Patience

Most of financial media is designed to get you to trade around your positions. There is always attention deficit disorder-inducing information about some minute development that tries to nudge you to getting in or out of positions.

Such actions are most typically very destructive for performance and also the disposition of securities destroy long-term benefits of tax deferrals on non-registered accounts.

There are times to pounce and there are times to just twiddle your thumbs and spend 10 bucks on a Netflix subscription and catch up on the soap operas. (I’m trying to make a modern-day version of a phrase Warren Buffett used to describe himself about “going to the movies” instead of taking an action in the market that he later regretted).

Right now is one of those times.

The Bank of Canada is going to raise interest rates on October 26, quite likely 0.5% to 3.75%. Then the Federal Reserve is going to raise interest rates on November 2, quite likely to the 3.75-4.00% range.

In both cases, QT continues concurrent to rate increases. The Bank of Canada has $370 billion in federal government bonds, and $17.6 billion goes off the books at month end. The US Federal Reserve peaked at $5.771 trillion in treasury securities at the beginning of June and is now at $5.629 trillion – and is mandated to drop $0.06 trillion a month.

While liquidity levels are ample, it is decreasing. The cost of capital is rising – while you can still get capital, it is a lot more expensive than it used to be.

Laying in the financial bushes and stalking targets is the mode of the day. In the meantime, cash is offering a dividend level not seen in well over a decade.