Snow in Idyllwild to over a hundred degrees in the Valley. It seems that it’s not only the weather that is finding extremes the last three weeks. So much for June gloom, the sun is out in force. Wall Street and the markets just hit the ceiling of all-time highs again. Just 2 weeks ago 2,650 seemed to be the next destination downward. Sentiment and probability of the Federal Reserve cutting interest rates soared providing comfort to the market. It is always sound advice to increase cash levels or “keep the powder dry” when your investments hit a premium. Typical increases in cash for a portfolio are 10-20% of a portfolios value. A good option to roll these funds over into are Treasury Bills. Treasury Bills are U.S. government short term fixed income securities that are backed by the U.S. and are categorized as zero risk. Surprisingly the annual yield of T-Bills average about 2.25% this week. There is no cost to buy them and they mature in 30 days. It may be awkward buying them at first and figuring out where and how to do it, but once you do it will be a new tool in your tool box to maximize short term cash interest with little risk, no fees, and a very short maturity.
If you are on the growth side and just cannot stand the simple return of Treasury Bills take haven in common commodities. The ones that are needed in daily life. Silver. Oil. Both of these are at cyclical lows. You will hear me say, “Buy it on sale!” With unemployment at all time lows and manufacturing up products made with these commodities and household disposable income to buy these goods are on the rise. For oil, have you seen a shortage of vehicles on the road, empty airports or less trains hauling goods? Yeah, me neither. It’s summer and I bet most families are or plan to travel. It takes fuel, lubricants, and some sort of plastic (petroleum product) food or drink container to survive all the traveling. Oil is off the median price of $65 a barrel down to the low $50 price range whereas the next high is expected to be $80. Silver on the other hand is used in all electronics, home building, car manufacturing and so many other forms of demand. Around $14.50 buying anywhere below this is on sale compared the median price of $15.50 and high of $17.35.
Yes, all of these are most likely not going to pop in the near short term and are not as sexy as the tech stocks FANG, but they do protect against inflation and are cheap! Park some profits this June and jump in the pool.
Andrew F. Kotyuk, CIMA* is CEO and Principal of Alpha Wealth Management LLC (951) 765-1200.