Monday, November 10^th, 2025

How to Invest When Interest Rates Start Falling

After nearly two (2) years of interest rate hikes aimed at cooling inflation, the Federal Reserve (FED) has officially changed course. In September, the FED cut its benchmark rate by a quarter point to a range of 4.00%–4.25%, citing softening labor markets and growing risks to the broader economy. CORE INFLATION is now running near 3%—well below its 2022 peak—and markets are betting on at least two (2) more cuts before the end of the year (2025).

This marks a pivotal moment for YOU, ME, WE the ATWWI FAMILY…

Falling rates can dramatically reshape the financial landscape, particularly for those focused on INCOME GENERATION and CAPITAL PRESERVATION. The early stages of an “EASING” cycle often create both “OPPORTUNITY” and “CONFUSION”—because while lower rates can increase asset prices, they are also a sign of a “SLOWING” economy. The key is knowing where to position yourself as the pendulum swings from “TIGHTENING” to “EASING”.

STOCKS:

Rate “CUTS” are often viewed as “BULLISH” for stocks, and HIStorically they can be—at least at first…

LOWER rates REDUCE BORROWING COST for companies and consumers, while also LIFTING VALUATIONS by LOWERING the DISCOUNT RATE investors use to price FUTURE EARNINGS. That said, the FED doesn't “CUT” rates when the economy is “BOOMING”. It usually does so because GROWTH is “COOLING”, and that can eventually weigh on CORPORATE PROFITS.

In the early stages of a rate ”CUTTING”cycle, some of the best-performing areas tend to be:

• Dividend-paying stocks, particularly in UTILITIES, CONSUMER STAPLES, REAL ESTATE INVESTMENT TRUSTS (REITs), MASTER LIMITED PARTNERSHIPS (MLPs). These sectors benefit from lower financing costs and become more attractive as bond yields decline.
• Growth stocks, especially in TECHNOLOGY, which often rebound sharply as the cost of capital falls. Their future-oriented cash flows become more valuable in a lower-rate environment.
• Small caps, which are typically more sensitive to borrowing costs and domestic growth trends.

However, “SELECTIVITY” is “CRUCIAL”…

Companies with HIGH DEBT LEVELS or “WEAK” PRICING POWER could struggle if the economy slows further. YOU, ME, WE the ATWWI FAMILY should emphasize BALANCE SHEET STRENGTH, CONSISTENT CASH FLOW, and SUSTAINABLE DIVIDENDS rather than simply chasing sectors that "USUALLY” perform well after rate “CUTS”.

BONDS:

For BOND investors, FALLING RATES are generally “GOOD” news. As YIELDS DECLINE, the market value of existing BONDS RISES—especially those with LONGER MATURITIES. After several years of pain for bondholders, duration is finally working in investors' favor again.

Now is a good time to:

• Extend duration. Short-term bonds lose their appeal as YIELDS FALL. Shifting toward INTERMEDIATE and LONG TERM TREASURIES, MUNICIPAL BONDS, or HIGH-GRADE CORPORATES can lock in HIGHER YIELDS before they disappear.
• Use Laddered Bonds. This structure—owning BONDS that mature at staggered intervals—helps smooth out reinvestment “RISK” while maintaining flexibility.
• Explore Credit Spreads. As policy eases, RISK PREMIUMS often tighten, benefiting HIGH-YIELD and PREFERRED SECURITIE. But be “SELECTIVE”—CREDIT QUALITY still matters if the economy weakens.

NOTE: During “EASING” cycles, CORPORATE CREDIT and SECURITIZED PRODUCTS tend to “OUTPERFORM” TREASURIES. That makes “NOW” a good time to reassess your FIXED-INCOME mix and ensure it's aligned with your RISK TOLERANCE.

Income Strategies: The Case for Recalibration

CASH and SHORT-TERM instruments have offered “UNUSUALLY” HIGH YIELDS over the past two (2) years, but that window is starting to close…

MONEY MARKET FUNDS and T-BILLS that once yielded over 5% will drift lower as the FED “CUTS” rates. Investors who have grown comfortable parking “CASH” will soon need to think LONGER TERM again.

