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Dear Reader,
Gold, real estate, Prop 13, blockchain and don’t be a smart be a smart. Gold, not a safe haven anymore? Gold is both a commodity and an alternative currency. There’s very little correlation between gold and 10-year inflation-linked Treasuries and gold has no inverse correlation to equities. Over the past 20 years, gold and the S&P 500 have experienced a daily correlation of negative 0.003 percent indicating almost no relationship. But there is a strong inverse relationship between gold and the USD, and that has been the cause of the decline in gold in the past months. Some say gold is no longer the historic safe haven as it once was… Real estate. Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes. Sellers are getting ‘jumpy’. Purchases of new homes are at their slowest in 8 months and existing-home sales dropped in June for a 3rd straight month. Inventory has increased and there is less competition. 65% of Americans said it’s a good time to buy a home, the lowest since 2008. Fun fact: Buying a home nationally is 26% cheaper than renting an equivalent home. Proposition 13. Under prop 13, property tax increases on any property were limited to no more than 2% per year as long as the property was not sold. Prop 13 capped property tax rates at 1% of full cash value at the time of acquisition. This tax advantage was also extended to inherited property. The controversial issue is California is losing billions of dollars in revenue due to the inheritance tax break, and 63% of homes inherited under the system are being used as second residences or rental property. Moment 4 Life. Sometimes, what you don’t have is just as important as what you do have. Change is only as good or bad as the response to it. Live what you preach and accept your reality as best as you can. They joy in life grows from being in the moment and really enjoying the little day to day things that make life worth living. We are not given a short life but we make it short, and we are not ill-supplied but wasteful of it. Life is long if you know how to use it. Another Hike Incoming? As many of you may know by now, this was a record setting week for the U.S. Equities market. By closing time today, both the S&P 500 and the Nasdaq were settling in at their record highs to enjoy the weekend. Jerome Powell, Chairman of the Federal Reserve, gave a speech in Jackson Hole, Wyoming today, ensuring the country that all is pleasant. Let us dive in as college students across the country dive into their studies, or beer cans. Powell stated the unemployment, currently at 3.9%, is sitting pretty near the 20 year low. "Most people who want jobs can find them," Powell said, which is sure to sooth. Inflation is hovering at the FOMC (Federal Open Market Committee) target level of 2%, without any current indicator of future acceleration beyond that target. Powell emphasized the balancing act that he and his colleagues must engage in in terms of rate hiking. On one end of the spectrum, they can act too quickly and prematurely halt a booming economy. On the other end, they can act too slowly and risk allowing the economy to burn out, which wouldn’t end well for the global economy. He believes that the current, gradual rate hikes as the way to go here. Thus, come late September, we can expect to go on a hike. Your first baby step to having a brighter future… knowing what Blockchain is. To simplify things, blockchain is a technology that records data in realtime. It is impossible to go back and manipulate what the data says, when it was sent, or any other detail pertaining to the data. The major question is, why is this so important to have? Well in a world where you have no choice but to have so much trust in these major institutions, its a breath of fresh air to have a system in place where data is stored in a completely public, online ledger, which can be audited at any time. Blockchain technology was created in 2008 by Satoshi Nakamoto, who has never been identified, as a alternative choice to using financial institutions. This technology was then implemented in 2009 into bitcoin. The first real transaction was in 2010, when 2 pizzas were bought for 10,000 btc. You can do the math to see the growth that BTC has seen since 2009, to today, where its being valued at a little over $6400. Learners are made not born (proven by a growing body of research including Marcel Veenman’s study)… don’t give up on yourself. Here are three practical ways to build your learning skills:
