Wednesday 3^rd November 2021

Yesterday the RBA kept interest rates on hold. The big change this month was the cutting of one of the Central Banks key stimulus measures known as ‘yield curve control’, which they kicked off in March 2020 during the peak of the stock market correction.

They RBA bough billions of dollars (approx. 5 billion/week) of Australian government three year bonds to artificially drop the yield on bonds down to 0.1% return.

The cutting of this program is probably the strongest indicator yet; that interest rates will rise before the 2024 narrative they’ve been spinning.

Today CommSec announced clients would be able to buy/sell up to ten different cryptocurrencies on their app. This is increasing the mainstream adoption of crypto in Australia for sure.

A long time client messaged me asking for articles and insights on inflation this morning.

 

Thursday 4^th November 2021

The S&P 500 and NASDAQ hit new all time highs over night.

Today in Australia Betashares launched a Crypto ETF. If you remember yesterday, Commmsec announced their crypto play too. It’s becoming easier for the people to get exposure to crypto currencies.

 

Friday 5^th November 2021

Both the NASDAQ and S&P 500 closed at all time highs again overnight. Essentially this means everyone who owns these indexes (NDQ and IVV for Australians) is in the green.

It’s probably time for a recap on all time highs. For years I used to believe all time highs meant the market was due to ‘crash’. This is wrong. Don’t buy into that stinking thinking.

Investing in businesses – listed shares – in this case, is a positive sum game. Value is created and lives improved through great products and services of various businesses. As time passes and businesses innovate and iterate it’s no wonder they become more valuable to society. We’re investing in human endeavour – plain and simple.

Markets are believed to be efficient and all news (positive, negative and otherwise) is already ‘priced in’ at every moment. The forward-looking indicator that is the stock market will rarely match up with what’s happening in the economy right now, because it’s future focused.

With this in mind, I expect the gross value of the listed businesses worldwide to continually increase in value and therefore it new highs regularly. Keep in mind regularly doesn’t mean linearly. There will be as there should be ups and down along the way. This is volatility that’s reflective of the wonderful liquidity the share market offers. Volatility is not a measure of risk, unless you’re emotionally immature (and this is the case for some people), it’s simply a byproduct of liquidity.

I love the fact I could get money out of the market in 3 days if I need it for some reason. I don’t have to talk to anyone; I don’t have to ask anyone and can do it in 30 seconds from an app on my phone. Not that I sell shares, but I LOVE the fact this option is available to me. It adds to my sleep and night factor.

In conclusion, will I be surprised when we have the next correction or crash in the market? Nope! There’s always one coming and we’re probably due. It’ll be a fantastic buying opportunity for anyone who has the temperament and funds available to invest.

Equally, will I be surprised if the market continues to hit new record highs over time? Nope! I believe in human endeavour and it’s continual, non-linear improvement through out my lifetime.

 

Wednesday 10^th November 2021

After eight straight days of record all time highs the S&P 500 closed down over night. Ironically, I came across some data on www.dimensional.com around all time highs. The key takeaways being:

1. Financial journalists periodically stoke investors’ record-high anxiety by suggesting the laws of physics apply to financial markets—that what goes up must come down
2. But shares are not heavy objects kept aloft through strenuous effort. They are perpetual claim tickets on companies’ earnings and dividends.
3. If stocks have a positive expected return, reaching record highs with some frequency is exactly the outcome we would expect.

Here’s the link to learn more if you’re interested: https://www.dimensional.com/us-en/insights/all-time-high-anxiety

Coincidently over night, TSLA has its largest one-day drop, down 11.99%. I’d say this was a result of Elon Musk selling some shares as a result of the compensation plan he has as TSLA CEO, unlocking bonuses. He trolled the Internet over the weekend via his Twitter poll, I’m guessing knowing the poll results would instruct him to sell 10% of his TSLA holdings to pay the enormous taxes he has to pay. Only a couple of weeks ago TSLA has it’s largest one day increase of 12.5% so the net gain is +0.5% as one way to look at it.

 

Thursday 11^th November 2021

Woke up to messages from xxx and a phone call from xxx re: news that inflation is a 31-year high in the US as CPI jumped to 6.2% in October.

We’ve all been noticing inflation recently, both in asset prices and the cost of materials blowing out (one of my friends last week completed his new home build and my other friend’s business is in property development) as well as in produce, electricity, fuel, insurances, etc.

One of the primary reasons to invest is to protect our purchasing power against inflation. Cash in the bank or under the mattress goes backwards over time and this is accelerated with rising inflation.

As an example, 1kg of organic beef mince was $10 in November 2020. Now that same 1kg of organic beef mince is $11.75. This is inflation. If you left your money in the bank or under the mattress this increased price of organic beef mince has eroded your purchasing power (your dollars don’t go as far). If you’d invested your money into an asset that’s return (growth plus dividends) was greater than inflation, you’ve not only protected your purchasing power, you’ve increased it.

Alternatively, if you're income increased faster than inflation, you've protecting your purchasing power too.

I see inflation as a tax. If you’re not aware of it, you’ll probably pay more than you need too. I have the RBA inflation calculator on saved on my phone and use it regularly. Check it out if you’re interested.

