Originally I was going to call today’s post Totem Pole Cactus Face. If that sounds like a strange title, consider the source. 🙂 Actually, a species of cactus is called the Totem Pole Cactus and we have two of them in our courtyard. To my wonderful wife and me, one of them looks like it has a face. Of course, human beings are wired to recognize faces and often see them when they are not really there. Think about the supposed “face” in the Cydonia region of Mars.
I took a photo of this cactus with a “face” and attempted to publish it here. However, neither of the two ways I can add a photo to my WordPress library would work meaning I have no photo to share. Could it be a case of censorship given I named the photo “Totem Pole Cactus Face?” That would not surprise me in this age of faux equality and woke.
OK, let me try an experiment…didn’t work. I tried saving the photo to my computer with a different name, but it did not appear among the choices when I tried to save it to my WordPress media library. Of course, the subject line in the email with the photo remained Totem Pole Cactus Face. I have never had any difficulty like this before. It is, indeed, a strange occurrence.
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In a move that was widely expected, the Federal Reserve lowered interest rates yesterday by 50 basis points, or one-half of one percent, compared to the 25 basis point cut that had been expected until just a few days ago. For our portfolio, such a move has two good outcomes and one bad one.
Lower interest rates are supposed to make stocks more valuable in comparison; indeed, stock prices opened much higher this morning. Lower rates also raise the value of bonds, which comprise 40 percent of our investment portfolio, although the amount we receive in income from our fixed income investments will not change unless/until some of those investments mature or we buy/sell bonds. In case you’re interested, or even if you’re not, our investment accounts–apart from cash in regular bank accounts–are 40 percent invested in large-cap stocks, 10 percent in international stocks, 5 percent in small-cap stocks and 5 percent in cash in addition to the 40 percent allocation in bonds.
The one bad outcome is that our cash will earn a lower return. I remember my first savings account at a local Baltimore bank paid five percent interest per year, compounded. We have been “enjoying” the interest rates paid on savings in the last year or so, but other than the money market account at our brokerage, we have been paid less than 5% per year on our cash, although not too much less.
As it applies to the purchase of cars, about 80% of all cars bought in the US–new and used–are financed. Lower interest rates, of course, mean lower payments for the same financed amount. Would you believe in the second quarter of 2024 the average car payment for a new car was $734/month and $525/month for used cars? Neither my wonderful wife nor I have had a car payment in at least 20 years. (Interestingly, at least to me, a higher proportion of homes–almost a third–are purchased with cash than that percentage for cars.)
While I think the Fed should exist as a lender of last resort and as the implementer of a constant, but small annual increase in the money supply, I think it wields too much power. However, I do think it must be politically independent. Of course, some would argue that the Fed has less control over the money supply than it used to given the use of credit cards, crypto, etc.
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Trying to segue to cars, as in speaking of cars…I’m afraid “I Got Nothing.” I have basically decided I am going to buy a 2021-23 Toyota Supra with an automatic transmission and the 6-cylinder engine and only in Tungsten (Silver), Turbulence Gray or Renaissance Red. The car will have fewer than 30,000 miles on the clock. The purchase will be a 2025 event and I will NOT get rid of my F-Type. For not the first time…
Also for not the first time, I am left cold by almost all new vehicles offered in the marketplace. Even though new EV sales are declining in much of the world, most of the ICE-powered portfolio–consisting primarily of SUVs and pickup trucks–is of no interest to me, either.
A “classic” car, you say? Well, such a purchase is even less practical than buying a Supra. Perhaps some day in the future I will be in a position to consider such an acquisition, but it’s too far away to speculate on what I might buy. Please feel free to offer suggestions, though.
#AStrangeOccurrence