Several strategies can help smooth the transition:

• COVER CALL writing can generate additional income from quality dividend stocks while providing a small buffer against volatility.
• REAL ESTATE and INFRASTRUCTURE ASSET especially those with INFLATION LINKED REVENUES—often perform well when borrowing costs decrease and capital flows back into hard assets.
• DIVIDEND GROWTH STOCKS remain a powerful “CORE” holding. Companies with the ability to CONSISTENTLY RAISE PAYOUTS often “OUTPERFORM” in LOWER-RATE environments, providing both INCOME and INFLATION PROTECTION.

The Bottom Line

FALLING rates are not a “MAGIC” bullet, but they do change the math for YOU, ME, WE the ATWWI FAMILY.

The generous yields in “CASH” are fading, and the search for “SUSTAINABLE” income is once again front and center.

The smartest approach right now is a BALANCED approach:

*STAY DIVERSIFIED

*KEEP “DURATION” APPROPRIATE for your goals and, favor HIGH-QUALITY assets that can weather a slowing economy. The FED's pivot may help stabilize markets in the short term—but for long-term investors, this is the moment to “POSITION” for the next phase of the cycle, not the last one.

PEACE & BLESSINGS
Kenneth Reaves, Ph.D.

Friday, October 10^th, 2025

How to “HEDGE” Against the Federal Government “SHUTDOWN”

The “SHUTDOWN” of the federal government last week has deprived investors of the one thing they need the most to make INFORMED decisions: “INFORMATION”.

Until the “SHUTDOWN” is over, data from any of the federal agencies that generate those numbers will NOT be available.

For example, we were supposed to see the EMPLOYMENT figures for September last Friday (October 3^rd, 2025). But since the “SHUTDOWN” began earlier that week, we can only wonder what those numbers produced by the Bureau of Labor Statistics (BLS) might have looked like.

Last week an employment report from outplacement firm Challenger, Gray & Christmas indicated PRIVATE companies are hiring the FEWEST workers since the GREAT RECESSION sixteen (16) years ago. However, those numbers could be quite different from the more substantial survey conducted by the BLS.

If the “SHUTDOWN” ends in a WEEK or two, then the missing data probably won’t matter much.

BUT, if it goes on for more than a MONTH as happened the last time the government “SHUTDOWN” in 2019, by the time we see those numbers the stock market may be far removed from where it otherwise might have been.

For that reason, heightened VOLATILITY should be expected and YOU, ME, WE the ATWWI FAMILY should “GOVERN OURSELVES ACCORDINGLY” as a INTELLIGENT way to protect our portfolios from the possibility of a “MAJOR” stock market move AFTER the government REOPENS.

The problem is, the stock market may MOVE UP or DOWN depending on what the MISSING NUMBERS turn out to be.

One Way or Another

Since we don’t know which DIRECTION the stock market will go, YOU, ME, WE the ATWWI FAMILY can implement our ATWWI “ROTHSCHILD” STRATEGY….

We can do that by employing an OPTIONS STRATEGY known as a “LONG STRADDLE”.

That means we can BUY both a “CALL” and a “PUT” OPTION using the SAME “STRIKE PRICE” and “EXPIRATION DATE” on an underlying security that we believe is likely to react strongly to INCREASED STOCK MARKET VOLATILITY.

An obvious candidate for such a trade is the CBOE Volatility Index (“VIX”), which is sometimes referred to as the “FEAR INDEX” since it reflects the degree to which “PROFESSIONAL” PORTFOLIO MANAGERS think the “RISK” of a stock market “CORRECTION” is IMMINENT.

If you are not familiar with the VIX, it is a RATIO OF SHORT-TERM “PUT” OPTIONS versus “CALL” OPTIONS on the SPDR S&P 500 ETF (SPY). When “PROFESSIONAL” INVESTORS are feeling “ANXIOUS” and BUY more “CALLS” than “PUTS”, the VIX goes UP. The OPPOSITE is also true.

