 Hey everyone, this is Dan with my first video on rising interest rates. In the last few months, the Federal Reserve Banks have been talking about raising the interest rates in 2022. The market already reacted to that. We see Treasury rates going up quite significantly in the last couple of months. Will the market be crashing because of the interest rate increase? If the market does not crash, where should we invest our money while the rates are going up? I have looked into 22 years of market data and interest rate data and found something very interesting. Let's get into the details. First, I'd like to let you know that I'm not a financial advisor. I share my stock trading strategies and analyses for educational and entertainment purposes only. If you want to invest in the stock market, you should make your own decisions and you should definitely consult with your financial advisors before you do so. Let's continue. This is a chart showing the movement of a 10-year Treasury rate as well as a 20-year Treasury rate and a 5-year Treasury rate. The top line here, the red line, is a 20-year rate and then the middle one, the candlestick chart, is a 10-year rate and the bottom line is a 5-year rate. As you can see, in the last 22 years, the rates have gone down quite significantly. The 5-year rate came down by about 77%, 10-year rate came down by 73% and a 20-year rate came down by 67%. But if you look at the last couple of years, the rates have been recovering. In other words, going up. This is the one-year picture. Certainly, all three rates have been going up and of course, they are the three-month rate and the six-month rate and so on and so forth. I just use these rates to represent the overall interest rate picture. And then if you look at the last 30 days, the 5-year rate went up already by 11.4%. 10-year rate went up by 5.17% and 20-year rate went up by 4.13%. If anything, this trend will most likely continue into the next 12 months and beyond. You might have heard or read a lot of financial analysts telling you what to do when the interest rates are rising. Some might say the market will crash. Some of them might say the tech stocks will suffer or buy gold and silver because they will give you protection or buy financial stocks because if the interest rates go up, then the banks will be able to make more money from the spreads or stay away from meme stocks and actually that's always good advice anyway or stay away from stocks with poor cash flow and that's always a good advice. In this picture, I am drawing the 10-year Treasury Rate Index, TNX, because basically the rest of the interest rates have been moving with the 10-year rate anyway. So this is a good representation of their overall interest rate picture. And I am comparing TNX with 11 other financial instruments, XLF being the financial ETF, XLV the healthcare ETF, CPER, the copper ETF, SPY, the ETF peg to the S&P 500 movements, USO, the crude oil ETF, SMH, semiconductor ETF, GLD, gold ETF, QQQ, the ETF peg to the NASDAQ 100 movements, SLV, silver ETF and UNG, finally the natural gas ETF. In the last two months, you can see TNX, the 10-year Treasury Rate went up by an impressive 18%. In the meanwhile, XLF went up by 2.3% and then next one up is XLV, the healthcare ETF, XLF of course being the financial ETF and then copper and then S&P 500 as represented by SPY and then the rest are in negative territory. Of course, in the last two months, the market has not exactly been very positive. And then if you look at the last one month, the 10-year Treasury went up by 19%, again it's a significant jump. Then interestingly, USO, the oil ETF went up by 9.8%, natural gas also went up significantly at 6.55%, then financial ETF went up by about 5% and then copper went up by about 1% and the rest have been in negative territory. To get everything organized and have a proper perspective, I pulled the data for the last 22 years starting from January 1st, 2001 all the way to January 3rd, 2022. And I look at the yearly period and look at to an extent the 10-year Treasury Rate has increased from one year to the next. And from all these 22 buckets, I can pick out three years in which the TNX Treasury Rate went up quite significantly. Starting the period from January 2009 to January 2010, TNX went up by 59%. From 2013 to January 2014, the interest rate went up by 62%, that's 10-year Treasury Rate. And then from January 2021 to January 2022, the 10-year rate went up by 78%. And interestingly, if you look at SMH, the semiconductor ETF and the financial ETF, they did not go down during those years. During this first period, the financial ETF went up by 19%, semiconductor ETF 55%, this period. Finance ETF went up by 31%, semiconductor ETF 27%, outward movement. And then this period financed 38%, semiconductor 45%. So already, it's pretty much broken the myth that if the interest rates are going up, then everything will crash. Certainly, that's not the case with the financial sector or the semiconductor sector in these three very representative years when the interest rates have been going up quickly. If you like what you've seen so far, I'd like to suggest that you click the like, subscribe, and notification button. It'll enable you to receive notification when I post my next video. It'll also encourage me to make more videos like this in the future. Thank you very much. Let's continue. Now, I'm zooming into each of those three years to look at the movement of the 10-year Treasury rate compared to 11 different financial instruments, definitely including the financial ETF as well as the semiconductor ETF. As you can see from 2009 to 2010, the best performing sector here, it's a semiconductor sector went up by 54%, QQQ went up by 49%, SLV 40%, and so on and so forth. The worst performing sector was natural gas. Actually, it went down by 57%. And then the second time period from January 2013 to January 2014, 10-year rate went up by 62%. These are the rankings of the different sectors, with healthcare being on the top, then QQQ, finance, semiconductor, SPY representing standard input 500. And then the third period, January 2021 to January 2022, the top performing sector being the oil ETF. And then semiconductor, QQQ, XLF, SPY, and