August 4, 2024 • 36 mins
For this Suze School, we get a lesson about being prepared. Just like you would prepare your home for a hurricane, you need to plan ahead with your investments, so you can ride out financial storms.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Suze (00:41):
August 4th 2024. Welcome everybody to the Women and Money
podcast as well as everybody smart enough to listen, Suze
O here and today is Suze School. So I'm going
to be giving you some really great information in terms
of things that I want you to at least look
(01:01):
into buying
my thoughts about what's going on and basically the posture,
the investment posture and psychology that all of you should
be taking. But before we begin with that, I just
have to say happy 18th birthday on Tuesday, Connor, what
(01:24):
an incredible young man. I happen to think that you
are all right. Everybody. I just wanted to say that
I like that boy
as all of, you know, KT and I live in
the Bahamas and during this past week on the news
constantly was that there was a storm that was going
(01:45):
to come this way, but people weren't sure the American
model showed that it was going to come right at us.
The European model showed that it was going to go
under us and go into the Gulf.
So then the question becomes, what do we do when
we're not sure what's going to happen? Because normally when
(02:09):
a storm is coming right at us, we evacuate the
island and we go somewhere that it's going to be
safe and sound because going through any type of serious
storm on this island is not wise. Remember this island
at its widest point is half a mile wide.
(02:29):
And our home has water on one side, water on
the other side that is not very far away at
all from the house.
So you have to prepare, you have to go. Oh
my God, the predictors are totally confused. So what should
we do? So, Colo brought in all the furniture and
(02:53):
he prepared the house as if it was going to
come right here and we knew that we could leave
the island immediately if we needed to. But the thing
that takes a long time
is bringing in all the furniture, taking away everything that
could fly, bolting everything down. That's what takes time preparing
(03:18):
for it in case it were to come after. Of course,
we did all that. Then the weather people came out
and said it's absolutely going south. It is not going
to hit us. So here we did all of this
preparation
and in the end, we didn't need to,
(03:43):
but it was smart that we did because if the
forecasters came out and they said it's coming right at us,
we were ready for it.
And investing is kind of like that. You really don't
know where the financial hurricane is going to go, what
(04:03):
areas it's going to hit
and how do you prepare? So that no matter what happens,
you are protected.
And a lot of that comes in with the areas
that your money happens to be invested in. Just last week.
(04:24):
I talked a little bit about how you can't have
all your money just in technology,
just in the magnificent seven. You can't do that because
if the financial hurricane comes in, oh, it's gonna hurt.
And of course, last week, the financial hurricane came in
(04:46):
for that sector.
So the question is, what do I think the forecast
is now for the overall
economy? Because what's happening in the overall economy on every
possible level
really affects what will happen in the stock market
(05:11):
as well as in your financial life. So let me
start with telling you about the things that concern me
and that I have to take into consideration when I'm
thinking about what do we do with money?
(05:32):
The very first thing that I've always watched is Intel. Now,
Intel is a big company and I just watched them
because so many people use them and it's just a
company that I've loved over the years. And what was
interesting to me about Intel is that prior to the pandemic,
(05:53):
their payroll was at 110,000 people that they had as employees.
Then in 2022
their payroll skyrocketed to 132,000 fabulous. Everybody. However, at the
(06:16):
end of this year, their payroll is projected to be
below 100,000.
So they are now going to be down in employees
more than they were during the pre pandemic times. Now,
(06:37):
why does that matter to me? And why do I
look at that
because you have to look at if companies are starting
to lay off people and they are actually shrinking their payrolls,
then the question becomes, what do those people who no
longer have jobs do? Especially at a time when artificial intelligence,
(07:05):
in my opinion, is replacing so many jobs and occupations
that people had to do prior to this and now
a computer will do it for you.
So when people are laid off and then the job
opportunities possibly aren't as great as they used to be.
(07:29):
And then those people don't have any more money where
they could make purchases, buy things, keep the economy strong.
That's just a warning sign to me.
So when I look at where we are at the
overall picture, currently, we are at 1.94 million continuing jobless claims.
(07:58):
Why does that matter? Because that's the highest that it's
been since 2017.
So again, that just is something that concerns me. Now,
the other thing that I love to always follow is
that how are people doing with their credit cards? Are
(08:20):
people paying their bills on time?
Are they falling behind or is it getting bad enough
that they are actually in collections? So I happen to
always look at the National Association of Credit Managers reports
because what this association does really is it keeps track
(08:43):
of all the accounts that have not been paying as
well as those that have been placed in collections.
And the numbers currently, when you look at them,
they are showing that it's the highest number since 2008.
(09:04):
And I'm sure you all remember 2007, 2008, 2009, at
least the beginning of it.
Remember those times. So when I see that the number
of people that are late in payments and the number
of people that are going into collection are the highest
(09:25):
since 2008.
