What's Next After Fed Held Steady on Rates?🌟🌟🌟The US Federal Reserve held interest rates steady at 3.75% to 4.00% in …
What's Next After Fed Held Steady on Rates?
🌟🌟🌟The US Federal Reserve held interest rates steady at 3.75% to 4.00% in a 10 to 2 vote which analysts said is a hawkish hold. Data from CME's FedWatch and market consensus indicate an 85% probability of at least one more rate hike before year end.
This is due to persistent inflation which is aggravated by energy and diesel pressures, combined with 3rd quarter GDP tracking above 3%, keeping a December tightening cycle very much alive.
I am choosing to park some of my cash into $iShares 0-3 Month Treasury Bond ETF(SGOV.US) while waiting for great bargain hunting opportunities along the way .
Fed Chair Kevin Warsh is playing hard to get with rate cuts, so I prefer to be cautious.
The current dividend yield of $iShares 0-3 Month Treasury Bond ETF(SGOV.US)is 3.64%, paid monthly.
The Oracle of Omaha, Warren Buffett also did the same thing by parking his cash into short term US Treasury Bills to take full advantage of the Fed's high interest rates.
Why Did He Do It?
He cited market overvaluation as he historically hoards cash when he cannot find good businesses trading at fair prices. Rather than forcing a bad investment, he chose to wait on the sidelines.
Warren Buffett also said that "Cash is like Oxygen". If the stock market experiences a sudden correction, $Berkshire Hathaway B(BRK.B.US)can instantly deploy those hundreds of millions to buy distressed assets on the cheap.
His successor Greg Abel inherited this colossal safety net and has only recently started chipping away at it to make opportunistic acquisitions.
Dear Fellow Investors, what do you think of Warren Buffett's strategy?
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