December 04, 2022
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On today’s Suze School, we get an update on the markets, what’s happening with how we are saving, and the current state of the economy. Plus, why you should not go beyond a 2 year treasury and an update on BitCoin.
Suze: December 4th, 2022. Welcome everybody to the Women & Money podcast and everybody smart enough to listen.
Suze: December 4th, do you know what that means? Come on, think about it. Do you know?
Suze: It means that tomorrow is December 5th.
Suze: And December 5 is my half birthday. It's also one of my best friends, Leslie Lynn's birthday. And on December 5th I'm going to be 71 and a half years of age.
Suze: I honestly don't know how to process that.
Suze: But it just is what it is, time is ticking away. So that's interesting. But some good news about that is the other day,
Suze: I was taking a walk with KT and truthfully, I really haven't taken a walk in a long time.
Suze: It's just hard for me to do so physically speaking my arm and other things. And I've been feeling better, don't you love that? I do. And so we took a walk and it was a great walk. And what was so interesting is as I was walking and I was feeling good, I also started to cry.
Suze: And was it tears of joy? Or was it tears of oh my God, I'm starting to be able to really live my life again, and do everything that I enjoy that I really haven't been able to do in over 2 and a half years now. For those of you who don't know I had a surgery, blah, blah, blah blah and I'm still suffering from the ramifications of it.
Suze: And I was then sitting on the beach with KT. I said to her, let's go down to the sand.
Suze: I haven't walked on sand
Suze: in all that time. And I was walking on the sand and KT said do you want me to hold you and help you? I said no, I can do it. And then we sat down and we started to talk and I said KT, I need to be like I always was, let's go in March and let's take a trip, let's go to Japan. We've always wanted to go to Japan, let's just do it, KT.
Suze: And so last night KT booked it and we're going to do it.
Suze: And I just wanted to share that with all of you.
Suze: I don't know why, but I did. Because it's not just about money and it's not just about what should you do and being hardcore that way. It's also me wanting all of you to know that I really do go through a whole lot of things that all of you go through.
Suze: KT as a caregiver for the past 2 and a half years
Suze: also goes through what a lot of you have gone through in your relationships as well. So to that end, I just want to say, on December 8th
Suze: at 1 o'clock East coast time,
Suze: there is going to be a free webinar on caregiving. And it's just something that I think all of you should watch or listen to if in fact you're in that situation. The link is on the Women & Money app, and all of you should be downloading that app and you can get it at Apple apps or Google play, just search Women & Money. It's something
Suze: this webinar that I think a lot of you might really find helpful. Okay now.
Suze: So there were so many things today that I really wanted to talk to you about. Obviously what I just talked to you about wasn't planned on any level.
Suze: I want to talk to you really about the market and Treasuries again. Now don't just sit there and think Suze, you have talked about Treasuries for so long. Are you kidding me? I'm not kidding you. Maybe there's something that you need to learn even if you think you know everything possible about them.
Suze: Maybe you'll learn something new if you listen right now. But a few weeks ago,
Suze: I gave a Suze School on an indicator known as the VIX. Symbol V-I-X. And you can go on and look up the quote for the VIX on any place that you get your stock market quotes. And if you don't know what the VIX is. You haven't listened to that podcast or maybe this is the first time that you're listening. If so welcome, you are going to be so happy that you are here.
Suze: What you need to know is it is a volatility index. When it goes below essentially 22, it indicates that the market, the Standard and Poor's 500 Index, could very probably start to go down.
Suze: When it's in its mid or high thirties, and it can go really high everybody. Like I think it was back in 2008, it went up to like 80 something. But anyway, normally when it goes up into the mid or high thirties, that's an indication that the market could very probably start to go up. Okay?
Suze: So now with my favorite saying, I want you to put a pin in that. Somebody wrote in and said Suze, that's from, from, I think it was Beyonce that has a song that says put a ring on it, KT and I were trying to sing for you but we couldn't remember what the song was. So thank you, whoever did that. Okay.
Suze: I also did a Suze School where I mentioned a topic called support and resistance levels. A support level is simple. Let's say you buy a stock at 50.
