Dear Reader,Love. The feeling you can never get enough of. Or for some, a feeling they have never learned to accept. A feeling of mixed emotion. A subject of individualism and an outcome of hard-work or of fantasy or of pure luck. A diamond that you wish you had when you don’t have it, but a pebble that you have when you don’t have a fear of losing it. It’s simple: the knowing that a pair would dedicate their whole selves to the mutual fulfillment and obligation of making each other happy, important, and safe. A word thrown around, beaten up, varying in its strength of meaning. But what is love? Love has a picturesque image of roses and hearts. It’s a symbol of nurture and of commitment. It’s a feeling one can uncontrollably describe. It’s a secret one can whisper into the ear of another... “tell me what love is. That sweet hers and his. How does it feel? Is it for real? Tell me what your heart says. I’d really like to know what love is.”
The Market. Some research says that when short-term rates are higher than long-term rates for a full quarter, a recession will occur in 12-18 months. To get ready for one, clean out your portfolio (rebalance, reallocate, take profits), pay down debt, be ready to buy when stock prices plunge, and check and clean up your credit score. Q2 GDP was estimated at 2.1%. Many economists say the Fed is acting prudently to prolong the economic expansion. Their two main goals are to keep the job market strong and maintain inflation around 2%. People are taking out personal loans (APR 10.6%) to pay off credit cards (APR 17.1%). Following ESG criteria doesn’t destroy value but rather creates value. The labor market remains strong and job gains have been solid. The Fed cut rates because they see economic weakening and they want to ward it off. Interest rates and inflation have an inverse relationship: lower rates equal higher inflation. The Fed cuts. Fed Chair, Jerome Powell, cut the fed funds rate earlier this week by 25 bps, decreasing it to a range of 2%- 2.25% The board attributed this cut to weak global growth, trade politics, and muted inflation. Although economic numbers came in as expected, or better than expected, the board decided a mid-cycle rate cut would be best to contribute to being proactive. Powell made it evident that we were entering a new regime where we would look towards trade talks, and other global indicators, as they were influencing economic numbers, to decide what the next steps will be. Our current core inflation, which is inflation minus food and energy prices, has been steady at 1.6%, expected to increase to their target of 2% in 2020. We have seen domestic inflation pressures muted, while the global world is experiencing disinflation. Wages are rising slightly, but not enough to materially affect upwards pressure on inflation. Markets stayed flat for the day until Powell mentioned the possibility that this could be followed by future interest rate hikes, which led to the market closing down 1%. On that point, Powell mentioned this was a mid-cycle rate cut, which has historically been followed by rate hikes, and that the economy could continue into an expansion. The benefits of low interest rates. Low interest rates encourage spending, reduce the cost of borrowing, lower the cost of monthly mortgage payments, encourage investing, and reduce the cost of capital. With more spending, it increases employment and increases wages. Low interest rates reduce the discount rate used in calculating the intrinsic value of companies, which raises the valuation of companies. Low interest rates incentivize investors to take on more risky investments which means a possibility of higher returns. Mortgages. For the vast majority of Americans, a house is likely to be their biggest investment. Mortgages are low interest, long-term secured loans. The typical mortgage works like this: you are looking to buy a house, so you secure a $100,000 mortgage and pay a down payment of 20% which brings the total cost of the home to $120,000. This loan will likely last for 30 years at the current interest rate of 3.92%. With this loan, you will pay $473 a month which adds up to $170,213 after 30 years, but since a mortgage is secured by your house, if at any time you become delinquent and the bank forecloses, they have the right to kick you out and sell your house. Mortgage rates are highly influenced by the market and have averaged 6.25% over the last 30 years. The Fed has worked to keep these rates low in order to allow the economy to keep its momentum, with the current rates around 3.75%. This is well below the average and should be leading to a rise in home sales and home refinances, but due to rising home costs, sales are down 2% from last year, home investments have declined for the last six straight quarters, and new home sales continue to decline. Just like any market, the housing market is cyclical. The case of a strong dollar. With a strong USD, U.S. consumers pay less for imports and foreign consumers pay for more U.S. exports (hurting U.S. production and employment). A strong USD also makes the US a less affordable travel destination but benefits US citizens traveling abroad. The reason the USD is so strong is that we are considered to have a “healthy” economy compared to the rest of the world. Factors that impact currency: the strength of the economy, geopolitics, trade, inflation, and interest rates. For US consumers, it is relatively good. For US manufacturers and producers selling abroad, relatively bad. Store-front focused retail companies. Department stores have been suffering in a self-explanatory way. In a way that you, as an American consumer, can figure out. When was the last time you spent more than an hour at the mall? When was the last time you shopped in a store-front department store? The issue at-hand for department stores in e-commerce. If department stores don’t have a competitive advantage in this new market, they are doomed to fail. And this basic thesis explains my position of betting against department stores (ex: Macy’s and Nordstrom). Both Macy’s and Nordstrom state that a major risk they face is from the competition in the digital space. In the short-term, tariffs and political affairs abroad have been hurting these companies. Nordstrom’s biggest challenges are being competitive in the e-commerce market (current digital sales are 30% of total sales), consistently growing their return on assets (2015 ROA: 8.1%, 2019 ROA: 7.07%), lowering their debt-to-equity levels, and improving their liquidity. Nordstrom has been outperforming their comparables due to “Nordstrom Racks”, their discounted retailer. This allows them to sell to a diversified demographic, gain more sales, and increase their inventory turnover. Macy’s has seen three years of consecutive declines in sales, decreases in the amounts of stores they own, a decrease in inventory turnover, and a decrease in cash flow per share. Conclusion: e-commerce is dominating the retail industry and department stores must innovate or be crushed. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Familiarity is a feeling of comfort. Your hometown, the local grocery store, the schoolyard you grew up playing in, the subtle voices of your loved ones. Familiarity keeps our knowing in check. It balances our emotions and reassures our thoughts that there is no reason to worry. But it exacerbates the trueness of reality and culture, and it diminishes the excitement of exploration and adventure. Familiarity is an HQ for temporary rest and recuperation. It grants us the pleasures of belonging, love, and clarity. But, it prevents us from finding a new path or a lost love or a better motivation or an inspiration to further enhance our reasons to live... Inspiration has two faces: the first is a product of action, when you actually sit down to produce something; the second, the one that fuels the first, born out of a will to freedom and exploration in a nonlinear way. Life is not suppose to be lived inside of a bubble or in between four walls that constitute a residential dwelling. It’s better not to lead a life that’s too comfortable in one go. You’ll treasure more if you gain things step-by-step. The Market. “The current environment is the market is asleep at all-time-highs,”(Dave Roberts, an independent trader). Short interest is a statistically and economically significant predictor of future market excess returns (the lower the value, the better the expectations). The unemployment rate is also a good indicator to predict an upcoming recession (the unemployment rate is currently 3.7%, the lowest value since 1969). Boris Johnson was elected the leader of Britain’s governing Conservative Party. Positive earning results, anticipation of lower interest rates, and trade talks between US and China resuming drove the market up. People make decisions all the time; some are risky, and others are riskless. Risky choices are made without advance knowledge of their consequences. Riskless decisions is a transaction for a good or service in exchange for money or labor. Hedge fund managers who own powerful sports cars take on more investment risk but do not deliver higher returns (hedge fund managers motivated by sensation seeking). Computerization versus the job’s market. About 47% of total US employment is at risk. Wages and educational attainment show a strong negative relationship with the probability of a job becoming computerized. Computerization has greatly impacted employment in routine intensive occupations (jobs that consist of tasks following well-defined procedures that can be performed by an algorithm). Algorithms for big data are now rapidly entering domains and can substitute for labor in a wide range of tasks. Service occupations are less susceptible to computerization because they require a higher degree of flexibility and physical adaptability. “Unless all individuals accept the verdict of the market outcome, the decision whether to adopt an innovation is likely to be resisted by losers through non-market mechanism and political activism, “(Mokyr, 1998). The price decline in the cost of computing has created economic incentives for employers to substitute human labor for computers. The most probable jobs that will be affected or that are currently affected by computerization are: transportation and material moving, production, office and administrative support, farming, fishing, forestry, and sales. The key: acquire creative and social skills so you can’t be replaced. The goodness of spending money on others. The more money people spent on others, the lower their blood pressure was 2 years later. Spending money on others shapes cardiovascular health, proving that prosocial behavior improves health. With heart disease being the leading cause of death worldwide, the happiness benefits of spending on others will lower your blood pressure and decrease your chances of dying from heart disease. Spending money on others causes neurohormones to release that directly affects blood pressure. Furthermore, volunteering leads to the greatest benefits for at-risk groups. Spending time helping others may have potent effects on the health of at-risk older adults. EBITDA over net income. Why do some investors like EBITDA over net income? EBITDA is the earnings before interest, taxes, depreciation, and amortization. It is calculated by adding operating income, depreciation, and amortization together. EBITDA is a much stronger indicator of ongoing, operational strength for a firm. Taxes, interest expense, depreciation, and amortization have no bearing on the ongoing operational strength of a firm. Improving consumer well-being. Much of consumer research assumes that the primary motivation in consumer choice is the pursuit of happiness. Meaning-oriented consumption is consumption motivated by a desire for self-growth, social connectedness, and the pursuit of personal fulfillment. Pleasure-oriented consumption is motivated by a desire to maximize positive affect and minimize negative affect requiring more affective evaluations. Individuals who spend money on time-saving services report greater life satisfaction. Time and money are interchangeable in today’s economy, and people are able to spend money to buy “free time”. One way to prolong happiness is through meaning. More meaningful memories show less happiness decay, making individuals happier for longer. Benefits of meaningful experiences would last longer than the benefits of pleasurable experiences. Taking a vacation has a significant positive effect on meaning at work. Active versus passive. There are 2 types of equity investors, those who plan on holding for the long term, and those who actively trade. In the next 10 years, I believe one of these types of investors will be almost completely phased out through the advancements of AI in conjunction with HFT (high-frequency trading). Active traders currently speculate on mispriced equities and use technical analysis to find potential opportunities to earn a profit. With the rise of AI and current developments in HFT, we are going to start seeing a more efficient market, which makes it harder to earn profit from an active management strategy, when accounting for excess time spent on trading and fees. Even in the current market, many important figures in the investing community believe a passive strategy beats actively managed portfolios. Don’t agree? Warren Buffet just won $2.2 million betting on passive versus active on a 10-year basis. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,Dominance. Some say it’s cruel and inhumane. Some say it creates inequality and supports greed. But I say it’s necessary for success. “Only weak people get upset, complain and give up”, “survival of the fittest”, “don’t be afraid of confrontation, people are more afraid of you”, “be hard to get”, “always be an alpha male”, “nobody will ever tell me no again, I am going to make sure of that”, “do not dwell on anything. When something bad or unpleasant happens, move on right away”, “never give a fuck”, and “don’t express weakness to others”. These are the principles you live by; created from mistakes and forged from the reflections of those mistakes. You’re a creator and an innovator. You work for yourself and you don’t take shit from others. You know that what’s yours is yours and you accept everything that happens outside of your control.You’ve built and strengthened a mindset that you live by. But sometimes, you take it too far. You lose your sense of humanity and your touch to love and be loved. The taste of greatness causes you to prioritize work and business over everything else. You can no longer smell the roses and beauty is only green with dollar signs. There needs to be a balance: work and play, give and take, want and be wanted, respect and be respected. You might be an asshole to others, but to yourself, you’re just pulling strings and playing with puppets.
