You don’t want to be in the prediction business, period, especially when it comes to your hard-earned money. In the last week, by example, my favored GNMA fund (managed by Wellington), surged by over one percent. In a week! That’s a big move when the annual yield is around three percent.
Markets are funny. The reason for the surge in GNMAs is because the market now believes the Fed will only raise rates a couple times this year. The market, remember, is a forward looking mechanism and had already priced in three increases.
This week, in studying Richard C. Young’s Intelligence Report from February 1989, I smiled when I came across this timeless quote: “Do not make your family investment decisions based on predictions. Am I clear on the word predictions? Cross the word out of your financial vocabulary.”
