For the Macho…
If you are ever in Playa Del Carmen, you will find a delicious pool snack at the Grand Hyatt, Nachos Para Macho (Nachos for the Macho). For the alpha male, he can request the Yucatan lady cooks to add more jalapeno peppers commensurate to his machismo.
Investors increasingly are investing more and more into tech stocks, stocks for the macho; everything else is bland/tasteless. While tech earnings have been very good, the rise in tech stocks already reflect a lot of the good news. Although, I am not advocating a collapse, I do believe that expectations are perhaps becoming too high.
This is evidence that the shift from a fear to greed market is near complete…we see this as our alpha male clients that hired us in the fearful years of 2008 to 2011 are rediscovering their machismo and asking us to spice up their portfolios.
Rapidly rising interest rates to high levels need to be feared…
Interest rates have been falling since 1982 leaving investors complacent. While I don’t see interest rates heading back to double digit levels like they were from 1975 to 1982, the 10 year US Treasury can rise back to pre-Financial Crisis levels of 4%. If the 10 year US Treasury rises quickly to 4%, this will hurt the equity markets, particularly tech stocks. Ultra-short term bonds are a good hedge against this risk, while paying an interest rate higher than that of the S&P 500 dividend yield.
As always, please call us if you have any questions or concerns