by Guysmarket
So right now you have a lot of smart money talking about getting into bonds or getting into precious metals.
Recently you’ve seen that move play out, but here’s the obvious risk. If indeed the fed plans to take us to that 5-5.25% area, then you will see bonds sell off again as well as precious metals.
Now some folks speculate that if inflation gets hot, they may hike even higher and I would argue to say that it may not be as likely that they hike higher, but rather they hold longer.
Eventually we will see those rate cuts and that is the move you want to focus on. Bonds here are not necessarily bad if you get the shorter dated notes and intend to hold to maturity. Bond etfs like TLT however, i would argue are not as great rightnow. They’ve had quite a run since October and I would prefer something like that cool off before getting in.
Silver I think will perform amazingly when the rate cuts do happen. Keep in mind that if you try to get into equities when rate cuts happen you have to worry about earnings deterioration. You don’t have to worry about that with silver. You would just hope that the dollar plummets and demand for silver goes up.
Now high dividend solid cash flow plays are great as well. If there is some sort of rug pull on market expectations with when rate cuts happen or how high rates go, I think you position yourself in dividend play that at least gives around 4%ish yield. Obviously higher is better, but don’t sacrifice higher yield for lower quality. When rates get cut rapidly, investors will be looking for places to park cash while earning passive income in relatively insolated companies. Rate cuts won’t always equate to stocks going up because you can see serious deterioration in revenues and earnings and valuations come into question and then you get doomers and gloomers talking about bear markets for next decade. So here the idea is to just lock in good yield in good companies with good cash flows.