August 2022 'To build a great nation we need well nourished, healthy and aglie human beings' - Sadhguru
Tuesday 2nd August 2022
The RBA upped interest rates 0.5% again today, taking the cash rate to 1.85%.
Property is a religion here in Australia and why not, it’s a beautiful part of the world to have a beautiful property. As interest rates start to rise there’s rumblings of the stupid prices paid recently toning back a little. Perhaps revision to the mean in action. As always, time will tell.
Thursday 4th August 2022
As I get older, the more I value leveraged and passive income, compared to the earned income (physical preparation coaching) I generate.
I think most people feel this way as their human capital decreases and their financial capital compounds. Which brings me to market valuations.
As the tax burden on society grows, the dollars I generate via leverage and passive means are of greater value to me than the dollars I trade my time for.
To put it another way. The $0.50 cents I receive passively and the $0.75 cents of leveraged income I receive probably outweighs the $1.00 I receive swapping my time and expertise for money coaching. And saying this, I love my work as a Physical Preparation Coach.
If other people feel this way, it only makes sense asset values will increase as the population ages and the proportion of older people in society grows - which is happening.
Add to this governments finding new ways to tax us (directly and indirectly) and the value of leveraged and passive income sources increases significantly for me as time marches on.
Friday 5th August 2022
The Department of Home Affairs released data that 42,700 international students applied for a Visa to study here in Australia in June 2022. ‘This was the largest number of offshore applications received in a single month in the last 10 years’ they said. The bounce forward from border shut downs is well and truly underway it appears.
In other interesting data the ABS shared mortgage commitments dropped by 4.4% in June on the back of the first two interest rate rises. This is the biggest drop since May 2020 which was the time of peak virus fear. It’ll be interesting to see the impact the subsequent (and all future) rate rises have…
Elon Musk reckons inflation has peaked now. He’d have a good overview on inflation in his role at Tesla alone, not to mention SpaceX, Starlink, etc.
I found a fantastic video on Twitter of Australian teenagers in the 1960’s being asked about the future and what life will be like in the year 2000. They had large concerns about the future, which is ironically similar to most people today.
Matt Ridley wrote a fantastic book called The Rational Optimist. It’s focused on how prosperity evolves over time.
Being pessimistic about the future is easy, because it’s unknown and most people fear what they don’t know or don’t understand. I’d much rather have a toothache today than 50 years ago. I’m happy we have access to the internet. I appreciate all the technological advancement we’ve had to date. I prefer that a machine washes my clothes than having to hand wash them myself, as an example.
Great things compound slowly with such little attention while tragic or negative things get all the attention because bad news sells.
"Lots of overnight tragedies and no overnight miracles so the headlines are usually bad even if the slow compounding of good news wins overtime" - Morgan Housel
I recommend reading or listening to The Rational Optimist. It has views and perspectives I’m sure most will find valuable.
Finally I feel a huge reason for the pessimism, negativity, depression and fear many people suffer results from a lack of personal discipline. There’s a HUGE difference between the use and abuse of technology, alcohol, junk food, social media and the like.
We have more data, information, knowledge and wisdom on health and wellbeing than at any point in history and yet diseases of abundance continue to reign.
While the majority of this is simple to solve, it’s not easy. It requires daily personal discipline and responsibility in what we consume (eat, read and listen too), do and who we are around.
If you've not listened to the song 'Everybody's Free To Wear Sunscreen' take 7mins to give it a listen. it's full of wisdom. And if you're still not sure after listening to it. Read the YT comments under the video. You won't regret it. https://www.youtube.com/watch?v=KdQbb3FXSEI
Monday 8th August 2022
I learnt something valuable recently.
When looking at long term graphs of share market returns, back in the day companies paid out more dividends as a percentage, plus they didn’t do share buybacks or retain earnings as much as they do now.
Hence, in more recent decades, more net asset value is sitting in shares reflected as higher prices, due to the more recent lower dividend payouts as a percentage and more buybacks and retained earnings.
Wednesday 10th August 2022
Australia’s biggest company CBA reported strong earnings today rewarding shareholders with an increase in dividends.
