I’m not one for reading Canadian news outlets, but The Financial Post does quite a good job of sticking to the topic of personal finance without straying too far into politics and social justice activism.
I came across an article from contributor Peter Hodson, who is a stock market veteran with over 4 decades of experience. As an older gentleman, he has been privileged to experience NUMEROUS market crashes over his lifetime: Black Friday in 1987, the “dot com” crash in 2001, the real estate crash in the early 1990s, the housing crisis of 2008, and the 2020 COVID-19 pandemic.
And with each crash eventually leading to a market rebound, he was wise enough to notice repeating patterns in market behavior… along with some time-tested rules for how investors should play them out.
Every single crisis is a buying opportunity if you allow time to be your friend: You are far better off if you have more time to let your investments go through the necessary volatility spikes on the way to the top.
Don’t be all-in for a single sector: The 2001 crash was a perfect example of this. Tech stocks can go up a lot, but they can also go down an awful lot. Just look at the number of hardcore tech bulls who were burned back then because their 100% tech portfolios had been eviscerated.
DO NOT fight the Federal Reserve: They can manipulate the markets and make them head in whatever direction they want. Hodson learned this lesson twice in 2008 and 2020.
It never hurts to have some cash and gold on the side: Hodson made no mention about Bitcoin in his piece, but the point still stands. You will never go wrong by having a chunk of your portfolio hedged in assets meant to serves as hedges against the markets.
No company is ever “too safe” to fail: We’ve seen numerous tech companies in the past decade experience massive losses and failures despite what appeared to be a fool-proof business model. Especially the ones who ALWAYS needed more cash on a frequent basis.
Above all else, panic is never a good thing: There are times when it is better to sit back and do nothing than freak out and sell everything you have. Imagine being one of the institutional investors who sold the majority of their assets in March instead of buying the dip and riding out the incredulous stock market gains we’ve seen in the past 9 months.
All in all, some very solid advice from someone who has been in the game longer than most young cats have been alive. He may not be the billionaire investor you want to hear from, but he certainly has a lot of much-needed common sense in today’s day and age.
What do YOU think about Hodson’s advice on long-term investing? Agree or disagree? Share your opinions with us by replying to this newsletter!
Unfortunately, We’re Off to a Bad Start With the Markets…
After a somewhat slow trading day on Friday, we are starting the week with a slight decline in the markets. Here are the most important numbers you need to know about:
- Dow Jones: -0.6%
- S&P 500: -0.4%
- NASDAQ: +0.5%
- Amazon: +1.3%
- United Airlines: -3.4%
The rollout of Pfizer and BioNTech’s COVID-19 vaccine on Monday wasn’t enough to stop the markets from falling. Several states and cities nationwide are making their lockdown measures increasingly more restrictive, with NYC mayor Bill de Blasio announcing the possibility of a complete shutdown if COVID-19 infections and deaths don’t stop rising.
According to Raymond James institutional equity strategist Tavis McCourt, the future of the economy is nothing short of a guessing game:
“It is abundantly clear the economy is slowing as local shutdowns continue, but any impact on the equity market has been limited so far. Whether this continues into Q1  is unclear, but our guess is pullbacks will be limited unless something materially changes in the vaccine story.”
Once again, it is imperative for investors to wait out the month of December and avoid making any rash buying or selling decisions. As this is the time of year when big banks and traders are on vacation, there’s no point in trying to be wise.
The Super Rich Are Spending More on Luxury Goods Than Ever!
When you are someone who has benefitted financially from the COVID-19 pandemic, or already had so much money to the point where slight setbacks don’t affect you in the least, you have the privilege of spending money on overly expensive items.
ZeroHedge recently compiled several case studies of resellers and auction houses who have seen a big boom in business from their ultra-wealthy clients. And let me tell you, it’s never been a better time in history for goods priced at insane amounts.
Christie’s auction house has seen a major boost in online sales for luxury goods – 200%, to be exact. 2019 had estimated sales of $95 million for the four events they hosted. This year, it’s going to be an estimated $40 million for TWELVE events (+322%).
Sotheby’s claims their year-over-year sales volume has increased five-fold – $150.5 million in total, with nine times the amount of online jewelry sales compared to last year ($79.7 million).
