The stock market has been having fits, housing is not affordable for most people, the central bank is rising interest rates to the point that mortgage rates are now hovering around 7.5 percent.
To make matters worse, the Federal Reserve (America’s Central Bank) said at their last September meeting that rates would be held higher for much longer .
And if that isn’t bad enough, banks are worried that high yield bonds are going to drain their accounts in favor of high yield treasury bonds which keep rising in yields with the short term paying 5.5% yields.
So what am I doing right now? I am hoping for the best but preparing for the usual crash that will inevitably come.
Déjà vu all over again
If you were too young or weren’t paying attention to the 2008 great financial crisis, there were huge problems with the banking system and the economy. Back then, NINJA (No Income, No Job, Accepted) loans created a huge housing bubble which ultimately crashed.
We don’t have NINJA loans in 2023 but what we do have are trillions in commercial real estate loans that are coming due in 2024 and 2025. We have a stock market that is way over valued as well as a housing and commercial real estate market that is way over valued.
The Fallout
In 2008, housing and stocks crashed and many people lost their jobs as the economy entered a recession. It took years to recover and it was only through many government interventions with silly acronyms like TARP that we all crawled out of the dark ages to a stable economy. There was a panic and there will be again.
I expect 2024 (or whenever it happens) to follow a similar pattern with stocks, housing AND commercial real estate correcting and/or crashing. It is likely some type of government bailout will be needed and people will get mad that another bailout at taxpayer expense was instituted to keep things from collapsing.
The famous quote from 2008 from George W. Bush was “If Money Isn’t Loosened Up, This Suck Could Go Down” and I’m curious what the quote will be from the next crash.
What I Am Doing Now
In a post I wrote recently, How To Prepare For A Recession, I outlined mostly things I was doing to prepare for a job loss but there are other things I’ve done so let’s go through some of those.
- I’ve sold most of my stocks and moved to T-bills and some energy stocks.
- I’ve increased my cash reserves and invest those in high yield savings accounts and T-bills.
- I’ve stocked up on non-perishable food such as rice and beans as well as other non-perishable items like paper towels and laundry detergent.
- I’ve paid down debt.
- I am planning a long vacation for 2024. Things may get very depressing and sometimes the best plan is to have a temporary escape and recharge.
- I plan on getting credit line increases on my credit cards just in case.
- I have taken $5k in cash and stored it in my safe just in case.
- I am conducting research into what stocks and other investments I want to own when things go down. At the top of my list are Apple, Microsoft, and Google stock if they correct enough but there are plenty of other stocks.
- I am conducting research into what real estate property I may purchase if the price gets low enough.
I will hopefully write more later but as you can see I’m really busy.