It concerns me. Then of course, I always look at
bankruptcies and bankruptcies are absolutely increasing. I also like to
look at car sales even more than what's happening with
real estate because real estate has gone. So high interest
(09:49):
rates to buy real estate are still relatively high,
although not as high as they were, but they're still
relatively high. So I look at car sales because people
need a car, they need a car to get to
work they just need a car, plus they want cars.
(10:10):
And if you're looking at not just here in the
United States, but globally, car sales are weak across the board.
So those are certain things that are concerning me
going away from money for one second. Right now. The
(10:32):
other thing that is concerning me big time
and therefore affecting the things that I would invest in
or tell you to invest in
is the potential war in the Middle East. And when
I see that the United States is sending ships and
(10:52):
carriers into the Middle East that concerns me.
So could we be in an all out war over there?
Well, we have a good possibility, even a probability that
that is coming. Now, I hope it is diverted. I
(11:13):
do not want to see that happen on any level,
but one has to look at the realities of what
is really going on there. And that then tells me, oh,
well, I have to prepare for that just like the hurricane.
So what would I then want to put in a
(11:33):
portfolio
that helps protect me against such a possibility.
Next, let's go back to financial things that are, I
find very, very interesting. I've been talking about either Series
I bonds for quite a few years and then I
(11:54):
switched and about a year ago, maybe I can't remember
the timing. I was telling all of you, I'm not
liking Series I bonds if you have certain Series I bonds,
I would be coming out of them to take advantage
and locking in
the interest rates that treasuries were offering at the time.
(12:17):
And I know there are a lot of other people
that do webinars and that are on youtube and everything
that our series I bonds people and all these things
and worry about inflation and those kinds of things coming again.
I'm somebody who thinks, listen, if inflation comes again, if whatever,
(12:38):
all right, I'll deal with it at that time. But
I think that there's more of a chance that interest
rates are going to go down
in the long run, then go up. And I've been
telling you that, which is why I wasn't liking Series
I bonds. I didn't want to lock in my money
for five years. I didn't want to get what I
(12:59):
was getting there. I wanted to lock in to remember
all this, everybody, the interest that you could lock in
for 20 or 30 years on treasury bonds.
I even told you a long time ago that I
was putting significant sums of money into the 30 year
(13:21):
Treasury bond. And I started doing that when interest rates
were at 4.1% 4.3%. And even though I was early,
I just kept doing it
after I had done that, by the way, I just
want to say this treasury interest rates on those maturities
(13:44):
went higher and higher. And I watched the value of
my treasuries that I had purchased go down and down.
But I was patient because I believed in what I said.
I don't think that there's a way one can time
when something is going to happen, you just wanna be prepared.
(14:08):
You want your furniture inside in case the storm comes
and if it doesn't come, ok, your furniture was protected,
the house is protected. Everything is ok. Are you following
my train of thoughts here?
So I bought treasuries, watched the money go down and
(14:32):
here we are, August 4th 2024.
And now when I look at the yield of 30
year treasuries, they are back to 4.1%.
So what that means is that the 30 year treasuries
I bought at 4.3% and higher
(14:56):
are now actually in positive territory because I want you
to remember when interest rates go down, the value of
bonds go up and the further out in maturity that
you happen to have. So a 30 year bond, if
(15:19):
interest rates go down that 30 year bond, the price
of it will go up more
than a 10 year treasury note or a two year
treasury note. If interest rates go up, the value of
a 30 year bond will go down more
than a 10 year Treasury note or a two year.
(15:42):
So the shorter term maturities have less fluctuation both up
and down than longer term maturities given that, I think
interest rates are going to continue down here.
I went out long term. Now, I have suggested to
(16:04):
all of you
that you should look at doing 20 - 30 years, but given
that we don't know really what's going to happen in
this world, you have to prepare.
So it doesn't hurt to do a ladder whether it's CDS, treasuries,
whatever it happens to be of longer term, maturities combined
(16:29):
with some short term. So that no matter what happens,
you are protected,
that's still something I want you to be doing.
If you now look at
the 10 year treasury and this is key everybody.
(16:50):
The 10 year Treasury is currently at 3.8%.
Do you also remember me telling you that if interest
rates for a 10 year treasury happen to go below 4%?
Here we go. Everybody.
And I said if that were to happen, don't be
(17:13):
surprised if you didn't see 10 year treasuries go down
to 3.43%.
Now, why is that important?
That's important because it is the 10 year Treasury
that essentially affects mortgage rates. What the 10 year Treasury does?
(17:39):
It correlates to what the 30 year or the 15
year mortgage rates or even adjustable rate mortgages are going
to be, which obviously affects, as I just said, real estate. Now,
currently
the 30 year mortgage is still at about 6.7% or 7.2%
(18:06):
the last time the 10 year was at 3.8% the
30 year mortgage was about 5.22%. Now, that also had
to do with economic conditions kind of back in 2009
and everything.
