Any here subscribe to the FIRE mentality?

[pshufd]

Whats the idea to invest once the hiking stops? interest will go down, people will take loans, money will start to flow?

Why are bonds indicator of stock market? Governments take higher interest loan (bond) when the market is doing well?

I thought interest is in all time low!? yes I am out of the loop

The Fed has indicated that they are going to hold rates steady for a year when they stop raising.

Bonds are competition for stocks in investing. Treasuries represent the risk-free return rate though there are a lot of other bonds or CDs that are near-Treasuries. If Treasuries are paying 0.1% and stocks are growing earnings at 5%, then it's no contest. If Treasuries are paying 3.5% and earnings are declining, then it's also no contest. I can get 5.25% with no risk from CDs or possibly make more in the market but I could possibly lose money in the market as well.

 

[KaliYoni]

Whats the idea to invest once the hiking stops? interest will go down, people will take loans, money will start to flow?

Why are bonds indicator of stock market? Governments take higher interest loan (bond) when the market is doing well?

I’m not following the Fed Hike Watcher approach but I’d say one likely belief behind it is that when the Fed stops its current rate increase campaign, it could indicate the Fed wants the economy to start expanding.

Bonds and stocks are complementary in a portfolio. Bonds earn a known return and if held to maturity return the face value of the bond. Stocks, on the other hand, have unlimited upside but also carry a possibility of large or total losses. So combining the two assets in a portfolio helps investors reduce risks and experience less volatility over the life of the portfolio.

The commentary I mentioned earlier was talking about how prices of high yield bonds, also known as junk bonds, can be used as criteria for planning trades or rebalancing a portfolio’s mix of stocks, bonds, cash, and other assets. The essential idea is that since junk bonds carry a high risk of default (that is, non-payment of interest and/or principal), declining prices of junk bonds signal that bond investors are pessimistic about the near to medium term performance of the economy. In other words, when investors believe a junk bond issuing company’s chances of failing or going bankrupt increases, the price of the company’s junk bonds decreases. Lots of companies failing or facing shrinking sales usually is not good for stock prices.

 

[KaliYoni]

Go to cash and plow back into the market when the Fed starts cutting rates.

So. Are you rotating from cash to equities now that Powell has given the signal?

 

[pshufd]

So. Are you rotating from cash to equities now that Powell has given the signal?

I'm using the approaches of Hedgeye and 42 Macro.