RE:RE:FRANKIE BOYTo compare this with a debt instrument is odd. This investment is not pure yield - its a security with underlying hard assets. GIC is simply a contract in a currency with a government (pick one) that is virtually insolvent but for the ability to issue more money in the currency the debt is denominated in. Yes, rates will continue to increase. Not sure of short-term action - I invest long-term, manage risk, and study the macro. That said, the tightening is virtually already done by the Treasury market - 10Y is at 3.5%. Credit market is breaking, credit spreads are exploding and the yield curve inverted again last night. Raising USD treasury yield is putting pressure on a Yen currently in yield curve control. The US debt needs to roll. More than half of it matures in the next 2 years... and must roll. At the current treasury rates, carrying cost of the new debt to replace the old will be ~5x greater. The pain can get much, much worse. But ultimately a long-term GIC will get your face ripped off as rates come down, and the monetary supply expands. The only option is hard assets. Pick yours. Within a portolfio of inflation hedges, my favorite is H&R. I hope this dosnt go down. But i expect hikes until something breaks, which means many will get hurt - heartbreaking. That said, I have bids in all the way to $11.80. My first filled today at $12.68. Best of luck to you all.
CatchTheDip wrote: Relief rally? This is hope. Sadly, no matter how much I want REITs to recover, sentiment says rates are going much higher. Rising rates will compete heavily with REITs and dividend paying stocks. You can buy a 2 year GIC over 4%. Next month, a 1 year GIC will be over 4%. Money will flow out of income type REITs and stocks, and into fixed income, until rates level out or the investment is too compelling. CAP rates will increase, NAV will drop. And lastly, margin use will fall, as rates make it expensive to borrow. This orderly fall in the market is not even panic, it's adjustment to the conditions. HR and many other stocks/REITs are a great deal. Buying and holding isn't a horrible option at these prices, but we shouldn't expect a return to NAV anytime soon.
SNAKEYBOY wrote:
Does the fed hike 75 pts tomorrow? If not I can see a relief rally. you?