But mortgage rates, in my opinion are absolutely heading down.
(18:31):
The other thing that I find very interesting about treasuries,
which is why I'm telling you, you need to go
longer term,
that the interest rates that you've been getting in money
market funds are absolutely starting to come down as well.
So it may not be as safe of a haven
(18:53):
just to keep money thinking, oh, I'm always gonna get 5%
on it
because of what's happening. If you now look at the
two year Treasury note, it's now at about 3.88%
the 10 year
(19:14):
is at 3.79%. They are incredibly, incredibly close
and because of what's happening with interest rates out there
in the treasuries, for instance, which are easy for you
to follow.
(19:34):
I think that this will be forcing the hand of
Jay Powell who should have lowered interest rates already. In
my opinion, he is behind again. He is not being
proactive to stop a possible recession or whatever may be
looming out there. So he may be forced to actually
(19:58):
lower interest rates even before September 18th.
But these are all the things everybody, ok, that happens
to be concerning me and things that I want you
to absolutely be paying attention to.
(20:19):
Now, for those of you, let's talk about technology for
one second
and your stocks like Meta and Apple and Amazon and
all the stocks that all of you have wanted to
be in or the qqqs, which is an ETF of
the basket of all those stocks.
(20:41):
The truth of the matter is those will eventually one
day come back and they're not just going to come
back because they're down, you are never to buy something
just because it has decreased in price. You buy something
because it has gone on sale
(21:03):
and it's still a valuable used commodity. It's something that
you want. It's something that will be leading the world
in how the world operates and all of those kinds
of stocks are still as great as they have ever been.
(21:23):
My favorite is Apple, as many of, you know, and
so when those stocks go down,
obviously, if you are losing sleep, you can't take it.
All of that is just making you sick to your stomach.
All right, then you have to do what makes you
feel secure because remember, the goal of money is for
(21:46):
you to be secure, but it would have been a
huge mistake
if you have time on your side where you can
leave this money in those stocks and you are diversified
in other areas as well, which I will talk about
in a second.
It's a huge mistake if you just sold.
(22:06):
And so therefore, even though they very probably will continue
down with wise management of your money with continuing to
dollar cost average into it on seriously big days when
they are down,
I don't think you'll be sorry, a few years from now,
(22:29):
but you have to know
that you have time on your side. And what starts
to happen is there was a day last week when
the market went down considerably and these stocks went down
dramatically
and you were scared to death. But then the very
(22:51):
next day, the markets skyrocketed and these stocks made a
great comeback. And then you thought to yourself, oh, great, great.
It's gonna go up from here. I know that's what
you were thinking and you were relieved
and then the next two days obliterated once again, then
(23:12):
you start thinking, oh my God, why didn't I sell
the day that they were up? What's wrong with me?
And now you are totally confused. And what's ruling
your investment decisions are the emotions of fear and anger,
fear that oh my God, these are gonna go down
(23:34):
even lower. I'm gonna lose my money, anger that you
did not sell when they were at their top. And
those two emotions are two out of the three internal
obstacles to wealth.
When you come from a place of fear. When you
come from a place of anger because you didn't do
(23:56):
something you cannot make intelligent decisions. So maybe you should
just stay and go away in terms of watching things
that you know, are incredible and come back. Do not
forget 2022 when these stocks were obliterated
(24:20):
and then look at what happened. So you just need
patience if you're invested in that sector and the ability
to dollar cost average. Ok.
So where should you be investing right now?
Given what's happening with a possibility of war with interest
(24:43):
rates coming down with the economy, maybe being in jeopardy
with layoffs
and things like that. Here are the areas that I
really would like you to have some exposure to. But
I've been telling you about these areas for a while now.
(25:03):
One is gold
and gold is a great place for you to be invested.
ETF for gold is GLD in case a war happens
to break out, I wouldn't be putting a lot of
money in it, but I would have some exposure to it.
I've already talked to you about bonds and you can
(25:27):
buy individual bonds or you could buy ETFs that are bonds,
but it's just something that you might want to consider
utility stocks and utility ETFs with interest rates going down.
(25:48):
Utilities are giving a great dividend
and also I think will give you some appreciation.
So the ETF that I like for utilities is XLU. XLU,
The Utility Select Sector Spider Fund is currently trading at
(26:11):
about $74 a share and giving you a yield of 3.22. Now,
it's very near its year high, but I don't personally care.
I just think it's something that gives you a defensive
posture in terms of what's happening. The next is XLP. Now,
(26:37):
this is an ETF, that's the consumer staple ETF that
actually we talked about buying and we bought a long
time ago when it was about $79 a share.
