February 2019

Are we living in an era of low interest rates, and if so, how is that going to affect you as an investor or a retiree? Hello, my name is Paul Carroll. I'm the CEO and founder of Efficient Wealth Management, a boutique wealth management first in south Texas. Now fed chair, Jerome Powell, at the most recent fed meeting, had a subtle message that I think a lot of people missed, and that is interest rates, in his opinion, have reached equilibrium. You're thinking so what. Well, globally we're in an era of low rates. Inflation, generally speaking, is tamed. There are demographic challenges that I've talked about previously. Today the fed funds rate is 2 1/4%. The 20-year fed bond rate is 2.9%. Inflation is just 1.6%. Real returns on risk-free bonds are less than one-half of a percent. This is a new normal according to the fed....

2018 was quite the wild ride. The worst year in 10 years. 2019 is the best January since 1987, the year I graduated from Texas A&M. What's going on? Hello, my name is Paul Carroll. I'm the CEO and founder of Efficient Wealth Management. In 2018, the wild ride took us first on a down slope with international stocks. Then we saw interest rates going up, coming back down, resulting in varying degrees of bond volatility. We had a strong dollar. It didn't matter what you did. Whenever you have a strong dollar, you herd commodities, you make it difficult for foreign countries to buy your raw material, you improve imports, you reduce exports, and no political agenda can change that reality. And finally the yield curve. It kept promising to go inverted. It got very flat. A five year bond and a 30 year bond paid almost the same...