Spencer Mcgowan, Investment Analyst, Two Year discussed on Live Abundant Radio

Automatic TRANSCRIPT

To warn certified investment analyst spencer mcgowan this is net worth radio i'm spitzer mcgowan alex toluene head of trading certified private wealth adviser joining me here in the second half of the program alex i wanted to give kind of a tour of the most conservative strategies in the current environment right all right now i will say that the fear of risk is completely different than two thousand nine okay i mean i i've seen psychological psychological contrast in investor moods but the one thing i'm not hearing about is risk right okay i mean that you know what are the risks going forward if the tech rally stalls so to the index is and the tech rally is responsible for pretty much all of the gains and the s and p five hundred so far this year right which leads to what's next now the energy sector actually gaining ground on tech and at least rivaling tech for the best year to date with a well above seventy now when i take that to what's the most conservative strategy right i had by thirty year treasury two point nine four percent i've got twenty percent duration risk if that rate goes to four essentially what about a two year to year just two and a half percent so you've you've led right into this and so i want to describe a strategy okay okay for the clients that say okay i'm gonna buy a house in six months and i want to get some interest the good news is you've got the vanguard regular money market one point nine percent okay right and that rate can change but it tends to follow the fed funds rate which predicted to go to to september so i can go park that the money market with no fee right that's right and or i could buy a two year treasury at would you say two point six percent it's about two point six percent right now okay so i only get a third of a percent more if i take all the duration risk but yeah it's hardly worth it just to be clear that between the two year in that thirty year right right so if you would walk me through the advantage of what's called a capital call if i park my safest money non managed no fee it mcgowan group right right then walk me through the potential advantage when there are other fixed income bargains okay well the first is is that it's being monitored right by us we do have it redo account for the performance reporting but it's gonna earn something number one number two yeah yeah and it turned two percent at least right number two is is when we see a dislocation rec a big discount somewhere we'll gives us the opportunity and say hey we can move this two percent money and we can now make it six seven eight ten long time for that happens but well i think it'd be right but twenty take some time but you do have a part of your portfolio that considered safe and it is earning two to two and a half percent okay that leads to something right because the rates used to be pretty much zero on cash and there's a lot of banks out there very happy with the fact that people don't complain about the point two five percent in their reserve cash right you've been doing it for so long they got used to yeah they're hoping you don't notice so in any case that's for the safe reserves it also carries with it the possibility that if the rates do spike like twenty thirteen thirty year treasury gets four percent we were getting five percent investmentgrade muniz in some cases at discounts with gain potential and if that event occurs we've got the capital call list right right now federal reserve overhang it's like a cloud okay see picture this cloud over the whole fixed income market because oh the rates.

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