Monday 15th August 2022
JB Hi Fi reported record sales and earnings for 2022, increasing its end of year dividend by 43% and total dividends for the year up 10.1%. This action is before the recent interest rate rises. Will be interesting this time next year to see if the RBA’s actions have tightened household spending. I’m using JB Hi Fi as a proxy for household spending and consumer confidence as most of what they sell is a want, as opposed to a need. Which in itself may or may not be valid.
xxx also reported today increasing its final dividend by 21% to 17cents.
Tuesday 16th August 2022
Last month my mate Matt suggested I share some old media headlines to provide some perspective in relation relating to current events in the market. I probably bit off more than I can chew in height insight.
There are so many headlines from the Great Depression to the Oil Crisis of the 1970’s, the 87 Crash, the Asian Financial struggles in the 1990’s, the dot.com crash, the GFC and I’ve shared Covid Crash headlines in earlier entries of Project Passive.
Instead I’ve done something a little different.
Selling Swamps Stock Market - 29th October, 1929
Prices Again Collapse On Stock Market - 29th October 1929
Market Losses Reach New Level - 29th October 1929
Mounting Fears Shake World Markets As Banking Giants Rush To Raise Capital - WSJ, 18 September 2008
Panic Grips Credit Market - Financial Times, 18 September 2008
A New Phase of Financial Crisis As Investors Run To Safety - New York Times, 18 September 2008
There are more. Many more. These headlines from major media outlets at the time, speak volumes. Everyone was saying the same thing on the same day. It’s always been that way and will always be that way.
That's said, after day comes night. I promise you that’s not going to change. History over the last 6000 years reads like this: opportunity mixed with difficulty. Sometimes there’s more opportunity than difficulty and other times there’s more difficulty than opportunity, but the mix is about the same.
It’s not the direction of the wind that matters, it’s the set of the sail. We’ve got to learn to set a better sail this year than last year. The next 5 years can be drastically different to the last five years and who can do that? Anybody!
That was all Jim Rohn philosophy you just got hit with. If you enjoyed it, look him up on YouTube. He’s got some great stuff!
Thursday 18th August 2022
A couple more of my favourite LIC’s announced their full year results this week, both with pay rises (increased dividends) which is always nice.
The earnings season overall for Aussie companies thus far has been solid. Having said that, the extent of inflation and rising interest rates hasn’t been felt by companies yet. We’ll know more when they report their half year results in February 2023 and full year results this time next year.
Friday 19th August 2022
USANA’s 30th annual International convention is on at the moment. Three days of education and celebration in SLC, Utah. 5,000 attendees with over 50,000 watching online. Aptly, the theme this year is ‘Start Something’. Something exciting. Impactful. Healthy. Helpful. Fun. Challenging. Sporty. Anything. Even if it’s not USANA related, start something. It’s a great message.
I was asked today if USANA has peaked as a company, as in are its best days behind it?
I’ve thought a lot about this from time to time and although I’m biassed with a vested interest working for the company, I could easily change that if I thought it was a sinking ship. Building the business in the old school way, I do think that way of business operation has peaked, particularly in the western markets.
Outside of that, my view is its future is bright as things have changed in the world which make USANA and the business model more relevant to me at least.
Here’s the short list…
In a world where you’re not allowed to participate in parts of society (e.g. travel, go to coffee shops, restaurants, work at a company to generate income if you’re not vaccinated and boosted, etc) for me USANA’s an opportunity where you can build some autonomy.
No one tells you what to do, what not to do. You can potentially generate a leveraged weekly income, without having to conform/comply, while retaining autonomy of choice, which is incredibly important to me.
I have no problem with other people running out to follow government recommendations. I have a huge problem being coerced and manipulated into a narrative that is not and was not factual.
Secondly, being able to do something online, from home, in your own time is important these days.
Thirdly, we used to get together to do training in person on top of the online training and weekly Skype/Zoom conference calls. Now we don’t. Instead, we get together and socialise and have fun.
Breakfast at the beach or up in the mountains. Play tennis. Go hiking. Go camping. People bring their kids. It’s fun while building trust and a strong community of good people is one of the greatest assets anyone can have.
Fourthly, in my experience no one’s life gets worse working with USANA. We use the products, focus on our health, be part of a great community, think independently, learn critical skills and potentially generate leveraged weekly income if you put in the work.
The friendships and relationships that have developed over the years because of USANA are a testimony to this.
Fifthly, technology has improved so much that in the past people who now drive Uber or operate an AirBnB might have joined USANA years ago. So people have more options these days, which is a good thing.