 

Wednesday 17^th November 2021

Just back from a few days camping with friends on North Stradbroke Island. We scored the most perfect weather and ocean conditions for snorkelling around the headlands. Unfortunately, it was dead flat so no surfing for us. But beach 4WD’ing, swimming and living out doors under the stars made up for it.

Good times!

 

Friday 19^th November 2021

The QLD Government announced starting December 17^th non-vaccinated Queenslanders will loose common freedoms in society, including going to a café or restaurant, entering QLD stadiums, entertainment venues, music festivals both indoor and out door, libraries, museums, aged care facilities and hospitals (except in end of life, childbirth or emergencies).

It’s difficult to put into words just how insane this is…

 

Saturday 20^th November 2021

NTF’s (Non fungible tokens) and the metaverse have both crept into my universe recently. Just yesterday I caught up with a friend who’s taking his business public on the ASX but we talked mostly about technology, NFT’s, the metaverse and society today. He showed me an NFT he bought to understand and experience the process. Told me about the ETH gas fees and processing time. Plus his NFT get’s him into parties/clubs in Miami, Florida if he’s every in the area!

Also yesterday, a contact at USANA told me he’s been getting into it too. He’d just bought an NFT an hour before we talked. He shared a fascinating overview of what’s happening in these spaces, what he’s doing and why.

He told me about Garry Vee’s NFT launch in May this year. It cost around half an ETH (half the price of an Ethereum coin in May). It’s now worth around 30 ETH (30 Ethereum coins currently around $4,500 USD each). Each of Garry’s NFT’s comes with a ticket for free entry to this events around the world for the next 3 years. It’s a great way to add intrinsic value to his NFT.

Then this morning, a few of younger guys I train grappling with, shared their experiences in this area’s. One of them, a graphic designer is currently designing digital accessories for an NFT to soon be released. They also told me about the metaverse, gaming and the money people are paying for stupid shit in the metaverse (in my uneducated but humble opinion).

There are transactions for digital Nike shoes, digital BJJ gi’s, buying ‘land’ in the metaverse (which call me crazy I’m going to do for the experience by the way…) and a bunch of other things.

I also saw surfer Nathan Florence released his latest surfing edit (surfing movie) in the metaverse. I think people had to buy an NFT to watch it (watching a normal surfing video) in a digital theatre in the metaverse. I think I’ve got that right.

A theme throughout these discussions was the deterioration of human health and happiness on earth. Humans have engaged in escapism forever from different plant medicines, to drugs and alcohol to watching hours of TV and movies everyday. On the flip side we have books and courses people pay for, teaching them how too be and the value of being present.

It’s all just a little crazy. Common sense is actually uncommon sense. Such is the world and times we live in.

 

Monday 22^nd November 2021

Received an email from Stake saying I’m in for free brokerage on the ASX until 1^st January 2022. Then it moves to $3 flat fee brokerage for the ASX.

It’s CHESS sponsored, so it sounds like a good deal to me. If you go back decade’s brokerage on buying shares was ridiculously high I’m told. Even now in Australia I feel it’s a stitch up.

It reminds me of the saying ‘all inefficient business models will be replaced by models of greater efficiency’. This is another example of that playing out.

 

Saturday 27^th November 2021

The market getting a little sketchy here in Australia and the US. Apparently another new covid strain has been found in South Africa but the bigger news might be the FED in the US aggressively tapering their stimulus ahead of schedule.

Ironic because a friend messaged me yesterday morning telling me he’s sitting on returns of 45% this year so long as we don’t get a crash and wouldn’t you know it, Murphy’s Law later that day…!

 

Monday 29^th November 2021

I’ll soon buy an NFT, for no other reason than to experience the process and have a little skin in the game. It’s the best way to learn.

It’s not as easy as it seems though. Three out of the four people I know with a metamask wallets are having challenges syncing it between their computer and phone. After some research my brother was able to help me get it sorted.

He then bought his first NFT for around $20 and paid $95 in gas fees. There were three options for gas fees. He selected the middle option. This has put me off wanting to buy one. I’d rather just own the ETH (the network that charges the gas fees).

Also can’t help but think of it like this. He paid $20 for a jpeg file you could find for free on the internet. He then paid $95 to have that jpeg sent (think of it as postage) to his MM wallet. People are paying more in online postage than in real world postage for something that’s electronic!

Doing my best to be open minded around this concept, technology and the communities surrounding them. But I'm definitely suffering from some bias in these area!

 

Tuesday 30^th November 2021

Sad news. A couple I know in their early 70’s and are facing significant health challenges. He unfortunately got exposed to asbestos as a young man and his now suffering the consequences of that after living a healthy and full life. His lung function is decreasing fast as is his work capacity. He’s already outlived doctor’s expectations by 18 months. His wife is the opposite. She drank excessively her adult life, was significantly over weight, had her stomach stapled a one point I believe and is soon to be full time care for advanced dementia. She’s here physically but no longer mentally. He’s no longer able to enjoy the simple pleasure of taking a deep breath filling his lunges with oxygen. Plus he’s doing his upmost to accommodate his wife’s needs in the time he has left.

Ironically and without going into detail, they’ve become incredibly wealthy during their lives and not got to enjoy it together. It’s health and time that they are short of.

When I hear situations like these I use them as a reality check. A reminder to ensure I enjoy everyday, the people in my life and how I use my time. You know, the whole ‘life is not measured by the number of breaths we take, but by the moments that take our breath away’ philosophy.