1. We were scrambling to lock in a 2.6% mortgage in early 2021 because it was unlikely that rates would be that low again for quite a while. Millions of refinancing homeowners turned out to be the smart money.
2. I am baffled that the banks were making themselves so illiquid with long-term debt. While I had some aggregate bond fund in my portfolio in 2020-21, there was also TIPs, stable value (3 year duration with insurance company hedging of interest rate risk), and just plain cash. The cash paid 0.01% interest, but I didn't see anywhere to put it that did not carry significant interest rate risk so I waited until Q3 and Q4 2022 to start deploying that in short term bond funds, CDs etc. I think it is the difference of looking long-term instead of focusing on quarterly and annual profit statements.
1. We were scrambling to lock in a 2.6% mortgage in early 2021 because it was unlikely that rates would be that low again for quite a while. Millions of refinancing homeowners turned out to be the smart money.
2. I am baffled that the banks were making themselves so illiquid with long-term debt. While I had some aggregate bond fund in my portfolio in 2020-21, there was also TIPs, stable value (3 year duration with insurance company hedging of interest rate risk), and just plain cash. The cash paid 0.01% interest, but I didn't see anywhere to put it that did not carry significant interest rate risk so I waited until Q3 and Q4 2022 to start deploying that in short term bond funds, CDs etc. I think it is the difference of looking long-term instead of focusing on quarterly and annual profit statements.
Rare as a hound's tooth: concise, accurate, well written and sans agenda - well done!
Allison, my aim is true.
Allison , you’ve made a good point.
I like your reasoning, and your writing style . Bloody good. Thanks Allison 👏👏
Just got me thinking about your movie analogy. Is the data (and the tools we have for that matter) from the last few decades still useful.
„Low rates were what made Silicon Valley Silicon Valley.“
Actually the best and most successful companies out of Silicon Valley were founded in a higher rates environment.
(Learned that from the all in podcast 2 or 3 episodes ago... I probably could find the source ... will do if you guys are asking ;-) )
Yes in the 80s they were quite high relatively. I believe the mantra that more expensive money makes better companies is often true.
https://advisor.visualcapitalist.com/us-interest-rates/