on it too slowly and then reversed course during the pandemic, which was obviously, the wrong decision. They could have realized that early enough in the pandemic but stuck with the opinion of a "transitory" inflation thesis. That was their real BIG mistake. They are now trying to get ahead of what is "sticky" inflation and stop sugar coating the outcome to the American people. There is no soft landing in these dire situations. It's only how hard of a recession we will incur and how high unemployment will grow. Yes, it's not easy to tell millions of people that you WILL lose your job and you WILL suffer economic hardship due to our mistake.

Very true

So why was money so cheap for so long? Because when inflation gets very low, there is the threat of deflation, and the deflationary spiral is much more difficult to manage than the inflation spiral. If the velocity of money goes negative, which the economy was trending towards, and had a few months of it, that very dangerous.. . .

But don't fall into the trap of resulting, which is what a lot of people do when high probability strategy is successful for a long time, and then hits the low probability outcome. People will describes the entire strategy as bad, because there is a period of the low probability negative outcome. Binary thinking, as well as dunning kruger effect. The banking system and managing an economy this size is a lot more complex with all the political influences and the uncertainties of outcomes with long and variable lags.

So the avoidance of a really disastrous outcome, which can't be proven as there is no A/B testing reality on the economy. . . for many years, always has the potential for a future mistake. Its easy to blame the goverment for all the mistakees, but there are other more subtle, barely visible long term trends which are increasing the risk of economic instability, and that's all in the corporate world, which the government is trying so manage the unfortunate social effects. . .

I just try to invest / trade to take advantage of the results, without judging the difficulty of the jobs with always incomplete information about the future, which is always uncertain.

Sportsguy, I usually concur with your opinions on these matters, but not on this one.

Money became cheap after the self inflicted housing market crash in 07/08. During that crisis, it became necessary for the government to step in and utilize the tools in their tool bag to stimulate the economy during a difficult time. Unfortunately, short term thinking politicians learned a dangerous lesson when the stimulus quickly turned the economy around. The lesson was that cheap money makes voters happy and gets them easily re-elected. Dam the long term consequences, keep the cheap money flowing and pop another bottle of Dom Perignon. Ultimately, that short sightedness created an economy which became addicted to cheap money and unsustainable debt. Now here we are with out of control inflation and dangerous debt because of many years of irresponsible and unnecessary cheap money, paying the price for shortsighted rather than long term thinking.

CDs were a good investment 30 to 40 years ago. But, since then, the Government's policy to punish savers and reward borrowers and spenders has turned them into a bad investment. Very sad.

Exactly…….but I am now spending some sideline cash on brokered CDs. I had never bought those before. I did not know that they are bought at $1000, so the number of CDs I needed to buy were in the number of 1000s I wanted to put in.

I have not laddered at this point. I just put some money in for 9 months at 4.70 (or was it 4.75?) annualized rate, FDIC insured, call protected.

Now…..watch for it……there will be at least one poster who will pop in to tell me I am not keeping up with inflation. (sigh) I know that, of course. But I also know it’s better than nothing like bricks-and-mortar banks think they can still get by with.

I do not sell long held dependable dividend stocks because we have been through this together before and I understand the companies enough to think they’ll be OK. Besides, if a dividend stock has been held for a very long time and the company is still doing well and has been increasing its dividend annually, without interruption, for a very long time, the math works nicely to see the dividend yield based on the original share price paid decades ago.

Boomer Whipple

I have been picking up some more 6 mo. T bills. The Fed is expected to continue raising rates so I am feeling defensive.