And I wanted you to do it at that time
(26:59):
because I was convinced on some level that we might
go into recession and that people were only going to
be buying things that they needed the staples in their house,
meaning toothpaste and things like that that you need. So
I told all of you to buy it at the time,
(27:20):
it was at a 2.82% dividend yield right around there
and you bought it many of you. And then as
time went on, and the market started to be ok
and everybody was going into technology and everything else was
skyrocketing
XLP, and remember this was only for a portion of
(27:43):
your money. XLP went down as low as about $65
a share. And a lot of you were writing me saying, Suze,
you think we should sell, what should we do? And
I could tell that they wanted to be more aggressive.
So it was like, ok, if you want to sell,
you could sell. There are other things you could buy
and probably at that time, make more money, which they
(28:04):
probably did.
But as we speak today, XLP is right back again,
at $79 a share,
kind of like my bond that I bought and again
paying 2.82 percent dividends. But I think XLP is a
(28:26):
nice defensive posture that might make you a little bit
of money. It's not gonna be like a QQQ or whatever,
but it might make you a little bit of money
and give you a little bit of income on the side.
All right,
next happens to be REITs - Real Estate Investment Trusts.
(28:53):
Now, in the past,
I gave you the names of two REITs that I
liked very much. My favorite actually was realty income that
has done very nice for all of us. I know
Keith Fitzgerald really likes, an REIT by the name of
(29:14):
Care Trust REIT symbol CTRE and that's at a 4.24% yield.
So those are reits that I've told you about a
long time ago on this podcast. And actually, if you
had purchased them when I first talked about them, you
would be up significantly. Another overall
(29:40):
REIT is the iShares US Real Estate ETF symbol IYR.
It's at about $95 a share right now paying about
a 3% dividend again, almost at its high. But for
some exposure in that area, not a bad idea.
(30:06):
So another area is health care and for exposure to
healthcare via an ETF I like the Health Care Select
Sector Spider symbol XLV paying you approximately. I think it's 3%
(30:30):
might be a way for not a lot of growth, people,
it's not a lot of growth and it's not going
to skyrocket, but these are things that will absolutely protect you. Obviously,
you also want to be in defense of stocks or
ETFs again, Lockheed Martin, Raytheon... stocks that will protect you
(30:53):
be defensive against what is happening
now, those are things that I would look at buying.
What would I be staying away from or selling?
(31:20):
I would be staying away from regional banks and European banks.
I would not be investing in those.
The other things that I would be staying away from
at least for now would probably be Bitcoin. I do
think Bitcoin currently at about $61,000 could very easily go down.
(31:54):
We'll see if war happens. Gold probably is a better
bet for you there. But did you notice I use
the word bet you should never bet. But it's kind
of when you're buying things like that, it's a little
bit of a bet, especially with Bitcoin. But anyway, I
still think long run Bitcoin can go and make you
(32:16):
a whole lot of money one day.
But it is something that has to go up, down, up, down, up, down.
So the other day on the island I ran into
a very wonderful and good photographer. He's here filming houses
and the island and things like that. And we were
(32:38):
talking and he said, oh, I invest most of my
money in Bitcoin and Ethereum.
And what I do, Suze is like when it was
at 70 I sold out
and then I put the money in stable coins and
then when it goes down, I buy again and then
I go up, down, up down and that's what I do.
(33:01):
Now, what he didn't know is that when he sold Bitcoin,
he now owes income taxes on that. And for some reason,
he was under the impression because he went from one coin,
Bitcoin to a stable coin. It wasn't a taxable transaction.
(33:24):
And I explained to him. No, that's like selling one
stock going into another stock. That doesn't mean that you're
not going to be taxed on it. So when you
trade anything,
you have to take into consideration taxes, especially if it
(33:44):
is outside of a retirement account
for an ETF for Bitcoin. If Bitcoin does go down here.
You know, I like the ETF IBIT as something that
you might want to look into for money that you
(34:04):
can afford to lose. So overall that is what I
think is happening. That is the possible storm that might
come our way
but might get diverted. I don't think that we have
seen the lows of these markets on any level here.
(34:27):
So I think it's important that you prepare for a
financial storm
but do not let your emotions rule what you are
investing in. But you have to be investing if you
have what it takes to do. So
in order to in the long run, really make more
(34:51):
out of less money. It is just that simple as
I hear the rain pouring down outside of my window
right now. And what's interesting is that even though the storm,
the big storm isn't coming this way, doesn't mean that
(35:11):
we're not going to get showers and wind
and that we don't want to get soaked. So we
stay inside and we prepare
and that is what I'm asking all of you to do.
Just put up your umbrellas and prepare for a possible
financial storm by looking into investing the way that I
(35:35):
told you in this August 4th edition of Suze School.
