Digital Assets & The Fed Meeting

Welcome back. This week I talk about Digital Assets and the Fed Meeting yesterday. The show was recorded Monday so that you can hear my predictions. Spoiler alert, I didn’t do too bad.

Last week I attended the Digital Assets Council of Financial Professionals (DACFP) this April. I completed their certification course, and this week I finished the Certified Digital Asset Advisor™ (CDAA™).

DACFP is headed up by Ric Edelman, which, if you have a 401K plan through Fidelity, you may be familiar with since his old firm Ric Edelman Financial Engines, helps manage many 401ks. I have a similar offering, but it is not nearly as large of an operation. On the plus side, it is a more personalized approach.

So, Digital Assets (Bitcoin, Ethereum, etc.) have been in the press a lot in the last month. In the Digital space, they call it a Crypto Winter. In the stock market, it is like a Bear Market. So, we heard from everyone from, Advisors to Money Managers to Miners.

The correction in Digital Assets, like any other asset, is healthy, but that does not mean pain-free. The best analogy I heard was it is like a Root Canal. Once it is over, you feel better and are in a better place, but nobody is hoping for one.

There is a lot of concern about safety and scams, and rightfully so. Most people have heard of FOMO (Fear of missing out), while with Digital Assets, many people are YOYO (You are on your own). As the industry matures, there will be more regulation, but when you have a decentralized asset, that means YOYO. Some people that are old enough may remember Bearer Bonds, where you clip an interest coupon and go to the bank to get your interest. Just like those days with Digital Assets, if you are doing this without help, you hold all the passwords and if they are lost, so are your assets. If someone gets those passwords, they can take your assets.

Hopefully, by July, I will be able to assist people looking to invest in Digital Assets.

On to the Federal Reserve and the Markets. The confusion seems to be the order of the day. The Fed has seemed to be behind interest rates for several months, trying to raise interest rates to tame inflation. A few weeks ago, the prediction was a 75 bp move backtracked to 50 bp. In my opinion, putting them in the wrong place. If they raise by 75bp as people think they should, then it would seem like things are worse than just two weeks ago when they said 50bp, down from 75bp at the last meeting. If they do 50 bp and it doesn’t help, the Fed will blame them for being too conservative.

*(What happened – edited in) The Fed raised 75bp, and the market initially reacted favorably. However, overnight everyone got to worrying, and things sold off at the open. With a few minutes to go in the day, the S&P 500 is off over 3.25% for the day.

The good news is that people saving for retirement are constantly Dollar Cost Averaging (DCA). Over time as the price rises and falls, you continue to buy shares. Sometimes at a higher and sometimes at a lower price. Over time using DCA, you tend to own more shares, which is a good thing, provided the market eventually hits a new high, as it has every time it has declined in the past. Maybe this time it will be different. Unfortunately, sometimes it takes a long time to recover. That is why planning for the long term is an excellent way to prepare when you are saving for retirement.