The Market. China’s economy grew 6.2% between April and June, the slowest growth since the early 1990s. The bond market is driven by the state of the economy and the sentiment of bond traders. The Feds now believe that there is a disconnection between inflation, unemployment, and economic growth. In 2018, the number of people suffering from hunger soared to an eight-year high to a total of 822 million. Manufacturers of car parts are starting to innovate the wheels, tires, headlights, and glass to prepare for autonomous driving. Humans generated 2.01 billion tons of solid waste in 2016 and by 2050, that could rise to 3.4 billion tons (12% of all municipal waste in 2016 was plastic). Uncertainty from trade conflicts, weakening economic growth, expectations of a bad earnings season, and increasing tension between the US and Iran are making investors nervous. Professionals are suggesting investment interest in: global telecommunication stocks, diversifying into international stocks like European equity, and infrastructure funds. The Feds signaled that they would act as appropriate to sustain the expansion of the economy. Investors need to start preparing for a world with lower interest rates. Why Amazon is NOT a monopoly. Amazon is a big e-commerce company, and it’s getting bigger every day. But Amazon is not huge. Last quarter, they took in $34.2 billion in sales, but only profited a mere $3.5 billion. Total annual retail revenue in the US in 2016 was $3.7 trillion dollars… Amazon accounted for only 3.6% of that. Now you can defend by saying that Amazon commanded 43% of all online sales in 2016 and 1 in 4 US adults are Amazon Prime members, so obviously that defines them as a monopoly. Then I would rebuttal by saying: Webster defines a monopoly as “exclusive ownership through legal privilege, command of supply, or concerted action”. In terms of retail sales, Amazon represents much less than 10%. That’s about 20% shy of the amount needed to demonstrate monopoly power. Furthermore, they don’t have a control on supply. This is where their business plan comes into play. Yes, they generate billions in sales, but they lose billions in discounts. They do this to hook more people into prime, and their other services. Granted, many prime subscribers use Amazon for the vast majority of their online purposes, but that is a consumer choice simply because of what Amazon offers. Countless stores have an online presence. The only real “barrier to entry” that stops another online mega-retailer like Amazon from popping up is demand. There are thousands of online stores that customers can choose from. This is a perfect demonstration of competition. In a monopoly, there is no real competition. It only seems like Amazon is above the competition because they have expanded their business into other industries to attract customers. Think about it. If you as a consumer can have a one-stop-shop, wouldn’t you go there as often as possible? Happiness and well-being. Happiness is simply the balance of pleasure over pain. Happiness is achieved by finding a balance in life between what you can achieve and accepting what you cannot. Happiness is influenced by factors such as health, status, employment, and family. Well-being is a balance in the domains of life; health, work, and social relationships. Psychological well-being consists of self-acceptance, positive relations with others, autonomy, environmental mastery, purpose in life, and personal growth. Family, health, and friends are the highest-ranked social values. Attitudes towards taxation. Society depends on the revenues from taxes to provide essential public services like education and healthcare. But many people hate to pay taxes, and some do not pay taxes. Tax evaders fail to pay 17% of tax dollars owed to the US, costing the US hundreds of billions of dollars each year. People would be more inclined to pay taxes if they believed that wealth incurs a responsibility to give back to society. Reframing the meaning of wealth can shape people’s attitudes about paying their taxes. Wealth-as-responsibility is the idea that wealth confers a responsibility to give back to society.People might feel better about paying taxes after recognizing that their financial success is due in part to societal factors. And when individuals receive messages and notices conveying the idea that wealth confers a responsibility to give back to society, it can enhance their satisfaction with taxation. Time over money. Prioritizing time over money encourages greater investment in daily social interactions. Valuing time over money facilitates social connection. Busyness comes at a social cost: not having enough time to spend with friends and family. People who valued time over money made decisions that enabled them to have more free time. Those who value time over money spend less time working versus socializing with new peers as compared to students who valued money more than time. People who valued money more than time were less interested in social interactions that could come at a cost to their ability to study or work. People who valued money versus time were less interested in workplace interactions that could potentially have an immediate cost to their productivity. The tradeoffs you make between time and money will directly impact your social connectedness. What is Libra? Libra is Facebook’s ‘failing’ attempt at redefining the financial institution and the central reserve currency as we know it. They have ambitious goals to launch a faux cryptocurrency which shares few aspects with the general industry, through a centralized attempt at taking over the traditional payment processing system, through reducing fees and cutting down transaction times to seconds. Libra is a digital currency and it will have a slight backing to a basket of currencies and government securities, although the user can never directly turn in their Libra for a share of this pool. Government entities are cautious regarding allowing Facebook, one of the largest tech companies in the world, to delve into the finance industry. If they were able to capture a small portion of current financial transactions, cross-country flows using western union, and from their current user-base, they would be one of the largest financial institutions in the world. This poses the question, do you trust Facebook all that much to allow that to happen? Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
We are a very particular and stubborn species. We hate and we love. We’re high-maintenance, needy, different, and approval-seeking. We want recognition and external-acknowledgment. But... we all still miss the small moments in life that create the memories we carry. The short-lived relationships are still worthy enough where they become a sketch within our life story. We complain and expect others to listen. We struggle and assume others understand our pain. But... we all believe we’re one of a kind; unique in experience and expression. Why is that? Education teaches us to “try our best”. Our parents tell us to “follow our hearts”. Religion tells us to “believe we’re the chosen people”. Society tells us to “follow trends and other influences; playing us to be the consumers that we are”. We learn from books and mentors. Our principles come from history and legacy. And all we can do is be as “individual” as we can... dreaming in fantasy land. The Market. The top 25 metro areas accounted for more than half of the US $19.5 trillion GDP in 2017. (New York, Los Angeles, Dallas, Washington, and San Francisco are the top 5). The new and best-paying jobs are clustered in cities like San Francisco, New York, and Seattle. Economic opportunity for most Americans increasingly hinges on one factor: where you live. There is a rate cut expected in late July. The Feds have made this decision due to the inflation increasing. Lowering rates is supposed to increase spending and investing. The US budget deficit widened by 23% to $747 billion in the last 9 months. How mobile devices are affecting families. Half of teens felt “addicted” to their mobile devices. 89% of teens had their own smartphones. US teenagers who spend three hours a day or more on electronic devices are 35% likely to have a risk factor for suicide than those who spend less than one hour. Poor sleep has been linked to a number of mental and physical health problems, as well as diminished academic and cognitive performance. Mobile device use affects sleep by encroaching on sleeping hours through the effects of bright lights (blue light) disturbing sleep rhythms. Parents and teens keep their mobile devices close by at night, including a third of teens who keep their mobile devices in bed with them. Many teens and parents are having their sleep interrupted by notifications. Doctors and researchers say not to use screens in the hour before bed. What makes a good trader. The two main drivers of trader performance are cognitive reflection and theory of mind. Cognitive reflection helps traders use market signals to update their beliefs. Theory of mind offers traders crucial hints on the quality of those signals. Most traders tend to rely on simple heuristics instead of performing the requisite calculations. Trades of high-IQ males outperformed those of low-IQ males. Financial literacy, personality traits, and risk attitudes play a lesser role in understanding trader performance. Fixed Income, Gold, and Equities are all near their local highs, and the USD is showing strength against its highest volume pair, the Euro. In the past, we have seen fixed income, gold, and equities all compete for capital inflows, shown by their reputable indices increasing/decreasing in value. In the last 3 months, we have seen all three of these asset classes increasing in value, while the USD at first depreciated, then appreciated in value. Usually when we see Gold increase, we see equity and the majority of the fixed income market decreasing, which represents fear in the markets, as people hedge with gold. The fact that we see all three nearing their local high’s, with a correlation between these 3 asset classes increasing, shows something weird is happening in our market. This could explain partially why the fed is seriously contemplating cutting the fed funds rate by 25-75 bp’s, while the market is already experiencing irrational exuberance. The Economics of Healthcare. About one out of every six dollars spent in the US economy goes to some form of healthcare. The healthcare market has consumers like patients, and producers, like doctors and nurses. There are also third parties like insurers and governments. Patients often don’t know what they need and cannot evaluate the treatment they are getting. Healthcare providers are often paid not by the patients but by private or government health insurance. People are living longer. Healthcare spending is a growing share of the economy. Monetary and Fiscal Policy. Fiscal policies are decisions to change spending and taxation levels by the federal government. Increasing federal spending and/or reducing taxes can promote more employment and output, but these policies also put upward pressure on the price level and interest rates. Decreased federal spending and/or increased taxes tend to lower prices and interest rates, but they reduce employment and output levels in the short run. Monetary policies are decisions by the federal reserve system that lead to changes in the supply of money, short term interest rates, and the availability of credit. Open market purchases or sales of government securities affect the money supply and short-term interest rates. The federal reserve tends to increase interest rate targets when it feels the economy is growing too rapidly and/or the inflation rate is accelerating. It tends to lower rate targets when it wants to stimulate the short-term growth of the economy. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Disclaimer: The "What's up Friday?" Newsletter has been different the past few weeks due to a temporary change in setting and time. We will be back to the original format the week of July 8th. The western culture for developing nations is an influence like drugs on an addict, video games on a child, and social media on a teenage girl. You walk through the marketplace of a poverty-stricken area and you’ll see a lack of structure, style, and care. The evidence of global consumerism, wastefulness, insecurity, and the lack of customs and cultures is proven. When did we lose ourselves to this “ill condition”? The advancements of education and technology have produced wonders in the fields of education, discovery and exploration, entertainment, health, and protection; creating clarity for our human consciousness. But at the cost of what? A forever-dividing inequality, the deterioration and destruction of our ecosystem, the loss of life (humans and other organisms)... The only viable solution is for the haves to spread their wealth to the have-nots and wanna-be-haves under the contingency of the given wealth being used in an ethical, moral, efficient, and beneficial way. The test of time will be between the point when the haves will be able to give after experiencing the short-term euphoria wealth brings and getting bored of it, and the limits of clean air, drinking water, and sanity that the Earth generously gives us. What do I want from you? What do I want from school? What do I want from life? They say it’s best to write out what you want. What you need. What’ll inscribe meaning and purpose and fulfillment into your life. Like a fucking genie will grant three wishes if you rub its teapot. So here I write: There’s no such thing as neutrality or minimalism. It’s either left or right. Everything or nothing. Life is full of extremes, and balance seems as far fetched as world peace. We’re all hustlers and sellers. We’re all needy and wishful. We either beg for survival or we beg for unnecessary amounts of wealth. We forget about our upbringings; the miracle of being brought into this world (though some are luckier than others), and instead we omit “gratefulness” from our vocabulary and ask what the definition of “altruism” is. We are consumed by noise as we consume everything around us. Insanity is a norm, and the quiet and solo-functioning are categorized. There’s no privacy, no place to disappear, no restraint for possession. But blame it on me. I am a part of the problem; I cannot deny my contributions. So, what do I want from life or from school or from “you”? Whatever it’ll give me, expectation is a fool’s game. I sometimes feel stuck underwater. Two voices fighting to win over my choice and decision. Pleasure over discipline. Want over need. Emotions over stability. I can’t seem to find everlasting strength in my mindset. I have good and bad days. The good days are filled with productivity and self-control. I accomplish everything I planned for myself in that day. I am better than the day before, and I go to sleep happy. Other days I seem to lose myself. I sleep in, I eat junk, I do nothing... I waste a full day; a day that I will never get back. My life is directed by time, and produced by ambition and a will to be better than who I am. The contents of my life are filled with thought and good deed. Striving to find the path that will lead to my purpose. My sense of distraction is a good book, and I reluctantly rather sit alone than in the company of strangers. The world in the depths of my head is more exciting to me than the one I see through the blue of my eyes. Control. You can’t control a delayed flight that causes you to miss your connecting flight. You can’t control the actions and reactions of others, or the words they say or don’t say. Control what you can and let go of what you can’t. I can control my emotions because what I feel is always an outcome of what I think. Nobody else controls your life. Two ways to view life: as a tiny person in a big space, or a big person in a tiny space. Changing the way you view your environment allows you to take things into perspective by miniaturizing your surroundings to have more control. Only control what you can. Be a master of your environment. You can’t change the fact that you were born with a deficiency, an infirmness, a weakness. You can only change what you have control of. Instead of dwelling on it, embrace it and spend the time to improve yourself in other ways. A better way of interacting with reality is by focusing on what can be controlled moment to moment, adjusting our orientation as we figure it out, letting the externalities play their part. Sometimes you just have to let things go and realize as much as we like to think about it... we are not in control. Let’s explore a bit. Here’s a controversial statement, it may be true or not. Because people go through the same experiences and their bodies communicate the same feelings, what I go through is not more special or different than what somebody else goes through. I just view it in a different light based off of my beliefs, what I have learned and the memories I carry. There is the occasional black swan event, the rare and unexpected, and that may make your situation unique, but we are merely the same with our common-held beliefs and our essential needs. Reality. We all want something great. Something shiny and valuable. Something worthwhile and desirable. Something special and scarce. Something different from the rest. We want it because we strive to become unique. We want to distinguish ourselves from the billions; to make ourselves be known. Everybody imagines themselves special, privileged, exempt. Everybody is identical in their secret unspoken belief that way deep down they are different from everyone else. What happens to one happens to most of us. Our lives are not so different-even though we like to think so. Only if you knew you were a unique world within yourself, you wouldn’t work so hard to prove to the world that you exist. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Your mindset. Such a key component in the human structure. Not the skeletal structure or the “epithelial tissues that line our internal organs” structure, but the structure of our well-being, success, and happiness. The most important things in life are internal, not external. “The clearer my mind is, the clearer I see, the clearer I respond.” Our whole experience of existence is really what’s going on in our mind. All of our emotions are created by our thoughts. Suffering is our mind not dealing with feelings in a positive way. People distract themselves because they cannot live with their minds. Our whole life is our attitude towards it. To change your emotions, change your thoughts. Be 100% present in body and mind in everything you do. Even if you lived in the skin of your idol, you would still feel uncomfortable. Why? Because even though your outer appearance changed, you still have the same mindset. The Market. United Technologies acquires Raytheon for $74 billion. Morgan Stanley says oil demand will continue slowing. Crude oil fell to a 5-month low due to oil inventories surging to their highest levels in 2 years. There is a very strong probability that the Feds will cut rates before the end of 2019. If rates are cut, it creates a marketplace where it is cheaper to borrow money. When it is easier to borrow more, you start accumulating more debt, with the riskiness of not being able to pay it back. But if the Fed starts cutting rates now, what tools will they have when a downturn occurs? Americans sleep, on average, less than seven hours a night. It is proven that missing one night of sleep impairs memory. The “flipping” of homes dropped 39% in the last 12 months. The Smiley Company, the global empire licensing empire of the smiley face, makes more than $500 million per year. Endurance: the ultimate limit of long-term human endurance is 2.5 times our resting metabolic rate (the rate at which your body burns energy when it is at complete rest). Central American Migrants are starting to travel to Europe instead of the US. Economies are largely driven by consumer spending. In the US, consumer spending is 70% of GDP. Global sustainable investment reached $30.7 trillion at the start of 2018, an increase of 34% over the past 2 years. Europe has the highest proportion (82%) of asset owners already active in the ESG space. In Asia, it's 76%. The most direct approaches to identifying a recession: wait for the National Bureau of Economic Research to announce a recession or wait for GDP to decline over two consecutive quarters. There has been 2,108 cases of Ebola in Africa since August 2018. Tax Advantages and Tax Deductions. SALT stands for state and local taxes. The federal government allows taxpayers to deduct real and personal property taxes, income taxes, and general sales taxes. This avoids taxpayers from being taxed twice on the same income. Other deductions can come from charitable giving and mortgage interest. 2019 Internet Trends. The current number of internet users is 3,800,000,000. China is the largest market of internet users. E-commerce sales growth is slowing. Google makes the most money from online advertising, at close to $30 billion in Q1 2019. In 2018, the daily hours spent with digital media per adult user in the USA was 6.3 hours (2008 was 2.7 hours). There is a steady decrease in watching television and an increase in watching digital videos. The Labor Market in 2050. Current estimates suggest that over the coming decades, slower population growth and lower labor force participation will constrain the supply of labor in the US. The standard economic model for the labor markets says that levels of employment and earnings for different demographic and education groups reflect the interaction of supply (number of workers) and demand (jobs created by employers) forces in the market. Automation and globalization affect these heavily. Any new technology can replace some groups of workers while creating new demand or complementing others. For older less-educated workers, these replacements can be damaging. In the last 40 years, the labor market has changed due to a stagnation in earnings, rising inequality, and declining labor force participation of less-skilled workers. The population growth will continue to slow, people will age longer, and diversity will increase with Asian and Hispanic races being a larger majority of the total. Two policies that would need to innovate to these changes are reforms in social security and Medicare that encourage longer working lives and later retirements, and immigration reforms that raise current levels of immigration. Can’t Stop, Won’t Stop Working. Almost 40% of Americans lack confidence they will ever save enough money to retire. Millions worry whether they are saving enough to live on once they stop working. People are living longer. Healthcare and medical care are becoming more expensive. The Employee Benefits Research Institute is telling millennials to save 10% of each paycheck. If you are older and haven’t started saving for retirement, the percentage will be 15-20%. The more income you make + the more you contribute to savings = the lower the probability you run out of money in retirement. If you make less money, you have to contribute a bigger percentage. The First Housing Bubble. Amsterdam, 1713-1750. This bubble was caused by a shift toward investing in real estate which increased housing prices, and the higher prices triggered more purchases of houses (the momentum effect: higher prices can cause additional higher prices). But there were no mortgages available (or housing loans)… so where did the money come from? During the 1600s and 1700s, the Dutch government was issuing huge amounts of government bonds (to pay for wars) to Dutch investors. When the interest payments became too much to pay, the Dutch government reduced the number of bonds sold and investors started buying real estate instead. Millennials. They have less trust in employers. They have less trust in the stock market. Millennials and Generation Z are expressing uneasiness and pessimism towards their careers, their lives in general, and the world around them. They express a strong lack of faith in traditional societal institutions including mass media and social progress. They aspire to travel and help their communities more than starting families or their own businesses. They want to travel, earn high salaries, be wealthy, buy homes of their own… Millennials who entered the labor market around the recession, or during the years of slow growth that followed, experienced less economic growth in their first decade of work than any other generation. They have lower real incomes and fewer assets than previous generations. They worry about climate change, natural disasters, income inequality, distribution of wealth, unemployment, crime, corruption, terrorism, political instability… Only half believe that leaders of their current governments are committed to helping improve society or behave in an ethical manner. Their behaviors are profoundly disrupting business and society alike. They start and stop relationships with companies for very personal reasons. Nearly 64% of millennials said they would be physically healthier if they reduced the time spent on social media, and that it would make them happier. Book Summary. “Open” by Andre Agassi. Take it more than one point at a time. Work for everything. No matter what happens, hold your head up. And for God’s sake enjoy it, or at least try to enjoy moments of it. Control what you can control. What you feel doesn’t matter in the end; it’s what you do that makes you brave. The tennis bag is a lot like your heart- you have to know what’s in it at all times. To be inspired- that is the secret. Hard work is the answer, the only answer. Only the strong survive. A win doesn’t feel as good as a loss feels bad, and the good feeling doesn’t last as long as the bad. I marvel at how unexciting it is to be famous, how mundane famous people are. They’re confused, uncertain, insecure, and often hate what they do. Money can’t buy happiness- but we never believe it until we see it for ourselves. Dangerous to surrender to fear. Fears are like gateway drugs. You give in to a small one, and soon you’re giving in to bigger ones. Don’t worry about whether she likes you. Worry about whether you like her. Love is how we grow up. We must care for ourselves, which means we must be careful in our decisions, careful in our relationships, careful in our statements. Keep Climbing, The Alchanati Campbell and Associates Team There are many ways to live a life. The first, live every day like it’s your last. The second, live with a long-term horizon with planning and delayed gratification; believing you’ll live to 120. The third, plan and work hard now to enjoy in your mid-life. The fourth, plan for tomorrow, live for today. The fifth, work hard and plan not for you, but for your kids and their kids; creating a legacy. The sixth, a hybrid of those listed above or something not listed at all. As you can see, there is no right way to live as long as your living is producing positive results. Nobody knows when their final day will be. You don’t want to live in fear. You don’t want to be reckless in shortening your life. You don’t want to hold off on pleasures, avoiding the possibility that you may not be able to experience what you want in the future. You don’t want to not plan for the future, causing you to outlive your money or not being able to support yourself with security and well-being. You don’t want to be a hyper-consumer, falling weak to self-gratification at every moment that you get. So, what “do” you do? Financially, you are disciplined. You plan, save, budget, invest, prepare for retirement, spend when it’s necessary, indulge sparingly and responsibly, delay gratification, educate yourself on financial literacy... Socially, build strong lasting relationships. Have a circle of competence, find love, keep in contact with people you value, be vulnerable in building personal relationships, don’t fall for social pressures or influences, trust your inner voice and be confident in yourself, do what makes you uncomfortable... Personally, find meaning or a purpose, focus on your strengths and specialties, work on improving yourself, do what’s best for you, work hard, be true to yourself... Besides that, I have no idea.
