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| Thanks for reading our sample newsletter. Our mission here is to educate and provide snackable content regarding the markets, economy and how to take advantage of that information and apply it to you and your money. |
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With that said, remember investing requires patience and discipline. Its about staying invested over a period of time and not in a single point of time. Tony Robbins, successful author and speaker, states that the biggest danger isn't a correction (10% hit) or a bear market (20% hit), its being out of the market.
From 1996 - 2015, the S&P 500 returned average 8.2% per year.
- If you missed out on the top 10 trading days during those 20 years, your returns diminished to just 4.5% a year.
- Missed out on the top 20 trading days, your returns diminished to just 2.1% a year.
- Missed out on the top 30 trading days, your returns diminished to just 0% a year.
- Missed out on the top 40 trading days, your returns diminished to just -2.0% a year.
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| *Stock data as of market close. Cryptocurrency data as of 1:00pm PT. Past performance does not guarantee future results. |
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| ▪︎ Markets: |
Are markets expensive? Yes. But that doesn’t mean it can’t continue getting higher. The markets are close to record highs and U.S. companies collectively are sitting on $7 Trillion dollars, 7 TRILLION DOLLARS!!! The last time U.S. firms saw this much cash, the market went up for another 3 years as the dot-com bubble unfolded.
It's dangerous to underestimate corporate America, but it’s also important to consider the risks involved. High inflation shooting up too quickly and Covid-related slowdown can pose big downside risks.
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| ▪︎ Economy: |
Inflation data is HOT. Total Consumer Price Index “CPI” for October was up 6.2%, highest level since 1991.Housing market still solid as demand stays strong with low inventory of homes. Daily Covid cases have flattened over the past 3 weeks at a little more than 70k cases per day. Goods news is that over 70% of the adult population has been vaccinated. However, cases in Europe have risen, showing vulnerability to future waves especially with holidays approaching.
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| ▪︎ Your Money: |
Cost of goods are increasing meaning the value of your dollar are getting less and less. Dollar tree after decades of keeping their items at $1 are now beginning to sell items at $1.25 and $1.50. So what can you do to keep up with inflation? Don't leave it in your bank account - keep investing! |
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| Viewpoint (as of 10.01.2021) |
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| Thoughts on the Market |
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Current Overall Portfolio Allocation:
65% Stocks , 25% Bonds , 10% Cash
Rationale:
Most indices are trending up besides emerging markets. Commodities are on course for 3rd best year since 1960 (better only in 1973 & 1979). Price of commodities are rising due to supply/demand. Too many companies want the same stuff forcing the price to rise because they simply don't have enough to meet the high demand from these companies. Plus, there are port challenges, containers are being stuck at the ports due to congestion. On top of that, there are labor shortages 🤦♂️
We are invested in QQQ and will continue to remain invested in QQQ representing 1/3 of our equity portion. It is above the trend line. QQQ is heavily weighted in the technology sector and remains susceptible to volatility due to rises in interest rates. But the magnitude and impact technology will have in our future is hard to ignore especially investing for long-term wealth.
Bonds representing our 1/3 bond portion include Government Bonds, U.S. Treasuries, U.S. Corporate Bonds, U.S. Mortgage-Backed Bonds.
Setting aside a small percentage of your money into Bitcoin & Ethereum are long-term plays to capture the explosive growth on the upside and not have a significant hit to your overall portfolio if it goes the opposite direction. |
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| A Whole New World |
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We are currently living in the fastest pace of change in human history.
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The world is transforming at its fastest pace in human history. It’s crazy to believe that 65% of children who are starting school today will be working in jobs that don’t even exist today. That is unbelievable! Some of those jobs include space tour guides, 3D printed food chefs, ethical technology advocates, etc…
Just like how the Earth’s plates are shifting underneath us, that’s what’s currently happening to our global economy. Geopolitics today is gaining more and more attention as countries around the world are seriously thinking about old assumptions about the way we work, spend money and direct the economy. Changes are coming and it’s important to be on the right side of disruption. If not, it’s at their disadvantage.
Themes that will have the biggest influence on the world moving forward are:
Geopolitics - Tensions over manufacturing jobs, technology, climate change cooperaton, etc…
Big Data/Artificial Intelligence – Majority of the world’s data has been created in the past few years and it’s going to double every 2-3 years (Moore’s Law). And smaller than 1% is ever analyzed and used.
Demographics – As of 2018, for the first time in history, the ‘middle class’ ($10 - $100 per day income) now outnumber the ‘poor’ (<$10 per day). Also, millennials and GenZ’s make up 50% of the global population.
Climate Change – 2020 was Earth’s 2nd hottest year, just behind 2016. The world’s seven-warmest years have all occurred since 2014, with 10 of the warmest years occurring since 2005. Also, extreme weather covers 10-12% of the globe vs 0.2% during 1951 – 1980.
Blockchain Technology – 10% of the worlds GDP could be transacted/stored on, as this technology matures.
Electric Vehicles – By 2025, 20% of global cars sold will be EV’s or plug-in, helping bring oil to a peak influencing sectors like Energy, Utilities, Consumer, among others. |
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| United Nations: Sustainable Development Goals (SDG's) |
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In 2015, world leaders from 193 countries agreed to the Sustainable Development Goals (SDG’s). The world new action plan for the next 15 years to end extreme poverty and hunger, fight inequality, tackle climate change and achieve sdg’s for all.
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The SDG’s have 4 underlying principles:
1.) Universal - They apply to every country - rich and poor, north and south, developed and developing. They recognize that global challenges like tackling climate change requires cooperation to come up with global solutions. Domestic policies that look at these issues in one country will have a impact on other parts of the world.
2.) Sustainability - Economic development, social progress, and environmental protection.
3.) Leave no one behind - Governments have agreed that no goal should be met unless it is meant for everyone including those in society most vulnerable and hardest to reach. Education, for example, should reach indigenous communities, jobs created for both women and men, quality healthcare available for all rural communities and water and sanitation facilities accessible for people living with disabilities. Tackling exclusion is the key to tackling inequality.
4.) Participation - The result of these goals are ambitious but it reflects what the world needs. And getting everyone involved from both the national and local level will increase the chances of achieving these goals.
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