🐂 Dividends in a bull run

+ a crypto market update & interpreting the latest inflation report

July 21, 2022 View online | Sign up TOGETHER WITH Happy Thursday. Inflation rates have doubled in 37 of 44 advanced economies over the last 2 years. In which of the following countries did inflation grow the fastest over those past 2 years (Q1 2020 vs. Q1 2022)? a. Indonesia, b. India, c. Israel. Follow the wave 🌊 below for the answer. Here are our finance & investing topics for today: In this bear market, dividends are still in a bull run A crypto market update How to interpret the latest inflation report 🌞 The Finny team will be taking a two-week summer break starting next week. So The Gist will resume on Tuesday, August 9th! Any questions or feedback, email us at feedback@askfinny.com.

INVESTING In This Bear Market, Dividends Are Still In A Bull Run Giphy—Ferdinand Movie Dividend investing is a strategy best described as not for the faint of heart, and certainly not the impatient. Investing for dividends most often means investing for income, stability, and for a long, long time. Spending money to make money Nothin’ new: Dividends have been consistently on the rise in recent years. Save for a dip in 2020, companies in the S&P 500 notched a new dividend payout high every single year throughout the last decade. Our latest record culminated to $140.6 billion in Q2 2022, up drastically from $123.3B a year ago, and well north of pre-pandemic levels.  Onward & upwards: Most analysts are projecting continued strong dividend growth in 2022, with some forecasting a double-digit (10%) move upwards, the first since 2014. Despite recession fears and inflation, most of these stalwart dividend companies have continued to see strong sales, and want to keep signaling that everything is grand. Find shelter somewhere: Despite the demoralizing market environment we’re in now, dividends have managed to remain bullish throughout, and aren’t showing any signs of slowing down as investors seek some form of income and stability. For example, compare the S&P 500’s YTD drop of about 20% to its high dividend counterpart’s (S&P 500 High Dividend Index) drop of just 8%. Finding your own dividend style Not for the impatient: Dividend stocks aren’t really something to get into for a short time or only during a down market—that won’t yield most investors much income at all. It’s not a strategy to produce investment income fast, or at all, unless you have a lot of cash, a lot of patience, or both. You would need to own 1,000 shares of that high-yield AT&T stock to produce $2,000 a year in dividend income. That’s a $29,000 investment, so it would take you 15 years to make your money back at present value. Pick wisely: It can be easy to get lured in by dividend yields that seem really high, that is until you realize there’s a reason for that. You’ll want to identify a company that strikes a balance between price stability, growth, and a strong history as a business (and dividend policies). If you don’t know where to start, look at dividend yields by sector and then drill down. You can also elect to go the route of selecting a dividend-focused fund. No guarantees: It’s paramount to remember that almost any stock can go sideways, especially during a market like this. While dividend stocks may be generally regarded as safer and maybe even defensive sometimes, no investment is entirely safe. As we always say, do your research (due diligence or DD) and invest only what you can afford to lose.