So until next week, there's really only one thing that
I want you to remember when it comes to your
money
and that is people first, then money, then things now
you stay safe and
unstoppable.
August 4th 2024. Welcome everybody to the Women and Money
podcast as well as everybody smart enough to listen, Suze
O here and today is Suze School. So I'm going
to be giving you some really great information in terms
of things that I want you to at least look
(01:01):
into buying
my thoughts about what's going on and basically the posture,
the investment posture and psychology that all of you should
be taking. But before we begin with that, I just
have to say happy 18th birthday on Tuesday, Connor, what
(01:24):
an incredible young man. I happen to think that you
are all right. Everybody. I just wanted to say that
I like that boy
as all of, you know, KT and I live in
the Bahamas and during this past week on the news
constantly was that there was a storm that was going
(01:45):
to come this way, but people weren't sure the American
model showed that it was going to come right at us.
The European model showed that it was going to go
under us and go into the Gulf.
So then the question becomes, what do we do when
we're not sure what's going to happen? Because normally when
(02:09):
a storm is coming right at us, we evacuate the
island and we go somewhere that it's going to be
safe and sound because going through any type of serious
storm on this island is not wise. Remember this island
at its widest point is half a mile wide.
(02:29):
And our home has water on one side, water on
the other side that is not very far away at
all from the house.
So you have to prepare, you have to go. Oh
my God, the predictors are totally confused. So what should
we do? So, Colo brought in all the furniture and
(02:53):
he prepared the house as if it was going to
come right here and we knew that we could leave
the island immediately if we needed to. But the thing
that takes a long time
is bringing in all the furniture, taking away everything that
could fly, bolting everything down. That's what takes time preparing
(03:18):
for it in case it were to come after. Of course,
we did all that. Then the weather people came out
and said it's absolutely going south. It is not going
to hit us. So here we did all of this
preparation
and in the end, we didn't need to,
(03:43):
but it was smart that we did because if the
forecasters came out and they said it's coming right at us,
we were ready for it.
And investing is kind of like that. You really don't
know where the financial hurricane is going to go, what
(04:03):
areas it's going to hit
and how do you prepare? So that no matter what happens,
you are protected.
And a lot of that comes in with the areas
that your money happens to be invested in. Just last week.
(04:24):
I talked a little bit about how you can't have
all your money just in technology,
just in the magnificent seven. You can't do that because
if the financial hurricane comes in, oh, it's gonna hurt.
And of course, last week, the financial hurricane came in
(04:46):
for that sector.
So the question is, what do I think the forecast
is now for the overall
economy? Because what's happening in the overall economy on every
possible level
really affects what will happen in the stock market
(05:11):
as well as in your financial life. So let me
start with telling you about the things that concern me
and that I have to take into consideration when I'm
thinking about what do we do with money?
(05:32):
The very first thing that I've always watched is Intel. Now,
Intel is a big company and I just watched them
because so many people use them and it's just a
company that I've loved over the years. And what was
interesting to me about Intel is that prior to the pandemic,
(05:53):
their payroll was at 110,000 people that they had as employees.
Then in 2022
their payroll skyrocketed to 132,000 fabulous. Everybody. However, at the
(06:16):
end of this year, their payroll is projected to be
below 100,000.
So they are now going to be down in employees
more than they were during the pre pandemic times. Now,
(06:37):
why does that matter to me? And why do I
look at that
because you have to look at if companies are starting
to lay off people and they are actually shrinking their payrolls,
then the question becomes, what do those people who no
longer have jobs do? Especially at a time when artificial intelligence,
(07:05):
in my opinion, is replacing so many jobs and occupations
that people had to do prior to this and now
a computer will do it for you.
So when people are laid off and then the job
opportunities possibly aren't as great as they used to be.
(07:29):
And then those people don't have any more money where
they could make purchases, buy things, keep the economy strong.
That's just a warning sign to me.
So when I look at where we are at the
overall picture, currently, we are at 1.94 million continuing jobless claims.
(07:58):
Why does that matter? Because that's the highest that it's
been since 2017.
So again, that just is something that concerns me. Now,
the other thing that I love to always follow is
that how are people doing with their credit cards? Are
(08:20):
people paying their bills on time?
Are they falling behind or is it getting bad enough
that they are actually in collections? So I happen to
always look at the National Association of Credit Managers reports
because what this association does really is it keeps track
(08:43):
of all the accounts that have not been paying as
well as those that have been placed in collections.
And the numbers currently, when you look at them,
they are showing that it's the highest number since 2008.
(09:04):
And I'm sure you all remember 2007, 2008, 2009, at
least the beginning of it.
Remember those times. So when I see that the number
of people that are late in payments and the number
of people that are going into collection are the highest
(09:25):
since 2008.
