I was driving from Dallas to Austin, Texas yesterday and it struck me that it is important to pay attention to your environment.
You must be aware of the cars around you, especially as you change lanes. There is constant monitoring of the speed limit, the gauges in the car and the signs on the road. After all, you don’t want to miss that next restroom stop!
That got me thinking about how important it is to be aware of your surroundings in everything you do.
I like to travel. Sometimes I go to places and get into situations that don’t necessarily thrill my wife.
Once, in Zimbabwe, I got between a cow elephant and her baby. Bad move. I should have been more aware. I survived and I am confident I would have qualified for the Olympic 100-meter sprint that day!
Exploring a cave in Botswana, we suddenly noticed very fresh leopard tracks and realized we had just entered the leopard’s home. We exited quickly.
In Tajikistan, the elevation was 15,000 feet and the temperature was minus 22 degrees Farenheit. With the wrong gear I could have been in trouble.
If you are not aware of your surroundings while you travel, you can put yourself in danger.
You can also put your investment portfolio in peril if you don’t keep an eye on the environment.
Stock and bond investors must keep tabs on macroeconomic trends as well as specific changes within their investment categories. Complacency can lead to trouble.
Real estate investors should also be aware of changes and trends that could affect their holdings.
While I am not a big fan of the current biased news entertainment industry, I do have numerous curated services that help me keep tabs on news that affects real estate.
One subject that piques my interest is the statements issued by the Federal Open Market Committee. This is the operational arm of the Federal Reserve System.
The Fed is a non-governmental organization and it’s not a bank, but it holds great power over monetary policy. For a detailed description of the secret formation of this non-governmental entity, read The Creature from Jekyll Island, by G. Edward Griffin.
Two of the Fed’s mandates are to moderate inflation and stabilize prices. They do this by adjusting interest rates and by providing liquidity to the monetary system through asset purchases.
I like to know what the Fed is thinking, or at least what they want me to know they are thinking. It helps long-term planning to have an idea of the trajectory of borrowing rates.
Today, the Fed is maintaining the lending rate at 0-0.25% and is purchasing $120 billion per month in bonds. That’s a great interest rate for borrowers and a staggering amount of monthly liquidity entering the monetary system.
These actions will have an effect on the economy as whole, and on your investment portfolio. Real estate moves slow, and you will have time to curate your holdings so they will be as protected as possible against future headwinds.
The effects of rampant money printing, inflation and loss of dollar purchasing power are the subject for another article. Until then, try to keep your focus on hard assets that will maintain their value, and fix your interest rates if you plan to hold your assets long-term.
It will pay dividends to understand the environment you’re living and investing in.
Click Here To watch a short video on the Fed.
Until next time!
Tom
