Fixed rate debt, locking in low rates in undervalued assets prior to rate hikes, before the Fed pivots and starts hyperinflation so you own a house (while everyone else is sidelined in hyperinflated cash/high interest debt)
During a downturn with rate hikes, a possible sovereign debt crisis and commodities/inflation possibly moving higher, look at high yield treasury bonds
max out series i bonds
- $10k per person or company
- 9.62% yield atm
- state tax exempt
if you have a lot of extra cash and no debt or low interest fixed rate debt, then park it in a no penalty CD, savebetter is paying 3% CD atm, no penalty, withrdaw anytime
then park the rest in 2-2.5% savings accounts atm
Investments have less to do - at this time - with a recession or a looming recession so much as the impact of federal monetary policy.
"Don't Fight The Fed"
If the fed is trying to actively cool down the economy by raising the interbank lending rate, this increases the price of capital for all companies. This also incentivizes people to not invest in companies - if they can get a "Risk Free" return from treasury bills of 4.5% today why would they invest with a 100% risk asset.
So no, forget 'recession' instead change your question to 'whats the best investing strategy to have during a period of monetary tightening' - and that is, in general, to not be investing until you think the period is over. Good luck with that one.
An inflationary bear market with federal monetary policy tightening and you suggest bonds? Really?
Unless they are IBonds - what rationale do you have for this and what would have been the return on invested capital if you did this anytime in the last ~6-8 months.
The best strategy to invest (with the goal to make money) at any period in economic cycles is have more accurate information than other people.
If you are worried about economic outlook, instead of investing money into financial instruments, invest time and some money into increasing your own personal value by learning new skills.
starting a business (that produces things people need rather than want)
as far as investments like stocks or bonds... i am largely sitting in cash since the invasion of ukraine. when things get bad enough (and the fed pivots) then i will buy stocks.
or you could just DCA if predicting macro trends isn't a fun filled activity for you (it is a hobby of mine).
I'm not advising anybody what to do, but the argument is that you'll be able to find good investments for a heavily discounted price if there's some real economic panic and everything crashes for a while.
The inflation loss you take from holding cash for a bit might be more than offset if/when the economy recovers and you've got something at a steep discount.
Not going to claim I have any great knowledge on this at all, but I stuck a chunk of cash into a moderately low risk ETF 6 month ago. It's gone down relative to the cash that is still in the account.
There are different types of inflation. When inflation is due to ongoing currency debasement you might see all things rising in price (goods and asset prices). This is not what’s going now. We are in a tightening cycle. Cash is appreciating in value relative to speculative assets
Readit News
During a downturn with rate hikes, a possible sovereign debt crisis and commodities/inflation possibly moving higher, look at high yield treasury bonds
max out series i bonds - $10k per person or company - 9.62% yield atm - state tax exempt
if you have a lot of extra cash and no debt or low interest fixed rate debt, then park it in a no penalty CD, savebetter is paying 3% CD atm, no penalty, withrdaw anytime then park the rest in 2-2.5% savings accounts atm
"Don't Fight The Fed"
If the fed is trying to actively cool down the economy by raising the interbank lending rate, this increases the price of capital for all companies. This also incentivizes people to not invest in companies - if they can get a "Risk Free" return from treasury bills of 4.5% today why would they invest with a 100% risk asset.
So no, forget 'recession' instead change your question to 'whats the best investing strategy to have during a period of monetary tightening' - and that is, in general, to not be investing until you think the period is over. Good luck with that one.
It depends. Countercyclical assets are a common strategy. Sometimes called "guns and butter." Utilities, some bonds, bulk food production, etc.
Unless they are IBonds - what rationale do you have for this and what would have been the return on invested capital if you did this anytime in the last ~6-8 months.
The best strategy to invest (with the goal to make money) at any period in economic cycles is have more accurate information than other people.
If you are worried about economic outlook, instead of investing money into financial instruments, invest time and some money into increasing your own personal value by learning new skills.
as far as investments like stocks or bonds... i am largely sitting in cash since the invasion of ukraine. when things get bad enough (and the fed pivots) then i will buy stocks.
or you could just DCA if predicting macro trends isn't a fun filled activity for you (it is a hobby of mine).
Why do you believe holding cash is a good idea?
I'm not advising anybody what to do, but the argument is that you'll be able to find good investments for a heavily discounted price if there's some real economic panic and everything crashes for a while.
The inflation loss you take from holding cash for a bit might be more than offset if/when the economy recovers and you've got something at a steep discount.
They said buy a business, and/or stocks at the right time.
One here from Monger, dont sweat the link bait headline: https://www.youtube.com/watch?v=v5UCmsXpngA