Dear Survivor,
Your Survival Guy takes note when Warren Buffett hoards $325 billion in cash, which is mostly invested in Treasury bills. When you look at the yield curve you can see he’s getting around five percent on his money. Not bad considering major investment firms are calling for about the same or less long-term returns for stocks. When you look at one of Buffett’s favorite indicators, stocks vs GDP, you can see reasons for his concern.
Which brings us to today’s discussion: When investors feel optimistic, they tend to see a bright future for stocks. When stocks are going up, they generally feel the next move for stocks will be higher.
The opposite is not necessarily true when stocks decline. Investors tend not to turn pessimistic until the losses run amok through a portfolio. They never stop believing in their stocks and don’t sell because they think, “This time, it’s different.” It’s not.
These are strategies, if you can call them that, heavily influenced by emotions. Your Survival Guy, as a fiduciary, is not emotional about money. I’ve taken live bullets through the worst markets this century and lived to write about it.
If there’s one takeaway from Trump’s win, it is that stocks may go up and stocks may go down, much like they have throughout history. The key is for you to have a plan to create income streams that come into your bank account on a regular basis. When you focus on income, you create a compounding mechanism to help you through good times and bad times. You do not bet the ranch on prices.
Now is as good a time as any to get your fixed-income house in order, especially while everyone’s jubilant about stocks.
Investment Surprise #1: This One Is Free for You
It is no surprise that the Fed cut rates at its last meeting (pay attention to The 4 Biggest Surprises of the 2024 Election) in the face of rising stocks, commodities, real estate, and more. Those are all inflationary signals in my book.
Rising bond yields suggest the same as investors demand more bang for their buck to hold Treasurys for longer. It would be nice if the Fed got out of the inflation business altogether and focused on stability with a gold standard. Since the Fed took over running America’s monetary policy, the value of the dollar has fallen from around 1/20th of an ounce of gold in 1913 to around 1/2707th of an ounce of gold today. Is that what counts for the price stability half of the Fed’s dual mandate?
When you consider past inflation and perhaps more to come, you want to be sure you get paid to be in this market. You know from the chart below how that 70s show looked: Prices did not save the day.
Prices are qualitative and may not go higher on your schedule. Income, on the other hand, is quantitative and can be transferred regularly to your checking account for retirement spending. And when it comes to compounding money, time is your most valued ally. Income helps you stay in the game.
One comment I get from clients is that they wish they joined our investment team sooner. Well, one way to help your family is to introduce your kids and grandkids to us. Once you’re in the door, they’re free to join at any time, even if they don’t meet the minimum on their own. Just let me know.
Explain Investing to Your Grandchildren
No, it’s not too early. Conversations with your children and grandchildren about investing are important at even very young ages. They don’t need to watch the markets or even put money away themselves, but teaching them the principles of giving something up today in order to receive something greater tomorrow is a valuable lesson. Patience, prudence, and planning can put children on the right track. If you need inspiration, show them this chart of what compound interest can do for them. Saving a little today can be much better than saving a lot tomorrow.
These lessons aren’t just for children and teens. Young adults right out of college or high school need them more than ever. If you need to catch up on those lessons with your young adult, click here to download my free Special Report: How To Invest After Graduating College.
Survive and Thrive this month.
Warm regards,
“Your Survival Guy”
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P.S. “Have you thought about getting another dog?” Your Survival Gal and Guy have been asked recently, having lost our dog Louis in April at age 13.
Now that some time has passed, we still have our precious memories of Lou during a time when our kids were growing up. But we also remember the times he wasn’t always a “good boy.” Like the times he would grab their sandwiches out of their little hands on the car rides to New Hampshire.
We’re empty nesters with a couple of wild kittens now. We remember what a lot of work dogs, especially puppies, can be.
“Don’t get another dog. You’re empty nesters. Enjoy it.”
Last week, when Your Survival Guy and Gal were on a walk, we talked about the idea of getting another dog for the first time since April. Then we made the mistake of looking at a breeder’s website and read that she was having a litter in late January.
“We can handle that,” we thought, and sent an email to inquire.
At 5 am the next day, we received an email from the breeder telling us she had a puppy ready to be homed right now. No way, we thought. Not ready. Too soon. How will the kittens adjust?
Driving home Saturday morning, that was the thought we had with our new puppy Stanton (named after Mt. Stanton in New Hampshire) sitting on Your Survival Gal’s lap. Stan, Stanley, Stan the Man, is learning the ropes. I’ll keep you posted.
Sometimes, you need to act even if you’re not 100% sure of the outcome. When it’s your time to act, email me here: ejsmith@yoursurvivalguy.com
P.P.S. If you live in the Northeast, you have probably encountered a Stop & Shop grocery store. There is one not far from Your Survival Guy’s office in Newport, RI, and even three in total on tiny Aquidneck Island. Stop & Shop is owned by the grocery store conglomerate Ahold Delhaize, which also owns Food Lion, Giant, and Hannaford. The company was recently hit with a cybersecurity issue that disrupted its supply chain, leading to food shortages at certain stores. Liz Young reports in The Wall Street Journal:
The cyber incident affected Stop & Shop’s supply-chain operations, leading to shortages of fresh produce, meat and dairy products at some of the grocer’s locations in Connecticut, Massachusetts and Rhode Island.
On Thursday, a spokeswoman for Ahold Delhaize said the shortages are expected to be resolved by the end of this week ahead of the Thanksgiving holiday. The company’s e-commerce operations including grocery delivery and pharmacy services are back up and running across all its brands, she added.
Companies face a range of cybersecurity threats and disruptions as they increase their reliance on technology for tasks such as managing inventory, filling online orders and scheduling deliveries. Cyber issues in recent years have disrupted supply chains for goods ranging from food and consumer products to medical supplies.
A ransomware attack on meatpacker JBS in 2021 knocked out production, pushed up wholesale meat prices and complicated livestock deliveries from farms.
Consumer-products manufacturer Clorox last year experienced a cyberattack that led to shortages of some products.
A blood distributor in the Southeast U.S. in July suffered a cyberattack that disrupted distribution of blood products.
Recent cyberattacks are going beyond customer data to target business operations.
If Americans learned anything from the COVID-19 response, it’s that the supply chain is fragile. Add in a heavy reliance on internet connectivity, and that fragility is open to attack by people from around the world. Prepare yourself with redundancies and perhaps some extra inventory to smooth out the shocks from disruptions. This is especially true for drinking water supplies if you rely on delivery or town systems. If you haven’t already, click here to download my free special report: Emergency Water Storage: How Much, Containers, Purification & More.
P.P.P.S. Today, many more Americans are living in states that explicitly protect the right to concealed carry embedded by the Founding Fathers in the U.S. Constitution. But there are still states where the right to self-defense is under attack. You can see the current state of constitutional (permitless) carry in Your Survival Guy’s map below:
The number of states protecting their residents’ right to self-defense with a firearm has grown to 29.
That leaves 21 states where you still need a permit to carry a firearm. And in some of those states, if you’re from out of state, even if you are licensed to carry at home, you aren’t allowed to carry. That might all change if Donald Trump is successful in implementing national concealed carry reciprocity. Trump recently announced that he will pursue making nationwide concealed carry reciprocity the law of the land.
Americans should be allowed to defend themselves from criminals no matter where they are. Concealed carry restrictions are hardest on the most vulnerable Americans who can’t physically defend themselves. If you haven’t already, get your gun and your training now.
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