My Investments - Based Solely On Interest Rates

I don't know what brought you to my blog, but where I come from, it is a sign of respect to welcome/greet every stranger you encounter. In that spirit, I say thank you for checking out my tiny blog and spending your precious time entertaining whatever nonsense I have to say, haha!

You'll probably have noticed from my previous posts that I greatly monitor interest rates and quite actually love them. You may have wondered how I use them to make money or guide my investments. Before we get into the nitty gritty of this episode, I want to clarify that I don't know anything and I'm just literally taking on risk based on my research on market behavior around interest changes and/or perceived future of interest rate changes. Look, you don't need to be an expert and you certainly don't really need an expert to invest successfully. The chart below will tell you why. If you just buy assets and hold them for at least 4-5 years during times of high interest rates, you'll make money. Experts will try to sell you stuff that you really don't need to invest in and fear-mongering you into doing all sorts of things. All you need is a little reading and some spare cash with a 4-5 year vision. I trade daily and it's a lot difficult dealing with emotions and life as a whole. Just look ahead, stay calm, and keep investing. 

                                                                          

  

What is it that I really do? Well! there are two questions I'm always asking myself: will interest rates go up or will they go down? I may do a lot more research to answer these questions which I actually don't need to haha. I could watch what major central banks (USA, China, EU, UK, Switzerland, Canada, New Zealand, and  Australia), are doing or saying about interest rates. To be honest, I'm 90% of the time just following and listening to the US Federal Reserve (FED). The US economy is just simply the ideal there's out there (relatively speaking) and this can be a hard pill for some to swallow but I'm sorry it is what it is. It would come as a surprise to some to learn that these major central banks are constantly speaking with each other and say it bluntly, they listen a lot to the US Federal Reserve. Read my other post to understand why the FED is so powerful. The Fed cannot surprise markets, so, they always communicate so everyone who is listening knows where they stand on interest rates. Anybody you hear calling themselves a macro investor is basically monitoring economic data and seeing when and where inflation and unemployment may necessitate the FED/other central banks to either raise interest rates or lower them. That's what I do too, but I don't have access to the kind of data institutions have so I just listen to the FED and confirm with the data I have as well as do some technical analysis on the asset class I'm monitoring. 

After the bull market during COVID-19 and the bear market that followed, I went back in history to see how the market reacted to interest rate changes. Forget the so-called economic experts. I challenge you to pull up the historical price data of any major financial asset you love. Or say any company you love that trades publicly on an exchange in the USA. If that asset did not drop in value when interest rates were rising or when interest rates were rumored to rise, reach out to me, proof it and I'll send you a $100 for your groceries. I guess what I'm saying is, that when interest rates are rumored to rise and are actually rising with no future communication of a drop, most assets begin to lose value. And the opposite happens when rates come down. Since debt/credit began to be used massively to fuel productivity, the cost of borrowing (influenced by interest rates) began to be the reason for markets either going up or down. This is how it works if you start looking long term like 4-5 years out. There's maybe a more nuanced approach to what I'm painting but it is this easy. When central banks are pouring money into the markets (lowering interest rates), or are rumored to do so, such an environment is a very good one to invest in. 

The time now for my investments. Did you really think I'd come here and disclose a 13F filing? hahaha! When Trump came in with his sweeping tariffs, I for one thought it was really all about balancing the budget. Clearly, that's not their number one priority because the debt ceiling will be raised again as the US government cannot default on its debt. Let me say this, many think Trump and Powell are enemies but take it from me, Powell and Bessent are buddies and they talk all the time. They're all in the same boat and will deliver lower rates. I say so because the same reasons that caused markets to lose so much value are now asking for markets to gain value. Negotiations are being made on tariffs, China will negotiate, they just have to and they just met in Switzerland to begin talks as we speak. Inflation is down led by low oil prices, and Ukraine signed the mineral deal. The Fed has been holding for recession that may not come and top banks will likely revise their forecast about recessions. Interest rates will drop and I have pointed this out already. I thought that Trump and Bessent wanted to crater the markets and cause the FED to lower rates. Then again I thought it was reciprocal tariffs and now I see it was all about causing China to be fair. In fact, there's more to what they are up to but the good thing is I know what to monitor and that is the FED and interest rates. That's all I need and you should give it a look. 

Hey! Charlie Munger once said if everyone was patient enough to just buy below the 200-day moving average and hold, they would make money in the stock market. Of course, I paraphrased there but all I'm saying is, that I bought a few $thousand worth of stocks and crypto when markets were losing value and many were crying recession. I bought it because guess what? most were below their 200-day moving average. I'm joking, I was monitoring inflation figures and those were dropping really hard from egg prices to gas at the pump. Then I saw that countries were actually negotiating with the Trump administration. I was ready to see my portfolio go even lower but that didn't happen at least for now. I just know when markets are bearish, the buyers feast on any positive news. Give it a try my friend. Take risks, I mean take calculated risks. Thank you.