The Market. Starting to save toward college costs can help limit how much a student will have to borrow. One way to save is putting funds into a 529 education savings plan, a tax-advantaged way to save toward education expenses (withdrawals are exempt from federal and state income taxes if you use the funds for qualified expenses). The biggest benefit of 401(k)s isn’t the tax advantage, it’s the forced savings nature. It turns out that you remember things better when they are unfinished. “China does not want a trade war, but it is not afraid of one and it will fight one if necessary.” Trump will no longer claim India as a developing nation, which will eliminate the exception that allows the country to export products to the US duty-free. 98% of US financial advisors are using social media for business and/or personal use. Every day, there are more than 1 million new caused by curable sexually transmitted infections among people aged 15-49 years. Poker and Hedge Funds. There is a correlation between skill in poker and skill in hedge fund management. Hedge fund managers who have won at least one poker tournament significantly outperform managers who have no wins. Skilled poker players are better at hedge fund management. Fund managers experience an economically significant increase in net inflows after winning in a poker tournament. A Two-Front War. That’s where the U.S might be heading in regard to trade. We all know about the persisting trade issues between the U.S. and China. Now, the U.S. is picking a fight with Mexico. President Donald Trump announced tariffs of 5% on all Mexican imports unless Mexico takes drastic measures to stop the flow of Central American migrants illegally entering the United States through Mexico’s northern border. These tariffs would go into effect on June 10th and have the potential to slowly increase to 25%. You might be wondering: didn’t the United States just reach a new trade agreement with Mexico and Canada? Isn’t this the whole purpose of a trade agreement? While you might be correct, Donald Trump doesn’t seem to care much because, in his words, “they need us”. Slowing Economic Growth. Slower population growth and slower labor force participation will constrain the supply of labor in the US. What happens to the US economy will determine whether there is a notable global connection or not. The private sector added just 27,000 jobs in May-the fewest since the economic expansion began. Nonfarm payrolls rose 75,000, missed estimations of 175,000. A financial crisis is caused by too much borrowing and then a wave of defaults and liquidations. Procrastination. Procrastination is not a time-management problem, it’s an emotion-management problem. If we know our emotions, we can deal with them as opposed to avoiding them and the tasks that provoke these emotions. Procrastination is a voluntary delay of an intended act despite the knowledge that this delay may harm us. People with anxiety often do everything they can to avoid the perceived external threat and shut off, leading to depression. Putting off these aversive tasks saves us from the unpleasant emotions associated with it (boredom, frustration, fear, anxiety). Don’t tell yourself “what’s wrong with you? Pull yourself together!” The lack of self-compassion might be exactly what’s causing your procrastination in the first place. Research suggests that taking a softer, more compassionate view of our own behaviors may be the key to breaking out of this self-perpetuating spiral. Focus on the right tasks at the right time. Write down any tasks or ideas that pop into your mind quickly so you can get them out of your mind. Book Summary. “The Millionaire Next Door” by Thomas J. Stanley. One of the reasons that millionaires are economically successful is that they think differently. The large majority of the rich live well below their means. The journey to wealth is much more satisfying than the destination. Many people who live in expensive homes and drive luxury cars do not actually have much wealth. Wealth is what you accumulate, not what you spend. Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and self-discipline. Building wealth takes discipline, sacrifice, and hard work. The wealthy believe that financial independence is more important than displaying high social status. We do not define wealthy, affluent, or rich in terms of material possessions. Frugal, frugal, frugal. It is easier to purchase products that denote superiority than to be actually superior in economic achievement. All too often young people are indoctrinated with the belief that those who have money spend lavishly and if you don’t show it, you don’t have it. If one lives below one’s means, one doesn’t have to be concerned with the possibility of being forced to reduce one’s standard of living. What is risk? Having one source of income. Dear Reader,
Dear Reader,
What does the future hold? Will it glitter with success and fulfillment? Will it be what I expect and plan for? Or will I be in the same place, or worst off from where I started. Having achieved nothing and having gone nowhere. Where will I be in 10 years? Who will I be in 10 years? Every action made today changes the outcome of your future. Putting things off is the biggest waste of life: it snatches away each day as it comes and denies us the present by promising the future. There are billions of ways to live a life; each person dead had theirs, and each person alive still has theirs. There is no right or wrong way to live, there’s just your way. Focus on the now and worry about future tasks later. Life is a game of negotiating boundaries. Live beyond your physical, mental, cultural and emotional means. Defy the system and stray from the path. Don’t follow the crowd and be so good that they can’t ignore you. The Market. Same-store sales grew only 4.8% year-over-year while online sales jumped 42% year-over-year. Theresa May resigned as Prime Minister of the British Conservative Party. Prime Minister Scott Morrison won a third term in office as Australia’s leader. People who buy property in Florida may value the tax-free income more than they worry about climate risk. No market can go up forever, and it always “eventually” makes a pullback. When we rush or move quickly, we stop being present and forget what we experience. So much of society is based upon narrowing people’s minds as much as possible. Family is ranked first for the domain of life that is most important for well-being. Steeply falling rates like the 2-year and 10-year are a worrying sign for stock investors, but they are great for fixed income investors. Bond interest rates and prices move inversely. Lower rates = higher bond prices. The Yen and Swiss Franc as “safe-haven” currencies. When there is market uncertainty and volatility, investors are looking for safer, less risky investments. For Japan’s Yen, when there is global turbulence, Japanese traders bring all of their money overseas back to Japan, which will stimulate the Japanese economy. For the Swiss Franc, the Switzerland economy is very stable and secure. The Swiss government does not evolve itself with global affairs or other global risks. The Swiss franc carries the strongest safe-haven attributes. Both nations also have trade surpluses (they export more than they import). The Fed Minutes. The Federal Open Market Committee (FOMC) holds eight meetings per year. The FOMC changes the fed funds rate which they target to be 2.25%-2.50%. If the rate is raised, expect slower growth. At the most recent meeting, the FOMC said they would be keeping rates unchanged because they see a sustained expansion of economic activity and strong labor market conditions. Markets are convinced that the trade war, the slowing down of global growth, and the pressures of the upcoming 2020 elections will force the Fed to reduce rates by the end of the year. Maturity Extension Program. The maturity extension program is a program that the Federal Reserve implements with their quantitative easing. It’s the gradual decrease in longer-term yields; selling or redeeming shorter-term Treasuries and using the proceeds to buy longer-term Treasuries. By reducing the supply of longer-term Treasuries in the market, it will put downward pressure on longer-term interest rates which will create a broad easing in financial market conditions that will provide additional support for an economic recovery in the future. This program lowers home mortgage, corporate bonds, and other loan interest rates as well. Our Climate. Trees are one of the world’s oldest and best carbon-capture technologies; they absorb carbon dioxide from the air, store the carbon in wood, and release oxygen. Sea ice has diminished by 40% in 40 years. Nature, through its ecological and evolutionary processes, sustains the quality of the air, fresh water, and soils on which humanity depends. Nature also distributes fresh water, regulates climate, provides pollination and pest control, and reduces the impact of natural hazards. If we save nature, we save ourselves. If you have healthy habitats, we have healthy wildlife populations with clean water. Satellites and AI will soon track carbon emissions by the world’s largest energy producers. Australia’s property market is expected to lose $571 billion in value by 2030 due to climate change and extreme weather and will continue to lose value in the coming decades if emissions remain high. By 2030, one in 19 Australian property owners face the prospect of insurance premiums that will be effectively unaffordable. Previous severe droughts have reduced Australia’s GDP by around 1%. Book Summary. “Siddhartha” by Herman Hesse. Siddhartha had one single goal- to become empty, to become empty of thirst, desire, dreams, pleasure, and sorrow- to let the self die. No longer to be self, to experience the peace of an emptied heart, to experience pure thought- that was the goal. He killed his senses, he killed his memory, he slipped out of his self in a thousand different forms. What is meditation? What is the abandonment of the body? What is fasting? What is the holding of the breath? It is a flight of self; it is a temporary escape from the torment of self. It is a temporary palliative against the pain and folly of life. Opinions mean nothing. Through thought alone feelings become knowledge and are not lost but become real and begin to mature. The reason why I do not know about myself and anything about myself is due to one thing- I was afraid of myself. Meaning and reality were not hidden somewhere behind things, they were in them, in all of them. One can beg, buy, be presented with and find love in the streets, but it can never be stolen. Everyone takes, everyone gives. Life is like that. Everyone gives what he has. One cannot have pleasure without giving it. If he made a profit, he accepted it calmly; if he suffered a loss, he laughed and said, “Oh well, this transaction has gone badly”. Lived the life of the world without belonging to it. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Validation, acceptance, acknowledgment, belonging, approval... all outer feelings dependent on another’s judgments and perceptions of you. The need to feel wanted. To go out of your way to please others. To seek validation to feel better knowing that what you’re doing is right. Did I do this correctly? Does this look good on me? Am I beautiful? People need to feel important. Wanted and desired. Looked up to and idolized. So they try to seek those feelings from others or from “things”. Just like how you must love yourself before you love somebody else, and just like how you need to work on yourself before helping others, you need to seek acceptance, approval, and acknowledgment from yourself. Build up your self-esteem and confidence, and know your mind and your body, so you don’t have to seek confirmation and validation externally. The Market. As many as one million plant and animal species across the globe are at risk of extinction due to the damage from human beings. The US birth rate hit a 32-year low. China, the biggest holder of US debt, reduced its holdings of US Treasuries in March by $20.5 billion, bringing the overall ownership to $1.12 trillion. Bond yields in the US are close to their lowest since 2016. Falling bond yields often indicate declining confidence in the economy. The US ranks only slightly higher than Botswana in adult financial literacy. You need $2.3 million to be considered “wealthy” in America. Californians need to get ready for the fire season starting in June, and East Coasters need to prepare for hurricane season coming in the fall. The UK plans to reduce its greenhouse gas emissions to zero by 2050. Book Summary. “All About Love” by Bell Hooks. It was love's absence that let me know how much love mattered. Love returns us to the promise of everlasting life. When we love we can let our hearts speak. "I am afraid that we may be raising a generation of young people who will grow up afraid to love, afraid to give themselves completely to another person because they will have seen how much it hurts to take the risk of loving and have it not work out. I am afraid that they will grow up looking for intimacy without risk, for pleasure without significant emotional investment. They will be so fearful of the pain of disappointment that they will forgo the possibilities of love and joy". To truly love we must learn to mix various ingredients- care, affection, recognition, respect, commitment, and trust, as well as honest and open communication. The heart of justice is truth-telling and seeing ourselves and the world the way it is rather than the way we want it to be. If you do not love yourself, you will be unable to love anyone else. Love is our true destiny. We do not find the meaning of life by ourselves alone- we find it with another. The financial strength of Americans. A majority of Americans, 56%, rate their current financial situation as "excellent" (12%) or "good" (44%). Overall, just 25% of Americans say they worry "all" or "most" of the time that their family income will not meet their expenses; 37% worry "some of the time"; and 37% "almost never" worry. At the same time, 56% of Americans report that they are currently saving money (19% say "a lot" and 37% "a little"). Not having enough money for retirement and not being able to pay for medical care in the event of a serious illness or accident are the most worrisome of eight financial issues for Americans. Cutting rates. The Federal Funds rate determines the prime interest rate, the interest rate used for mortgages, credit cards, consumer and business loans… Many individuals believe the Fed will cut rates, making it easier to borrow money. More access to money = economic stimulation by encouraging more borrowing and investing. Typically, this tool is used when the economy is doing poorly to try and force it out its slump. Many economists regard interest rate cuts as something done in a crisis. "Why doesn't rates always stay low even when the economy is doing good?" Well, think of it like this. If the rate is already low, say from 1.75-2.00%, and the booming economy starts receding, the Fed can't do much to stimulate as there isn't much room to drop the rates. That’s why they like to increase during times of economic prosperity so that when the bad times come, they have options. Now, Federal Reserve officials have been adamant about not cutting the rates. They believe that so long as inflation is near their 2% goal, and economic growth is steady and healthy, there isn't much concern. Recent data, however, might contradict these two standards, and that is a decision the Fed will have to make shortly. Let’s talk money, power, and influence. E&P, which is better known as the oil and gas exploration industry, is big time money. What you may not know is the extent of power this industry has. E&P is worth an estimated $90 trillion dollars. To put that in perspective, the American GDP for 2017 was $19.39 trillion. That is not just big money, that is topple nations and end regimes money. One of the most strategic ways this money is used is lobbying. Oil companies lobby governments all over the world and this tactic has paid off big time. A new report by the IMF found that in 2015 the US spent more than $649 billion dollars (10 times the amount spent on education) in various oil subsidies, while the same year it spent $599 billion on its entire defense budget. That means that we spent more money on oil companies than we did funding and maintaining the most powerful military on Earth. Averaged out, the fossil fuel subsidies cost each man, woman, and child in the United States $2,028. This trend does not stop with the US. The same report found that the governments of the world spent $4.7 trillion dollars subsidizing fossil fuels. The true impact of this corruption goes further than that fact this money could have been spent on much more noble causes. Without subsidies, oil companies would face stronger competition from competitors and be forced to find more sustainable sources of energy and cleaner ways to burn their energy. Consumers would have more access to alternative options like solar panels or electric cars, but the fossil fuel industry has been so heavily subsidized that competitors are left at a fierce disadvantage. In fact, the IMF concluded that without these subsidies global carbon emissions would have been cut by 28%. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Over the last two years, our country has grown to be the most divided it has been since the civil war. Corruption has infected Washington DC, and legal investigations have plagued the current administration. Donald Trump is still the only US President not to receive an approval rating over 50%, which means at no point in his presidency have more than half of the population approved of his actions as President of The United States. In the midst of this political distrust, nearly two dozen candidates are using this opportunity to run for president. This election may prove to be the most important in modern history as our nation and the world face evermore increasing issues. Some of these issues like climate change will require an entire generation to completely shift the foundations of our modern economy or face dire consequences. This may sound scary, but the chance to influence the course of the 21st century is in your hands. As citizens, you have a civic duty to become knowledgeable of the candidates so when election day come you can make an informed decision. To get started let us take a look at who is running separated by political party and in the order of their current polling numbers. Democrats: Joseph Biden, 76: Former vice president and senator from Delaware he is currently the most popular candidate running both nationally and internationally. Supports have embraced the chance to bring America back to Obama-era conditions. He has voiced support for restoring America’s image as a global leader and protecting low-income workers. Bernie Sanders, 77: Senator from Vermont. Bernie has a long history in DC, first winning his seat in Congress as a self-described democratic socialist in an area that was historically more conservative. Bernie is now known for his far-left political views, some of which he has championed for decades, including Medicare for all and free college tuition. He has received overwhelming support from small-time donors that helped him bring in $20.6 million dollars in 2019 Q1 alone. Elizebeth Warren, 69: Senator from Massachusetts. She had received lots of support from east coast democrats and is one of the frontrunners in the campaign. Has championed many core democratic policies and focused on income inequality and providing support for the middle class. She has been able to raise an impressive $16.4 million in Q1 2019. Kamala Harris, 54: Senator from California; former attorney general of California; former San Francisco district attorney. California is often regarded as the fundraising state for Democrats and Kamala has used her home state to her advantage bringing in $13.2 million reviving large donations from celebrities like Felicity Huffman, William H. Macy, Darren Aronofsky, Elizabeth Banks, Reese Witherspoon, Eva Longoria, Jenny Lewis, J.J. Abrams, Ben Affleck, and Quincy Jones. Pete Buttigieg, 37: Mayor of a small town in Indiana, Pete is the clear underdog among the frontrunners, but has recently been thrown into the national spotlight as the first openly gay candidate. Pete has proven to be a stark contrast to the current administration with his notable administrative and military experience, has a degree in economics, was a Rhodes scholar at Oxford University after attending. Harvard, speaks several languages, and if elected would be the youngest US President. He has voiced his support for issues like climate change but has not yet developed clear policies. Thanks to a recent publicity boost he raised $7.1 million in Q1. Beto O’Rourke, 46: Former congressman from Texas. He is considered a celebrity among Democrats and became wildly popular after almost beating Ted Cruz for Senate in Texas. He has received criticism for not having clearer policies and has since voiced more support for issues like immigration reform and marijuana legalization. Beto has used his popularity among young Democrats to bring in $9.3 million. Amy Klobuchar, 58: A Senator from Minnesota she is most known for her questioning of Brett Kavanaugh during his confirmation. She has worked on legislation regarding the current opioid crisis, drug addiction, and high-cost prescription medications. Has raised $8.8 million. Tulsi Gabbard, 38: Congresswoman from Hawaii and Army National Guard Veteran. Early in her campaign, she received criticism for her meeting with Syria’s President, and former anti-gay statements while working for an anti-gay advocacy group. She is known to oppose US military intervention overseas. Julian Castro, 44: Former housing secretary and mayor of San Antonio, Castro was once a rising start but is now mostly overshadowed by Beto O’Rourke. He has voiced support for a universal prekindergarten program, Medicare for all, and immigration reform. Has raised $1.1 million. Andrew Yang, 44: Former tech executive who founded a nonprofit to help economic development. His campaign is centered around providing a universal basic income of $1,000 a month for all Americas. While he is largely unknown his online campaigning presence is one of the most effective out of all the candidates. Has raised $1.7 million. Tim Ryan, 45: Congressman from Ohio. Has been in Congress since he was 29. Has received support from blue-collar voters in the Midwest that may help him gain support form people who previously voted for Trump. Supports renegotiating and enforcing Trade deals, as well as key issues for blue-collar workers like unions rights. The Democrats listed below have consistently polled far below 1% and are listed in no particular order. Michael Bennet, 54: A senator from Colorado who is commended for his ability to compromise. He has voiced support modernizing the economy with artificial intelligence, increasing infrastructure spending, and in 2013 he co-authored a comprehensive immigration bill. Cory Booker, 50: Former senator and mayor of Newark, and of one the most well-spoken candidates. He is regarded as a leader in criminal justice reform. Has raised $7.9 million. John Delaney, 56: Former Congressman from Maryland and business owner. He has been campaigning since 2017. He supports universal health care, but also try to appeal as a bipartisan problem solver. He has raised $12.1 million in Q1 but it should be noted that he has loaned himself $16.3 million since July 2017. Kristen Gillibrand, 52: Senator from New York and former congresswomen. She previously held conservative policies and position, she has now faced on equality for women which may isolate many voters. Has raised $4.5 million. John Hickenlooper, 67: Former governor of Colorado and former mayor of Denver. He has had a successful career in Colorado supporting issues like climate change, gay rights, and gun control. Colorado is a purple state or a state that is evenly split between Republican and Democratic support. If he can appeal to other Purple states he will have an advantage over many of his peers. Has raised $2 million. Jay Inslee, 68: Governor of Washington and a former congressman he had shown immense support for green-energy programs in both positions.Has raised $2.2 million. Wayne Messam, 44: Mayor of Miramar, Florida. Is known for his proposal to cancel more than $1.5 Trillion in student debt. Has raised $45,000. Seth Moulton, 40: Congressman from Massachusetts. Mostly known for his military service and his signature policies have to do with forgiven policy, and defense. Eric Swalwell, 38: Congressman from California. Has a growing national profile, thanks to his popularity as a cable news guest. Marianne Williamson, 66: A self-help and spirituality author who has written more than a dozen books. She has proposed a $100 billion slavery reparations package. Has raised $1.5 million. Republicans: Donald J. Trump, 72: Current President. His tenure so far has focused on undoing policies from the Obama administration especially relating to healthcare, environmental regulation, and immigration. He is currently the center of more than 18 separate legal investigations. Has raised $30.3 million, largely in traders from PACs and the Republican National Committee. William F. Feld, 73: Former governor of Massachusetts and former federal prosecutor. He ran for Vice President on the Libertarian Party ticket in 2016. He is currently the only Republican running against Trump and is targeting moderates and centered conservatives that Trump has alienated with his policies. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Greatness, more tariffs on China, learning how to buy stocks the smart way, and creating habits to change the way you think. Strive for greatness. The level of proficiency in your specialty or talent or niche that puts you above all the rest. The feeling of being more than you can comprehend. The truly great cannot be defined or categorized. They are well-known in their space, looked up to for their contributions, and valued for their presence and being. They don’t need to prove anything. Their work says it all. There is nothing comparable. Greatness is something of dreams, aspirations, goals, and objectives. It’s an achievement of its highest kind. How does one become great? If you want to be really great, work on the details. Focus on one thing and master it. “Anybody could do that, but I did.” “If you can’t, you must.” Face adversity head-on and overcome it. The Market. Trump raises tariffs on more than $200 billion worth of Chinese goods. Uber went public today at a $75.5 billion valuation but decreased 7% in its opening debut which caused its most recent private investors to be underwater. In the past two trading days, the S&P 500 lost $528 billion in total market value due to fears from the trade war. New immigration reform has caused international student enrollment to decrease. Delays in tackling climate change could cost companies about $1.2 trillion worldwide in the next 15 years. Investors have a pivotal role to play in moving the world to a low-carbon future. World anger levels are at a new high. The 3-month and 10-year yields inverted again. Curve inversions are leading indicators of recessions because they imply the market expects central bank easing to offset a looming slowdown. Customer utility. The goal: Maximizing utility and giving people what they desire. People seem to reliably seek out a few things that make them unhappy. People are either addicted or seek other things besides happiness. As consumption of a good or service increases, the marginal utility obtained from each additional unit of a good or service decreases. Utility is the satisfaction one gets from consuming a good or service. Total utility is the total amount of satisfaction. Marginal utility is the extra satisfaction from an additional unit of the good. Customer utility changes in trends and generational shifts, but the same basics of microeconomic theory will be used. How do investors determine which company to invest in? How do they determine if they should buy a certain stock? The answer is NOT one size fits all and requires intense critical thinking to be as effective as possible. That being said, most decisions usually incorporate some analysis of financial data, and many use that data to forecast the value of the firm. How do they do this? A common method is a Discounted Cash Flow. Essentially, you determine all future cash flows for a company and discount them back to the present day (money is worth more today than it is tomorrow). 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 can't be designed. Keep Climbing, The Alchanati Campbell and Associates Team What's up New-World Economics? Keynes, Karl Marx, and Adam Smith are losing their (monetary)Â value5/3/2019 Dear Reader,
Humans being animals, California as a country, employment for the near-graduates, the current economy, politics, finance, and M&A. The older I get, the more fucked up I realize this world is. It’s like a rush of ocean water from a wave pounding you down over and over again. It’s like discovering the girl you are dating was born a guy. (Not a personal experience) I’ve been tricked. Censored. Protected from the society I live in. I didn’t know death, I didn’t know fear, I didn’t know the outrageous acts caused by humans. I was an ignorant, dependent child focused on self-gratification, my needs, and my wants. Now, I wake up every morning to notifications of chaos and misfortune. Bad luck and destruction. Hatred spoken and expressed. Would I have been scarred if I would have learned this at an earlier age? Would I have matured more quickly? Would I be too afraid to leave the house every day? Does my maturity and age now give me the allowance to view this content? Is it an obligation to know what’s happening around the world? Or can I hide away from it all? All I know is, even with the advancements of technology, medication, standard of living, communication... there will always be inequality and we will always be animals. The only thing you can do is fear something that is greater than you, society, and the universe. The Market. The effective minimum wage has risen to $11.80 an hour. China produces about half of the world’s pork. Due to African swine fever, the output will fall 20-30%. Based on margin debt numbers, traders don’t seem to be as willing to increase the leverage in their portfolios today as they were in 2018. Traders are being more cautious in 2019 than they were in 2018. Two out of the three major US markets are at record highs… investor optimism is starting to fade. The physician’s industry has a surprisingly high rate of sexual harassment, assault, and retaliation. A report states that 20-50% of women students said they had experienced sexually harassing behavior by a faculty or staff member. Japan will be having its first abdication since 1817 when Emperor Akihito resigns, and Naruhito takes the throne. The less volatile and the less risky stocks are overperforming the riskier stocks in this current market. The Consumer Confidence Index grew 5 points from 124 to 129 in April. Home prices in 20 US cities saw slowest price gain since 2012. A study shows that the same brain circuits that are triggered when eating chocolate and winning money are also activated when teenagers see a large number of likes on their social media. Central bankers continue their effort of holding interest rates low while trying to lift inflation. The sleep aids’ market is expected to hit $100 billion by 2023. Why California is the best state economically. California is 1/8 of the US population. California has an annual growth rate of 3% and is the 5th biggest economy in the world behind Germany and in front of the UK. 17% of the 5,440 corporate locations in California are research and development facilities, and that ratio beats China’s 13%. In the last 10 years, California’s publicly traded companies returned 420% while the S&P 500 returned 239% during the same time period. With more growth and earnings, the state is able to employ more people and continue to stimulate its economy. Recession affects on employment. College graduates who start working during a recession earn less for 10-15 years than those who graduate during a boom. High school graduates and dropouts earn even less. Recession graduates also had higher death rates when they reached middle age. “Our results demonstrate that health, mortality, and economic and personal well-being in midlife can bear the lasting scars of disadvantages that come during young adulthood.” Best of luck 2020 graduates! The current economy. The Federal Open Market Committee, the branch of the government responsible for the monetary policy (cutting/hiking rates, increasing/decreasing monetary supply), does not see a need to cut rates to increase inflation. The Feds target for inflation is 2% and they held interest rates at 2.25-2.50%. The price of gold has dropped 2% month-to-month. Gold has been dropping because of the strong dollar and reduced appeal for the metal. The stock market has been dropping because investors expected the Feds to cut rates, which would stimulate growth and strength. According to Bank of America’s survey, investors are “bearishness” and it’s a six-month high. M&A. If you delve into the business world, you will hear these two words repeated quite a lot, Acquisitions and Mergers. This is a pretty general term which is the ‘consolidation of companies or assets through various types of financial transactions’ (Bloomberg). This broad term involves mergers, acquisitions, consolidations, tender offers, purchase of assets and management acquisitions. In their briefest definitions, mergers involve two companies combining, with the end result being a single company. Acquisitions involve a company purchasing a majority stake in a separate company, which does not result in a change in name or legal structure. Consolidation is creating a new company from 2 separate companies. A tender offer is when a company purchases the outstanding stock of another company at a specific price. What do acquiring companies look for in potential acquisition companies? Well, they are usually looking for a reasonable price in comparison to book value, a steady cash flow that can cover interest expenses, and a potential synergy between management teams. Acquiring companies value potential target companies by using comparative ratios, replacement costs, M&A models, and discounted cash flow models. Modern Policy 3. The problem: how to get the economic machine of markets (buyers and sellers, businesses and consumers), and stimulants like banks and the government to produce economic well-being for most people when monetary policy does not work. The current practices of monetary policy like rate cuts and quantitative easing might not work for the future. In the future. Some believe that fiscal policy (adjusting spending, tax rates, and employment) and monetary policy will have to be closely connected to be able to squeeze the economy out of a recession. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