1stDibs has seen a 30% increase year-over-year of gross merchandise value, and 60% for any item worth more than $100,000. All of their high-end products for fine art and interior design are selling like hot cakes.
Tragically, their conclusion to the story could not be any more accurate:
“As wealthy people benefit from the wealth effect of record high equities – hunkered down in their countryside estates – waiting for the virus pandemic storm to pass – everyone else is barely surviving with insurmountable debts, unable to pay rent, rising food insecurity, nevertheless, unable to find a job.”
There’s never been a better time in history to join the ranks of the wealthy elites!
How Will Credit Card Companies Restructure Their Offers in 2021?
The Motley Fool contributor Brittney Myers loves nothing more than exploring the best of what credit card companies have to offer. Whether it’s access to a generous rewards program or the freedom of not having to pay an annual fee, she’s obsessed with every little detail.
That gives her more than enough confidence to make some bold predictions about the future trends of credit card rewards programs in 2021. Here is what Brittney sees happening…
It will be harder to get approved for a new card: Not only will credit card limits be cut in order to minimize further losses amid the pandemic putting millions in financial jeopardy, but it will also be more difficult to get approved for a new credit card. And you can kiss your purchase protection good-bye, as companies start to cut costs even further.
But there will be new benefits and bonuses to look forward to: With travel rewards still useless for the time being, companies will have to scramble and find new rewards to give out. A five to ten-fold increase in the points given per dollar spent on essentials such as groceries, cable, internet, and takeout seem quite likely.
Travel rewards may come back, bigger than ever: Should the travel industry make a rapid comeback in 2021, the rewards will be much more generous in nature. Significant cuts in flight ticket costs, free night stays at prestigious hotels, and perhaps a lower barrier to entry for these benefits.
What do YOU think about Brittney’s predictions? Will credit card companies rapidly adjust their offers to accommodate for a new “work at home” lifestyle adapted by millions of Americans? Reply to this newsletter and share your thoughts with us!
Grocery Shoppers Should Check out the Amex Blue Cash Preferred Card
Speaking of credit card rewards for groceries, CNBC contributor Alexandria White claims she has the perfect card for anybody spending tons of money on food, especially for someone like her who spends $325 per month on groceries and has 10 separate credit cards.
Specifically, she means the American Express Blue Cash Preferred Card.
Here are some of the benefits that come with it:
- Earn $300 in welcome bonuses when you spend $300 on eligible purchases within the first six months of opening your account
- $0 annual fee for the first year, and then $95/year afterwards
- 6% cash back on US supermarkets, up to a maximum of $6,000 per year before reverting to 1% for additional purchases (NOTE: You’ll need a different card for Costco)
Regarding the last point, Alexandria claims to have received $234 every year in cash-back rewards because of their focus on supermarket purchases.
Not bad at all, and certainly something to think about as consumer habits altered by the COVID-19 pandemic will stay that way for the next 3-5 years…
Here’s Why Your Kids Should NEVER Have Access to your Credit Card…
For the parents who read this newsletter and allow their young children to have access to technology, you might want to keep your credit card information as far away from them as possible…
Six-year-old George Johnson loves playing Sonic Forces on the iPad, and enjoys nothing more than leveling up and collecting cool items. Some of these items, as you may imagine, cost money. Unfortunately for his mother Jessica, it just so happens that her credit card information is stored in her iPad.
Over six months, and without her knowledge, George made $16,000 worth of purchases within the time span of six months. One day saw a total of $2,500 racked up over 25 purchases! Jessica only found out about this because her bank account was being drained by PayPal and Apple!
When she investigated what was going on, she filed a fraud claim with her bank Chase. However, Jessica was informed that 100% of the charges were hers and she needed to investigate them further.
To make matters worse… by the time she called Apple, over 60 days had already passed by and it was too late for her to dispute the charges. Customer service reps were very unforgiving, saying that next time she should have parental controls implemented on all of her devices.
I don’t know what’s sadder about the story: The child’s relentless addiction to the video game and his impulsivity with spending money, or the mother’s ongoing ignorance for several months!