Good day. Since the pandemic, freelancing has become an exceedingly popular side hustle for many folks — can you guess how many new self-employed individuals have joined those ranks since 2019? a. 7.7M, b. 11.1M, c. 13.3M. Follow the wave 🌊 below for the answer. Here are today's topics: - The Artificial Intelligence Frenzy Continues
- How to Buy Treasuries as Yields Hit 5%
- The Gig Economy Slump
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MARKET OUTLOOK The Artificial Intelligence Frenzy Continues | | | | OpenAI released ChatGPT about six months ago, and it's already taken the world by storm — surpassing over 100M users and 1.8B site views per month. But ChatGPT was just the kindling that has lit the AI sector ablaze, and it's proven to be a flame with some endurance. The do-it-all AI query tool has incited a media frenzy over the world of artificial intelligence, and it's taken a whole sector of the stock market with it. The latest AI happenings - How could you miss it? Chip manufacturer and all-around tech behemoth NVIDIA was already a massive company, but recently it's been catapulted to another level. $NVDA briefly topped $1T in market cap earlier this month as the stock rocketed over 30% in value in just a week on AI fuel + increasing demand for its services.
- Other stocks: NVIDIA is now up over 160% on the year, and others have benefited from its waves. Stocks like $AI (up over 220% this year), $AMD (up 85%), Micron Technology (up 33%), Adobe (up 24%), Oracle (up 26%), and of course the tech giants like Alphabet, Microsoft, Amazon, and Tesla are all rising with the tide.
- Banks getting involved: This AI craze isn't just for the techies — it's even getting into our finances. Big banks like JPMorgan are leading the way, having already filed a patent for IndexGPT, a financial advice equivalent of ChatGPT.
- AI benefits funds: And it's not just individual stocks rallying, investors can get exposure via ETFs too. Goldman Sachs Hedge Industry VIP exchange-traded fund (ticker GVIP) is an ETF designed to scoop up popular hedge fund picks. Its top three holdings? AI specialists NVIDIA, Broadcom, and Advanced Micro Devices (AMD). Year-to-date, this fund has lapped the S&P, returning over 18%.
- Other opportunities: Elsewhere, there are plenty more examples of funds benefitting from the AI hype. iShares U.S. Technology ETF ($IYW) has returned over 40% this year, and these 8 other correlated funds have also returned 30% or more so far this year.
- Reality check: NVIDIA now boasts returns of over 10,000% over the last decade, almost 4X greater than the second-best performing stock during that same timeline. That sounds amazing, but is it sustainable? Probably not. This frenzy is likely a springboard for the future and an indicator of where technology is heading, but the gains it's produced are ephemeral.
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INVESTING How to Buy Treasuries as Yields Hit 5% | | | | Often a safe haven during times of market turmoil, bonds weren't exactly able to live up to their legend in 2022. Rate hikes took a toll on the bond market while stocks suffered their fate at the hands of headwinds, leaving investors with nowhere to hide. This year ushered in a different story. With the largest of rate hikes behind us, bond buyers are now enjoying heightened yields without as much of a drag on the value of backdated bonds in their portfolios. How to get in on the action - Treasuries 101: Treasuries come in three flavors — bills, notes, and bonds. Bills mature from 4 weeks to 1 year, notes range from 2-10 years, and bond maturity dates span 20-30 years.
- Innerworkings: Treasury pricing and yields have an inverse relationship. When the price goes up, the yield goes down, and vice-versa. This is because the yield is calculated as a percentage of the price. For example, take a $1,000 T-bill purchased at a 4% discount or $960. We subtract $960 from $1,000 to get to $40. Then when we divide $40 by $960 to achieve a yield of 4.16%.
- For practicality though, you'll always be shown the true yield when surveying the bond options available online.
- Recent revelations: We're still experiencing an inverted yield curve, meaning rates on short-term treasuries are higher than those on far-out dates — like the 30-year bond. This is because investors are pricing in more uncertainty in the short term than in the long. Due to a confluence of factors like lingering prospects of a recession, inflation, job reports, and other economic (and sometimes politicial) factors, those short-term yields have risen again recently.
- Offerings: While rates on longer-term treasuries like the 10-30 year have mostly held steady or fallen a bit, short-term rates are rising. Investors can now accrue over 5% on the 1-month T-bill, 5.3% on the 3-month, and 5.4% on the 6-month bill while also picking up a nice 4.5% to 5% on the 1-2 year dates.
- How to buy: If you want to buy treasuries directly, you'll have to face an outdated website feel and labyrinth of a signup process by visiting TreasuryDirect.com. Here, you'll be able to buy, hold, and view your bond portfolio value directly from the government itself. With this method does come some liquidity restrictions though, so be sure to check this out.
- Other options: If you're not too keen on that and want to incorporate bonds into your usual portfolio, the best route would be to go through your existing brokerage firm if you have one. While you can't directly purchase individual bonds with a broker, you can purchase bond funds and ETFs that usually come with a minimal fee structure.
Take this related lesson and earn 🟡 Dibs: | | | |
ECONOMY The Gig Economy Slump | | | | The definition of work is always changing, and we should be thankful for that. This has rung true more so than ever over the last couple of years as work has become more dynamic, flexible, and even uncertain as the jobs economy undergoes serious changes. All of this shifting and uncertainty also made way for more individuals to go the self-employment route, whether it be full-time or just a side hustle. This cycle peaked in 2021, flatlined in 2022, but has fallen drastically in 2023. Why we're abandoning the gigs - The drop: We saw peak self-employment back in August of 2021 when the list topped out at around 9.51M Americans — it has since fallen back down to 8.73M, a decrease of over 750,000 people.
- Certainty is more desired as U.S. employees are less able to afford to take on the risks associated with leaving a job or switching careers right now. While this is an anecdotal observation, the numbers that lead us to that conclusion are not.
- The trend is still there: There are almost 74M freelancers in the U.S. alone right now, a number expected to reach 90M by 2028. Despite the recent drop in official self-employed individuals, the overarching trend of freelancing is still on the rise over the long term.
Take this related lesson and earn 🟡 Dibs: | | | |
🌊 BY THE WAY | - 👩🏽💻 Answer: 11.1M. 62.2M workers in the U.S. were considered freelancers back in 2019, a number that's since grown to 73.3M individuals (Exploding Topics)
- 🍟 Those ketchup packs in your drawer might be worth something (The Takeout)
- 💸 ICYMI. Bond buyers may get some relief in 2023 (Finny)
- 🍎 Apple acquires augmented reality manufacturer Mira as it introduces Apple Vision Pro (Axios)
- 🌍 Irish islands will pay you 80,000 Euros to move there. What's the catch? (Euronews)
- 📊 Finny lesson of the day. Bonds have made a comeback in 2023, but they remain an unfamiliar investment vehicle to many. If you're thinking of getting involved, it pays to understand them first:
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| Advisory services are offered through Origin Financial, a Registered Investment Adviser registered with the U.S. Securities and Exchange Commission. The status of registration as an Investment Adviser does not imply a certain level of skill or training. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services. All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor, is it intended to be a projection of current or future performance or indication of future results. | | | | | | | |
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