It concerns me. Then of course, I always look at
bankruptcies and bankruptcies are absolutely increasing. I also like to
look at car sales even more than what's happening with
real estate because real estate has gone. So high interest
(09:49):
rates to buy real estate are still relatively high,
although not as high as they were, but they're still
relatively high. So I look at car sales because people
need a car, they need a car to get to
work they just need a car, plus they want cars.
(10:10):
And if you're looking at not just here in the
United States, but globally, car sales are weak across the board.
So those are certain things that are concerning me
going away from money for one second. Right now. The
(10:32):
other thing that is concerning me big time
and therefore affecting the things that I would invest in
or tell you to invest in
is the potential war in the Middle East. And when
I see that the United States is sending ships and
(10:52):
carriers into the Middle East that concerns me.
So could we be in an all out war over there?
Well, we have a good possibility, even a probability that
that is coming. Now, I hope it is diverted. I
(11:13):
do not want to see that happen on any level,
but one has to look at the realities of what
is really going on there. And that then tells me, oh,
well, I have to prepare for that just like the hurricane.
So what would I then want to put in a
(11:33):
portfolio
that helps protect me against such a possibility.
Next, let's go back to financial things that are, I
find very, very interesting. I've been talking about either Series
I bonds for quite a few years and then I
(11:54):
switched and about a year ago, maybe I can't remember
the timing. I was telling all of you, I'm not
liking Series I bonds if you have certain Series I bonds,
I would be coming out of them to take advantage
and locking in
the interest rates that treasuries were offering at the time.
(12:17):
And I know there are a lot of other people
that do webinars and that are on youtube and everything
that our series I bonds people and all these things
and worry about inflation and those kinds of things coming again.
I'm somebody who thinks, listen, if inflation comes again, if whatever,
(12:38):
all right, I'll deal with it at that time. But
I think that there's more of a chance that interest
rates are going to go down
in the long run, then go up. And I've been
telling you that, which is why I wasn't liking Series
I bonds. I didn't want to lock in my money
for five years. I didn't want to get what I
(12:59):
was getting there. I wanted to lock in to remember
all this, everybody, the interest that you could lock in
for 20 or 30 years on treasury bonds.
I even told you a long time ago that I
was putting significant sums of money into the 30 year
(13:21):
Treasury bond. And I started doing that when interest rates
were at 4.1% 4.3%. And even though I was early,
I just kept doing it
after I had done that, by the way, I just
want to say this treasury interest rates on those maturities
(13:44):
went higher and higher. And I watched the value of
my treasuries that I had purchased go down and down.
But I was patient because I believed in what I said.
I don't think that there's a way one can time
when something is going to happen, you just wanna be prepared.
(14:08):
You want your furniture inside in case the storm comes
and if it doesn't come, ok, your furniture was protected,
the house is protected. Everything is ok. Are you following
my train of thoughts here?
So I bought treasuries, watched the money go down and
(14:32):
here we are, August 4th 2024.
And now when I look at the yield of 30
year treasuries, they are back to 4.1%.
So what that means is that the 30 year treasuries
I bought at 4.3% and higher
(14:56):
are now actually in positive territory because I want you
to remember when interest rates go down, the value of
bonds go up and the further out in maturity that
you happen to have. So a 30 year bond, if
(15:19):
interest rates go down that 30 year bond, the price
of it will go up more
than a 10 year treasury note or a two year
treasury note. If interest rates go up, the value of
a 30 year bond will go down more
than a 10 year Treasury note or a two year.
(15:42):
So the shorter term maturities have less fluctuation both up
and down than longer term maturities given that, I think
interest rates are going to continue down here.
I went out long term. Now, I have suggested to
(16:04):
all of you
that you should look at doing 20 - 30 years, but given
that we don't know really what's going to happen in
this world, you have to prepare.
So it doesn't hurt to do a ladder whether it's CDS, treasuries,
whatever it happens to be of longer term, maturities combined
(16:29):
with some short term. So that no matter what happens,
you are protected,
that's still something I want you to be doing.
If you now look at
the 10 year treasury and this is key everybody.
(16:50):
The 10 year Treasury is currently at 3.8%.
Do you also remember me telling you that if interest
rates for a 10 year treasury happen to go below 4%?
Here we go. Everybody.
And I said if that were to happen, don't be
(17:13):
surprised if you didn't see 10 year treasuries go down
to 3.43%.
Now, why is that important?
That's important because it is the 10 year Treasury
that essentially affects mortgage rates. What the 10 year Treasury does?
(17:39):
It correlates to what the 30 year or the 15
year mortgage rates or even adjustable rate mortgages are going
to be, which obviously affects, as I just said, real estate. Now,
currently
the 30 year mortgage is still at about 6.7% or 7.2%
(18:06):
the last time the 10 year was at 3.8% the
30 year mortgage was about 5.22%. Now, that also had
to do with economic conditions kind of back in 2009
and everything.