That said, USANA’s new affiliate program cuts through a lot of the old school friction points like business centres, placing people on the left or right side and the like. We'll soon have none of that.
It's just you share and sell products, you get paid, simple as that. The affiliate program is fantastic for the social media world we live in and for people who build their brands and tribes can connect to an incredible company that does great things long term.
Now this one might seem a bit out there, but deep fake is a reality we’ll all likely face. Personally, I’m putting plans in place to protect myself from this as much as I can. This starts with investing time in relationships with good people and building an airtight community where trust and honour are above all.
I might sound a little extreme, but to use an analogy, ‘better to be a warrior in a garden than a gardener in a war’.
Seventh, when it comes to your health and wealth, no one is coming to save you. The helicopter money from the government during the pandemic was a short term high. It’s only made people more dependent on the government on the whole. This is not a good thing at all.
When it comes to wealth, yes we can also marry or inherit it. But it's a fragile plan in most cases. Creating it ourselves, not for the wealth, but for the person we have to become to create it, is the real gift. Similar to becoming a legit black belt in a legit Martial Art. You don’t do it for the belt, you do it for the skills you’ll acquire and the person you have to become to acquire those skills.
I’m raving on, I know… These are some of the reason’s a connection with USANA is an asset moving forward. If you'd like to experience the products yourself go to the shop link at https://kdmhealth.com/shop/ or check out mitchell.usana.com
Saturday 20th August 2022
I’ve decided to add a Physical Preparation component to my podcast. At the moment they’re a few of the articles I’ve written over the years with me reading them. The more I think about it, the more likely I’ll just dump whatever I’m doing onto the podcast. I’m also giving thought to a Project Leverage component as well. After 18 years of rock solid consistency in USANA I’ve experienced and learnt a lot. Plus I’m still on the journey to improve and serve people. What do you reckon?
That would make it Physical Preparation, Project Leverage and Project Passive and maybe some interviews too. Previously I was hesitant to combine these things publicly, despite doing exactly that for close to two decades privately. Today, I’m thinking that combining them is the way to go. A document, don’t create type philosophy.
Friday 26th August 2022
Home building company Oracle went into liquidation costing hundreds of tradies income, leaving around 300 unfinished homes and owing $14 million dollars. Inflation of materials is insane at the moment and supply chain issues are making it difficult to price builds I’m told.
A client recently built a shed. He was told if he ordered the shed (materials) after xx date the cost would jump 18%. The guy who built his shed said he has a waiting list of 500 sheds to be built in Brisbane alone. Now imagine that on a house build.
xxx was telling me about her grandfather. He’s 93yo, in good mental health and looking at moving into a retirement village with his wife. When it comes to cleaning out his house/garage he was saying ‘I don’t want to throw out this piece of hose, I might be able to use it at some point’ and ‘these old clothes have still got some life in them’.
He’s a great example of a Depression Era baby. Born in 1929, the year the Great Depression kicked off, his parents would have been incredibly resourceful and it clearly rubbed off on him.
He’s done well financially so it’s easy to think ‘throw it all out and buy it new if you need it’. He definitely has the means too. But old habits die hard. I’m guessing the experiences he had growing up will never leave him no matter how much wealth he’s created.
I think it was Morgan Housel who shared a fantastic graph on the asset allocation of people born in different generations. For all our perceived independent thinking, it’s humbling to realise the decade we were born influences our asset allocation more than we realise.
In the vein of living a long healthy life, Dr Andrew Huberman released a fantastic podcast on alcohol and your health. If you’re even a casual drinker and value your health, this episode will be a tough one to swallow. You can check it out here: https://www.youtube.com/watch?v=DkS1pkKpILY&feature=youtu.be
The YouTube comments for this episode are also worth reading.
Monday 29th August 2022
The US market had a 3.5% pullback on Friday after FED Chair Jerome Powell said interest rates will rise and remain high for as long as necessary. This resulted in some red Australian markets today.
It’s important to remember just how off track central banks have been recently. In the USA they said inflation was ‘transitory’ for the longest time while here in Australia the RBA said interest rates would not rise until 2024…
Now hearing Powell say this, I’m wondering if the opposite will happen!
On the topic of central banks and governments encroaching on our lives, this JRE podcast with Alex Berenson is phenomenal.
It appears the coercion and manipulation the public was sold during the pandemic is starting to be questioned.