At the start of this week (October 6^th-10^th, 2025), the VIX was trading near $17. That is very close to where it has been trading for the past five (5) months and is also close to its LONGER-TERM HISTORICAL AVERAGE.

In other words, WALL STREET does NOT perceive much NEAR-TERM “RISK” to the stock market despite the lack of ECONOMIC DATA until the “SHUTDOWN” is over.

TIMING Is The “KEY”

To execute a LONG STRADDLE on the VIX, we must identify an EXPIRATION DATE and a STRIKE PRICE for both OPTIONS. For the sake of this example, I will use the $17 STRIKE PRICE that EXPIRES on November 19^th, 2025.

A few days ago, that “CALL” OPTION could be purchased for $4.50 while the “PUT” OPTION was going for $0.25.

That means it would cost $4.75 to purchase both OPTIONS. For this trade to be profitable, the VIX must RISE ABOVE $21.75 or FALL BELOW $12.25 within the next five (5) weeks.

The odds of the VIX FALLING BELOW $12.25 are low. That has not happened in a long time.

BUT, the chances of it RISING ABOVE $21.75 are much better. In April (2025), it briefly SPIKED ABOVE $60 when the Trump administration introduced its “LIBERATION DAY” reciprocal TARIFF plan.

Let’s say the government REOPENS around the end of this month (October 2025) and we learn that the economy is in much WORSE shape than we thought.

In that case, the VIX might RISE ABOVE our “BREAKEVEN” PRICE of $21.75.

If it gets up to $25.50, the combined value of both OPTIONS would be at least TWICE what we paid for them.

Of course, this type of trade is not without “RISK”. If the government does NOT REOPEN by the time these OPTIONS EXPIRE, then INSTITUTIONAL INVESTORS and PROFESSIONAL MONEY MANAGERS may have reason to suddenly LOAD UP on SPY “PUT” OPTIONS.

If the government reopens BEFORE THESE OPTIONS EXPIRE and we discover that the economy is in better shape than we thought, the VIX probably won’t move enough for this trade to be profitable.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Tuesday, September 16^th, 2025

Long Term U.S. Treasury Bonds Could Be The Biggest “WINNER” From Upcoming Rate Cut(s)

Since the conclusion of the “GREAT RECESSION” 18 (eighteen) years ago, the yield of the 30-year U.S. Treasury Bond has mostly traded in a range between 2.5 percent to 5.0 percent. The notable exception occurred five (5) years ago when the FED pursued its ZERO INTEREST RATE POLICY (ZIRP) after the onset of the coronavirus pandemic.

For about a year, those bonds were yielding LESS than 2.0 percent as investors “FEARED” that the global financial markets might collapse. Fortunately, that didn’t happen, and bond yields recovered quickly as the FED allowed rates to RISE.

In May, the yield INCREASED above 5.1 percent as WALL STREET “FRETTED” that the recently enacted import tariffs would be inflationary. Instead of a rate CUT by the FED that the WHITE HOUSE was “DEMANDING”, a rate INCREASE seemed possible if retail prices started soaring to reflect the cost of those tariffs.

So far, that hasn’t happened. In July (2025) the Personal Consumption Expenditures (PCE) price index reflected a 0.3. percent monthly INCREASE in “core” PCE, which excludes FOOD and ENERGY prices. Over the past twelve (12) months it grew by 2.9 percent, higher than the FED’s 2.0 percent “TARGET”t rate but still within tolerance.

Meanwhile, the EMPLOYMENT situation in the U.S. grown considerably “DAMPENED”. The jobs report for July (2025) showed a huge DECREASE in new job openings. At the same time, the numbers for June and May (2025) were revised DOWNWARD by a substantial amount.

Although the national UNEMPLOYMENT rate ROSE only slightly to 4.2 percent, a sudden DOWNTURN in NEW JOB OPENINGS usually presages an INCREASE in UNEMPLOYMENT. That is why everyone on WALL STREET was waiting on “PINS and NEEDLES” for the August (2025) jobs report that was disappointing

Into that fray steps the 30-year T-bond. It is widely viewed as a proxy for the “LONG-TERM HEALTH” of the U.S. economy. A yield BELOW 3 (three) percent is indicative of a “WEAK” economy that requires CENTRAL BANK intervention in the form of LOWER INTEREST RATES to stimulate CONSUMER SPENDING.