Many people don't fully understand the "keeping up with inflation" theory. It's not as simple as inflation is 10%, so I need to find an investment that matches or exceeds that rate of return. That is a flawed belief that helps financial advisors push equities. It's better to ask yourself, what has been the increase to all my expenses for a specific given time. Let's say you lived on $50,000/year and now it costs $60,000. That's YOUR specific inflation rate, which is 20%. Now, you must find an investment that covers that $10,000 increase NOT 20% to "keep up with inflation". If you had $300,000 in CD's earning 1% (yes that low and even lower!) a year ago, you were earning $3,000. CD's were earning 4% weeks ago, which would have provided you with that extra $10,000 of income and you would have "kept up with inflation". Now, this is NOT the entire picture or that I'm recommending CD's but please keep this concept in the back of your mind. Don't go chasing yield to beat inflation if it doesn't align with your risk/reward profile.

It sounds like your analysis only addresses your current spending level. But, if you have a substantial portfolio, you need to get a return that matches the inflation rate to maintain the buying power of your portfolio. For example, if you plan to buy a $500K house in 3 years, and you have a $500K portfolio today, your portfolio needs to grow to match the inflated price that the house will cost in 3 years. Otherwise, you won't have enough money to buy the house.

Need to consider your tax rate in regard to what you are earning and agree 100%

Yes, my somewhat short sighted "analysis" was basically just stating what you replied in that your "substantial portfolio" needs to "get a return that matches the inflation rate to maintain the buying power". Isn't that what keeping up with inflation is all about? Many smart, wealthy people welcome a little healthy inflation, as they can still maintain their buying power with less risky assets.

More people need to understand you can make good money betting against the market. Piece of cake the last year

For those who still have investment money, after betting/losing against Tesla for so many years by shorting them, 2022 finally paid off. A lot of analysts say that Musk has been too enamored with his new toy Twitter and isn't paying enough attention to Tesla and his other companies, so we'll see if he really steps away from what seems like an obsession with him.


Tesla's largest-ever decline has short sellers sitting on $15 billion in profits: Morning Brief

TIPS is still doing good thanks to all the inflation.

Thats cost / expense minimization strategy versus the wealth income maximization strategy described here

The more money you make to keep up, the more taxes you pay, so keeping up with higher inflation with higher returns will increase your taxes. .

taxes are a byproduct of doing well, and you want to do well? the only tax strategy for increased income/wealth is income gains versus capital gains. . . that balance is the key. .

I have never sat in a growth investment corporate meeting and the tax strategy was the guiding strategy. . . just a foot note. . .

Great strategy, same as I doing with our money and my parents' estate.

You are correct in blue as the inflation was supply driven and very sudden, and there aren't any instruments to "buy" to keep up. However, the answer to higher prices is higher prices where capitalism wants to take advantage of it and join in the production / sales of same.
and that's where prices will fall. There were plenty of opportunities for short sales to hedge/offset increased rates.

I predict that inflation with a basis issue, will suddenly fall, and that's when very low coupon t bonds will make out tremendously with high capital gains vs interest.

There are dividend income equity ETFs which offer diversification without having to buy individual stocks to get the diversification risk reduction which i recommend as the best "simple" strategy, looking at large cap stocks + utility industry with guaranteed rates of return.

finance professional in the utility industry and formerly mergers/acquisition analyst at an investment industry supplier buying and selling investment companies.

Although Schwab's is not yet available I just downloaded yearend statements from a couple of other brokerage houses in which I hold accounts. The damage is not as bad as I feared. Yippee!

Here comes 2023!

Housing prices are only going down. You have the option of staying put. Fix your major costs. The rest can be managed.

The optimal way to pass is being deeply in debt. Let someone else hold the bag

We are not close to a bottom. You could say that we are getting closer to the bottom everyday, but nobody knows what the bottom will be.
Look at apple which is the most held stock in the world and it’s been going down almost every day. My friends have been asking me for months is it time to buy apple and I tell them wait a week and it will be cheaper, then wait another week and it will be cheaper.
I ignore these bear market rallies. You have to think about the broken system/government we have and we need changes before the market will change for the better. Passing of the omnibus bill last week will not help the stock market.

Fix your cash flows and minimize risk. The rest is noise. You can’t take it with you