Suze: And it trades, it goes up and down and up and down. But it has a support level. And what that support level means is that when the stock goes down, and it hits that support level. And that let's say maybe it's $40 a share. When it hits that support level, usually it will bounce off that support level and go back up.
Suze: It's kind of like you standing on a ladder.
Suze: And you fall off that ladder.
Suze: And you hit the ground.
Suze: You don't get hurt, everything's okay, don't worry about it. But you hit the ground, the ground is your support level.
Suze: Now just like with you, if you go through that support level, so if the stock goes through $40 a share, down to let's just say 35 or so, it just goes down, it breaks the support level, and it closes below that support level for approximately two weeks.
Suze: That usually indicates that stock is in trouble. If you break the support level of the ground, that just shows you how hard you fell and you then also will be in trouble. Resistance is when a stock is going up. So the stock you bought at 50, is now going to let's just say 60 or 70.
Suze: And 70 is its resistance level. Which means that it's having a hard time breaking through that level. That every time it gets up to 70, it doesn't really go higher. It hits that level, and it starts to either stay there or go back down. Let me put you back on the ladder for a second, which is you have a tall ladder.
Suze: And you are climbing the ladder. If you were to hit the ceiling.
Suze: Okay? If you were to hit the ceiling, that would be your resistance level. It would be very difficult for you to go through the ceiling, unless there was a hole in the ceiling, or you were strong enough to go through that ceiling. And then you could go up and up.
Suze: Same thing with the stock. If the stock goes through its resistance level, that's a fabulous sign. And if it closes for about two weeks above that resistance level, that's an indication that it is very possible that the stock could continue up.
Suze: So those are two little lessons for you. The VIX, and support and resistance levels. Now, let's put those two little lessons to work here.
Suze: Last Friday, the VIX closed at 1906.
Suze: Below 22, below 20.
Suze: And when the VIX is under 20, that is a warning sign
Suze: that it is very probable that the stock market, the Standard and Poor's 500 index, will start to go down. You couple that with,
Suze: that the Standard and Poor's on Friday, closed at 4,071. Its resistance level is currently 4150.
Suze: So what this says when you combine the VIX and the Standard and Poor's resistance level, it is that it is probable that the Standard and Poor's could stall out here or possibly sooner than later, start to go down.
Suze: Got that everybody? Remember, for the support and resistance levels to really matter,
Suze: it has to close above those levels or below those levels for approximately two weeks.
Suze: Now. A little while ago, I also told you that I thought that this market had a little bit of a ways to run. That it could go up and up up and down and everything, but I still believe that it maybe could go up a little bit here, who knows? And really what's going to happen with it, has a whole lot to do what the Feds do in December with the Fed Funds rate,
Suze: but regardless of all of that.
Suze: Whether the markets go up a little bit more here or whatever, I still firmly believe
Suze: that sometime next year we will go into recession.
Suze: I also firmly believe that probably at the beginning of January or even sometime in December that the markets could absolutely start to go down. Now, one may say Suze, why do you think that?
Suze: The economy is doing so well. Didn't you just see, even Colo said to me the other day, Suze, did you see that on Friday. Cyber Friday, $9 billion was spent on, on Monday, $11 billion was spent. It seems to me Suze, people have a whole lot of money to spend.
Suze: That's the problem, everybody.
Suze: As long as all of you continue to spend money the way that you are spending it,
Suze: as long as you continue to take trips, like me going to Japan. But that's another story. Right? Or eating out at restaurants or staying at hotels or whatever it may be.
Suze: You are spending and spending, and that makes our economy look like it is strong.
Suze: But I have a problem with that. And I have a problem with that because the savings rate in the United States of America
Suze: is only at about 2% right now. Two years ago it was at 30%. Little by little. All of you
Suze: are using up your cash,
Suze: and you're not saving anymore, you're taking it from your savings accounts or wherever you're taking it from.
Suze: And credit cards are starting to be used and accumulated.
Suze: And even though there aren't defaults on credit cards right now to the tune of what it used to be, you know in 2008,
Suze: I still believe it is coming. Also when you look at inflation, whether inflation comes down or not.
Suze: I still think we have a problem when it comes to real estate.