A yield ABOVE 5 (five) percent suggests an “OVERHEATED” economy that may require rate INCREASES to cool it off. That’s what happened a few years ago after the ZIRP had its intended effect of stimulating the economy. Despite an unprecedented series of rate INCREASES commencing in March 2022 that RAISED the FED’s POLICY RATE by 500 (five hundred) basis points (5 percentage points), the stock market “RALLIED” strongly the following year.

Now, WALL STREET is “DEMANDING” a series of rate CUTS to justify higher stock prices. If that happens then BOND PRICES should RISE as YIELDS FALL.

If rate CUTS fail to “IGNITE” the economy, then BONDS MAY “OUTPERFORM” STOCKS until a new “EQUILIBRIUM” between the two (2) asset classes has been established.

You don’t need to be an “INSTITUTIONAL” investor with millions of dollars to invest to own U.S. TREASURY SECURITIES. However, it probably makes more “SENSE”/”CENTS” for “INDIVIDUAL” investors to do so via an EXCHANGE-TRADED FUND (ETF) or CLOSED-END FUND (CEF). That way, YOU, ME, WE the ATWWI FAMILY can obtain portfolio “DIVERSIFICATION” and “PROFESSIONAL” MANAGEMENT at a LOW COST.

One such fund is the VANGUARD LOND-TERM TREASURY ETF (VGLT). It currently generates a 30-day SEC annual yield of 4.9 percent, pays DIVIDENDS MONTHLY, and has a very LOW MANAGEMENT FEE of .03 percent.

Five (5) years ago, VGLT’s share price “SOARED” above $100 while the FED was aggressively CUTTING interest rates…

Three (3) years later VGLT’s share price had “FALLEN” below $50 after the FED began INCREASING interest rates.

That is precisely why I think now may be a good time to consider, upon completion of the appropriate ATWWI “DRILL DOWN”, adding VGLT to your/our portfolio(s).

If the FED is once again “FORCED” into the position of CUTTING rates, LONG-TERM U.S. TREASURY BONDS could end up being the biggest “WINNER” of them all.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Friday, September 12^th, 2025

Is Paying Off Your Mortgage Early a Good Idea???

For many people, the thought of living “MORTGAGE-FREE” carries powerful “EMOTIONAL” appeal.

*No more monthly payments.

*No interest charges eating away at your budget.

*No bank holding a lien on your house.

It’s the financial equivalent of removing a heavy backpack you have carried for decades.

BUT, before you start sending extra payments to your lender, it’s important to ask a simple question: Is paying off your mortgage early really the smartest financial move???

The answer, like so many financial decisions, isn’t simply “BLACK” or “WHITE”. It depends on multiple factors such as:

*Your “STAGE OF LIFE”

*Your other OBLIGATIONS

*Your TAX SITUATION, and even

*Your PERSONALITY.

Let me break it down…

When Paying Off Early Makes “SENSE”/”CENTS”

1. Nearing Retirement

If you are approaching retirement, eliminating your mortgage can significantly reduce your fixed expenses. For someone living on SOCIAL SECURITY, PENSION INCOME, or DISTRIBUTIONS from RETIREMENT ACCOUNTS, every dollar of freed-up cash flow matters. Not having to make a mortgage payment can provide “PEACE OF MIND”—and make your retirement savings stretch further.

2. You Have Cleared High-Interest Debt

A mortgage is typically the cheapest form of “DEBT” you will ever incur. If you still have CREDIT CARDS at 20%(+), AUTO LOANS at 8%(+), or STUDENT LOANS in the 6–7%(+) range, those should take “PRIORITY”. But once those are gone, the mortgage stands out as the last “MAJOR” LIABILITY and paying it down can simplify your financial picture.

