Kingsmill's Investment Miscellanea - Friday October 27th, 2023

October 27, 2023 | Joshua Kingsmill


With global interest rates reaching levels not seen in over a decade, I’m often asked whether the era of zero and negative interest rates has ended. I’ve attached an excellent piece on this, but wanted to highlight a few points.


In short, it's important to be nimble, and to be in a position to react when new information and data is presented. In recent times, we were conditioned to the low interest rate environment. Prior to the pandemic, it was largely the consensus that the low interest rates would stay for a while. Then recall rates were reduced even more, to provide stimulus when we were all in lock-down. When inflation began to creep in, in one of the all-time “mistakes”, this inflation was deemed “transitory”, and rates remained lower for longer.


Fast forward to today, after a decade of investors navigating through zero and even negative interest-rate policy regimes, what the next five, 10, and 15 years might look like for interest rates?


My bottom line is that rates are likely to remain at higher levels for an extended stretch, (meaning you aren’t renewing mortgages next year at 2.5%), but if and when central banks need to turn back to stimulus measures, low rates are likely to remain the primary tool in their tool kits.


Long term readers know that I am big believer in not being able to “time the market”; attempting to time the market is only likely to mean that an investor will miss it altogether. You will see though that we have been employing a strategy out of cash as the current higher yield environment presents opportunities for investors not seen for a long time.


On a lighter note, Trick or treat next week! At what age do you think kids should stop going door to door for Candies? For this, given that Halloween was “canceled” a few years, I’m going to give the benefit of the doubt to some perhaps “older” kids: given that they were robbed of their inalienable right to consume as much candy as possible for a few Halloween’s…But for the record, I think 13-14 is cutoff (unless accompanying younger siblings!)