Since 2008, in a successful effort to prop up the economy and the stock market, the Federal Reserve has kept interest rates artificially low by quantitative easing, or printing money. That’s changing, and the rate on 10 year Treasuries will soon exceed 3%, and is trending higher.
With no more easy money, the markets may be in for a rough ride. Or not. But for retired investors such as myself, who want income, not growth, this is good news. We’ll finally get a decent return on our money. This is normal. But for go-go investors, easy money is like a drug to which they are addicted. It’s loss will be painful.
I’m no stock expert. We made our money in the 90’s, when it was easy pickings. But I did have the good sense to listen to Bob Brinker’s “Money Talk”. In January of 2000 Brinker called the top of the NASDAQ bubble, and told his listeners to sell 60% of their holdings, which I did. Then I thought, why am I in with the remaining 40%?, and sold it all.
I paid a horracious capital gains tax. But by selling when I did, Babbie and I could afford to pull up stakes in Alaska and come back to California.
It’s good to listen to people who know more than you do.