I have this unquestionable desire to disappear. Dissolve all trace and presence. Cut connections and relationships. Be born into a new environment in a new time. Why does it seem like a paradise? I’m getting away from all of the noise and responsibility. I’m going at my own pace, doing what I want to do, with nobody controlling me besides my own ambitions, goals, and work ethic. What would you do if you had no responsibilities? Nothing holding you back besides the limits of your potential. I would vanish without explanation or warning- go off the grid. A big part of living a fulfilling life is doing so in a way that is true. Living a fortunate life is not hard, but when it’s not your life that you’re living, what are you living for? Everybody talks about life and how to live it correctly, but only a few actually live what they preach. It’s better to have a short life that is full of what you like doing than a long life spent in a miserable way. The Market. America’s elderly are twice as likely to work now than in 1985. 20% of those age 65 and up haven't retired yet because they do not have enough money to retire. Researchers say climate change makes poor countries poorer and widens the global inequality gap. Half of 16-year-olds in the US had a driver’s license in 1983. Only 25% of 16-year-olds do now. The US tightens the ban on Iranian oil. Junk bonds act similarly to stocks. If junk bonds continue to decline, that can be an indicator that large-cap stocks decline as well. Fed policy is guided by the theory that high unemployment equals low inflation and vice versa. The most valued skills for an employer: problem-solving, collaboration, customer service, adaptability, culture fit, growth potential, in-demand technical skills, being curious and communication. Behavioral Finance. “The human mind is fundamentally not a logic engine, but an analogy engine, a learning engine, a guessing engine…” The study of behavioral economics allows us to understand the decisions we make. Behavioral finance aims to influence and improve our financial decisions. We are more sensitive to losses than gains and overly influenced by short-term considerations. We seek to conform to group behavior and prevailing norms. We overweight the importance of recent events. We are poor at assessing risks and gauging probabilities. We over-estimate our own abilities. We focus on outcomes. We are often persuaded by captivating stories. Have a long-term investment plan. Automate your savings. Rebalance your portfolio. Don’t check your portfolio too frequently. Don’t make emotional decisions. Don’t trade, invest. Save more tomorrow. Individuals should build reserves that can provide an acceptable standard for living in retirement. To achieve this, they should start saving early. What’s hurting us is our tendency to think that the present is more important than the future, and limits to our self-control. Ask yourself these questions: What is the problem or issue? What is the rational or optimal decision? How do you actually behave? What is causing this difference between what you should do and what you actually do? How can we alter behavior to deliver better outcomes? A Never-Ending Work Life. In 2017, 32% of people ages 65 to 69 were working and 19% of people ages 70 to 74 were employed. In 2024, it is projected that 36% of people ages 65 to 69 will be in the labor force. There are two reasons why a 75-year-old would still be working: they love their job; they are active, healthy and want to work due to longevity OR they need to work; they cannot pay off their current debt and expenses, and they do not have enough saved to be able to retire and survive. The first reason is not the issue, but there is a debate between living longer and not working and living longer and continuing to work. If your job is stressful, physically demanding, and lacks meaning, then it will have a negative effect on longevity and your health. But staying mentally, socially, and physically active is good for long-term health. The real problem is people working past the “retirement age” due to them not having enough money. You cannot rely on the government to fund your retirement. Starting to save earlier in life, being frugal and disciplined with your money, and enforcing saving by auto-enrollment or forced/auto contributions will help ensure your ability to have the choice of retirement in the future. Orange and LA Real Estate. Home sales volume in Orange remains weak. The low turnover rate will continue until 2022 when renters of Millennials start buying and Baby Boomers start retiring. Homeownership remains low with the state average being 55% and Orange being 57%. Home sales volume in Los Angeles remains low. The homeownership rate in Q4 2018 was 50%. With the increase of interest rates (that increase mortgage rates), which caused the prices of houses to fall because people are having a harder time affording real estate. Debt and Equity. What is the cheapest financing option, a company selling debt or a company selling equity? The answer is debt financing. Reasons: you get an income tax benefit on the interest component that is paid to the lender. If the firm goes bankrupt, equity investors lose everything, but the debt holder has the first claim on company assets. You do not give away ownership or a stake in the company. The cost of equity is more expensive due to its riskiness (cost of debt is lower than the cost of equity). Generally, companies in stable industries with consistent cash flows use debt financing (taking out a loan or selling bonds) more than equity financing (selling shares of the company). Tesla. On Earth Day, Tesla invited representatives from their largest investment partners to check on the progress the company has made and their plan for a fully self-driving car. Tesla has just begun to manufacture its first in-house self-driving computer which boasts an impressive 142 trillion operations a second. The new FSD computer is said to be the last piece of hardware Tesla needed to achieve full self-driving by the end of the year through over the air updates. Once FSD is accomplished, Tesla plans to launch a ride share network similar to Lyft and Uber, but driverless. The idea is while you are at work you can activate your Tesla and allow it to give rides to people and earn you some extra cash. Tesla plans to launch their RoboTaxi service next year and if so, Uber and Lyft stand to lose big. Tesla has a massive competitive advantage over Uber and Lyft because they are closer to reaching FSD capability, already make the cars and self-driving hardware in-house, plan to offer their own insurance, will not have to employ human drivers, and will run on a completely electric fleet who's cost per mile are less than half of current costs. Tesla owners stand to make upwards of $10,000 a year while Lyft and Uber stand to lose billions. It's a race to the future of self-driving cars. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
There this voice in my head that tells me what to do and what not to do. It dictates my actions and the words that come out of my mouth. Sometimes it tells me not to do something, even though I should have. And other times it tells me to say something, even though those words weren’t the correct ones to say. A strong, genuine self finds its foundation in the destruction of his initial character. You fail to succeed. You get hurt to grow stronger. You experience pain to build a tolerance. You fear to become fearless. The impulse to “good” should judge what you do or not do. But not only what’s good and socially sound. What’s right for you and your life should judge every action you set forth and every word you project. Man is blind to his shortcomings. Observers trying to decide what a man is like look closely at his actions. But when our inner voice tells us to strive to become better than we are, everything around us becomes better too. The “j” in jobs is for “joy”. Do you like what you do? Which parts of your job make you happy? Which parts are a dreadful waste of time? If you see your life more fluidly as a commitment of playful responsibilities, there is no reason work has to be a source of dissatisfaction. The Market. Pinterest and Zoom went public. Both are trying to price at “the higher end of their price range” just like Lyft and most likely Uber when it goes public as well. The US trade deficit on trade in goods and services narrowed 3.4% in February. With Disney’s new streaming service, Netflix says, “we don’t anticipate that these new entrants will materially affect our growth because the transition from linear to on-demand entertainment is so massive and because of the differing nature of our content offerings.” Netflix is investing over $12 billion to create new content this year. Most Financial stocks recently released earnings and beat estimates. The Federal government collected $1.6 trillion in income taxes this year and paid out $2.19 trillion in outlays (social security, national defense, Medicare, income security, health, education…). Slow things drive us crazy because the fast pace of society has warped our sense of timing. US Retail Sales for March increased by 1.6%. 3 unconventional tools the government can use during a recession: buy both corporate bonds and equities to own a percentage of the country’s entire stock market, tolerate more inflation, and the Fed distributing money directly to citizens in the hope that they would spend it. Mueller Report. Robert Mueller is an American lawyer and government official. He was asked to be the special counsel in the Russian investigations to see if there was collusion between President Trump and Russia. Mueller found at least 10 cases of possible obstruction of justice. Trump tried to remove Mueller, curtail Russian investigations and prevent public disclosure of evidence. “Our investigation found multiple acts by the president that were capable of exerting undue influence over law enforcement investigations…” Mueller couldn’t establish Trump committed crime. Life After College. What job you have and where you work are likely to impact most aspects of your life for decades to come, so it is important you get the best job that you can get. Before you even begin applying there are a few things you need to do. First, make sure you update and clear all of your social media profiles. Recent studies show that 70% of employers check the applicant's social media accounts. Next, you want to research the company to ensure that the company is a good fit for you and to better market yourself to your future employer. Look into the job description, their corporate values, or the company’s mission statement to find what they look for in employees. Use this information to update your resume and tailor your cover letter for the specific position you are applying for. Lastly, try to find the hiring manager and contact them directly so you are not just another faceless piece of paper in an otherwise indifferent stack of applications. Marketing Yourself. When drafting your resume make sure to focus on having a functional design and including only relevant content. Keep the colors and font simple so the hiring manager can easily find what they are looking for. As a vernal layout, you want to have your name and contact information at the top, an executive summary, employment history in reverse chronological order, an education section, and a technical skills section. Under your name, be sure to include the URL for your LinkedIn or other professional inline profile to ensure the hiring manager can easily find you. Instead of including the generic objective statement include an executive summary that explains who you are and what you are looking for. Treat it like a “30-second elevator pitch”. When listing your previous jobs be sure to include company descriptions, what your role was, and any projects you may have pioneered or worked on. When writing your accomplishments to be sure to use the “result by action format”, write what you achieved followed by how you achieved it. Don’t forget that during the initial hiring process your resume is all that your employer will have to go off of, be sure to put in the time to better market yourself and ensure you stand out. Be yourself and be honest. The recruiters are skilled in knowing if you are faking your skills and personalities. For those of you in school, trying to break into the world of finance, and everything in between. The key to doing well lays in preparation. The first step is knowing yourself. This includes, but also goes beyond your resume. You need to be able to extensively discuss everything you've included on your resume. If you can't talk about it for a substantial amount of time, don’t include it. You need to know your strengths, your weaknesses, and how those align with what the company needs for the proper position. The next step is to truly prepare for any and all technical questions. This isn't really something that you can cram for. This is the type of preparation that takes months. You need to know information about finance in general, and possibly specific information regarding the role.For example, if this is a position regarding investing, you better know, roughly, where the DOW, S&P, and NASDAQ are. Know what the Fed has been up to. Have a prediction based on where you think the market and/or economy is going to head in a given timeframe. Sites such as Glassdoor allow you to read information about specific interviews from candidates that have already gone through the process. They can give you information regarding the types of behavioral, the specifics of the technical questions, and a general feel of the interview. Below are some questions that I have personally been asked during interviews? - Tell me about a time in which you had to deal with conflict within a team? How did you approach it and what was the outcome? - What is your greatest accomplishment and why? - What is the federal funds rate right now? Where do you think it’s going? Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Identity. What makes you, you. The masks we wear — or don’t wear — shape the way that we interact with the world around us, and they determine the space in front of us. That inner person (your inner voice) is who you are. What you tell yourself and what you express to others is what you are. And your reflections on life and your reactions to life will determine where you are. Your identity is only as valuable as its ability to help you create a sense of order in your mind about what is going on in the world. Live what you preach and accept your reality as best as you can. In a world dominated by distractions, we are increasingly getting out of touch with our ability to direct ourselves to where it matters most. We don’t become who we are by staying as we are now. There’s a constant fight between who I want to be versus who I should be. Should I always be nice and genuine? Positive and soft-spoken? Or can I benefit from being ruthless and emotionless? With a thick face and a black heart. Thick Face, Black Heart. Key takeaways from a great book: When you conceal your will from others, that is thick. When you impose your will on others, that is black. A successful life is one that is lived through understanding and pursuing one's own path, not chasing after the dreams or fulfilling the expectations of others. The thick-faced person has the ability to put self-doubt aside. He refuses to accept the limitations that others have tried to impose on him and he does not accept any of the limitations that we commonly impose on ourselves. Black heart is the ability to take action without regard to how the consequences will affect others. No price is too high to pay for victory, as long it is achieved at someone else's expense. To conquer others through ruthless means is not difficult: all you must do is agree to sell your soul to the devil. There is no one out there you have to conquer. When you have successfully conquered yourself, the world will be at your feet. Extraordinary people don't care what others think of them. Keep your misfortune private and only share it with those who can truly support you. One who is skilled in defeat shall never see destruction. The Market. The US monthly international trade deficit decreased in January 2019 from $59.9 billion in December to $51.1 billion in January. Trump is threatening $11 billion tariffs on the EU (on wine, cheese, ski suits, helicopters, and motorcycles). The world economy will grow only 3.3% this year, the weakest growth since 2009. The Consumer Price Index rose 0.4% in March. A bad diet kills more people globally than tobacco. This is expected to be the first quarter of negative year-over-year earnings growth since the 2015-16 earnings recession. Investors are betting on the future earnings or profitability of a particular company or industry when they buy a stock. Making ourselves inaccessible from time to time is essential to boosting our focus.Americans borrowed $88 billion in the past year to pay for health care. About 45% of Americans said they are concerned that a major health event will leave them bankrupt. Americans spend $3.5 trillion on healthcare, 1/5 of the economy. Spending is expected to rise to $5.6 trillion in 2026. Sources of return for investors: earnings growth and dividends. The value of any company should theoretically be the combined value of its existing business persisting into the future and a speculative component that represents the market’s guesstimate of the present value of future growth. Why do markets appreciate over time? Because earnings have grown over the very long term and reinvested dividends additionally contribute to the growth. The International Monetary Fund cites a slowdown in 70% of the world’s economies in 2019. 2019 Q1 Earnings. Over this next month, we will see a large portion of the financial industry reporting earnings, with JPM, PNC, FRC, and WFC leading the charge. Out of these 4 companies, we saw 3 beat, and 1 miss. JPMorgan beat expectations by 9.9%, PNC beat by 3.3%, First Republic beat by 2.9%, leaving Wells Fargo to miss by 7.7%. Next week will be another massive week for financial earnings reports, with Charles Schwab, Goldman, Citi, BOA, Blackrock, and Morgan Stanley releasing earnings. Currently, it seems optimistic for the financial industry, with these three massive companies posting surprises, showing that we might just have a bit more fuel for this late stage expansion. We saw the market rise to 6-month highs after these banks posted earnings, which brings hope for next week after more financial institutions start postings. Elections. Back in 2016, the US presidential elections showed a country divided almost completely in two. Since then elections all across the world have followed a similar trend. Israel recently held parliamentary elections where the results were so close that seats were divided 35-35 between the two major parties before a recount gave the current prime minister’s party 36 seats. In India, a similar theme can be seen as the world’s largest democracy begins its elections. India has nearly 900 million registered voters and several high profile candidates running this election. A central issue for India has been religion, almost 80% of the voting population is Hindi and religious differences have been driving the country apart. Lynching is becoming more common as some radical citizens have targeted members of India’s Muslim population. Whatever the outcome may be there is no doubt that these elections show a world that is starkly divided. Big news for SpaceX this week. In February of last year, Elon Musk launched his car into space on the first ever flight of the Falcon Heavy. On Thursday, a new iteration of the rocket launched its first payload, delivering a 13,000-pound satellite to orbit and successfully landing the 2 side boosters and the center core; a feat that other companies and space agencies are nowhere near being able to achieve. The company is now preparing to launch the rocket a third time in June to deploy some of the first operational satellites for their Starlink satellite constellation. The company has also begun to test a prototype of their Starship rocket which will likely be the first rocket to bring humans to Mars. Following their streak of success, SpaceX signed a contract with NASA to intercept and try to move an asteroid. These recent developments show that the aerospace industry has plenty of room to grow. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,Emotions. The thoughts that turn into an overbearing exaggeration that alters our sense of reality. Emotions do not tell us what’s true. About half of our emotional judgments are fully in conflict with our understanding of reality and lead us astray. Leads us far from the truth to a bad place where mistakes are made, and regret is forged. The other half are gut instincts; insights that are far sturdier than anything we can reason. The effective mind is one that has learned to distinguish the two. Rule over oneself and never be “carried away” by anything. The struggle not to be overthrown by our emotions. Conduct oneself in a gentle and dignified way. The accomplishment of necessary duties without complaint. Nor can I be angry with my fellow man or hate him, for we have been made for cooperation. Perform every action in your life as if it were your last, putting aside all aimlessness and emotional resistance to the choices of reason. People are ignorant of what is good and what is bad, which is no less a disability than the inability to distinguish white from black. Our lives are but a series of choices. If something noble is to be done or said, do not judge yourself unworthy of doing or saying it. It is not the actions of others that trouble us but rather it is our own judgments.
