Thriving with Interest!

Over the past week we have had a huge move in the interest rates. Check out the charts below: These are not moves that one would normally expect to see if the economy is going to expect to roar ahead. Economic growth is generally accompanied with higher interest rates, not lower ones. Well how can we explain this? Growth will moderate from the abnormally high levels of the past few quarters We will probably see some stops and starts in economies as the delta variant and other Covid scares become more common (check out some of the renewed lockdown put in place in Asia recently) There is still a lot of cash on the sidelines and some people have taken advantage of a recent pullback in bonds to purchase them as stocks and property markets are at all time highs There is still a bit of reluctance to hop into the crypto space, which should be a reason why it will remain rangebound for some time to come (another 3-6 months in my opinion). So what can you do from here? These lower rates will he...

The other day as we were watching some sport on TV the topic of "who would you put on your Mount Rushmore" of American sport. Of course the discussion got quite lively and there was little consensus amongst those of us sitting there in Camarillo. However I do believe that I have cracked the puzzle and here you have it folks, my four faces that I would carve into that granite rock. For my non American readers out there, a little pause to explain Mount Rushmore. It is a monument located in South Dakota and features 4 faces sculpted into the side of a mountain. These are 4 major figures of American democracy, George Washington, Thomas Jefferson, Abraham Lincoln and Theodore Roosevelt. For those of you wondering why there aren't others, such as FDR or JFK, it's because the project was executed between 1927 and 1941. For more information, please see wikipedia... A few things I need to make clear in order to explain the selection process. Obviously we need to pick some gian...

  Well here you have it folks, an amazing start to the year, notably when it comes to your investments. With a 14% return the S&P notched its best H1 in 23 years (see headline above). What are the top 3 takeaways from the first 6 months of 2021, they are here (in my humble opinion): The rise (and rise and rise) and staying power of meme stocks (or stonks depending on your point of view). The beginning of the year was dominated by the GME and AMC saga with even non financial news outlets focusing on this story. I don't need to rehash it here, but this is a post I wrote about earlier  ( https://thrivingwithinterest.blogspot.com/2021/06/democracy-at-work-meme-stocks-are-back.html ). What is interesting is that after a quiet few months and a little retracement they actually managed to hold on to most of their gains and in the case of AMC closed up much higher by the time June rolled around. The little investor continues to gain in power (continue reading as this relates to on...

The headlines continue to trickle in about the strength of the housing market with April and May figures continuing to be off the charts in terms of YoY growth. After writing about how I don't think it is too smart to buy property at the moment (link here:  https://thrivingwithinterest.blogspot.com/2021/05/is-it-smart-to-buy-property-in-2021-i.html ) I would say that for those who have a mortgage it is a great time to refinance from a 30 year mortgage to a 15 year loan. Let's crunch the numbers. Most people who follow these sorts of things know that the Fed cut interest rates close to 0 in the immediate aftermath of the pandemic and forced shutdowns last year. A number of my friends took advantage and refinanced their homes at that point in time. It was a great opportunity as 30 year mortgage rates reached all time lows. Since late 2020/early 2021 those rates have ticked up a bit. Interestingly the same thing has not occurred with 15 year rates. They did reach a an all time low...

New month, new motivation, new challenge. Here is a little July challenge that I have set for myself and think it's worth jumping on board. July has 31 days, so let's do 1 rep for each day (this would have been an easier ask in February you say? That may be correct, but no pain, no gain! Speed isn't the goal, nice form and getting through the rotation is. So here we have it, let me know what you think: 1. Jumping Jacks: These are a good way to start, as they get the heart rate pumping quickly and effectively. They are relatively simply and get most of the body working as well. Calfs, hips, core, lower back and shoulder abductors all get a bit of a workout here. 31 down... 2. Push Ups: These can be done normally, wide stance or from your knees depending on how you feel. These are also useful to bring down the heart rate after the jumping jacks and get your ready for the remaining 3 exercises. Push Ups engage a different set of muscles to the jumping jacks the precede it and ...