Suze: Because even though inflation is starting to come down supposedly,
Suze: your rents are coming down. but they may be coming down so little that really it's still up dramatically from where it was two years ago.
Suze: That concerns me, that many of you can't afford to rent
Suze: or you can't afford to rent a decent place in a good neighborhood so you don't have to be afraid.
Suze: And still real estate has out priced most everybody today, unless you're making well over $100,000 a year of income.
Suze: And even if interest rates do come down even more to buy a home,
Suze: it is still not affordable in my opinion. So we still have that problem. We also have the problem that we're starting to see corporations now lay off people. You know, one of my biggest heartbreaks was my very good friend is Robin Meade on HLN.
Suze: I think Robin is one of the greatest talents. Have you ever watched her? My God, I'll post a picture of the two of us. So you know who she is. One of the greatest talents out there.
Suze: And her show and HLN really... it's gone now.
Suze: So, so many people seem like they're starting to be laid off.
Suze: Energy and oil still concerns me. So there's still so many things out there that I don't like. And I don't think wherever really going to go back to how it was before the pandemic. I just think certain things in the United States have changed. Now, I get that the price of chicken has gone down dramatically over the past year.
Suze: I get that the price of a gallon of gasoline is back to where it was during the pandemic. I get that the unemployment rate is low, and that is the problem. Because the Feds are going to continue to raise the Fed funds rate,
Suze: whether they raise it at 75 basis points at a time, or 50 basis points at a time, or 25 basis points at a time. They're going to continue to raise it until the unemployment rate does what? Starts to go up.
Suze: But why would the unemployment rate start to go up, when all of you are still going out and using services such as hotels, airplanes, restaurants and things like that, so that they need to hire more and more people to service all of you. I just think that things are still very unsettled. I still don't like what's happening in China and our relationship with them. I don't think it's
Suze: a good thing that we're fighting with them.
Suze: I still don't like what's happening with Ukraine and Russia,
Suze: and energy, and I'm still waiting to see what happens in the next few months with winter. 00:17:50
Suze: So I would still be playing it very, very safe if I were you just saying. For me, you always want to know what am I doing. I liquidated a little bit ago when the market was up dramatically, another serious some of stock.
Suze: And while it's true,
Suze: I'm going to owe a huge tax bill on that,
Suze: even paying capital gains tax rates for me,
Suze: I still made a lot of money.
Suze: And what am I doing with the money that I have been liquidating? Well, you know the answer to that, I'm putting it in to short term Treasuries. Now when I say short term, I literally mean three months to six months. I am not going out at this particular point in time, further than that. I want you to keep in mind however.
Suze: I still have a considerable sum of money invested in the stock market. I did not take all of it out.
Suze: So I am looking to keep this money safe and sound until I think it's time for me to go back into the stock market. So I want it to be pretty liquid for me. So if that's your situation, or maybe you just want to be safe and sound with a particular sum of money,
Suze: then that brings us to my next Suzy School.
Suze: Because I think it's important to understand,
Suze: do you put all of your safe money into Treasury bills, bonds or notes? Or do you put all of your safe money into certificates of deposits? Or do you do a combination of both?
Suze: I also believe, just so you know, that even though interest rates, long term interest rates in particular, have come down, I think next year they will turn around and go back up and again, I don't think it's impossible to see long term rates - meaning 20 years, 30 years, whatever it may be, up at about 5 - 5.5%.
Suze: Now, I want to show you, get out your little Suze notebooks, everybody. Are they out?
Suze: You sure? Okay. I want to simply start with showing you
Suze: what's happened with Treasury rates as we speak right now.
Suze: I also want you to just see what's happened to short term Treasury interest rates in the past month.
Suze: And why I have wanted you to only do short term Treasury ladders.
Suze: Now again, if you're new,
Suze: you have to know what a Treasury note is, a bill or a bond, and that's simply a instrument that pays you an interest rate that's issued by the United States government, a bill can go anywhere from a few weeks, all the way to one year, a note is usually two years, all the way out to 10 years, and a bond is 20 to 30 years. Those are the maturity dates. So.