But mortgage rates, in my opinion are absolutely heading down.
(18:31):
The other thing that I find very interesting about treasuries,
which is why I'm telling you, you need to go
longer term,
that the interest rates that you've been getting in money
market funds are absolutely starting to come down as well.
So it may not be as safe of a haven
(18:53):
just to keep money thinking, oh, I'm always gonna get 5%
on it
because of what's happening. If you now look at the
two year Treasury note, it's now at about 3.88%
the 10 year
(19:14):
is at 3.79%. They are incredibly, incredibly close
and because of what's happening with interest rates out there
in the treasuries, for instance, which are easy for you
to follow.
(19:34):
I think that this will be forcing the hand of
Jay Powell who should have lowered interest rates already. In
my opinion, he is behind again. He is not being
proactive to stop a possible recession or whatever may be
looming out there. So he may be forced to actually
(19:58):
lower interest rates even before September 18th.
But these are all the things everybody, ok, that happens
to be concerning me and things that I want you
to absolutely be paying attention to.
(20:19):
Now, for those of you, let's talk about technology for
one second
and your stocks like Meta and Apple and Amazon and
all the stocks that all of you have wanted to
be in or the qqqs, which is an ETF of
the basket of all those stocks.
(20:41):
The truth of the matter is those will eventually one
day come back and they're not just going to come
back because they're down, you are never to buy something
just because it has decreased in price. You buy something
because it has gone on sale
(21:03):
and it's still a valuable used commodity. It's something that
you want. It's something that will be leading the world
in how the world operates and all of those kinds
of stocks are still as great as they have ever been.
(21:23):
My favorite is Apple, as many of, you know, and
so when those stocks go down,
obviously, if you are losing sleep, you can't take it.
All of that is just making you sick to your stomach.
All right, then you have to do what makes you
feel secure because remember, the goal of money is for
(21:46):
you to be secure, but it would have been a
huge mistake
if you have time on your side where you can
leave this money in those stocks and you are diversified
in other areas as well, which I will talk about
in a second.
It's a huge mistake if you just sold.
(22:06):
And so therefore, even though they very probably will continue
down with wise management of your money with continuing to
dollar cost average into it on seriously big days when
they are down,
I don't think you'll be sorry, a few years from now,
(22:29):
but you have to know
that you have time on your side. And what starts
to happen is there was a day last week when
the market went down considerably and these stocks went down
dramatically
and you were scared to death. But then the very
(22:51):
next day, the markets skyrocketed and these stocks made a
great comeback. And then you thought to yourself, oh, great, great.
It's gonna go up from here. I know that's what
you were thinking and you were relieved
and then the next two days obliterated once again, then
(23:12):
you start thinking, oh my God, why didn't I sell
the day that they were up? What's wrong with me?
And now you are totally confused. And what's ruling
your investment decisions are the emotions of fear and anger,
fear that oh my God, these are gonna go down
(23:34):
even lower. I'm gonna lose my money, anger that you
did not sell when they were at their top. And
those two emotions are two out of the three internal
obstacles to wealth.
When you come from a place of fear. When you
come from a place of anger because you didn't do
(23:56):
something you cannot make intelligent decisions. So maybe you should
just stay and go away in terms of watching things
that you know, are incredible and come back. Do not
forget 2022 when these stocks were obliterated
(24:20):
and then look at what happened. So you just need
patience if you're invested in that sector and the ability
to dollar cost average. Ok.
So where should you be investing right now?
Given what's happening with a possibility of war with interest
(24:43):
rates coming down with the economy, maybe being in jeopardy
with layoffs
and things like that. Here are the areas that I
really would like you to have some exposure to. But
I've been telling you about these areas for a while now.
(25:03):
One is gold
and gold is a great place for you to be invested.
ETF for gold is GLD in case a war happens
to break out, I wouldn't be putting a lot of
money in it, but I would have some exposure to it.
I've already talked to you about bonds and you can
(25:27):
buy individual bonds or you could buy ETFs that are bonds,
but it's just something that you might want to consider
utility stocks and utility ETFs with interest rates going down.
(25:48):
Utilities are giving a great dividend
and also I think will give you some appreciation.
So the ETF that I like for utilities is XLU. XLU,
The Utility Select Sector Spider Fund is currently trading at
(26:11):
about $74 a share and giving you a yield of 3.22. Now,
it's very near its year high, but I don't personally care.
I just think it's something that gives you a defensive
posture in terms of what's happening. The next is XLP. Now,
(26:37):
this is an ETF, that's the consumer staple ETF that
actually we talked about buying and we bought a long
time ago when it was about $79 a share.
