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Mountains of Cash and a Simple “Lever”

Mark’s Market Update – 8/11/2022

The Consumer Price Index came in hot yesterday (by hot – that means that it came in below expectations) which automatically meant that *everyone* instantly thought that the 8.5% (instead of the expected 8.7%) was an indicator that we’re past inflationary economic pressures and that the Fed would instantly start backing off on their future rate increases. 

Well – it grabbed headlines – but when you take a deeper look at the decrease in fuel prices (which are a big part of both the standard CPI and Producer Price Index (PPI) – yes – fuel decreased – but that’s probably 70 to 80% of the declines of both. In other words – one major component of both the CPI/PPI decreasing doesn’t mean that inflation is suddenly, and magically, fixed.  

But – it was still a great headline. Remember what I said the week before last about clickbait… 

So – the stock market surged, and mortgage rates saw a nice little gain yesterday but are giving some of that back today. 30-year fixed rates are trending between 5.375 to 5.75 – and remember, the average for mortgage rates during the last 20 years was just under 6.5%. Now’s the best time to buy, and we’re starting to see some supply/demand balance come into play. Whew.

So – let’s talk about leverage. Watch the attached video to see why the wealthy get wealthy, stay wealthy, and get wealthier. I believe in following the “Biggest Pile (of money) Philosophy”: Whoever has the biggest pile of money – watch what they do and do what they do. Chances are, they may be better at it than you or me – which is why they have the biggest pile of money.  

Be Warren Buffet.  

P.S. I am hosting a virtual Lunch and Learn next Wednesday, August 17th at 11am on Business Partners and why you need them! Sign up here!