Before reviewing my 1Q 2021 and discussing what’s next for various asset classes, let’s talk about hard things.

Waiting for the opportune time to propose after buying an engagement ring is hard. The ring just starts burning a hole in your pocket. But do you know what’s even harder? Writing an April Fool’s Day post and not responding to a single comment for two days! I’m sorry for tricking y’all folks. I hope you will forgive me. I’m a jokester at heart.

Ever since I was a kid, I’ve also been a dreamer. Over time, I’ve noticed the more you dream, the more good things tend to come true. It must be due to one part positive mindset, one part taking action to achieve your goals. If you go about your day-to-day like a zombie, never dreaming about a better future, I’m not sure anything special will ever happen.

Buying that beachfront dream home in Hawaii costs closer to $15 million, not $10 million as the online estimates say. Sadly, there’s no way I can afford it. The funny thing is, one of my good friends can easily afford it, yet he still refuses to live it up!

If the house can earn a $900,000 a year net operating income, a 4% cap rate would give it a valuation of $22,500,000. But it probably earns closer to $500,000-$600,000 a year as the house sits empty most of the time when asking between $85,000 – $250,000 a month in rent.

When in doubt, follow this real estate investing rule: Buy Utility, Rent Luxury. It’s much cheaper to rent a luxury home than to buy one. The ongoing maintenance costs are a killer.

In general, buying stocks on margin is a bad idea. However, the idea of buying stocks on margin has increased due to a long bull market and a drop in interest rates. More people are trying to get rich as quickly as possible thanks to what we see and hear on the internet.

Let’s quickly review why buying stocks on margin is a suboptimal move. We’ll then go through some terminology, a couple of margin-buying examples, and the dreaded margin call.

Let me share why I dislike investing in the stock market even in good times. Times are good now because we’re near all-time highs after a scary March 2020. Corporate earnings are rebounding. The economy is opening up. There is light at the end of the tunnel.

The problem with the stock market is that despite great gains, any losses feel at least twice as bad. Even if the stock market losses are paper losses, it still feels very painful. And when you’re investing in good times, there is often a one-way direction bet up.

Sell too soon. Buy too early. Sound familiar? Welcome to the club. I am the King of making suboptimal trades due to fear and greed. Whenever I’m about to make a trade, I begin to have delusions thinking I’m smarter than the market.

After all, I need to have conviction if I’m going to put tens or hundreds of thousands of dollars to work.

Whether you like it or not, interest rates are rising once more. With corporate earnings rebounding and massive stimulus spending since the pandemic began, the expectations for higher inflation are growing. Therefore, this article will discuss how to invest and profit in a rising interest rate environment.

Even though we are in a rising interest rate environment, I’m in the camp that interest rates will stay low for years to come. Here’s why:

• Information efficiency
• Economic slack
• Contained inflation
• Coordinated Central Banks
• The growth of other countries such as China and India and their continued purchasing of US debt
• The growing perception that US dollar denominated assets are the safest assets in the world
• A 35+ year trend of declining rates is telling us we’re more adept at managing inflation with each new cycle that passes

However, there will be points in time where investors will face a rising interest rate environment. After all, the Fed Funds Rate (FFR) is currently at 0% – 0.25% and inflation is picking up post-pandemic.

The 10-year yield bottomed at 0.51% in late 2020 and has since climbed to as high as 1.8% in 2021. The 10-year bond yield will likely stay above 1.5% for the foreseeable future.

With the S&P 500 at all-time highs and the U.S. national median home price also at new highs, inflation is clearly on the horizon. Therefore, investors need to shift their thoughts on how to invest and profit in a rising interest rate environment.