Suze: I want you to write down, that as of a month ago. In October - right around October 28th, when I started to really get into this with all of you, a three-month Treasury,
Suze: was paying you 4.087%. Write it down.
Suze: A six Month Treasury was paying you 4.515%. Write it down.
Suze: A one year treasury
Suze: was paying you 4.562%, and a two-year Treasury was paying you 4.414%.
Suze: And just so you know, a ten-year treasury was paying you 4.01%. And remember me telling you, I didn't want you to really go out further than two years.
Suze: And here is the reason why now.
Suze: Right as I'm talking to you.
Suze: A 3, 1 month later.
Suze: Write these down. Like you should do a little column, and then write these right next to it. A three-month Treasury is paying you 4.315%.
Suze: That's quite a bit higher than just a month ago. A six-month Treasury is 4.666%. A one-year Treasury
Suze: is 4.687%. Now, those three maturities
Suze: are higher today than they were one month ago. Got that?
Suze: Now, a two-year treasury today, you would only get 4.284%, which is less
Suze: by a lot. Because on October 28th you would have gotten 4.414%.
Suze: Today, a 10-year treasury is 3.492%.
Suze: A month ago, it was a half a percent higher at 4.01%.
Suze: So do you see what's happening here? Shorter term Treasuries
Suze: are going up in comparison to what they were a month ago. Longer term Treasuries are going down in comparison to what they were
Suze: a month ago.
Suze: So if you are going to do a Treasury ladder now,
Suze: I do not want you going out further than one year if you are going to do it with Treasury's. Got that everybody?
Suze: The question becomes, many of you write me and you say Suze, I want to do a five year ladder.
Suze: I want to buy a one-year Treasury, or a two year or a three year or four year or five year. And I don't want to think about it.
Suze: And every year when that instrument comes due, I'll just buy another one.
Suze: So you're wondering now, what should you do?
Suze: So here's what I want you to think about. It is very possible that maybe you are in a situation where buying short term Treasuries, a year or under, make far more sense than anything else. But maybe you should start to look at certificates of deposits,
Suze: when you want to buy maybe a three year or a four year or a five year.
Suze: Because currently, and I'm just gonna quote you what's at Alliant Credit Union, because so many of you have your money at Alliant Credit Union, so I just want you to do a comparison.
Suze: So what you need to understand is that if you wanted to buy, let's just say a three-year Treasury,
Suze: the interest rate on a three-year treasury right now would be 3.997%.
Suze: A three-year certificate of deposit would be 4.50%, right now at Alliant Credit Union.
Suze: For those of you who wanted to do a 1,2,3,4,5-year type thing, treasuries don't offer a four year Treasury note.
Suze: So, a four-year certificate of deposit at Alliant Credit Union is paying 4.25%.
Suze: A five-year treasury is paying 3.659%,
Suze: and a five-year certificate of deposit is paying 4.25%.
Suze: So, if you want to do a five-year ladder,
Suze: maybe you do a combination of all of them. Am I making sense?
Suze: And now you're going to listen to that, and you're gonna say that makes sense. But it only makes sense if. And I want you now to listen closely to me.
Suze: If you have money
Suze: that is in a retirement account,
Suze: then it doesn't matter really if you're buying a Treasury or a certificate a deposit
Suze: because you're not paying income tax on it.
Suze: If you live in a state where it's a tax-free income state,
Suze: then there's really no difference tax wise between a Treasury
Suze: and a certificate of deposit, because remember in a Treasury Bill, Bond or Note, you do not pay any state income taxes on it.
Suze: So if you live in a state like California, in New York, you pay state and local income taxes, it could be a 13 - 18% difference.
Suze: So even if you were getting a higher interest rate in a certificate, a deposit outside of a retirement account,
Suze: and you paid a state and local income tax on that,
Suze: then you would be better off probably in a Treasury whose interest rate was near what the certificate of deposit happens to be, than a C. D. Did that make sense to all of you?
Suze: If however, you are in a low income tax bracket, you really hardly pay any income tax at all. Or again, you live in a state where there is no state income tax, such as Washington, Hawaii, Florida, Texas and so on,
Suze: then you go for the higher interest rate.
Suze: Or again, if you're buying these within a retirement account.
