HI El,
In short, your selling by now should be over.
We should be having a lot of cash and be buying stock with the dividend revenue streams built so far.
I've been buying AMNF, KMI, and INTC. Under water on INTC but small position and will accumulate more with dividends.
Sitting on 37.8% cash and being very patient.
IF this terminates in a hard landing, which so far I've not seen, I want to be in fixed income Treasuries that will have a 6% plus yield minimum (I will expect that once the Fed wants to boost the economy and drops rates, there will be capital gains to cash in on). Meanwhile getting paid close to the current inflation rate.
What I remember of the 1980's is runaway inflation at the 12-14 percent rate. One could not save enough to get ahead and having debt was considered the way to beat it. At the time I worked for GM and GMy moved us to Houston , which necessitated selling our home. We lost $25,000 of our $30,000 saved down payment on our first new home. I sold my new Corvette to raise more cash and we rented for another 24 months.
Our second new home was purchased in March of 1983 after mortgages dropped from 18% to 13.375. We basically started anew.
The idea of embracing debt would have worked, had I control of my future. The forced move by a corporation was beyond my control and I learned that to be totally independent with your assets, you need to own your own business. That was a rude lesson I learned early on.
My next proposed move within Chevrolet's organization came in 1987 back to a Central Office assignment in Warren Michigan, which I declined and left the organization to become a retail employee at a dealership I had great respect for and an opportunity to buy into a minority equity position.
The most traumatic event in my employment history and by far the absolute best thing that ever happened to me from a personal growth and wealth perspective.
So it will be interesting to see which of the millennials have been working, saving , and are in control of their world.
IF this results in a hard landing, we'll see who has been conservative and saving vs. buying $7.00 lattes and renting a $2500.00 a month apartment full of gorgeous clothing.
There could be some very harsh lessons coming this way.
So far, I do not believe it will happen.
I think we have made a big deal of our economy morphing from a pandemic impacted somewhat closed economy, to an economy that is normalizing to a post pandemic economy.
There are and will be shifts of economic flows. There are pent up desires and last years Peloton may well become an expensive coat hanger.
To say that the citizenry and there interests are shifting after a several year pandemic is an obvious statement. There is no doubt that interests and money flows will morph. Additionally a LOT OF FREE MONEY WAS HANDED OUT.
One thing I know from selling cars for 30 years, is a lot of people stay up to their neck in debt. When they get their hands on cash from the government - they're going to spend it.
Thus the supply channel shortages developed as many spent their new found funds on things and objects.
There is also a segment of people that wisely paid down or off their debt.
The PPP program gave tax free money to small businesses in an effort to continue the payroll of their employee base. Some owners bought Ferrari's and Lamborghini's, some paid off their businesses debt.
So the mix of those different views and spending habits is just a current unknown.
Many have blown it on just life and enjoyment.
Some businesses are now debt free and much stronger financially.
An unwinding of free money for too long will wring out the weak persons.
For those who paid down debt and/or saved, any bust or financial BK will be an opportunity for the conservative/savers to be advantageous.
Tis the way of the smart and strong.
I suspect for a short while the weak will flounder and cash will once again be king.
That being said, a lot of noise will be made about the change in spending patterns, and the markets will over react as they always do.
I suspect it will be very short and overhyped.
Many sectors of industry are in short supply of inventory as others are over supplied with stuffed supply channels.
Most really big recessions result from stuffed supply channels, almost in every category. That makes me think the recession it will be short, if it happens.
The other scary truism is all recessions have always started after an energy spike in prices.
With the errant messages of "The Green New Deal" and the misguided results of ESG all combining into the misplaced results of reduced capital being applied to the safer, more reliable, and less expensive production of energy produced by fossil fuels, we've got a big problem with a bigger time lag to resolve.
That is IMO, the big unknown that some will be ready for and some will be severely impacted by.
To me that is the wild variable and unknown.
Best to have some cash and be able to respond opportunistically or just hunker down in the tough patches.
Pardon my long ramble
Bob |