MARKET OUTLOOK A Crypto Market Update The crypto markets have been through a lot in their relatively short lifespan, and have experienced their fair share of volatility and turbulence often synonymous with highly speculative markets.  There are, of course, two sides to every coin. So here’s an aerial view on what’s happened and how to approach the current situation. A series of unfortunate events Stablecoins: In the aftermath of the TerraUSD (UST) incident, the broader crypto market stayed deep red. Bitcoin correspondingly suffered a 25% drop in value over a 3-day period, and other coins followed suit out of fear. This lapse shed some light on yet another crack and potential oversight in one of crypto’s many complex underlying technical structures Bankruptcy spree: Without getting into the complexities of bankruptcy legislation or what exactly led to these defaults, we’ve witnessed 3 major crypto players declare some form of bankruptcy over the last couple months. It started with 3AC (3 Arrows Capital) and their mismanagement of borrowed funds, and has since trickled within the industry to many of their creditors like BlockFi, Blockchain.com, Voyager, and other crypto firms that lent 3AC money they couldn’t repay. This chain of events has created increasing dismay and angst amongst crypto speculators, which far outweighs the die-hard hodlers, and thus resulted in more selling. Growing correlation: Despite being less than 1% the value of traditional stock or bond markets, Bitcoin recently touched its all-time-high 90-day correlation with the S&P at 0.58, and has clocked even higher numbers relative to more tech-oriented indices like the Nasdaq. As crypto becomes more mainstream, investors seem to be more prone to lumping it in with stocks in the traditional market too. Sounds innocent, right? Until you consider the state of our markets at present, and how a lengthy bear run in the traditional markets is going to inevitably weigh down any correlated markets too. A few ways to look at it all As a skeptic: Crypto has been through hell lately, and not many would blame anyone for erring on the side of pessimism here. If you feel entirely uncomfortable with crypto right now and don’t want it anywhere near your portfolio until it seems more stable, that’s a reasonable choice to make, and maybe even the right one if you’re in a situation that’s less risk-tolerant.  As a hodler: Without nuance, news means nothing. Many close followers and true investors in the crypto community see this as nothing but growing pains, and even the CEO of Celsius (another bankruptcy participant) said he believes they’ll look back and view this as a “defining moment” for the company and crypto. If you truly know and believe in what you’re investing, then keep doing it.  As an investor: An investor’s perspective on this situation is the objective one—one that simply asks “is there a potential likelihood of profit to be made here?” and decides based on that alone. If you’re inclined to think that the winds of trends will blow enough in crypto’s favor to turn a profit from these lows, go ahead and invest in the coin you think has the most upside. If not? Stay the heck out of it. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Cryptocurrency Basics Crypto & NFTs 6 mins

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ECONOMY How To Interpret The Latest Inflation Report If it seems like we’ve been speculating on the nature of inflation for years now, it’s because we have. The Fed first started using the transitory descriptor early in 2021, and that’s since gone far out the window. The reports keep rolling in, and the numbers keep climbing.  Our latest update came last Wednesday, and CPI data showed us a 1.3% increase in June alone, and 9.1% over the last year, 0.3% above most forecasts. Energy of course dominated, up 41.6% in isolation, as “items less food + energy” number came in at a much lower 5.9%. What do we make of this continual upward trend? A few things... Energy weighs a lot: Energy makes up the 4th heaviest weight in the CPI at 7.54%, coming in behind shelter, food, and transportation. With it also being the costliest sector, the energy sector exerts a lot of mathematical pressure on our calculations, and contributes a lot to the increases we keep seeing. The good news? Commodity prices are starting to slip a little. A couple of key drops: Instead of just reading 9.1%, it helps to go line by line and see what items actually moved. When doing so, you’ll notice that two key categories fell for the first time in a while. A subcategory of food, “meats, poultry, fish, and eggs” dropped 0.4% after rising 1.1% last month, and “fuel oil”, another term for distilled crude, fell 1.2% after rising a whopping 16.9% last month.  Food and energy are big culprits: If we drill down specifically on the “all items less food and energy” section, you’ll notice that no item rose over 2% in June, and most are only up single digits in the last year. Compare this with the food and energy sections where most categories are up double digits, with a couple in the energy section even nearing triples. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: What is Inflation? Investing Basics 6 mins

🔥 TODAY'S MOVERS & SHAKERS 1life Healthcare Inc (+69%), the US-based primary healthcare clinics chain (under the One Medical brand), will be acquired by Amazon for $18 a share in cash or about $3.9 billion including debt. Tesla (+8.4%) shares are up after reporting better than expected Q2 earnings in Q2 but shrinking profit margin as a result of higher costs and supply chain issues; Tesla also revealed that it sold 75% of its Bitcoin holdings, adding $936 million in cash to its balance sheet. Carnival (-11.1%), the international cruise line company, as it announced that it will sell a billion dollars in stock with the intention to user the proceeds for "general corporate purposes, which could include addressing 2023 debt maturities." Bitcoin (-2.5%) to $22,645 (1D) Ethereum (-0.7%) to $1,511.10 (1D) This commentary is as of 9:00 am PDT.

