A Debt Ceiling Market Crash in November Is Entirely Possible: 7 Smart Moves for Investors to Do Immediately

• If you have the good fortune to come into a windfall, like an inheritance or something similar, think about real estate. Mortgage rates have increased over the past year; the 30-year fixed rate has risen to 7.80% for a 30-year FHA mortgage. While still reasonable on a historic basis, it is the highest since 2000. Owning cash-generating rental property is an idea that makes sense now.
• If you choose to look for stock ideas, look at extremely conservative ideas, which are not affected as badly by even the worst-case scenarios. In other words, companies that provide goods and services that are needed all the time, like utilities, telecommunications, consumer staples and real estate investment trusts. While utilities and REITs can also be hurt in a rising rate scenario, they will make sense soon.
• Sell high-volatility stocks and look at the short end of the Treasury market. The two-year note, like all Treasury debt, is guaranteed by the full faith and credit of the United States and yields a stunning 5.15%. One-year certificates of deposit yield as high as 5.50% as well, and money market savings accounts, which are FDIC insured up to $250,000, yield anywhere from 4.50% to 5.50% with daily liquidity.

The 13-year bull market was a blessing that now may end up being a curse. There were numerous drops and corrections along the way. The fourth quarter of 2018 was a good example, when over a three-month period the S&P 500 declined 18% on an intraday trading basis. Last year was the worst year for the stock market since 2008, and while 2023 has been much better, especially the tech-heavy Nasdaq, a precipitous drop is becoming increasingly possible. In fact, the Dow is now down for the year after recent selling.

Remember that even the most difficult events in human history and investing have eventually been overcome, whether it be health-care-related, war-related, foreign geopolitical or domestic troubles or any other issues that have combined to cause market sell-offs. With COVID-19 seemingly in the rearview mirror, the economy is in reasonably good shape, at least for now. The Federal Reserve finally is finishing what it should have done when it started raising rates in 2018, at least some of the carnage is closer to an end.

However, the rally this year was likely of the bear market variety, and some feel we could be headed for a 20% or greater drop, with or without a new budget in November, so it makes sense to take advantage of the recent increase in stock prices and shift to higher and safer ground.

Originally published at 24/7 Wall St.

By Lee Jackson