Interest rate changes are legitimately keeping me up at night again in January 2026 and I’m pretty sure I’m not the only investor feeling this way.
I’m sitting here in my little home office outside DC (well… technically Virginia but close enough), it’s 28°F outside, the baseboard heater is making that weird clicking noise, my coffee is already cold, and I’m staring at the latest FOMC minutes like they owe me money.
Last Tuesday when Powell basically said “we’re probably done cutting for a minute” my whole portfolio did the electric slide downward. Not cute.
Why Interest Rate Changes Hit Different in 2026
Look — back in 2023-2024 when rates were sky-high I was that annoying guy telling everyone “just buy short-term Treasuries bro, 5% is free money”. Spoiler: I didn’t put nearly as much in as I should have because I was “waiting for the dip” in growth stocks… classic.
Now we’re in this weird middle ground. Fed funds rate is sitting around 4.00–4.25% (after the last 75 bps total cuts in late 2025), inflation is kinda sticky around 2.6-2.8%, and everyone’s arguing whether we get one more baby cut in March or if we’re literally done.
Schrödinger’s portfolio, basically.
For a good quick summary of where things stand right now I keep going back to this nice clean explainer from Schwab: → What the Fed’s Interest Rate Decisions Mean for Investors – Schwab
My Biggest F*ck-ups During the Last Round of Interest Rate Changes
Let me be embarrassingly honest for a second:
- Sold most of my TLT (long bonds) in Nov 2023 at like a 45% loss because “rates are going to 6% surely” …they peaked at 5% basically the next week lol kill me
- Went super heavy into regional banks March 2024 thinking “higher for longer = great for net interest margin” …then the second wave of stress tests happened
- Kept telling myself “I’ll rebalance when rates actually start cutting” …and then when they did cut in Sep 2024 I was on vacation in Asheville and just… didn’t do anything for two weeks
So yeah. If you want to do the opposite of what I did during interest rate changes, you’re probably in good shape.
Okay but seriously — what should investors actually do right now?
Here’s my current (very flawed, very human) playbook in early 2026:
- Laddering Treasuries & TIPs – still doing it. Got 1-3 year Treasuries rolling off every few months. Not sexy, but I sleep better.
- Quality over garbage – I dumped most of my speculative small caps last summer. Moved more into boring dividend aristocrats and large-cap value. Boring is beautiful when volatility picks up.
- Gold & a tiny crypto hedge – yeah I know, cringe. But when real yields go negative again I want something that isn’t printing more zeros.
- Cash is trash… but dry powder is king – I’m keeping more cash than I ever have (almost 18%) because if we get another 50-75 bps
Quick visual of how brutal the last big rate-hike cycle was on long bonds (this is basically my 2022-2023 PTSD in chart form):
(If anyone from iShares is reading this…
Bottom line (from one very imperfect American investor to another)
Interest rate changes aren’t just numbers on a screen — they mess with your head, your risk tolerance, your marriage (ask me how I know), and your ability to look at your brokerage app without having a small panic attack.
We’re in that awkward “not quite bull, not quite bear, definitely not calm” phase again.
My only real advice that’s worth a damn? Do less than you want to. Rebalance on a schedule, not on emotion. And maybe keep a little more cash than feels comfortable.
Because the second you feel smug about your positioning… that’s usually when the next leg of interest rate changes kicks you right in the teeth.
Anyway.
What are you doing with your portfolio right now? You holding, selling, buying the dip, or just drinking and hoping like the rest of us?
Drop it below (or don’t, I’m not your dad).
Talk soon, — me, still clutching my cold coffee and questionable life choices