 Well well well, here we go.  The S&P 500 is up 14% this year, closing June at a record, while the Dow Jones Industrial Average has climbed 13%. This quarter will mark both indexes’ fifth consecutive quarter of gains, their longest such streak since a nine-quarter stretch that lasted through 2017. Where to from here?   It appears that we can now set our sights on a 5250 target! This is thanks to our Italian friend Fibonnaci: Why would this be the case? there doesn't seem to be any irrational exuberance (or any real semblance of a consensus) both growth and value stocks have done well this year which means that is not a major agreement about the future economic growth prospects earnings will continue to motor ahead (thanks to low base levels from 2020) consumer spending and cash on sidelines are at very high levels yes, interest rates are poised to rise, but not anytime soon and even if they do rise they are still going to be at very low levels for some time to co...

A staple of any Algebra 2 and Pre-Calculus curriculum will include a unit on Sequences and Series. I love teaching this as it allows me the opportunity to go over one of the most famous infinite series, the sum of natural numbers. Although it is clearly divergent in a traditional mathematical sense, by employing the Ramanujan summation we can arrive at a result of: 1 + 2 + 3 + 4 + ... = - 1/12 Surprising no? In so many ways: how does one arrive at a negative value only summing positive numbers? how does one arrive at a fraction only summing natural numbers? how does one arrive at a sum at all?!? Don't believe me? Here is a copy from Ramanujan's notebook entry: Another key surprise is that with one little approximation the proof become relatively trivial. In addition, this result is used in physics applications such as string theory. Here we have a graphical representation of such sum: source: wikipedia Now onto the simplified proof: Recall: our goal is to find the sum of the fo...

It's the summer, time for some reading that will help you pass time at the beach, the lake house, or simply at home. This one is quite a something. Well worth it.  Trump can get a little bit of credit for encouraging Operation Warp Speed. This helped get the vaccines across the line much faster than might otherwise have been the case. It's not 100% clear if this could have happened in an alternative universe without Operation Warp Speed. Unfortunately the majority of the good people that were in the Trump administration got muzzled or if they tried to talk realistically about the issues facing the nation, then they were eventually shown the door. Therefore on that front, Trump gets 0.5 points. Since then, the vaccines have been rolled out at warp speed and the US is a global leader in this race. As such, we are now getting closer and closer to normal, a lot faster than I would have imagined (see past blog post: https://thrivingwithinterest.blogspot.com/2021/05/how-quickly-do-we...

For the past week I have been teaching young men about finance. We have covered a whole range of topics from the origins and purpose of money, to stocks, from crypto to foreign currencies. However the one topic that seemed to blow most people away was the power of compounding. The genius himself even has a quote attributed to him: It's safe to say that teenage boys don't necessarily have retirement as the number 1 topic on their minds (I can take a pretty good guess as to what the top topic is for most). That being said, when we went through the concept of compound interest and how much money you can end up with if you are able to save a little bit each and every month while giving it a bit of time, the scholars' eyes lit up. I could almost see the "mind blown" word balloons pop up from most in the room. This is a summer class and not designed to be heavy on mathematical calculations. Therefore I relied on an online compound interest calculator to come up with the...

There is a lot of fear out there amongst Bitcoin (and other crypto) investors/traders. BT C broke below $30,000 for the first time since January is now down over 50% from the highs reached in April. As mentioned in earlier posts, we are well and truly in a correction ( https://thrivingwithinterest.blogspot.com/2021/05/testing-patience-crypto-correction-is.html ).  What have been the reasons for the most recent downturn? China cracking down on miners over the weekend. It's nice to be a centralized government where you can quickly make such decisions; Investors with leveraged positions are being stopped out (close to $1bil in liquidations have taken place recently); Dramatic slowdown in onchain activity; and From a conspiracy theory perspective, some might point to the fact that Microstrategy keeps on doubling down on BTC (they just issued another convertible bond) and traders are trying to cause additional stress. Where to from here?  My best guess is that we have another few m...