🌊 BY THE WAY 🎈 Answer: c) Israel. The inflation rate in Israel in Q1 2022 was about 25x the rate in Q1 2020; in Indonesia, inflation fell early in the pandemic and has remained at low levels; inflation in India also remain at low levels (World Economic Forum) 🥷 How Wall Street evaded the crypto meltown (NYTimes) 🎩 ICYMI. The money illusion trap (Finny) 🟥 Speaking of bull runs... after a pandemic Hiatus, the bulls are running again in Pamplona (NY Times) Finny lesson of the day. For those who are beyond crypto basics and curious about how some crypto companies were able to offer high yields, learn more about DeFi yields are: DeFi Yields Crypto & NFTs 5 mins

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Finny is a financial education platform on a mission to make your money work for you. We offer a customized financial learning platform through bite-size, jargon-free lessons, money trends & insights. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. Finny does not offer investment and stock advice or endorsements. The Gist content team: Austin Payne, Chihee Kim.  We're thankful for the support of today's sponsor & partner⁠—Athletic Greens—as they make rewards on our platform possible. If you're interested in sponsoring The Gist, please reach out to us. And if you have any feedback for us, please contact us. © Finny 2022. All rights reserved. 736 Paloma Ave, Burlingame CA 94010 Unsubscribe Preferences Privacy Policy Terms of Service

🌀 What goes up must come down

commodity prices, that is + lessons learned from past bear markets

July 19, 2022 View online | Sign up TOGETHER WITH Good Tuesday to you. The number of travelers reporting stranded luggage this summer has increased. Can you guess by what percent that figure has jumped since 2019? a. 15%, b. 30%, c. 45%. Follow the wave 🌊 below for the answer. Zooming in on the money topics for today: 🔎 Commodity prices are finally dropping Lessons learned from prior bear markets  Keeping your summer budget reasonable 🌞 The Finny team will be taking a two-week summer break starting next week. So after this Thursday's edition, The Gist will resume on Tuesday, August 9th! Any questions or feedback, email us at feedback@askfinny.com.

COMMODITIES Commodity Prices Are Finally Dropping Commodities have drawn an unusual amount of attention over the last couple years, as this typically mundane sector was one of the primary benefactors of the pandemic’s rippling implications.  Commodity prices are finally slipping a bit though, but that might not be exclusively good news. The skinny The backstory: Crimped supply chains and whipsawing demand back in 2020 sent prices sky high just as quickly as they’d plummeted initially. Since then commodity prices have remained relatively elevated thanks to various catalysts—economic reopening, market uncertainty, war and economic sanctions—keeping costs up on things like lumber, oil, metals, and even soft commodities (goods that are grown vs. mined, such as coffee, wheat, corn, fruits, etc.). Prices rise: In the first half of this year, the Bloomberg Commodity Index rallied more than 20%, largely driven by the rise in energy prices (44.5%), agricultural goods (20.5%) and industrial metals (17.6%). As the globe fears the economic ramifications of the war in Ukraine, the impacts have undeniably been felt in prices throughout the world—whether it be in basic foods or insanely expensive gas.  Current state: Demand for gasoline is down, and subsequently so is the price of crude. Rising interest rates and high prices have homebuyers finally growing a bit weary too, resulting in lower demand for lumber. Aggregate demand for metals is also declining as overall growth softens. Other key commodities like copper remained relatively lofty through April of this year, but their prices have since fallen drastically, usually a sign that investors are bearish about the economy.  The potential meaning Slowing demand: Things have gotten insanely expensive in certain areas like food, gas and rent. Even a stronger dollar can’t chase these prices forever, and it seems like we’re entering somewhat of a contractionary period in terms of consumer demand too—right in lockstep with the Fed, which has already said they’re willing to risk a recession to control inflation.  Flagging for a recession: Slumping commodity prices can oftentimes be a telltale sign of a pending recession, or an indication that we’re already in one. According to a recent Bloomberg survey, 47.5% of economists believe the economy is headed toward recession, a 17.5% increase from last month as persistent inflation and widespread layoffs fuel recession fears.  It might not be all bad: Recessions and slow growth are often painted as doom and gloom, but that’s not always the case. In a situation like this, a little reset to help curb prices and get inflation under control might actually be a good thing in the big picture. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Investing in Commodities Advanced Investing 8 mins

