Election Fallout

One of the many surprises in the fallout from the election has been a sharp increase in interest rates.  Whether this results from an overly optimistic view of the economy or fear of runaway inflation, the result is the same. This, in our view, finally provides the opportunity to establish or reestablish a Treasury bond ladder in many of our clients’ portfolios. A Treasury Ladder is a good way to invest cash that will be available if the need arises, yet earn a return that is at least ten times higher than present money market rates.    A Treasury Ladder consists of a series of US Treasury Notes ranging in maturities from two to ten years.  The notes mature at intervals and the client then has a sum of cash to use if needed or to reinvest in a new Treasury note if the cash is not needed.

Our plan is to have a discussion with all of our clients during the present quarter, with the goal of having a ladder established in many client accounts prior to the Presidential inauguration in January. The detailed composition of the ladder of course will vary by client, but it is our opinion that increasing the safe, income producing segment of a portfolio is prudent right now for most of our clients.