FYI: (With yesterday's sale of NI, the Linkster cash position stands at 4.9% of my asset allocation. The remainder of the portfolio is as follows. Stocks 43.95, ETFs 16.75%, Bonds 15.63%, and Mutual funds 19.27%)
As interest rates have risen over the last few months, we have seen a number of charts similar to the one below comparing the yield on the 3-Month US Treasury (UST) to the dividend yield on the S&P 500. Up until just a couple of months ago, this entire bull market has occurred during a period where short-term interest rates have been lower than the dividend yield on the S&P 500. After over two years of rate hikes from the FOMC, though, short-term interest rates rose above the S&P 500’s dividend yield this summer and have continued to rise ever since. With yields crossing this key inflection point, there’s been a decent amount of chatter that the higher yield on cash makes it more attractive than equities given their lower yield.
Regards,
Ted
