Your August Report
Monthly Strategy Report
August 2025
Vol. 4, Issue 8
The Fed’s interest rate committee met today. They decided to keep short term dollar rates where they are… at 4.25%. And they suggested that they won’t change them at the next meeting either.
There were two dissenting votes on the committee. Michelle Bowman and Christopher Waller both voted to cut rates by 25 basis points (it was the first time there were two dissenting votes at an FOMC meeting since 1993...interesting).
A rate of 4.25%. Not a bad compound growth rate for holding cash or ultra-short term government bills. We have 40% of our portfolio allocated to cash, which I’ve said many times is the holding that makes me most uncomfortable.
But at 4.25% a year, I figure we’re more or less breaking even with inflation. And we retain the optionality to buy other assets should an opportunity present itself. It’s not an asset we want to ‘marry’ but it is an asset we should be very happy to ‘date’ for now.
Meanwhile, the hard asset section of the stock market plunged today… gold, silver, commodities, shipping, stocks, bitcoin… they are all down. The dollar is much stronger against other paper currencies. Copper fell 20% this afternoon…
It’s revealing. It seems other investors feel the same discomfort I feel about holding cash and they have positioned themselves for lower interest rates, more stimulus and more debasement. But maybe we should appreciate cash more?
Regardless of emotions, it’s essential to hold cash and we’ll continue to keep a 40% allocation… and collect 4.25% from it (along with the other cash strategies we use to enhance our return. More on these below.)