3. The “EMOTIONAL” Value of Debt Freedom

Not every decision is purely about numbers. Some investors thrive on OPTIMIZING RETURNS, while others feel constant stress knowing they OWE MONEY—even at low interest rates. If paying off the mortgage helps you “SLEEP BETTER AT NIGHT”, that’s a benefit you can’t measure on a spreadsheet.

4. When Cash Returns Fall Short of Mortgage Rates

If your mortgage rate is 6% and your idle cash is generating 4% in a MONEY MARKET FUND, you are effectively LOSING yield. In this scenario, putting money toward the mortgage may deliver a better AFTER-TAX RETURN, especially if your investment alternatives are “CONSERVATIVE”.

When Paying Off Early Is NOT the Strategy/Decision

1. You Locked in a Low Rate

Millions of homeowners refinanced during the pandemic-era LOWS, with rates UNDER 3%. If you are one of them, your mortgage is “CHEAP” money. In that case, your dollars may work harder elsewhere—whether in:

*DIVIDEND PAYING STOCKS yielding 4–5%(+)

*INVESTMENT GRADE BONDS

*HIGH YIELD SAVINGS ACCOUNTS (HYSA) or even

*LONG TERM CDs

NOTE: Make sure your “NET” YIELD exceeds inflationary rate.

2. Liquidity Takes a Hit

Money used to pay down a mortgage is money you can’t easily access. If an unexpected expenses INCREASE, you can’t just “WITHDRAW” from your HOME EQUITY. You would need to:

*REFINANCE

*Open a HOME EQUITY LINE OF CREDIT (HELOC) or

*SELL the property

All of which involve TIME, FEES and “UNCERTAINTY”. Keeping some “LIQUIDITY” is essential, particularly if you do NOT already have a “ROBUST” EMERGENCY FUND.

3. You Are Missing Tax Benefits

While it’s true that fewer Americans ITEMIZE DEDUCTIONS since the STANDARD DEDUCTION was INCREASED, MORTGAGE INTEREST REMAINS DEDUCTABLE for many households—particularly those with HIGHER INCOMES or LARGER LOAN BALANCES. Giving up that deduction may tilt the “MATH” against early payoff!!!

4. Retirement Contributions Take a Back Seat

This is a BIG one. If accelerating mortgage payments prevents you from MAXING OUT your 401(k), FUNDING your IRA, or taking advantage of EMPLOYER MATCHES, you may be sacrificing “FUTURE WEALTH” for the sake of “DEBT REDUCTION”.

NOTE: Your retirement accounts not only grow TAX-DEFERRED (or TAX-FREE in the case of ROTHs) but also keeps your money LIQUID and DIVERSIFIED.

A Framework for the Decision

Think of the mortgage payoff decision as a “BALANCING ACT” between three (3) competing priorities:

• Return on investment: Could your money generate more yield/profit elsewhere???
• Risk management: Does paying off the loan reduce stress or exposure???
• Liquidity and flexibility: Will you still have cash available for emergencies or opportunities???

In some circumstances, paying off early may be the right move. BUT, if paying off the loan “COMPROMISES” LIQUIDITY or prevents you from funding HIGHER-YIELDING INVESTMENTS, the “MATH” often argues against it!!!

Legacy Planning Angle

Another often-overlooked factor is what happens to your home after you are gone. If you leave a paid-off house to heirs, they inherit the property without the burden of “DEBT”. That can be a significant advantage, especially for children who may not have the resources to handle a large monthly mortgage.

On the flip side, if most of your “NET” WORTH is tied up in “HOME EQUITY”, your heirs may face tough decisions about whether to “SELL” or “BORROW” against it, and they may not agree on a course of action.

The Bottom Line

Paying off your mortgage early isn’t a “ONE-SIZE-FITS-ALL” decision. For some, it provides “EMOTIONAL” RELIEF, LOWER EXPENSES during retirement, and a “GUARATEED” RETURN that rivals “CONSERVATIVE” investments. For others, it can mean giving up LIQUIDITY, TAX ADVANTAGES, or BETTER MARKET RETURNS.