Suze: So in this particular situation for shorter term,
Suze: you're probably better off buying treasuries. Once you start to get to the three year, four year, five year desire of a maturity date, now you're better off if you meet all the qualifications I just told you,
Suze: of what? Of a certificate of deposit. One other thing, I want you all to know.
Suze: Most certificates of deposits.
Suze: Whether they're purchased through a credit union and or a bank, are usually just insured up to $250,000 by the FDIC, or the NCUA.
Suze: I believe last year
Suze: close to 500 banks, believe it or not went belly up. So the FDIC came into play.
Suze: So in my opinion, unless you know how to set it up correctly with a trust and or multiple beneficiaries, you never truthfully want to put in more than $245,000 into a certificate of deposit.
Suze: However with a Treasury.
Suze: you could put a lot of money in there. A million dollars, two million. Whatever it may be.
Suze: And it's backed by the authority of the United States government.
Suze: So that's something else that you need to take into consideration. Also with a Treasury, they're easily sold on the secondary market if you need to get out.
Suze: With many certificates of deposit, there usually is an interest penalty if you come out before the maturity date. If you happen to buy your certificate of deposit through a broker, you can then sell it,
Suze: but it doesn't have the liquidity with it as a Treasury does, and I'm sure if you sell it before its maturity, you're not going to get as much as you think, so the penalty is probably built right in there. Now I have talked to you about all these things over the years.
Suze: However, I'm bringing them back to you right now, because a lot of you are writing in emails and you are asking about Should you do a CD, should you do a Treasury? You're asking all kinds of questions.
Suze: So the truth is many of you may be in a situation where you're never going to sell your treasury, you're never gonna sell your certificate of deposit, you just want to collect interest, you want to wait for it, you know until it matures, and that's 99% of you.
Suze: So I really wouldn't worry about the liquidity and or the penalties. Because most of you never sell before it matures. What I would do is I would go for the higher interest rates. Just make sure that you take into consideration if you live in a tax-free state,
Suze: your income tax bracket, or your in a retirement account, or what is the difference if you bought a certificate of deposit at a higher rate and you do have to pay taxes on it on the state level. Does it still make sense for you to do so.
Suze: Alright. That's Suze School for today. Now just one other little thing, because a lot of you are still writing me about Bitcoin about Ethereum, and what should you do? Just as I talked about support and resistance levels at the beginning of this Suze School,
Suze: Bitcoin has a support and a resistance level as well. You know most everything does. But remember,
Suze: for the support and resistance levels to really be kind of accurate to give you two guidance, what you're investing in has got to have closed for two consecutive weeks above or below those levels. So right now Bitcoin is at $16,975 and its support level is $15,600.
Suze: If it breaks that support level, its next support level is $13,900. If it breaks that support level, easily it will be seen at $10,000 as its next support level.
Suze: Its resistance level is currently at $17,600. So that's why you've been seeing lately, like the other day it popped up to 17 and then went back down, it's in a holding pattern here. Bitcoin is consolidating and very well could just sit here for quite a while. However,
Suze: when you look at things long term, its trend is still down. Same is true with Ethereum.
Suze: So do you stay, do you buy more? What do you do? Well, Bitcoin and Ethereum really is kind of on the chopping block right now.
Suze: And that's because what happened with FTX, it's bankruptcies, and the effect that that bankruptcy is now having on other firms and their eventually possibly going to go belly up as well, so I've said it once, I've said it a million times. Only invest in Cryptos
Suze: that you can afford to lose every single penny and you will not be upset. Got that everybody?
Suze: I'm so excited to see what happens with soccer today. Did you know I was an incredible soccer fam? Yes. Suze sits with Colo, and we scream while KT is in her garden doing what KT does. Now that the United States team is out. France is really who I want to win.
Suze: So until Thursday when Miss Travis joins me again with Ask KT and Suze Anything, don't forget about the Suze holiday sweepstakes, and don't forget to listen to this podcast over and over again, because there is a lot in it. But until Thursday there's really only one thing that I want you to remember, and that's for you to be smart,
Suze: strong and secure. Okay now everybody. You stay safe. Goooooooaaaaallll!
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