Portfolio Laddering, Spending Cash and SS Expectations

SAS Financial Advisors, LLC |




This week’s inflation report caused a monumental drop in stock market averages due to expectations for a decline in prices as a result of a decline in the price of gas. The results were disappointing leading to confirmation in markets that next week’s Fed meeting will result in a ¾% increase in the Fed funds rate making borrowing rates increase and decreasing the value of earnings growth in the future. Increasing interest rates cause many problems but the upside is also significant. Expectations for Social Security benefits in 2023 are estimated to be around 8.7%. This should allow purchasing power for social security recipients to keep up with inflation at least. Downside is the increasing cost to the federal government from increased SS benefits as well as increasing cost of the Federal Debt.


For good news junkies, the census bureau reports that childhood poverty has declined significantly, in fact a record amount since 2021.  From a high of over 12M in 2009 to 2021 number of 3.8M.  Here is a link to the details:  https://www.axios.com/2022/09/14/child-poverty-rate-census

Bottom line: The increase in the child tax credit of 2021 had the largest impact. In consideration of how tax dollars are spent and for a return on investment this seems to be a good use of tax dollars.


A headline from the NY Times from late August still applies: “To Make Money in the Stock Market, Do Nothing”.   The challenge of timing markets remains.  As financial planners, an important consideration is asking yourself “when do you need the money?”  Any committed spending over the next year should be in cash or cash equivalents. The good news is keeping short term needs in cash equivalents yields 3% now. US Treasuries track the daily moves of interest rates most closely and provide inexpensive access with the most liquidity of any fixed income securities in the world.  


One of the challenges in any market is visibility to the behavior of markets in the future. For instance, what looks like the highest yield now is a maturity of 1-2 years. Interest rates are lower at 4 or 5 years given the yield curve and even lower at 10 years.  On one hand the inverted yield curve indicates that the bond market feels the economy will slow down over the next year. On the other hand, the interest rate on 10-year Treasuries looks lower now but, in a year, rates might be even lower.  Our solution is to allocate fixed income funds at different maturities called laddering a fixed income portfolio. If you want to know more or have any Questions let us know.

Current Events


Even more favorable news, pathway in Ukraine’s very successful so far counteroffensive against the Russian invasion. Of note is the constant downplaying and the declared fragility of the successes.  The Ukrainian management of the buildup, preparation and strategy are notable as examples of humility vs. the unfounded hubris of the Russians.  Although the Ukrainian military has taken back a significant amount of territory, the war continues with NATO’s eyes on the longer-term horizon as winter approaches.  But very good news indeed as Putin’s hold on the Russian people is now more fragile than ever.


Another Positive note looks like this morning there is a strong possibility we have averted a rail and transport worker's strike.  The contract has yet to be approved by the union members, but approval looks very likely.


Zelle Scam Alert:

Internally, our team’s personal contacts have been hit with this new bank related Zelle scam. Thankfully, the scammers didn’t win this time, in this case, but be on the lookout for any scam email or call that appears to be from “your bank.” Always know you can stop, end the call, and call the bank back at the provided number in your own records rather than continue the inbound call which may be a masked or fraudulent number that only appears to be your bank.





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