Household Net Worth

Behold the household wealth creation of a pandemic combined with ZIRP. Broken window fallacies be damned. Break them, and break them good I say. It's a brand new era of unprecedented prosperity! And should this plan ever start to falter, look for plague, pestilence, and NIRP to save the day!!

Seriously. Other than recent bitcoin and stock market performance, there's absolutely no reason to fear downside risk or reversion towards the mean theories. Even in uncharted territory, the Fed always knows what it's doing. Always has your back!

I know I said I was serious in the last paragraph. It was gallows humor. Sorry about that. I actually just bought more I-Bonds. Not only do they track inflation as seen in the CPI, but they can never deflate. Not that many are all that worried about deflation again. Yet.

A Channel Too Far?

Risk Off Is Not a Recent Development

The following chart shows how utilities are performing relative to the Nasdaq over the past 6 months. Note that utilities have been outperforming the Nasdaq since Halloween, which oddly enough is the same time I decided to go on a diet. Pure coincidence? Or is it all part of the same risk off mindset? I cannot say.

Chart courtesy of StockCharts.com

First they came for the Nasdaq
And I spoke out
Because the Internet really needs more bloggers stating the obvious

Here's something less obvious. Next they came for utilities? Interest rates have risen. The spread between utility dividends and the yield on the 10-year Treasury bond is dangerously narrow. Those who bought utilities as a bond replacement (such as myself) should be finding less value there now. For what it is worth, it is that narrowing spread in "safe stocks" that triggered my flight to safety just 10 days ago. The situation has definitely not improved.

Plenty of risk out there and not much value. Doesn't feel at all like it did through most of 2021. The headwind to tailwind ratio has increased dramatically.

The Sarcasm Report v.289

Apple added trend analysis to their Health app. The added functionality really helps me understand what's actually going on. No longer must I guess at the direction my weight is heading.

Here's my weight over the past month:

Very disappointing month. I was under the impression that I was losing weight, but when a $2.7 trillion company says there is no discernable trend downward even as I walk 9+ miles per day and count calories, I have no choice but to concede that they must be right. Any optimism I once had has been replaced by a feeling of complete hopelessness. It's the kind of hopelessness that only a few quarts of ice cream could temporarily undo.

Here's my weight over the past 6 months:

Once again, my assumptions are found to be lacking. I was under the misguided impression that I started losing weight at Halloween, as a defiant response to leftover candy and a long-term trend that I finally decided to reverse. That could not be farther from the truth. As seen in the professional trend analysis, my quest actually began just 7 weeks ago. While not the good news that I had hoped, at least there is some hope here. It does shatter my self-confidence to be that far off on the timing though.

The future is bright. I'm looking forward to the day when this trend analysis technology can be applied to investments, and you should too. Can you imagine all the money we'd make being able to spot new trends in real time? I wouldn't expect Apple to provide professional tools for free though. They will most likely monetize it. But still, there should be so much money rolling into our investment portfolios that we won't care in the slightest. That's a win win for both Apple and us!

Monetize is such an awesome word. What a great day it is to be able to work monetize into a post! Monetize! Monetize! Monetize! All the world is our monetized oyster! Woohoo!

And lastly, there are other obvious uses for this trend analysis technology. For example, full self-driving cars clearly need to understand the movement trends of the objects around them. In real time! Now that weight trend analysis has been mastered, how hard can it be?

Fed Chairman Boromir

It is a strange fate that we should suffer so much fear and doubt over so small a thing. - Boromir, The Lord of the Rings

Trading Update IX

Closed all positions within my IRA. Sitting in cash.

Down 0.15% for the day, up 2.98% in 2022, and up 21.10% since I bought stocks in late December of 2020. (I'm also owed some dividends from all 3 tobacco stocks.)

I patiently await new opportunities. It is my hope that real rates will continue to rise and my next investment will be long-term inflation protected Treasury bonds (my preferred "safe" investment).

Right or wrong, this liquidation was triggered by the narrowing spread between the dividend yield on VPU (utilities fund) and the yield on the 10-year Treasury bond. At roughly 1%, it's way too narrow for my liking. Since I've earned more than the equivalent of a 10-year Treasury bond held to maturity (in just one year), I feel no great need to push my luck.

Side note: XBI continued to crash. Was my worst performer, by far, and I'd only held it two weeks.