How to control your emotions. I can control my emotions because what I feel is always an outcome of what I think. Your whole experience of existence is really what’s going on in your mind. Don’t involve emotions with rational decision making. All of our emotions are created by our thoughts. Change your thoughts to change your emotions. Your whole life is your attitude towards life, and your whole experience of existence is really what’s going on in your mind. Your brain naturally rules over your heart. You might not be able to control your urges, but with your will-power, you can prevent the urges from ever affecting your behavior. Don’t look back unless you plan on going back and remember: everything in your life is there to test you and make you better and stronger. The Market. New York will become the second state after California to ban single-use plastic bags starting in March 2020. Boeing cuts output of its 737 jetliners to 42 airplanes a month from 52. Each jet is assembled with 600,000 parts. The USD is becoming more valuable. The EURO-USD rate dropped 2.19% year to date. The dollar is a drag on average earnings because it reduces the value of profits made overseas and makes US exporters less competitive. Prices of avocados imported from Mexico spiked 34% on Tuesday. The US economy created 196,000 new jobs in March and the unemployment rate is unchanged at 3.8%. The US, UK, and China all released better than expected manufacturing data. Generation Z becomes the biggest consumer cohort globally. Credit cards/debt. Americans owe a record $1.04 trillion in credit card debt- up from $854 billion 5 years ago. Only 60% of borrowers pay their balance in full every month. The average APR is 17.67% and on average Americans owe $6,354 on bank-issued credit cards. What caused this? Lack of education and how easy it is to obtain a credit card. Financial illiteracy. 40% of US adults don’t have enough savings to cover a $400 emergency. The median retirement savings for Americans between ages 55 and 64 is $104,000, $310 per month if it was invested in an annuity. Average household credit card debt rose to $8,284, 25% higher than in 2011. The average student loan is $6,600 per student, annually. Students with loans leave college with an average debt of $22,000. Leadership. For any leader, it’s important to know how your risk tolerance can bias your decisions. Surround yourself with a leadership team of people with different dispositions who can serve as a sounding board. Controlling emotion is essential to handling risk. Anger makes men more willing to gamble. For many CEOs, one of the most important aspects of personality is narcissism. Risk-taking can be inappropriate and so can risk aversion. Strive for somewhere in the middle. Adaptability to new cultures and ways of doing things are some of the keys to success. Listen to the concerns and ideas of employees first and focus early on in areas in which they need help. Communicate openly about your goals and reasons for them. What led this latest 24% increase in BTC? The short answer, someone market bought around 100m worth of BTC across three different exchanges. Over the last 4 months, we have been ranging from 3,200 to 4,000, with this last push breaking 5,000. It seems that this current price is holding, with momentary dips below 5,000. Is this an outbreak to new recent highs? Flip a coin and that will give you a better answer than I could give. The current state of the market, Bull or Bear? I believe the consensus currently lies that we are still in a bull market, although opinions differ in what stage of the business cycle we currently are in, and how much longer this 10-year run will last. Although many people believe we are in the late stages of the business cycle, and will most likely see an economic downturn, new data came out today supporting the contrast, with new job additions to the US economy increasing to 196,000, from the previous month of 33,000. It also seems that a China trade deal is priced into the current market, with a majority of Chinese ADR’s being up 10% YTD, and the major ones being up over 20%. The question we could ask is, how much more good news will keep this rally going, and what will be the major event that eventually leads to the downturn. Past bull runs have seen 226%, and 87% gains, while this run has toppled both of these at 262% over the past 10 years. IPOs. An IPO is an Initial Public Offering, and it is the first time that company issues shares of stock on the public market, allowing investors like you and me to buy ownership within the company. Prior to an IPO, a company is private. It still has investors, but it is immensely more difficult to invest. Going public allows the company to raise tremendous amounts of capital by selling shares and bonds. This capital allows the company to invest more in its own operations, which theoretically should lead to increased growth. Furthermore, public companies are much more liquid in the eyes of the shareholder, as a shareholder can sell their share in the company virtually whenever they want. This ability to increase or decrease your stake in the company on a whim is hugely important. So, you might be wondering, why doesn’t every company go public? Well, going public also requires disclosing financial information and details. Public companies also face tighter regulations from governing bodies (SEC). Also, by the nature of stock, going public reduces ownership of the company, from the firm's perspective. By allowing investors to buy shares, they are also buying ownership in the company. We have Lyft Off! Lyft, the ridesharing service company, went public just over a week ago. Their initial IPO price was $72. However, you and I could not purchase at this price. This is for institutional investors (Hedge Funds, banks, etc.). Once they bought, retail investors (you and me) could then buy from them. On the first day, Lyft stock jumped nearly 9%. This was particularly interesting because Lyft ended up pricing their IPO higher than they expected due to interest levels. (IPOs tend to be underpriced roughly 15% so that the first week experiences an increase in price) However, after that, the price kept dropping below the IPO price, and people were calling it an example of what not to do in an IPO. Some people blamed Lyft’s financials, which reported tremendous losses. Some people blamed the fact that Lyft just isn't a household name like Uber, its prime competitor that is going public later this year. Some people are blaming the investment bank, saying they screwed up gauging interest. Some people are blaming the fact that the ridesharing business has very low barriers to entry, meaning new companies can come in easily and take away some of Lyft's market share. Truth is, nobody truly knows. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
What are common beliefs that we all share? Beliefs that are universal and that apply to all. Beliefs that everybody should live by regardless of religion, origin, ethnicity and personal difference. Today we are celebrating our 1 year Anniversary! We’ve learned a lot and we’ve shared a lot. Here’s a list of some common beliefs we all share and that we all should live by: Social cooperation is our key for survival and reproduction. Always be calm and composed regardless of the situation. Never compare yourself to others, especially if they are above you. If you value who you are, you need no one to confirm your worth. Persistency leads to success. Life is unconquerable. It is not about the end, it is about the process and the adventure to get to the end. When you fail, get a bad grade or mess up, don’t be discouraged and do not give up. Money is only a byproduct, it is not the main pursuit. All of our problems are the same. Actively work on knowing your true self and being comfortable with your inner voice. Don’t fear failure. Listening is a great virtue. Increase your threshold for pain and criticism. No one is perfect and we are all learning and growing. Focus on the now and worry about future tasks later. If you do not love yourself, you will be unable to love anyone else. Stop trying to seek validation. Make people feel like they are valued and important. Most people want two things: pleasure and stability. Don’t give a fuck and never be afraid. The Market. Modern Monetary Theory proposes that a country with its own currency doesn’t have to worry about accumulating too much debt because it can always print more money to pay interest. While any single household can dig itself out of a hole by cutting spending when its income falls, the economy as a whole cannot. Lyft went public today, surging 23% on its first day. Half of Americans approaching retirement have nothing saved in a 401(k) or other individual accounts. Purpose unmasked. What is it that you want to achieve? Why are we always trying to create? What is true but not obvious? What if all your close-held beliefs were wrong, would your identity survive? Who are you, where is your place and what were you made for? Everybody in the world is looking for a purpose. 1) The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have your life make some difference so that you have lived and lived well. 2) The purpose of this world is choice- to give us the incredible opportunity to be independent things, to live our own lives, to be ourselves. All you hope to get out of life is that you lived for the purpose of what you were created for. 3) The purpose of life is right in front of us: it’s to create a reality we want to inhabit- to reach towards the better end of our conscious experience. Because we live, life matters. What makes a human life have meaning or significance is not the mere living of a life but reflecting on the living of a life. A life, like anything else, may be of much worth even if it is not geared toward and does not serve any ulterior purpose. I do not enjoy myself for a certain end or purpose. I just enjoy; it is worthy in itself. 4) The purpose of life: improve yourself and improve others. No one can lead a happy life if he thinks only for himself and turns everything to his own purposes. You should live for the other person if you wish to live for yourself. It is your ultimate choice to decide whether life is for a purpose, for what purpose, or for no purpose at all. The current state of the Fed. It seems like the Fed, led by Jerome Powell, is standing by his dovish stance. After seeing the weakening economy in 2019, the Fed has held a decisive stance of not raising rates, for the first half of 2019. Currently sitting at a 2.25-2.50% Fed funds rate window, it seems the Fed has dug themselves into a tight spot, with the economy still weakening, with a heavy balance sheet, and a relatively low interest rate. In the past, it has taken over an 800 basis point move to pull us out of a recession, with 2009 taking us from a 5.25 Fed funds rate to 0. What most people don’t realize was from 2009-2010, we also employed over $1.3 trillion worth of quantitative easing (debt), bringing our Fed balance sheet to a local all-time high of $2.054T. We continued to use QE to keep our economy booming, with our balance sheet hitting $4.5t in 2014. In the last year, the Fed has been unwinding this balance sheet to around $4T. Personally, with the already low interest rate, and the massive balance sheet they weren’t unable to unwind at a fast enough velocity, they will not have any financial instruments left to stop any impending recession. Inverted Yield Curve. An inverted yield curve is when the short term rates have a higher return than long term rates. The reason this occurs is due to capital leaving other financial markets and going into long term treasury bonds. This causes prices to increase and yield to decrease. People usually also leave short term treasuries and flock to long term, which in return decreases prices and raises rates. This has happened in the last year to the 3month - 3 year- and 5 year, but recently we saw the 3month and 10 year invert, which most people view as a sign of an impending recession. Personally, I like to look at the fed funds rate vs. 10 year, which has had a decently high rate of predicting an upcoming recession, most notably in 1981, 2000, and 2006. As of March 25th, this has inverted and has continued to stay inverted. Productivity and Motivation. Productivity is the name we give our attempts to figure out the best uses of our energy, intellect and time as we try to seize the most meaningful rewards with the least wasted effort. It isn’t about working more or sweating harder, it is about making certain choices in certain ways. Productivity rises when people do the same kind of tasks over and over. Repetition makes us faster and more efficient because we don’t have to learn fresh skills with each new assignment. To motivate ourselves, we must feel like we are in control. When people believe they are in control, they tend to work harder and push themselves more. When we start a new task or confront an unpleasant chore, we should take a moment to ask ourselves “why”. If you can link something hard to a choice you care about, it makes the task easier. The best productivity strategies: assign a fixed period of time to a task, schedule it and stick to it. Prioritize. Politely decline (say no!) so that you can focus on the most important work. Moving around does a lot for you. Clear your desk of distracting devices and see how much more you get done with fewer distractions. Take short breaks. Eat well. Choose when to check your email. Organize your workspace. Wake up early. The fall of the iPhone has begun. As sales peaked, Apple needed to allocate their insane amount of cash into new products and services so they could grow. The answer? Apple decided to enter not one, not two, but three overcrowded and highly competitive industries. First on the list is Apple’s new subscription service. Apple TV has been around for a while but this summer the app is getting an upgrade and will soon include providers like Hulu and HBO as well as Apple’s very own streaming service similar to Netflix. The video streaming industry is roughly valued at $30 billion annually and is expected to double by 2021. With that much potential growth at stake, it's no wonder that the industry is filled with major players like Disney, Amazon, Hulu (Disney, Comcast, AT&T), and Netflix. Together these companies represent trillions of dollars meaning that Apple may have a tough time differentiating their product and carving out a market segment. Apple then decided to give the gaming industry a shot. Since its release, the “App Store” has dominated the mobile phone gaming industry beating every other major company to the table and holding their ground for years. Apple may be poised to do it again as Apple Arcade is set to release this summer and offer a subscription-based gaming service that is similar to ones in the works by Google, Microsoft, Sony, and Amazon. Again you can see Apple is taking on a major and highly competitive market, but Apple had a definite advantage here. The gaming industry was estimated at nearly $140 billion dollars in 2018 but over half of revenues came from mobile gaming. At launch, Apple’s gaming service will be able to reach half of a market segment valued at $70 billion dollars. To top things off, Apple partnered with Goldman Sachs to offer a brand new type of credit card. This is Goldman Sachs’ very first consumer credit card and together the companies plan to enter an industry that saw $1 trillion of volume in Q4 2018 alone! There's no way to tell what the future holds, or apparently what market Apple will enter next, but one thing is for certain: Apple will face competition it hasn’t seen since taking on tech giant IBM in the early ’80s. Keep Climbing, The Alchanati Campbell and Associates Team Dear Reader,
