After about a month, I now have more visibility into my future cash flows and outlays in order to better forecast of when we get hit the 120K milestone. It’s going to be a challenge to keep the meals and entertainment costs down now that I’m vaccinated, but I will try to stay on track and not lose sight of the goal.
Getting a little help from leverage
As you know, inflation is rampant. The US Fed keep calling it “transitory”. What does it mean? I have no idea. One of the ways we can deal with inflation is to take on low interest bearing debt, on the presumption that it’s easier to pay back a dollar of debt using future fiat money then current day fiat money. Therefore, I took on a debt that bears interest at 2.99%. Currently, its sitting as cash in my broker accountant waiting to be deployed.
Now, leverage is dangerous in finance. Warren Buffet as said: dumb people shouldn’t use it, and smart people don’t need to use it. Well, I’m neither dumb nor smart, so I i’m going to use some.
So where does that leave me – well with this boost, I only have to go from $95K to $120K, roughly a 25% or 25K. For the next three months, I’m projecting 7K in monthly contributions. I should be able to deploy all the excess cash in the account by end of Aug. So I should able to make another special one-time contribution of 10k in Sept. This would bring down the gap to about 8K. Let’s just hope that S&P will continue to perform with all the stimulus going on. My view is that the market is pretty speculative right now, but people have no where to go with the money. Cash getting inflated away; bond is in dangerous territory given where the interest rate is today. Once we hit 120K mark, I might start think about directional hedging plays. For now, I ma remain bullish. I used to be a big fan of David Einhorn. But his fund hasn’t performed well lately because I feel like he hedges excessively. I think he does fairly well on his longs and the returns on his short exposure has been rather disappointing.
The main thing with investing I find is to stay patient and stay the course. It’s not like a casino where you’d wake up one day and all of a sudden you’re a millionaire.