Well...licking the cuts and healing the bruises from the market this past year...I think it's time to form an actionable plan. Many mistakes were made, some of my timing was horrible, but now as earnings compress the deals will be there.
Had bad timing selling out of my stock portfolio to go into crypto....six figure loss. Got discouraged so I stopped making videos as I felt stupid and didn't want to hide the losses.
Time to pick my self up again and build a nice foundation.
Crypto + Precious metals will now be a part of this journey as the world is accelerating the rollout of cbdc's and the eastern hemisphere of the world is actively getting away from the US dollar so the two will be in synergy as we see commodity backed cbdc's
Stock Market (Taxable & Retirement Account): $38,150 (Sold out of taxable, started from $0)
Robinhood (Tecnical Trading): $2,122
Wealthfront (Roboadvisor): $2,523
Fundrise (Private REIT): $1,275
SeedInvest (Private Equity): $2,000
Crypto: $57,193
Silver: 300-400 oz
TOTAL: $
100,740 + 300oz-400oz silver
Youtube Subscribers:
455 / 1000
Youtube Watch Hours: 145 / 4000
Channel: https://www.youtube.com/channel/UChT4ajlHkg9z-3uGoSmxE4g
So...moving forward, lets talk about what changed in the market. If you see this screenshot from the last post in July of 2021, I spoke about how the price of Microsoft was rapidly outpacing the actual earnings of the company.
Well, we know how that unfolded. The market took a beating and is starting to revert to its mean. (Below orange line = start heavily buying. Below blue line = every last dollar you can use, BUY)
This is something I should have been more cautious about, because all markets including crypto, stocks, real estate, precious metals all follow the stock market and more importantly the central bank rates. You cannot stop the market, so even if a company look like a good deal, the market can take it down with it.
Now that the general sentiment of the state of the market is out of the way, lets talk about the future. The past year has definitely outline a few things.
Cash flow = freedom
>What I mean by this is that if you want to replace your current income with invested income, well you'll need investments that payout on a regular or semi regular basis (monthly or quarterly)
- Real estate = monthy rent
- Dividends = Quarterly / Monthly
>Equity investing is a fantastic wealth generator, but if you want to replace your income from a job or business with passive or semi passive income then you need the assets to pay you back cash on a predictable basis. Yes, you can take loans out on your stock/crypto portfolio but I wouldn't advise it for general living expenses unless your assets are in the multi million dollar range as you can get easily margin called, and the rates are variable and rise and lower when the FED rises and lowers. Having a large balance gives you the option as 1-10% borrowed is much different on a $1 million account vs a $5 million. On a $5 million you can borrow 2% and have $100k to spend while the market, appreciates an average of 7% but a down year like this past could put your say $1 million dollar portfolio in jeopardy as you'd need to leverage more to have a livable income. The whole point is to avoid asset erosion, that's how general wealth is lost by spending the principal amount.
- See for example, when rates were lower a year ago I could take loans on my stock portfolio for 2%...now it's around 4-6% depending on how much money you have in your brokerage
- Below is my brokerage account. You can see the bill from September to August jump tremendously as the FED raises the rates. I didn't borrow more money, the cost of borrowing just increased. This is why the market drops as money is harder to come by, and companies who aren't profitable collapse dragging the whole market down.
The margin is used on Agree Realty corp aka the little brother of Realty income corp, a monthly paying reit. I'm not going to close it out yet as the dividend yield is 3.86% so instead of 5.75% I'm truly paying 1.89%. The margin interest can be used to offset some of the dividend taxes as an fyi.
I believe compared to the physical real estate market, the underlying holdings/buildings of the company did not appreciate accordingly compared to the private market. So funnily enough the opposite of the silver market which we'll get to in a second.
This is a list of their institutional grade tenants. Enough to not worry me to close the trade, as I believe their tenants will survive long term (Autoparts, Aldi, Dollar General, Walmart, Tractor supply, etc.)
https://agreerealty.com/properties/
So, one pattern I've recognized with cashflow, is that real estate tends to be one main pillars. Think about it, there are only so many businesses that have a predictable monthly income where the customer is locked in for one to decade year contracts. If the operator is good, they will have factored in maintenance, operating, and vacancy costs.
I personally cannot afford to do commercial or residential real estate in my area as the average home is in the $350-400k range. I don't have the operating experience so I don't want to put all my eggs in one basket, that will be once the real estate market starts to go down. See pic related, the average median home in the US has been far above the mean for a long time now.
Our currency has inflated so much attributing to the real estate appreciation. But with the continuous raise of rates to stop inflation, people can't afford a mortgage that almost just doubled in monthly payments. That same 500k home where someone was maybe paying $1,250 in just interest a month is now paying $2,500 in just the interest alone. So it has to go down, but I believe hard assets are going to be crucial moving forward. Will this be the last hoorah for the USD? Let's find out.
$USD:
Now this is where things are getting interesting on a world macro level. The USD has been officially the world reserve currency since the Bretton Woods agreement in 1944 following WWII. Meaning that majority of trade if not all from country to country was transacted with, and held in USD.
Well, that's great if your on the benefiting side from a strong dollar, US citizens and corporations because they are able to get cheap imports. Why? Because if the trades all around the world are transacting in USD then it holds it's value. Well, what ends up happening is countries dump their own currency as fast as possible to the USD because it holds it's value from stated above. This causes a spiral of continuous dumping of the host currency for the USD. Well, if the currency continues to be sold off, it becomes less and less valuable.
As the host countries currency declines, the salaried wages / pensions increasingly become worthless as the cost of foreign goods are held in USD. This can cause two different effects, the people of the country either spend as fast as they can on goods, weakening the currency. or trade immediately to USD. If that happens then the economic activity is slowed in the country, so then they print/inflate the currency to stimulate activity, but it then further devalues as more is in circulation.
This leads to worthless currency -> countries raising their rates to cause deflation....which then leads to pic below
Mortgage rates in the 10%+ range. At that point most things are paid in cash past a 15-20%+ range as no one will lend in a defaulting nation. At this point business loans are in the same boat, if not impossible to find.
We are already finding this in many nations on this very list above, inflating currency becomes worthless which all stops to prevent it only lead to a downwards spiral.
As you can see below, a woman has to result to robbing the very own bank that has been holding her money hostage, as the defaulting country cannot afford for their currency to be sold off, and the banks themselves whether country or privately owned may not even have the funds left.
https://www.bloomberg.com/news/arti...-banks-to-get-savings?leadSource=uverify wall
Coming to a country near you. Hard assets that are tangible and useful like energy vs inflating currency as you can see in Germany and UK already....winter is coming
Part 2 will include Energy, Gold/Silver, and CBDCs.
BRICS = COMMODITIES + CURRENCY = CBDC
...stay tuned
