Alchanati Campbell & Associates
How bout em apples, Brexit, cryptocurrency, technology and fertility rates.
Hi Apple. “Here’s to the crazy ones, the misfits, the trouble makers, the round pegs in the square holes” to the ones who use a trillion dollar company to bring the power of innovation to hundreds of millions of people across the planet. Apple’s September special event hosted at the Steve Jobs Theater was a hit. Apple continues to double down on Jobs’ philosophy and focus on the hardware. This year’s main product announcements included the Apple Watch Series 4, iPhone XS, XS Max, and XR. The new watch is now capable of monitoring your heart rate for irregularities, can preform an ECG and can alert authorities if the user falls and is injured. These new features will help Apple gain a larger share in older demographics and potentially save lives. Tim Cook announced that Apple recently sold their 2 billionth device and the impressive numbers don’t stop there. The new A12 Bionic chip puts in emphasis on matching learning and can perform 5 trillion operations every second! The product launch also shows off Apple’s new strategy. The three new iPhones will allow Apple to expand into several markets, the XS Max is expected to preform well in China, while the XR can boast many of the same specs as the XS and even surpass it in some like battery life. It also comes at a much lower price making this new tech accessible to more people. Two weeks ago, we speculated that Apple would not include a 5G ready receiver in the new iPhones, well the iPhone XS and XS Max have gigabit LTE antennas which is a stepping stone to 5G.
The Situation with BREXIT. By now, I'm sure all of you have heard about BREXIT. For those that haven't, let's give you the run down. Essentially, the United Kingdom is planning to leave the European Union. To be incredibly broad, the European Union is a pact between 28 countries establishing a system of a free flow of goods and people between the participating countries.
The actual exit isn't happening until 2019, but there's a lot to be done before then. This week, there has been more extensive talks of a deal for the exit plan, which officials hope to reach prior to December of this year. If a deal is not reached and BREXIT occurs, it could be disastrous for all parties. Primarily, the flow of people from country to country would be more limited and costly. This would of course have ripple effects on each country as they are losing tourists who go to those countries and spend money there. Furthermore, Mark Carney, Governor of the Bank of England, informed the world that the housing market in Britain would crash in this event. Remember what happened when the United States Housing Market collapsed?
Where is the bottom? You will get a different answer every person you ask. Some people are saying we could see mid $3000’s, while others are saying we have already hit the bottom, and there is only room for growth. A lot of people are claiming that $6000 will be the bottom as that sets it equal to the cost of mining a single BTC. Personally I think we have the chance to go down further than $6000, as cost to produce isn’t always the price floor of an item. Mining operations won’t just turn the power off once BTC falls below $6000, as they have a lot of fixed costs they will still need to cover. We could easily see BTC drop below $6000 in the next few weeks, or we could even see it rise and try to break its resistance zone at $7400. It is constantly brought up concerning the crash from $19,950 to $5700, that it will never recover to its previous highs, the common common argument against that is to look at its previous crashes. In 2012, it fell from $7.38 to $3.8, which was a 49% drop. In 2013, we saw a drop from $260 to $45, a 83% drop. In 2015, $1163 to $152.4, a 87% drop. This last drop, from $19,665 to 6000 was 70% drop. Will history repeat itself and will we recover back to previous highs? Only time will tell.
Are they improving our intelligence or making us stupid and violent? Research shows that by constantly distracting us, the internet affects cognitive performance, but does not radically alter our brains. There is simply no experimental evidence to show that living with new technologies fundamentally changes brain organization in a way that affects one’s ability to focus. When individuals try to do two or more things at once that require their attention, their performance suffers. Multitasking on the internet paradoxically makes users less effective at switching from one task to another. Now with violence: the American Psychological Association concluded that playing violent video games accentuates aggressive thoughts, feelings and behavior while diminishing empathy for victims.
An asset allocation that has never lost money over rolling 6-month periods. If you want a portfolio to not have any losses over short rolling periods (less than 10 months), then simply invest all your capital in 30-day US Treasury bills. If you want a portfolio to not have any losses over a three-year rolling period, then allocate your capital to small-cap equities, precious metals, intermediate-term US Treasuries and long-term US Treasuries. (These asset allocations are based on historical data, a 45-year exam period, when small-cap stocks did exceptionally well and Treasuries and precious metals were excellent diversifiers. These strategies were great ways to not lose money, but to gain market or above-market returns, not so great.)
Lehman, Happy 10 year Anniversary! Banks had too much debt and too little equity. Now, theres a safer banking system (strengthened capital buffers, more responsible approaches to balance sheets and better liquidity management) and a more robust payments and settlement system. But, the misconception of the collapse of Lehman Brothers causing the crisis is not true. There are more factors in play than Lehman filing for Chapter 11 bankruptcy.
A drop in fertility rates may cause future trouble. Global fertility rates have dropped to about 2.4 from 5 in the 1960s. 2.1 is the rate required to keep the world’s population stable in the long run. Why is this happening? With advances in agriculture and medicine, people are living longer and fewer children are dying young. Increasing urbanization means families don’t need as many kids to work in the fields. More women are delaying marriage and children for work and education. There is a high correlation between low fertility and higher incomes. If a country’s population stops growing, the pace of its economy’s expansion would be limited to the speed at which productivity (output per hour worked) is rising. If fewer people work, there’s less income to go around.
In the world of sports. Yesterday on Thursday night football, Andy Dalton and the Bengals beat the 2013 Super Bowl MVP Joe Flacco and his Ravens at home to stay undefeated with a 2-0 record. On Monday, 20-year-old Naomi Osaka beats tennis star Serena Williams in the women’s US Open after accusing umpire Carlos Ramos of sexism. During the game, Ramos gave Williams a code violation following a gesture made to her by her coach which is isn’t allowed during a game, that’s called “coaching”. Ramos penalized Williams again a point later after she smashed her racket in frustration and docked her an entire game again after she called the umpire a “liar” and a “thief” for stealing her point away.
The Alchanati Campbell and Associates Team
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