Competitive edge. How is it created? Speed. Money. Power. Influence. Better physical, mental and emotional capability. Diverse connections and a wide network. Having more knowledge that is well-rounded and vast, and having better access to information. Having an edge is how you win more customers, increase your top-line (revenue/sales), beat your competition, gain status and power... making yourself a somebody in this world. Knowledge: turning data into applicable information that is then manipulated for your particular use. It’s knowing how things are connected together. How A affects B and how C can be used to avoid A and B altogether. How people behave in certain situations, and how and why they react. Knowing which market to target and knowing how much time, capital and energy to allocate in every endeavor you pursue. Knowing who to be connected to and knowing which strings to pull to make the puppet show have a standing ovation at the finale. It’s a strategy and a skill set learned from years of experience. Experience of booms and busts from working with different people with different cultures in different places all around the world. The Market. Oil prices and Sterling affect the UK’S inflation rate. Inflation rises when demand hits a “potential level”. Companies don’t necessarily respond to higher demand by raising prices. Stock prices have shown uncommon strength. The stock market expresses the culmination of real-time money-backed decisions made each day by tens of thousands. My theory: The global economy is slowing down, debt is starting to be harder to pay off and more individuals and corporations are in debt, and the US economy’s recession is at a hold due to politics. The Feds are being controlled by the government and they are not doing their job properly. California’s drought officially ended after being in a drought for 7 years. Lyft filed to go public. Levi Strauss just became publicly traded. A quadruple Witching Day: A day on which four asset types (stock index futures, stock index options, stock options, and single stock futures) expire simultaneously. Volatility is a measure of the breadth of movement in the market, an index of an individual asset is currently experiencing. Implied Volatility is a measure of the expected volatility the market, an index or an individual asset is going to experience in the future. If investors believe a stock or an index is going to make a large move in the future, its implied volatility is high. Higher prices for oil and gold have been responsible for the outperformance in commodities. No more interest rate hikes in 2019 which means the lower interest rates will incentivize borrowing and raise the prices of stocks. The 90-day and 10-year Treasury yields are .05 basis points away from each other. Case Study: Vietnam. Corruption is embedded into the government in dozens of countries around the world, but it happens in every single country undoubtedly. Vietnam is one of these countries. Vietnam is a developing economy and relatively a 3rd world country. It’s mostly a cash society, but the government has this almost impossible goal of making it a cashless society. Vietnam is a net exporter and specializes in tourism, manufacturing (electronics, metals, rubbers, and plastics), textiles and agriculture (fruit, coffee, pepper, rice). Total population of 95.54 million(with 70% of the population under 40 years old) and GDP of 223.9 billion USD in 2017. Forecasted, Vietnam will the second best-emerging market in regard to growth with an estimated yearly growth rate of 6-8% for the next 30 years. About 80% of the economy consists of small to medium-sized local businesses with the rest of the GDP coming from trade and foreign investors. The biggest mafia in the world is the communist party. They kill sparingly, but they are vicious all the same. Corruption in developing countries enables growth in order to compete with other nations and the economy might depend on corruption to keep themselves in the global race, but it only benefits a select few. Imagine corruption as a big spider web with thousands of different end point connected to one another. If you are having a million dollar debt issue with another individual and that individual “employs” the economic police to collect, all you would need to do is know which higher up official you need to pay off (of course for less than a million) and your problem is solved. Money starts at the bottom and is fractioned off on its climb to the top. Public officials are on pay-rolls and “envelopes” is a term that’s used not in the way you know it as. Vietnam’s industrialization was delayed due to international embargoes, countless wars, lack of trade in the past and their bad relationship with China, and in order for Vietnam to become developed they need to fix their corruption, improve their human rights, increase their education, divest from state-owned businesses and have a free-market with the support from a communist-free government. History: Vietnam. The dispute of power and values. The influence of strength and control. The longing for freedom, safety, and peace of mind. With the hope and goal of prosperity, independence, and unity. The effects of the Vietnam War still cast a shadow on this country. It stunted its growth, scarred its citizens and left the country in a continuous recovery. Read up on history, educate yourself, remember those who lost their lives, respect the culture, but in the end, all they want is to forget and forgive. Keep Climbing, The Alchanati Campbell and Associates Team Dear Climber,
Ambition. What the “dreamers that can’t sleep” have. It’s a talent, a skill, an urge inside of you that never rests. Ambition keeps you up at night and it wakes you up in the morning before the sun rises. It’s for those who’d rather be impressive without acclaim than having acclaim without being impressive. They don’t need public opinion to validate who they are or what they have done. Only the fame-driven, lazy, confused, and ill-exposed go after acclaim without being impressive. It’s fake and meaningless. Ambition could also be your downfall. You’re so driven to be better than everyone else that competition becomes your life. The thought of others working and producing drives you to work and produce even harder. You become unfriendly and everything turns into a race. You look at others as competition instead of thriving individuals that are a part of your society. So how do you be ambitious without losing a sense of humanity? Don’t be afraid to follow your gut, hold onto true core values, act on your dreams and live to better yourself every single day. The Market. Amazon plans to make all of their shipments carbon-free, with 50% of shipments achieving this by 2030. More airlines have cameras installed on their seat backs. Many Americans are managing their finances based on their monthly subscriptions and lease payments, not thinking of the total they’ll pay in the long run. Car debt has reached $1.2 trillion. The US trade deficit widened more than expected in December to $59.8 billion. 63% of the US’s $598 billion deficit is from trading with China (a total deficit with China of $375 billion). The Fed is nearing the end of its balance sheet reduction process. Employers added 20,000 jobs during the month, bringing the unemployment rate to 3.8%. The end of the road for automobiles? “Your time is not free, right? Your time is worth more than $20 an hour. So, in my case, why not spend $15,000 to $20,000 a year on Uber and Lyft to get all of that time saved?” The dilemma is traffic and wasted time, and the solution is not owning a car and using ride-hailing apps. Auto sales are declining, 26% of US 16-year-olds earned a driver’s license in 2017, the average price of a new car in the US hit a record $37,777. Ultimately, you will start seeing a trend of people not having cars and using ride-hailing and mobility apps instead. The relationship between financial statements. The three most well-known statements are the income statement, balance sheet, and cash flow statement. The income statement states the revenue and costs and determines the bottom-line net income. The net income is used on the top line of the cash flow statement and in retained earnings on the balance sheet. The cash flow statement uses the cash from operations, investing and financing to determine the net change in cash during the period, and the balance sheet balances liabilities and equity to assets. The net change in cash from the cash flow statement is added to the top line of the balance sheet where it is a current asset listed under the description of cash, cash equivalents, and marketable securities. Change in current assets and current liabilities on the balance sheet is represented as the changes in working capital on the cash flow statement. What is Brexit? Brexit, in its purest essence, is the United Kingdom’s exit from the European Union. The European Union is an economic union which is comprised of a set of counties that share 4 things in common. •No barriers to imports/exports amongst member countries •Uniform trade agreements with non-member countries •No barriers to labor and capital amongst member countries •Uniform economic policies, and common institutions The European Union will be considered a monetary union post Brexit, as all member countries will also be sharing a set currency, the euro. The big issue currently with Brexit is setting up new trade agreements which they have never had to deal with before. They must also set up restrictions on labor and capital, which once flowed freely amongst EU countries. The last issue lies into setting up an entirely different economic system, with differing policies then they once held. Luckily for the UK, they never left the sterling, so they won’t have to deal with setting up a new monetary system. All in all, their big issue lies into getting this all set up before the UK officially leaves the EU on March 29th. The next recession. A recession is defined as two consecutive quarters of negative GDP growth. Currently, unemployment is at its lowest level in decades, employers have added jobs for eight years running, and the economy this year is on track to grow at its fastest pace since 2005. But, weakness in some major sectors (auto manufacturing, agriculture, construction, and retail), stock market declines, global economic slowing, and the fear of a worsening trade war with other countries show that a recession may be on its way. Right now, the country is in the part of the business cycle known as expansion and this expansion is currently the second-longest on record and will be the longest if it continues into summer. The effects of a recession can devastate an economy as people lose their jobs, pay is cut, and production slows. According to the Federal Reserve, 2 in 5 Americans don’t have enough money in their savings to cover a $400 emergency expense. This means that millions of American families would be unable to support themselves through even a mild recession. When a recession strikes, the economy slows down and contracts. In order to encourage borrowing and spending, the Federal Reserve lowers interest rates. When the economic outlook of a country looks poor, people begin to lose confidence in their currency. In the United States, Americans may prefer the stability of gold over the US dollar which would drive the price of gold up and may destabilize the dollar. Since production has slowed, companies lay off workers which leads to less circulating money which in turn leads to consumers spending less money and as a result companies produce less. This cycle leads companies to post low revenues, which in turn lowers the value of the stock market. The US economy is the largest economy in the world and is the largest importer in the world. When the US economy slows and imports fewer goods then the economies of other countries begin to slow. Globalization has made the economies of the world increasingly intertwined, which means as the US economy suffers, so does the rest of the world. In preparation for a recession, it is recommended to have at least 6 months of income saved up and you may also want to move some investments around since stock prices tend to decline in a recession while less risky investments like bonds offer higher relative rates. Keep Climbing, The Alchanati Campbell and Associates Team Dear Climber,Failure. At what point do you give up? When do you know that you’ve failed? Is it when you can’t find a viable solution? Is it when you can no longer continue forward? Is it when you’ve tried your best and didn’t succeed? Failure; a problem many don’t have because they fear it. How unfortunate. The world doesn’t lack motivated people. It lacks those with the drive to follow through. It’s better to act and fail than to have not acted and floundered. Stuck in the same place at a different time because you fear to leave. Change scares you. The possibility of success haunts you. “I can’t really be that guy in that fancy car wearing that fancy watch walking in those fancy shoes.” Or in my world: “I can’t really be that knowledgeable and that deeply in love, surrounded by loved ones who I can teach and learn from, traveling the world building my circle of competence, making a difference, finding purpose and forgetting fame.” But really, you can and I can. What you think will manifest into reality, and if you believe it, you're on your way. Let’s get to it:
The Market. “While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” (Powell). Debt among 19 – 29-year-old Americans exceeded $1 trillion at the end of 2018. Student loans (with an 11.42% 90 days+ delinquency rate) made up the majority followed by mortgage debt. What drives US consumer debt? Mortgage debt, student loans, auto loans, credit cards, HE revolving and other. CBD (Cannabidiol) has the potential market value of $16 billion by 2025, with 7% of Americans already using it. The cannabis industry could reach $130 billion by 2029. Warren Buffett says he would support Mike Bloomberg as President. March 1st deadline for new tariffs to be imposed on an additional $200 billion worth of Chinese imports was waived by Trump. The 2019 healthiest countries are Spain, Italy, Iceland, Japan and Switzerland with the US ranked at #36. GDP for the 4th quarter of 2018 increased by 2.6%. There were increases in consumer spending, business investment, exports and inventory investment. GDP is projected to go down 1.3 points to 1.8 in 2019. The Feds. Investors expect the Fed to refrain from any hikes this year. The markets have priced in a flat 2019 interest rate path and no hikes this year would please Trump. The Fed will remain patient in light of uncertain economic and market data. The probability that a slowdown turns into recession decreases if the Fed promptly eases policy, and to cause a recession, the Fed needs to over-tighten monetary policy. But now, the Feds are taking the opposite approach: they are easing policy by announcing that they are “patient” and are ready to cut rates if needed. Powell emphasized that wages have gone up, but inflation has not. So why should the Fed raise the rates now? He also said that the Fed is going to cease their balance sheet runoff by the end of 2019. However, Mr. Powell also had some discouraging things to say. Markets, in general, are more volatile right now, while U.S. economic growth is expected to slow down. On a global front, a larger economic slowdown in China presents a real risk to the global economy, which would then subsequently threaten the U.S. economy. Tesla. Following an ominous tweet by Elon Musk, the long-awaited $35,000 Model 3 is finally here. Curiously enough the announcement came just a day before Tesla had $920 million of debt due. Investors who had been following Tesla closely, myself included, had expected that Tesla would find a way out of the nearly $1 billion dollars in debt looming over their heads. The debt was due in convertible bonds, which are certificates a company can issue that work similar to bonds except that the bondholders have the option to convert the bonds into stock. If Tesla had been able to keep the stock above $354 then most of those bonds may have been converted into stock, saving the company badly needed cash, but after losing their CFO, large layoffs, and the closure of their retail stores, they were unable to keep the stock at that crucial price point. Wall Street has been bearish on Tesla despite the company posting their first consecutive profitable quarter, but this may change in the coming months as the first truly mass-market electric vehicle is finally ready for purchase. Another important note was lost in all the Model 3 excitement but a subtle change to Tesla’s website that announced full self-driving capabilities by the end of the year. Keep Climbing, The Alchanati Campbell and Associates Team Dear Climber,
What defines a bad day? Waking up late and missing class? Eating candy when you’re on a strict no-sugar diet? Breaking the cork on a scotch bottle and having the other half fall in? Scratching your car on an aluminum signpost when backing into a parking spot? Or, is it going through a whole day without eating because you have no food or hiding in a bomb shelter at night because you live in a terrorist-occupied territory or begging on the side of the road asking anybody for anything? I used to think I wanted the whole world, or nothing. I used to think I had it bad and that my life was tough. I used to think that my stresses were unbearable and nobody felt what I feel. But, the only thing I know now is that what I used to think was ignorant, immature, silly, stupid. At the end of the day, it comes down to empathy. It’s about putting yourself in somebody else’s shoes before seeking to establish any sort of alignment. It’s about being realistic and having a diverse awareness. Don’t tell me you’re stressed out, I’ll just laugh at you. The Market. The S&P 500 ended its fourth consecutive week of gains at the close today. Some are concerned that the market is becoming overbought and is due for a consolidation. The Federal Reserve is focusing on “patience”. Existing Home Sales dipped below 5 million- coming in at 4.94 million in January- not having low numbers like this since 2015. Emerging markets, developed markets, and US markets all have seen gains since the start of the year- recovering from the mid-December correction. “More of the same and punish those who still believe in an efficient market.” The strategy is buying the most hated/shorted names while shorting the names that have the highest hedge fund and institutional ownership. This investment strategy has continued to be consistently profitable and has consistently generated alpha. The most hated stocks are Mattel, Under Armour, Nordstrom, Microchip Technology, Discovery and the least shorted names are Johnson & Johnson, Medtronic, JPMorgan, UnitedHealth Group, Exxon Mobil and Microsoft. The financial industry. Jack Bogle led the campaign for a better, fairer, more consumer-focused investing industry. Now that he’s gone, Tom Coutts is a candidate to take his place. Tom believes that the investment industry may be experiencing a peak. The financial industry “creates little of value, but it is a facilitator for the economy”. He believes that most firms have an inwardly focus on their own interests and that the industry should evolve to a model based on low fees (enough to cover costs) and a capped performance fee. Many people think that the finance industry serves no purpose with their selfish acts. That banks only care about the money going into their pockets instead of the money going into their client’s pockets. Banks, pension funds, private equity, and asset managers do more than you think. They help raise capital for start-ups that bring innovative technology into the market, they help individuals meet their goals and retire well, they help families finance homes, they help small businesses get loans, and they contribute to GDP, productivity and the growth of the economy. Reasoning logic down to its roots. What drives us? What formulates