When CD performs better than real estate and 401k

Question

This month is the strangest month in the whole US economic history.
CD is now offering 6.0%

401k with 60% stock and 40%bond allocation is mere flat this month, if you are 100% bond you're wiped out 15%.
10 year yield of 5% is higher than average earning of S&P which is 5.2%
Arrived's.com real estate LTR yield is only 2-4%, but median is only a meh 2.5% yield, which is almost close to 3% cap rate.

If this condition continues, nobody would like to work and most bank/company would just shutdown.

Doug Smith · Answer

Hi @Carlos Ptriawan. I know...the world is on fire right now. One of my old banking co-workers is now a bank president and posted this a while back. I found it interesting as it illustrated the 10-Year Treasury Yield is meeting cap rates. His point is "what's the point". We started our company prior to the last crash and this is the first time since then that we've had more people calling us to buy loans from us or to get into lending rather that what we've had over the past few years which is people borrowing to build rental portfolios. We've been slammed the last couple of years by people wanting to borrow from us to do buy and hold. That's not become a steady chorus of "I now want to lend" or "do you have any shorter-term, hard money pools I can park my money in". Those now seem to be outperforming real estate. I don't see that changing in 2024, but we'll see what happens after that.

Nicholas L. · Answer

@Carlos Ptriawan

yep. and now a wave of new investors is coming in because they heard on a BP podcast 8 years ago that they had to buy, and they also don't have a down payment and need 100% financing.

ugh

J. Mitchell Bernier · Answer

A bigger financial institution will likely fall if this holds for longer than 2 years. Lenders have a lot on their portfolio with yields below 6% and they can't pay enough to keep the deposits. Not to mention their non-performing assets are starting to grow. It's going to be interesting.

Chris Seveney · Answer

@Carlos Ptriawan

Like Doug, our lending is getting 12%+ on our loans. It’s a great time to be a private credit fund

J. Mitchell Bernier · Answer

What a time to be alive! Hahaha

Carlos Ptriawan · Answer

Even the Fed itself is laying off people LOLThe whole nation going bankrupt if this continue for the next 13 months.Imagine 10 yield in Vietnam is lower than yield in USA LOL LOL LOL

Carlos Ptriawan · Answer

this is the most bizarre aspect of all of this. The very purpose the existence of company such as group of S&P is to create earning from their operation. Their earning yield now can't even exceed CD rate for the very first time in history.One billionaire statement is true though that the biggest victim of Fed policy is the US goverment itself becoz they have to pay 40% interest with increased budget deficit. We used to have flu only two years ago, but they injected the economy with cancer and heart attack and stroke so economy and company can't move , when people can't move the Fed think one would not spend money LOL

Seems like much bigger financial institution gonna collapse soon but truly there's almost no point for company to continue operation.

When CD performs better than real estate and 401k

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