so on. To put things into perspective, I rank the different sectors for these three represented years into this table. So from 2009 to 2010, the top performing sector was a semiconductor sector, and then QQQ, and then SLV, and then GO, and then SPY, healthcare sector, and then the financial sector. And I color coded some of these financial instruments. From the color coding, you can see that the semiconductor industry, SMA, actually performed pretty well during those three years when the interest rates were going up significantly. Next to that, QQQ is not too shabby, and then XLF is pretty good for two of the three periods. This first period of 2009 to 2010, it's not surprising that XLF, the financial sector performed very poorly because that's right after the collapse of Lehman Brothers, the crash in 2008. You might know that. And that's why it took a lot longer for the financial sector to recover. But after that, in recent years, the financial sector has been performing pretty well, even when the interest rates were going up. We can look at this list again to identify what is true and what is false. First of all, the allegation that the market will crash when the rates are going up. Nah, that's definitely not true. We saw those three years when the interest rates went up quite significantly, and some of those sectors were still performing pretty well. The tech sector will suffer. Not true, especially the semiconductor sector has been able to perform well during those years when the interest rates were going up. By gold and silver, in those charts, the performance of gold and silver were not impressive. Therefore, the statement is false. And by financial stock, that's true. With the exception of 2008 to 2010, the financial sector has been performing pretty well when the interest rates were going up. Stay away from meme stock, even though in this analysis, we didn't really look at the meme stocks specifically, but just from a logical perspective, a lot of these meme stocks, they really don't have very good profit or even cash flow. And that's why we need to stay away from them when the interest rates are going up, because the cost of borrowing money will be a lot higher, and people cannot borrow money to buy stocks easily, and these companies cannot borrow money to continue their operations, and some of them are probably going to go bankrupt. That's why I'll definitely stay away from meme stocks. And so this statement is true. And then similarly, I will stay away from stocks with poor cash flows. If you look at the last two months, how does that compare with our conclusion? XLF definitely is top performer. Remember that we said it's a good idea to buy financial stocks, and healthcare actually has been doing pretty well. Although among the rankings of those three years, I don't see XLV being a top performer, so I would not be too eager to buy healthcare stocks if the interest rates continue to go up. Copper is an anomaly also. With those three years, I don't see copper being a top performer. It's probably just a short-term phenomenon. SPY at this point, it's barely positive. So two months, it's a bit of an adjustment period. And then SMH unfortunately has not been performing well. Short-term, I'm staying away from SMH or semiconductor stocks, but as soon as they start recovering, I will be looking into opportunities to buy more shares of my favorite semiconductor companies, such as AMD or ASML. My focus will be the financial sector and the semiconductor sector. What are my strategies? I will apply the following strategies if the broad market as represented by SPY and QQQ are still generally trending up or bullish. If the market starts to trend downwards, I will activate my crash protection strategies, which I explained in several of my videos, which you can find in my YouTube channel. I will be looking into opportunities to buy XLF, FAS, which is similar to XLF related to financial sector, except it's three times the volatility or bank stocks. And now we'll be investing in SPY QQQ or related ETF, such as Upro or TQQQ, if I continue to see a bullish trend for the broad market. Then I will be looking into buying stocks of companies with strong cash flows and profits, such as the fang stocks. Now looking to buying SMH, the semiconductor EDF, and the stocks of strong semiconductor companies, such as my favorites AMD and ASML, both of these companies have very low debt-to-capital ratios and very strong cash flows. They will be able to compete well in the environment where the interest rates are rising. And I might invest in TMV, which is the ETF paid to the changes of the 20-year treasury rate. And I will stay away from Gold, Silver and Copper based on what I saw in the data for the last 22 years. And I'll definitely stay away from meme stocks and stocks with poor cash flows. I'll be mindful of broad market conditions and I'll update my Twitter subscribers on a daily basis. At this point, I'd like to remind you to subscribe to my Twitter account or follow my Twitter account, which is DanMarketL in addition to subscribing to my YouTube channel. For example, on December 28th, I tweeted that I bought XLF, the financial ETF, in anticipation of interest rates rising. And then a couple of days later, December 30th, I bought FAS, which is XLF triple. I bought FAS also in anticipation of the interest rate increase. Then on January 5th, both FAS and XLF started to drop. At that point, I sold FAS and cashed in 5.5% gain. I also sold XLF at 2.5% gain. And I explained why I did that. Then January 7th today, I tweeted that yesterday I actually bought FAS shares when the price started to recover from the previous day. So at this point, I still own FAS shares, which is consistent with the strategies I was talking about. If you like what you've seen so far, I'd like to suggest that you click the like, subscribe and notification button. As usual, I'll very much welcome your comments, questions and suggestions. Again, I'd like to remind you that I'm not a financial advisor. This is about wraps up my video for now. I will talk with you again in the next few days. In the meanwhile, I'd like to wish you a happy new year and the very best of luck with your financial investments in 2022.