INVESTING Lessons Learned From Prior Bear Markets History doesn’t always repeat itself, but it does often rhyme. So when it comes to investing in bear markets, it’s helpful to look to past bear markets to guide us now as we navigate the markets. Bear market lessons learned The drop: The average bear market decline is about 36%, whereas bull markets return an average of 114%, so eventually it’s usually worth holding steady, right?  The frequency: Historically speaking, although bear markets have become less common in recent years, their long-term average still has them striking roughly every 3.6 years, making them about as common as a cold and nothing to be too fearful of.  Positivity wins out: If you’re invested for 50 years, then based on averages, you can reasonably anticipate weathering about 14 bear markets. Worry not though, because in the end, markets are still positive about 78% of the time.  Be patient: The average bear market lasts about 289 days or almost 10 months, but that clock only starts once the market is down more than 20% from its previous high. We crossed that 20% line on the S&P 500 a little more than a month ago and have since been bouncing above and below as markets weigh the events at hand. So, what does that mean? No one knows for certain, but we might still have a ways to go.  Don’t be fooled: Big, flamboyant green days are very common in bear markets as volatility takes a hike and the pent-up desire to run often gets loose on some positive news, only to be put back in check shortly thereafter. These are relief rallies and false breakouts, and it’s important not to be fooled by them and to remain objective and unemotional. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Bear Markets & Volatility Investing Basics 5 mins

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MONEY TIPS Keeping Your Summer Budget Reasonable Keeping a reasonable summertime budget with vacations included is hard enough in any given year, and almost downright impossible when fuel is so expensive and inflation is setting records.  Nevertheless, we should try, right? Even though things might be defeatingly pricey out there, when the alternative is to give in and rack up debt, our only choice is to get creative and combat costs any way we can. 3 tips to keep your summer spending in check Skip peak seasons: Summer vacations can be a little prototypical and cliche—everyone else is traveling too, it’s crowded, hot, and expensive. So why not just put it off? Flying, for example, during “shoulder seasons" or in-between times like late spring or early fall instead of right smack in the middle of summer is often notably cheaper, not to mention less stressful too.  Plan ahead and say no: Even if you’re a master budget maker, expenses can still easily overflow when last-minute plans take control of your life and your wallet. If a tantalizing, costly opportunity comes up that isn’t budgeted for and you know it’ll mess up your finances, just say no. Plan ahead for your fun and your expenses to the extent you can. Save in advance: Okay so, this one's for next summer, or… any upcoming season where you’re planning a trip or some fun. Even if you’ve already got the money for said fun, set aside an additional savings bucket for “excess fun money” on top of that, because last-minute expenses always arise, and anything leftover can be put toward the next one. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: Budgeting Basics Budgeting & Saving 6 mins

🔥 TODAY'S MOVERS & SHAKERS Apellis Pharmaceuticals (+22.9%) as the FDA has granted priority review to the company's marketing application seeking approval for their lead product for age-related macular degeneration, an eye disorder. IBM (-6.2%) shares are down after beating top- and bottom-line estimates for Q2 but warning of a $3.5 billion impact to future earnings because of the strong USD. Bitcoin (+0.98%) to $22,662.00 (1D) Ethereum (-3.8%) to $1,522.26 (1D) This commentary is as of 8:30 am PDT.

🌊 BY THE WAY 🏖️ Answer: The number of travelers reporting stranded luggage this summer jumped 30% from 2019, according to Spanish insurer Mapfre SA (Bloomberg) 🥤 A can of Coca-Cola for $13? Prices are rising on one of Europe’s most popular islands (CNBC) 🤔 ICYMI. Why is the value of the US dollar is going up? (Finny) 💳 Does Klarna build credit? You might be surprised (Tally) 🪙 Finny lesson of the day⁠—Get a better understanding of the relationship between gold and the US dollar: Gold & the US Dollar Advanced Investing 6 mins

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Finny is a financial education platform on a mission to make your money work for you. We offer a customized financial learning platform through bite-size, jargon-free lessons, money trends & insights. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. Finny does not offer investment and stock advice or endorsements. The Gist content team: Austin Payne, Chihee Kim.  We're thankful for the support of today's sponsors & partners⁠—⁠Trust & Will, Tally—as they make rewards on our platform possible. If you're interested in sponsoring The Gist, please reach out to us. And if you have any feedback for us, please contact us. © Finny 2022. All rights reserved. 736 Paloma Ave, Burlingame CA 94010 Unsubscribe Preferences Privacy Policy Terms of Service