In the world of sports. 40 years ago yesterday, the black mamba was born. August 24, 2016, the city of Los Angeles has declared "Kobe Bryant Day" to celebrate the historical tenure of the retired Lakers legend. Bryant has gifted the city where he played his entire career with five chips and an MVP (08’) to go along with 18 all star selections. He is one of only three players to have played for the same franchise for twenty straight seasons, others include (Dirk and Duncan). Turning our attention to golf, the 2018 FedEx Cup playoffs are underway with Tiger Woods in top 20 in the FEC standings. He’s not just in the playoffs, but likely to make it to the final event! He actually has a chance to win… Tiger’s last win came in 2013 at the WGC-Bridgestone Invitational. But 2013 was four back surgeries, a DUI, and treatment ago. Keep tuning in to see if Tiger can come out victorious at PGA Tour this season for a grand total of $67 million in prize money. Keep Climbing, The Alchanati Campbell and Associates Team Subscribe here: http://eepurl.com/do-SwL Dear Reader,
Being versus doing, free trade, satisfaction and reality in it’s most blunt form… get ready for it (breathe in through the nose and out through the mouth). Is it better simply to be or continue to do? Modernity, capitalism, productivity, moving, evolving and doing. Being comes before doing. To be an effective doer, you have to develop the self-awareness to trace the root of surface-level conflicts that cause you to exert effort towards something you don’t care about deep down. The lower the cost of moving from one space in your life to another, the more you will be able to both experience and accomplish. Any extra decision you have to actively think about before you start doing something takes you out of the flow. If you focus on synchronizing your being by interconnecting the different modular goals of your mind, then you can get to a place where doing becomes enjoyable. Free trade. Completely free trade is unlikely because countries have vastly different economies in different stages of development, different degrees of domestic economic and political freedoms, and separate currencies. Americans with the skills and knowledge to compete in a free market world would continue to thrive, but the rest would suffer lower incomes due to globalization. Reality. The rate of people 65 and older filing for bankruptcy is three times what it was in 1991. The median retirement account balance of people ages 56 to 61 is just $25,000. The financial problems aging Americans are experiencing will be exacerbated by the fact that people are living longer. 78% of full-time workers sad they live paycheck to paycheck. Why we are never truly satisfied. Only a man who lives not in time but in the present is happy. For life in the present there is no death. Given that we are the narrators of life, we trust that the existence of the past and the future is as real as the existence of the present. We are so attached to an imagined inner story about who we are that we forget that the world in front of us isn’t at all dictated by this story. It is not often where you are simply there in a particular moment rather than stuck in a loop of thought dominated by a voice in your head that keeps you company. Humans report the highest satisfaction when they are completely lost in some activity around them rather than in the imagined struggle that goes on in their mind. We need to sacrifice the comfort of our imagination. Reality pt. 2. You are both everything and nothing at the same time. The key to an open mind lies in being able to attend to a topic at hand without using that same attention to closely tie in a current belief system in such a way that it forgets the existence of a world beyond what it already knows. You have to look for the pleasant in the unpleasant. Humans don’t make rational decisions based on outcome, but rather in terms of gains and losses. We don’t ever fully see or experience reality. Our personal experience makes up 0.0000000000001% of what has happened in the world, but it represents about 80% of how we think the world works. We don’t become who we are by staying as we are now. Your sense of attachment to who you want to become is more valuable than a life of more. Choose development beyond success; the only way to capture meaningful success is to give up chasing more of what you already have. Keep Climbing, The Alchanati Campbell and Associates Team Subscribe here: http://eepurl.com/do-SwL Dear Reader,
The Turkish Lira, generation Z, investments, loss, personality traits and tips. Turkish Lira in free-fall. Political and economic tensions arise between the US and Turkey, as Presidents Trump and President Erdogan exchange insults, furthering damage to Turkey's Lira and global markets. In a tweet posted at 5:47 AM PST, President Donald Trump said he had, “authorized a doubling of Tariffs on Steel and Aluminum”. In response, today President Recep Tayyip Erdogan in a speech told a Turkish crowd that, “those who believe they can make us kneel by economic manipulation, have never understood this nation at all”. As of today, the Turkish Lira has dropped 18% against the US Dollar, it now taking only 1 Dollar to buy 6 Lira. European markets are also feeling the damage, with Turkey’s biggest European lenders, including BBVA, UniCredit and BNP Paribas, all expressing concern as their stock prices fall. Post-millennials, iGen, Gen-Z. More than 70% of Gen Zers influence their family’s spending. Their expectations are lower, they are not as confident and they are more risk-averse than previous generations in terms of attitude and behavior (today’s teens are less likely to have sex or drink). American teens are four times less likely to use cash than the general public and only use cash for 6% of their transactions. Suggested investments. Uncertainty, fear and predictions of a turbulent market. Here are some investments to look into:
Loss aversion. The idea that people place more weight on avoiding losses than gains. A fundamental truth about human beings is we are more motivated by our fears than by our aspirations. Loss can feel permanent. From an evolutionary perspective, the biological penalties for losses are existential threats to an individuals survival. For gains, you live to hunt another day. The big 5 personality traits and earnings. Openness to experience, conscientiousness, extraversion, agreeableness and neuroticism. Men being conscientious and extroverted tend to get paid more. “Agreeable” men earn significantly less, but higher IQ is correlated with higher earnings. Maybe it’s not such a bad idea to buckle down and work hard, and don’t be shy! Tips for aspiring portfolio managers. Great fund managers are made, not born. Investment decision making is something you will always be able to improve upon, and the day you stop being interested in that improvement is the day you should find another occupation. Behavioral alpha and being more focused in self improvement than the next person is more important than being smarter than everyone else or having access to better information. Willingness to learn. Be skeptical, be critical and make up your own mind. Do not get overconfident, stay disciplined and be prepared to reflect on your personal shortcomings and deficiencies. Financial tips to help you live your best retirement life. Understand your lifestyle expenses. Be aware of financial costs that will change in retirement. Understand how taxes impact your money. Decide when to start social security. Understand how your investments support your income needs. Budget for unexpected expenses. Be aware of how expenses change over time. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Shorter reads and interesting ideas to add to your long-term knowledge vault. The art of thinking. There is no real structure that you are forced to operate within unless your life depends on it. You can create your own rules if you build the right supporting systems. Our environment controls far more of our behavior than we realize. Creating better habits and opportunities begins with deliberately shaping your surroundings. The real purpose of life is to create a story in which you can constantly define what it means to be better tomorrow than you are today. That’s what we are programmed for. Happiness, productivity, presence, and fulfillment all find their roots in your ability to proactively control where you direct your mental energy. Take control of your attention. You don’t have to be an expert scientist, artist or psychologist, but you should know the fundamentals in all of the major disciplines if you want to optimize your thinking. Over a long enough timeline, if you seek to reduce uncertainty, you can optimize your exposure to luck. Success is often random, but that doesn’t mean it cant be designed. Psychology behind plate design. Your plate size has a definitive effect on how you perceive the food contained in it, and how it affects your perception all depends on how ravenous you are. If your brain sees food on a very large plate, you won’t be satisfied when you eat it. But put the same amount of food on a small plate, and you will. When you are hungry, it is more difficult to trick the brain via illusions when food is in need. How to be less wrong. Always being consistent makes you inconsistent with the reality around you. The ability to correct mistakes and to be less wrong over time comes down to the capacity to embrace and understand the contradictions that arise in the world when they do. The world around us is inconsistent and the way to fight this chaos is to live in a fluid and malleable way. Fear of death. There is an idea that all of human culture has a persistent fear of death. We are the only animal that is self-conscious enough to be fully aware that it ends. The realization of our mortality is deeply embedded in our psyche, and whether or not we notice it, it does affect how we live in this world. It shapes the decisions we make, it determines how we commit our time and it creates who we become. Keep Climbing, The Alchanati Campbell and Associates Team |
AuthorWHAT'S UP FRIDAY? is a weekly newsletter that will give you a summary of "What's up?" on Wall Street, in the US and around the World written by The Alchanati Campbell and Associates Team. What makes us unique is we focus on long-term knowledge; knowledge that will still be useful to you 10 years from now. Archives
July 2020
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