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Thanks for opening this email and joining us for another week of FWIW! The most clicked link from last week’s edition was to our “Cashing In” story explaining “liquidity,” the resource that is getting the most clicks this month is “Unpacking the ESG Soup” and the most clicked “Before You Go” in the last month was our map to Goat Yoga facilities near you!
Sometimes it is difficult to see the forest for the trees, particularly with the constant breaking economic, political, and social headlines. Focusing on the long term can sometimes be a bit like trying to keep a cat still when there is a laser pointer in the room, but we are starting to see signs that some of the policy decisions made in the last few months are breaking through in the financial markets. A few months ago, stalwart FWIW readers will remember that the Fed started raising interest rates to try to “cool” the economy and tame inflation. The impact of the Fed’s action (and the expected rate hikes still to come) are usually hard to see and quantify in real time. Well, the experts are now telling us they can see their impact. To support this thesis, they point to things like the leveling off of housing prices (thanks to higher mortgage rates) and some of the drivers of higher costs — like used car prices and lumber for construction — flattening or even dropping. This has led some to say that the last month of data (an admittedly limited sample) shows the Fed’s medicine is showing some signs of working.
Cooling off an economy is never easy or straightforward (cough, cough, gas 😲 prices), nor does it create a clear path for investors. But as values-aligned investors look for signs of where the market is ultimately going, it is important to not be distracted by the shiny light of the latest news or trend. As for whether the Fed’s actions are having the desired effect — particularly when global economic trends could also play a big role — we will all have to wait and see. That is why we keep talking about the long term and, a bit farther down this newsletter, we will introduce you to a new and innovative area of investing that we think some of you may be interested in monitoring and learning about as it comes online over the next few years.
News you can use
- The sun came up on the solar industry this week as President Biden invoked the Defense Protection Act to boost the manufacturing of solar panels and shield the industry from two years of import tariffs. While some criticized the decision for aiding Chinese solar panel producers and only providing a short-term fix, the MAC Global Solar Energy Index and the popular Invesco Solar ETF (which tracks that index) rose as shares of companies like SunRun and Sunnova Energy brightened with the news.
- In life, and in investing, timing is everything. Enter the CD-ladder (no, not the one your parents used to fill with Tower Records purchases). With investors putting a premium on liquidity, some have turned to buying multiple Certificates of Deposit with varying maturity dates to try to maximize returns as interest rates rise. Check it out to see if this works for you.