Lamensdorf Market Timing Report – Special Edition

This special report by LMTR.com will highlight a few charts. Investors with a lot at stake should pay close attention to these gauges over the coming months. Failure to act on warning signs could be the difference between a comfortable retirement or years of slaving away at work. Investors have too much to lose to be asleep at the wheel.

Start by paying attention to the interest rate that matters. Chances are, you’ve watched the talking heads on TV. They are heavily focused on the Federal Reserve and what actions members plan to take on interest rates.

But, the interest rate that really matters is LIBOR. LIBOR stands for the London Interbank Offered Rate. It’s an extremely important rate.

When investors borrow money and use their portfolio as collateral, the loan is often priced at LIBOR plus some base interest rate. For example, the loan might be priced at LIBOR plus 1%. Importantly, these loans are not priced based on the federal funds rate.

Please note the blue line on chart below. The blue line is 3-month LIBOR, which has been rising steadily from the ashes to multi-year highs. Nearly every day it is getting more and more expensive to maintain these lines of credit that wealthy investors have been using.

How much credit is out there, borrowed against stock portfolios? Trillions of dollars.

People with portfolios of liquid assets, people who own stocks, have access to these credit lines. Often they must have more than $1 million in stocks and bonds to gain access to LIBOR-plus loans. These are the one percenters.

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