our thoughts? What makes us do what we do? It starts with nurture. How our parents raised us, taught us, punished us, rewarded us, loved us… Then nature. How community-based your family is, how close your family is, where you live, who you hang out with, where you went to school, religious beliefs, economic-political standing… Then when you leave the nest and go out into the world, it ends with individual growth and understanding, and your contribution to the world when you no longer exist. Who you make yourself out to be, the core rules and principles that you live by, the experiences and mistakes that you learn from, the relationship you have with yourself and with others, the restrictions and disciplines you impose on yourself… We now live in a world where we’ve connected to everything except ourselves. We read up on others, obsess over the latest gossip and keep up with the hourly following. We lost our courage and increased our insecurity. The secret? You will become way less concerned with what other people think if you when you realize how seldom they do. Everybody else is too worried about themselves to really care what you do. What drives portfolio performance? Does asset allocation or market timing and security selection drive portfolio performance? Answer: more than 90% of a portfolio’s long-term variation in return was explained by its asset allocation, leaving only a small amount that can be explained by an investor’s ability to time the market or successfully choose individual securities. Data privacy. As technology continues to evolve and become more available, the chances of that technology being used for unethical purposes increases. This led Bill Gates to ponder, “Should surveillance be usable for petty crimes like jaywalking or minor drug possession? Or is there a higher threshold for certain information? Those aren't easy questions.” Unfortunately, governments and private companies are answering these questions for us. Passengers aboard American Airlines and Singapore Airlines have reported front-facing cameras in their in-flight entertainment displays. The airlines responded by stating that the cameras are not in use and are automatically installed by the plane’s manufacturers to be used for things like seat to seat video calls. The issue is that the cameras were not disclosed, with passengers not being notified that during their 12 hour plus fights there is a camera pointing right at them. Meanwhile, Democratic lawmakers are calling for high-tech products to be required to disclose their specifications. This is in direct response to Google’s Nest which had an undisclosed microphone in it, and this is not the only case of this. In perhaps the most radical surveillance case known to date, China is using DNA to track its citizens. With the help of American companies, the Chinese Government is forcing members of its Muslin population into “re-education” camps. In these camps the Chinese offered “free medical checkups”, but when the check-ups were administered, they also took fingerprints, face scans, DNA, recorded the patient's voice, and refused to share medical results or findings with patients. The real purpose of these medical checkups is to better track the Muslim population in order to force them to conform to the Communist Party’s beliefs. Instead of the international backlash that should have been expected with these extremely unethical practices, many organizations have come out to talk about the benefits of these practices. American companies have played a large role in China, and currently in the US, companies like 23andMe collect DNA information and hold on to the right to distribute it at their discretion. As consumers, we need to be aware of products of this nature and voice our opinion about companies that collect data from our phones, listen to us in our houses, watch us on flights, and collect DNA from our examinations. Keep Climbing, The Alchanati Campbell and Associates Team Dear Climber,
Past, present, and future; the only time that we’re capable of knowing. They say you're supposed to learn from the past, live in the present, and plan for the future. But everybody is always looking forward to something. The present never satisfies us; it is always better one minute later or two minutes before. You keep wishing you were older until you finally realized its better to be young. The young want to be old and the old want to be young. Your mind is stuck six months in advance when you expect your diet and workout routine to payoff. But that’s only if you are actively working to better yourself in the present. Putting things off is the biggest waste of life: it snatches away each day as it comes and denies us the present by promising the future. The greatest obstacle to living is expectancy. So how do we live properly? The past is gone, and the future is impossible to predict. I can die tomorrow or live to 120. Let’s get to it: Be present. Be 100% present in body and mind in everything you do. Do whatever you’re doing in the present moment well. Yes, our current beliefs depend on realizations experienced in the past, but we are in a constant change that requires adaptation and an open mind. Live every second like it's your last, but don’t lose value or meaning in those seconds. In order to benefit yourself and the universe, you must have a higher intention in mind beyond mere self-gratification. It doesn’t mean you’ve given up on the pleasures of life; you’ve replaced them with even greater pleasures. Your brain naturally rules over your heart. You might not be able to control your urges, but with your will-power, you can prevent the urges from ever affecting your behavior. Your actions, speech, and thoughts are under your complete control. Right now, you can achieve total self-mastery if you so desire. The key to this is focusing on the “now”. Don’t obsess over how bad you were in the past. The truth is that we live in the present, and right now, your focus should be getting the most out of each day you live in. The Market. We are in a national emergency; do you feel it? Stocks surge on trade talks and consumer sentiment. Many are beginning to suspect the Administration and the Fed are purposely releasing statements to keep this market rally intact. When will they realize this will backfire in the end? A record 7 million Americans are 90 days+ behind on their auto loan payments (a million more people behind than during the financial crisis era and most are under 30 years old). US national debt tops $22 trillion. On a lighter note, the 30-year fixed mortgage rate fell since its November 2018 highs. Value, quality, low volatility, momentum, and size. These 5 factors pose as the best factors to evaluate equities. When you create a valuation model for an equity, you evaluate the equity’s internal factors like profitability, debt management, liquidity, the capital structure, and the free cash flows, and then you use these metrics and their growth to forecast the future to see if this equity has “value” or “growth”. A big part of an equity’s valuation is how it compares to its competition. Is it leading the industry? Does its sales growth beat competition? Does it have a majority of the market share? When you are creating a portfolio of equities, the best factors to go off of are these 5. Value as in price-to-book ratio. Quality as in profitability and the degree of conservative investment. Low volatility as in the lowest volatility in sector, region and global betas. Momentum as in outpacing the market in growth. Size as in large-cap versus small-cap. All of our problems are the same. You didn’t reach a goal? Don’t give up, try a different approach and remember the end result is less important than the journey it took you to get there. Somebody criticized you? You can’t please everybody. Learn from the criticism and don’t be afraid of it. You have financial troubles? If money was the purpose in life, inflation wouldn’t exist. Lack of money helps you decide on what matters and what doesn’t. You’re unhealthy? Quit feeling sick and do something about it. A relationship ended? Finding love is about understanding what love is not. You need relationships to end to find out what love really is. Keep Climbing, The Alchanati Campbell and Associates Team Dear Climber,
There is this beautiful girl in your presence. You’re amazed at her being, and her appearance is urging you to learn more about her. Her name, what she studies, what she likes, why she’s here… But you can’t seem to get yourself over there to initiate the interaction. There’s this invisible boundary between you and her. You keep imagining how the conversation will go, “Hi, I apologize for interrupting you, but I see you in here every day and I just wanted to tell you that no girl that comes in and out of here compares to you. You’re absolutely gorgeous.” But you’re still sitting across the room. You finally lose momentum and become content with the imagination before regret sets in. Let’s get to it: Relationships. Every successful interaction grows when we move further away from the environmental norms to a deeper interpersonal culture. Whether directly or indirectly, everything we do is shaped by our relationship with people. Most relationships we form remain in the introductory period, where the norms are upheld and with our defenses still in place. We remain here because we lack courage. The Market. The market tends to hear what it wants to, rather than what is really being said. If stocks rally until the central bank’s next meeting in March, we might see talk of a couple rate hikes. But Powell’s goal is not to spook investors with further hikes. The market is in late cycle and securities that are higher in quality and liquidity are preferable. “The key to a good life is not giving a fuck about more; it’s giving a fuck about less, giving a fuck about only what is true and immediate and important,” (Mark Manson). A confident man doesn’t feel a need to prove that he’s confident. The more you pursue feeling better all the time, the less satisfied you become, as pursuing something only reinforces the fact that you lack it in the first place. Being open with your insecurities paradoxically makes you more confident and charismatic around others. Who you are is defined by what you’re willing to struggle for. The question is not whether we evaluate ourselves against others; rather, the question is by what standard do we measure ourselves? It’s easier to sit in a painful certainty that nobody would find you attractive or appreciative of your talents than to actually test those beliefs and find out for sure. Rejection is an inherent and necessary part of maintaining our values. Life is about not knowing and then doing something anyway. Lessons learned from other people’s jobs. You can make a more powerful point in 10 words than you can 10,000 (Poet). The cumulative effects of small daily habits- both good and bad- add up to something enormous over time (Doctor). The winner is not always the most accurate, but the most persuasive (Politician). No argument is ever 100% airtight (Lawyer). Bet when others think the odds of success are low but be able to survive when those other people are right most of the time (Gambler). What people present to the world is a tiny fraction of what’s going on inside their head (Therapist). “The U.S. economy is growing almost twice as fast today as when I took office, and we are considered far and away the hottest economy anywhere in the world.” The State of the Union is a chance for the President to address the Nation with the hardships we have overcome and the problems we still face. But for President Trump, it was a chance to rally his troops after losing big in the midterms and facing heavy criticism for the longest government shutdown in U.S. history. Those who watched the speech noted that Trump was mellow and that the speech was uncharacteristically long and professionally presented. The theme of the State of the Union was “greatness” and in the pursuit of greatness Trump made another unusual move, he called for unity within the government. At face value, this was a very significant statement and one this country badly needed, unfortunately as Trump’s speech went on his motives became clearer. President Trump is currently the subject of no less than 18 investigations, and with strong Democratic support in the house, many of them will be able to move forward. As Trump began to recite, “if there is going to be peace and legislation, there cannot be war and investigation”, he was met with some applause that quickly faded as the implications of his words became clear. In a move paramount only to Richard Nixon’s call for Congress to stop investigations into the Watergate scandal, Trump called for a stop of the investigations into his affairs. He then threatened the economy stating, “An economic miracle is taking place in the United States and the only thing that can stop it are foolish wars, politics, or ridiculous partisan investigations," Basically saying nice economy you got here, it would be a shame if something happened to it. Keep Climbing, The Alchanati Campbell and Associates Team Dear Climber,
Gratitude and empathy: these are words for the developed world. For those who got lucky in the Ovarian Lottery. For those who live a life where food, shelter, and survival is a given. It’s handed to us and fed to us and bestowed upon us. There are no questions asking if we deserved this or earned this through hard work and sweat. To receive these is natural; we’ve become accustomed to it. Two characteristics; selfless acts that show you’re conscious of your being. Two characteristics that would balance out your ego, self-pity, inaccurate hatred and all the other nonsense noise in the background. Because there’s absolutely no reason for those. Let’s get to it: The Ovarian Lottery. “You don’t know whether you’re going to be born rich or poor, male or female, infirm or able-bodied, in the US or Afghanistan. All you know is that you get to take one ball out of 5.8 billion balls. And that’s you,” (Warren Buffett). This is called the “Ovarian Lottery”. It’s how I got so lucky to live the life I have. I won the lottery with my parents. I won the lottery with my brother and sister. I won the lottery with my extended family, friends and the opportunities and experiences I have had. But not everybody is as lucky as I am. One of the greatest challenges of this world is to appreciate and enjoy what we ourselves have- even though there are others who have more. Wealth inequality. In order to survive, any flowing system must evolve to increase its access to flow. If movement is hierarchical, then so is wealth. For example, our highway systems operate through a few large, high-capacity freeways and many small, local streets. Today, globalization continues to create an unequal distribution of wealth over the population. As time moves on, inequality cannot be avoided even with legislation. The Fed. Interest rates went unchanged on Wednesday. The Fed has committed to a more patient approach of hiking rates which means slower interest rate increases on the horizon. PG&E goes bankrupt…. again. Just a few nights ago The Pacific Gas and Electric board of directors voted to file for Chapter 11 bankruptcy. This move is not surprising since the company did the same thing after the energy crisis in 2001 and has considered it several other times. There are two main options a company can choose from if it wants to file for bankruptcy. A company can file under Chapter 7 or Chapter 11. Chapter 7 is used when a company has no viable future and their debts are so massive that they have no choice but to liquidate the company. Chapter 11 is known as a business reorganization and that allows the business to restructure their debts and present a plan of how they will pay back their creditors. California lawmakers and financial analysts have speculated that PG&E has no need to file for bankruptcy and that PG&E, one of the nation’s largest utilities would be able to pay off their debts in spite of the recent fires. Equipment owned by PG&E caused at least 17 of the 21 major wildfires that burned through California in 2017 and may be responsible for several of the fires of 2018. 98 civilians and 6 firefighters died from the 2018 fires. Liabilities for these fires cost the company $30 billion, bringing their total debt to $52 billion at the end of September. It is possible that PG&E is using their leverage as a large utility and Chapter 11 bankruptcy to avoid directly paying for the damage they caused in the recent wildfires. Whatever the case may be, California lawmakers voted to allow PG&E to take out 10 billion dollars in bank loans to continue operations through the bankruptcy. It is likely that PG&E will continue to power most of Central and Northern California and remain a major U.S. utility throughout the bankruptcy as taxpayers and customers help foot the bill. The current state of Venezuela. Over the last week, Venezuela has gone from bad to worse, as hyperinflation runs rampant in the country leaving people starving on the streets with nothing but a shattered government to turn to. An entire briefcase of money could barely buy you a pack of toilet paper as the annual inflation rate grew past 1,300,000%. Infrastructures crucial to daily life like health care and transportation are crumbling. On January 23rd, Juan Guaidó, the leader of the legislature, declared himself acting president on the grounds that the recently reelected president, Nicolás Maduro, won the presidency by using force and corruption. The US along with several other nations are recognizing Juan Guaidó as the rightful president which has only escalated political tensions. Nations all over the world continue to show interest in the situation because Venezuela has one of the largest oil reserves in the world. 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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