July 11, 2022
We have crossed the mid-line of the summer with the MLB All-Star break impending. Yanks and Mets in first place and my beloved Orioles are only 1 game under .500. Football is in the air with NFL camp around the corner, the UCLA and USC move to the Big 10 and the SEC prepared to dominate with NFL prospect QB’s sprinkled throughout.
Gas: Gas prices have dipped below $5/gallon, but we need a decline of another $1.50/gallon to make a difference. Mortgage rates are down by .5% in the last ten days to 5.625%. We need to get back closer to that 3% threshold to be comfortable.
Crypto: Bitcoin, Ethereum etc. I just do not believe in the long term stamina of this currency. Nothing backs it and and it is so volatile. I have seen many people make a fortune and lose a fortune trading this vehicle. Secondly, NFTs – Non-fungible Tokens – are financial securities consisting of digital data. NO, thanks!!!! As Peter Lynch, of Fidelity fame said, “A share is not a lottery ticket, it is part ownership of a business.” NFT is not a business, nor a hard asset.
Inflation and Recession: We’ve seen it before in the early 70’s, and we survived with a bit of pain. In 1982, the Dow Average bottomed at 776 and CD rates were at 22%, yes 22%, and my mortgage was at 17.85%! In 1975, Gold was at $139, it’s now at $1735 and In1982, silver was at $7.92 now at $24. Stagflation means that we have rising inflation and rising unemployment with a weaker economy. Quite a different scenario than we have had over the past ten years. How will this affect us? One beneficiary of inflation is that those receiving Social Security may get a 10% raise next year.
No one, not even the world class economists can be accurate as to the future, so what can we do to continue on the path to success and dodge the consequences of the perfect storm?
WHAT YOU CAN DO:
1. Continue to invest in hard assets that generate income, ie. rental properties, timberland (guaranteed to grow
4% per year with risks of bugs blight and fire.)
2. Buy Series I savings bonds — yield 9.62% through Oct 2022. www.treasurydirect.gov
3. Own your own home. The cost of buying a home is so much less expensive than renting, even at 5.625% interest. You can borrow $250,000 for 30 years for $1,449 a month and the interest and taxes are deductible.
4. Diversify, diversify, diversify. Stocks, Bonds, Real Estate, Gold/Silver, Coins. Never put all of your eggs in one basket.
5. Continue to build your 401K and/ Retirement accounts.
6. Pay down debt unless you have a very low mortgage** under 3.5% **
7. Do not waste money on depreciating assets like new cars.
The real estate market in Florida is still very vibrant with European, Latin American and Canadian citizens joining the northerners moving to our great state. We are constructing our 9th high school in Collier County. These public schools are among the best in the nation and are FREE, yes free. Health care is tremendous here with top docs and tons of coverage. Weather is amazing, crime is the lowest in Florida (Naples named safest city in America) and the beaches and Gulf are beautiful. Fishing and Golf are top-notch. The pace of life is peaceful yet vibrant with southern charm and balance. We have wonderful amenities including a world-class library system. Our area is clean, friendly and affordable with delicious food and grocery stores. The inventory of real estate is a bit lower than normal, but higher than last year. Sales are very vibrant with quick closings (30 days is normal).
Come join us in paradise! We are here to help you reach your goals and achieve your dreams.