I'm the same. I dumped money into high interest savings and 6-month/1-year CD's and am about to dump a crap-ton more into CD's. Unfortunately, it's just me in the household, so I'm limited to what I can dump into i-bonds, but I'm about to dump another crap-ton into another 6-month or 1-year CD in a week or so here. I dumped money into JEPI a while back and also heard about QYLD, though I've never looked much into the latter. If CD rates get to over 4% around here, I'll be content for now waiting all this mess out in the stocks I have and dinky CD's and savings accounts since I'd rather have a bit more safety/security than volatility during times like this. As it stands now, CD's are around 3-3.5% here at a lot of places for 1 year maturities and savings are only giving about 2-2.5%.
Inside trades? They stopped purchasing MBS last week, maybe they got sweet deals for renting out homes in that year and a half.
I wouldn't consider QYLD at all in this environment. It has no natural appreciation so it'll go down and it'll likely never come back up. It only exists for the consistent monthly dividend. Frankly, I'd never consider QYLD even in good times because it just has no upside. I'm personally sticking with high interest savings accounts for everything that isn't in an i-bond (even if the interest rate is 2% lower than a CD). The flexibility to withdraw and move money as needed is worth the loss of interest.
For me, the CDs are more like safe/predictable returns I need for health insurance purposes (quirky ACA insurance requirements). If we ever get to 5%-7% CDs, I'm locking those in for a few years. lol. With savings accounts, they ramp the rates on those up and down throughout the year, and in many cases they're teaser rates that get dropped. I have money in savings accounts - more than in CDs right now, as a matter of fact, but I'll put more into CD ladders so I know with certainty what I'll be getting from those. Savings accounts also usually have teaser rates or fluctuate throughout the year, which annoys me. There's more liquidity with savings, but that's not as important to me in this case.
Some quick notes from Powell today. The full q&a session from Powell was surprisingly good. Fed calling for a housing correction and this rate environment is going to persist for years. They want housing to be affordable again for people. They are trying to basically rebuild the economic environment so that we have long term low inflation. He felt if they let off rates too early then it will lead to more long term inflation pain so I would expect them to stick to their word. That will involve significant job losses. One reporter estimated about 1.5 million jobs lost in order to get to the Fed target. Also they aren’t just looking at unemployment. They are looking at the ratio of job openings to people applying and also looking at the number of people quitting their jobs. Both of these numbers are still historically high in their words. They are not projecting a “soft” landing but are hoping for one. He didn’t sound too hopeful though. Rates will likely be above 3% thru 2025.
The irony of all this is, "for us to get housing and other things affordable again, some of y'all gonna hafta lose y'allz jobs". Of course everyone knew this was coming, but I still don't know if it's going to be a soft landing or something a bit more shocking/cataclysmic. Home values will dip, interest rates will go up before they ease up a bit, and the youngsters can maybe afford a house again and/or hopefully not be paying crazy rents, but the questions is "how long will all this take?"
edit....now the pics should be clickable to enlarge them Based on the Fed "dot chart" aka their own survey of where they think rates should be then they feel pretty certain about this path for at least all of 2023. After that they don't really know and some things don't add up the more I've thought about it. https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220921.pdf It's on page 4. The entire fed survey is interesting to look at as well. One part of their outlook that is a bit hard to mesh with the history of things is their unemployment projections. We are going thru massive rate hikes and an inverted yield curve. A Fed hike greater than 1.5% almost always results in a recession or some economic issues. Clearly we are beyond that and going further. Their forecast for a painful housing market correction is more gas to the fire. Additionally, Powell was not confident in a "soft landing". Also, real M2 money stock (M2 money stock adjusted for CPI) is declining as maybe the fastest rate ever. It got dramatically inflated during Covid and it's never going to pre-Covid levels but this decline is rapid. https://fred.stlouisfed.org/series/M2REAL Anyhow, they are only projecting a modest bump in unemployment from 3.7% to roughly 4.4%. Only 2 of the Fed survey participants thought unemployment could move to 5% in 2023. That said when you put all these together and you look at the history of recessions they NEVER have modest increases in unemployment of 0.7%. It's almost always at least a 2%+ increase or much greater and they very rarely move calmly. Additionally, they are projecting GDP growth to increase in 2023 while they project increasing unemployment, with a projected housing correction, and with dramatically higher rates. That doesn't make much sense when we look at history and would seem to be unprecedented in my eyes.
Sales prices might already be declining. But it's gonna take another 1.5yrs for avg monthly payments on houses to go down, if they go down, IMO. We're still short on inventory and a recession wont solve that. If prices fall 30% in H-Tine I'm getting another rental though. With my SQQQ stack. Mwuahaha.
Damn it. leave the houses for first time buyers man. You landlords are the reason we have no freaking inventory. Stop it.
Lulz. The anti-landlord movement really DOES bother me in TX, like bro, complain about property taxes or something else instead of letting your dog piss on my floor.
We're approaching bear market rally time. Going to buy support on SP500 and see if it can run for a bit.
SQQQ straight BOPN. Market will soon be up if USD is up, but it'll be FAKE. Buy the SQQQ when it bleeds. YEEEHAW. Bozos. @Dr of Dunk loves me lulz