And I wanted you to do it at that time
(26:59):
because I was convinced on some level that we might
go into recession and that people were only going to
be buying things that they needed the staples in their house,
meaning toothpaste and things like that that you need. So
I told all of you to buy it at the time,
(27:20):
it was at a 2.82% dividend yield right around there
and you bought it many of you. And then as
time went on, and the market started to be ok
and everybody was going into technology and everything else was
skyrocketing
XLP, and remember this was only for a portion of
(27:43):
your money. XLP went down as low as about $65
a share. And a lot of you were writing me saying, Suze,
you think we should sell, what should we do? And
I could tell that they wanted to be more aggressive.
So it was like, ok, if you want to sell,
you could sell. There are other things you could buy
and probably at that time, make more money, which they
(28:04):
probably did.
But as we speak today, XLP is right back again,
at $79 a share,
kind of like my bond that I bought and again
paying 2.82 percent dividends. But I think XLP is a
(28:26):
nice defensive posture that might make you a little bit
of money. It's not gonna be like a QQQ or whatever,
but it might make you a little bit of money
and give you a little bit of income on the side.
All right,
next happens to be REITs - Real Estate Investment Trusts.
(28:53):
Now, in the past,
I gave you the names of two REITs that I
liked very much. My favorite actually was realty income that
has done very nice for all of us. I know
Keith Fitzgerald really likes, an REIT by the name of
(29:14):
Care Trust REIT symbol CTRE and that's at a 4.24% yield.
So those are reits that I've told you about a
long time ago on this podcast. And actually, if you
had purchased them when I first talked about them, you
would be up significantly. Another overall
(29:40):
REIT is the iShares US Real Estate ETF symbol IYR.
It's at about $95 a share right now paying about
a 3% dividend again, almost at its high. But for
some exposure in that area, not a bad idea.
(30:06):
So another area is health care and for exposure to
healthcare via an ETF I like the Health Care Select
Sector Spider symbol XLV paying you approximately. I think it's 3%
(30:30):
might be a way for not a lot of growth, people,
it's not a lot of growth and it's not going
to skyrocket, but these are things that will absolutely protect you. Obviously,
you also want to be in defense of stocks or
ETFs again, Lockheed Martin, Raytheon... stocks that will protect you
(30:53):
be defensive against what is happening
now, those are things that I would look at buying.
What would I be staying away from or selling?
(31:20):
I would be staying away from regional banks and European banks.
I would not be investing in those.
The other things that I would be staying away from
at least for now would probably be Bitcoin. I do
think Bitcoin currently at about $61,000 could very easily go down.
(31:54):
We'll see if war happens. Gold probably is a better
bet for you there. But did you notice I use
the word bet you should never bet. But it's kind
of when you're buying things like that, it's a little
bit of a bet, especially with Bitcoin. But anyway, I
still think long run Bitcoin can go and make you
(32:16):
a whole lot of money one day.
But it is something that has to go up, down, up, down, up, down.
So the other day on the island I ran into
a very wonderful and good photographer. He's here filming houses
and the island and things like that. And we were
(32:38):
talking and he said, oh, I invest most of my
money in Bitcoin and Ethereum.
And what I do, Suze is like when it was
at 70 I sold out
and then I put the money in stable coins and
then when it goes down, I buy again and then
I go up, down, up down and that's what I do.
(33:01):
Now, what he didn't know is that when he sold Bitcoin,
he now owes income taxes on that. And for some reason,
he was under the impression because he went from one coin,
Bitcoin to a stable coin. It wasn't a taxable transaction.
(33:24):
And I explained to him. No, that's like selling one
stock going into another stock. That doesn't mean that you're
not going to be taxed on it. So when you
trade anything,
you have to take into consideration taxes, especially if it
(33:44):
is outside of a retirement account
for an ETF for Bitcoin. If Bitcoin does go down here.
You know, I like the ETF IBIT as something that
you might want to look into for money that you
(34:04):
can afford to lose. So overall that is what I
think is happening. That is the possible storm that might
come our way
but might get diverted. I don't think that we have
seen the lows of these markets on any level here.
(34:27):
So I think it's important that you prepare for a
financial storm
but do not let your emotions rule what you are
investing in. But you have to be investing if you
have what it takes to do. So
in order to in the long run, really make more
(34:51):
out of less money. It is just that simple as
I hear the rain pouring down outside of my window
right now. And what's interesting is that even though the storm,
the big storm isn't coming this way, doesn't mean that
(35:11):
we're not going to get showers and wind
and that we don't want to get soaked. So we
stay inside and we prepare
and that is what I'm asking all of you to do.
Just put up your umbrellas and prepare for a possible
financial storm by looking into investing the way that I
(35:35):
told you in this August 4th edition of Suze School.
So until next week, there's really only one thing that
I want you to remember when it comes to your
money
and that is people first, then money, then things now
you stay safe and
unstoppable.
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