Money Market Springtime
Degenerate Business School
English - February 27, 2023 18:00 - 24 minutes - 16.6 MB - ★★★★★ - 16 ratingsInvesting Business News Business News Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
We spend our days trying to guess which way financial markets will go, like medieval alchemists or broadcast news meteorologists. Is the bottom already in for the S&P and all degenerate risk assets? Where will rates go, and for how long? Is now the time to buy bonds? Does it even make sense to pick stocks?
But why struggle, when staring us in the face for the first time in our investing lives, is a risk free rate of 4.4%. Plumb any mutual fund money market account from Fidelity or Blackrock and you shall find a yield of just that. Mind you taxes and inflation will still mean we're losing money, but we'll lose it more slowly.
Why? Because Jerome Powell has raised the Fed Funds rate. The 1 month treasury yield is now 4.68%. Just 1 year ago, that figure was a mere 0.05%. So why not just hang out and collect? We discuss.