The best approach is to run the numbers “OBJECTIVELY”, WEIGH THE TRADE-OFFS, and—just as importantly—factor in how you feel about “DEBT”. A mortgage is both a FINANCIAL and PSYCHOLOGICAL “OBLIGATION”. Whether you “KEEP IT” or “KILL IT” should reflect your broader financial goals, not just the desire to own your home “OUTRIGHT”.

At the end of the day, the smartest financial strategy is the one that leaves you with both “STABILTY” and “PEACE OF MIND”….

PEACE & BLESSINGS,

Kenneth Reaves, Ph.D.

CONSULTING and MARKET RESEARCH: The Knowledge Business at “RISK”

The CONSULTING and MARKET RESEARCH industries are also facing new headwinds. AI excels at synthesizing vast amounts of information, identifying trends, and even generating polished reports—functions that have HIStorically commanded premium fees.

Gartner (IT) shocked investors recently when it cut revenue forecasts, and the stock plummeted 30% in a single week. Analysts pointed to the RISE of AI-driven research tools that can produce “ACTIONABLE INSIGHTS” without the steep subscription fees Gartner charges.

This is a classic case of knowledge “COMMODITIZATION”. Once upon a time, accessing deep datasets and expert analysis required firms like Gartner. Now, increasingly sophisticated AI agents can replicate much of that functionality—sometimes for “FREE”. The industry isn't disappearing overnight, but the pricing power of traditional research and consulting models is weakening.

Why These Sectors Are “VULNERABLE”

What ties these industries together???

A few key characteristics:

• HIGH HEADCOUNT, LOW AUTOMATION: Companies with large workforces performing repeatable tasks are ripe for AI substitution.

• CONTENT “COMMODITIZATION”: When AI can generate art, copy, code, or data analysis instantly, the value of human-created content diminishes.

• KNOWLEDGE REPLICATION: AI can “MIMIC” the work of analysts, consultants, and recruiters, undermining fee-based models.

YOU, ME, WE the ATWWI FAMILY should recognize AND monetize the fact that in many cases, these are “LEGACY” business models colliding with “DISRUPTIVE” technology—a dynamic that rarely ends well for incumbents.

What Should YOU, ME, WE the ATWWI FAMILY Do To Monetize This Occurrence???

If you are a ATWWI FAMILY MEMBER worried about AI-related “DISRUPTION”, here are some ATWWI strategies, techniques, and paradigms that will minimize your concerns:

1. Look for AI “ADOPTERS” not “RESISTERS”. Companies that embed AI into their platforms—rather than fight against it—are better positioned to survive. Adobe (ADBE), for instance, still has a chance if the company can integrate AI in ways that make its creative tools indispensable.
2. DIVERSIFY across sectors. Don't overexpose your portfolio to industries at HIGH “RISK” of AI displacement. Consider balancing with UTILITIES, HEALTHCARE, or INFRASTRUCTURE—areas where human labor and regulation provide more durable “MOATS”.
3. Watch the “DISRUPTORS”. Firms enabling AI-driven STAFFING, CONSULTING, or DESIGN may prove to be tomorrow's “WINNERS”. Just as Uber (UBER) “DISRUPTED” TAXIS”, AI-native companies could “DISRUPT” these incumbents.
4. Be “CAUTIOUS” with VALUATIONS. If a stock is cheap, ask yourself whether it's undervalued or simply in structural decline. A 30% drop in companies like Shutterstock (SSTK) may not be a bargain if the core business model is eroding.

Final Thought(s)

Artificial intelligence (AI) is one of the most powerful technological shifts in decades. But while many investors are focused on the “WINNERS”, it's equally important to identify and monetize the “LOSERS” via the utilization of various ATWWI strategies, techniques, and paradigms.

From CREATIVE PLATFORMS and STAFFING FIRMS to RESEARCH CONSULTANTS, some business models may simply NOT survive in their current form.

For YOU, ME, WE the ATWWI FAMILY, the message is straightforward: don't just chase AI “HYPE”—also pay attention to where AI is quietly DESTROYING “VALUE”!!!

In a world of “CREATIVE DESTRUCTION”, knowing how to MONETIZE the occurrence will get us “P.A.I.D.”!!!

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.