YOLO Economy - Market Update March 25-29 2024
You Only Live Once And You Probs Aint Gonna Die Tomorrow
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Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Summary of Topics:
Economic News
The YOLO Economy Boosting GDP 💸
Death of A Legendary Economist ⚰
Company News
Amazon GPT 🤖
Stats of the Week
3.4% GDP Year-Over-Year Growth 📈
29.2% Raise for In Office Workers 🤑
-1 second cause Earth is spinning faster 🤔
Looking Ahead
Jobs Week
Disney Drama Climax 🤺
Sports I Love
Giannis: The Marvelous Journey (A Must Watch) 🏀
Man U Does The Man U 😓😑😡
Extras
Robinhood Credit Card
Markets
The hype remains. The bulls are in complete control. Nothing seems to be able to stop this market. The Stock Markets ended the 1st Quarter on its best run in over 5 years. I'm torn on how to feel about it. As a young investor with 3 decades of investing ahead of me, I want lower returns in the short run for much higher returns in the long run. However, I also like seeing my net worth go up. But I'm scared higher returns today might lead to lower returns in the future when I own more assets 🤷🏾♀️😔 Guess I'll enjoy the present.
YTD Returns
Tale of the Tape
Economy
According to the Bureau of Economic Analysis, consumer spending increased 0.8% last month. Much higher than economists expected. This equates to $145 Billion more retail spending than in the month prior.
🔎Details: Post-pandemic there has been a mindset switch for the American public especially those in my age group (25-40). The Washington Post dubbed it the YOLO Economy. A desire the younger generation feels not to let any opportunity or experience pass them by after feeling like they missed so much during the pandemic years. People feel starved of what makes humans feel like humans, social interaction. They have used the last year to make up for it and are pushing forward with that idea.
💬In Their Words: The Washington Post interviewed people to get a sense of what's going on and a 28-year-old named Arriel Vinson said, “My mind-set has completely changed after covid: When I see something I want to do, I make it happen. For a while I was going to dinner all the time. I was getting things delivered, but now I’m like, ‘I don’t want to waste money on that.’ I want to travel and go to shows.”
She talked about traveling with her friends for the Beyonce Eras Tour and the Taylor Swift Tour. This year there are plans for the Usher tour and multiple trips out of the country to Jamaica and Mexico.
😝Takeaway: This is awesome news for the economy. It is the reason the recession that has been prophesied by a multitude of analysts never came to pass. You and I, the consumers, continue saving the economy from the worst. With a combination of increased wages, a strong labor market, and excess savings from pandemic time. Consumers have been willing to let go of their dollars while complaining about inflation.
😒My Takeaway: Unfortunately, Negative Kelechi must enter the newsletter. The money being spent has to come from somewhere. It is not simply pay increases making up for the excess spending. It is a combination of less savings and increased borrowing.
According to the Bureau of Economic Analysis, savings rates dropped from 4.1% last year to 3.6% this year.
Borrowing has also increased with Buy Now Pay Later services becoming a norm and credit card debt increasing 22% since 2020. This is as borrowing costs have risen to unimaginable levels. The average credit card interest rate is almost 25%.
💭Final Thought: Don't fall for these two lies:
You Only Live Once so do it today.
Reality: More than likely you won't die tomorrow. So plan accordingly.
Spend money on experiences over stuff cause experiences have a better happiness reward. So if it's an experience you'll never regret spending the money on it.
Reality: You can spend money on whatever you want as long as you can actually afford it. If you can't afford it no matter how great an experience it may be, the memory will always be clouded by the anxiety of trying to pay for the experience.
You may have no idea who Daniel Kahneman is but for all money nerds, he was a legend. He is seen as the father of Behavioral Economics. He pioneered the idea that we humans are not as rational as we would like to believe. He came up with multiple biases and shortcuts that we make which cause us to be irrational in our decision making.
A Few Biases: Loss-Aversion Theory - is that we value gains and losses differently. We would rather not lose $100 than gain $100. This is why so many of us are so scared of investing. The pain of seeing your money go down is much more than seeing your money grow.
Peak-End Theory is the theory that we remember events not based on the totality of the event but rather the high points of the event or the very end of the event.
This is why if you watch a movie and the ending was not the best, we say the entire movie sucked.
Or if you're on vacation and the last stay sucked then the entire vacation sucks.
Narrative Fallacy comes from our need to make sense of the world around us. It is why we come up with flawed stories about the past which shapes our expectations of the world. A Quote from his Book Thinking Fast & Slow:
The explanatory stories that people find compelling are simple; are concrete rather than abstract; assign a larger role to talent, stupidity, and intentions than to luck; and focus on a few striking events that happened rather than on the countless events that failed to happen. Any recent salient event is a candidate to become the kernel of a causal narrative.
Takeaway: Many of his theories were explained in his book, Thinking Fast & Slow, one of the best books to help us understand ourselves a bit better. So we can make much better decisions. He is the reason most of us are automatically enrolled in 401(k) plans. He helped the world realize we (human beings) are not as rational as we choose to believe.
He is a legend and will not be soon forgotten!
Companies
Amazon wants in on the AI race. On Thursday, Amazon revealed an additional $2.75 Billion investment into Anthropic, the only true AI competitor to OpenAI. This follows a $1.25 Billion investment it made in the company last year. This is the biggest investment in a company ever.
Stock Move After Earnings: No real reaction from the stock because, unlike Google and Microsoft. Amazon is not currently seen as a company that can profit directly from the AI boom.
What to Watch: How will Claude, Anthropic's version of ChatGPT, be incorporated into Amazon's various services? One way might be making Alexa more useful to compete against Google's Gemini. Regardless this shows how much Amazon is serious about making AI a core part of its offerings. However, Anthropic also has major investments from Google and Salesforce. It will be interesting to see how the tools created will be shared with these giants.
Stats of the Week
US economy grew by 3.4% last year according to the Commerce Department. Faster than the estimated 3.2%. This shows that the economy continues on a positive momentum despite inflation fears.
According to ZipRecruiter, US workers who changed from fully remote jobs to fully in-office roles saw a pay bump of 29.2% last year. The average offering for in-office roles was $83,000 vs $75,000 for fully removed jobs and only $60,000 for hybrid positions.
According to a geologist in Mature, the earth is spinning faster than ever. It's not a noticeable difference; however, in 2029 we will need all clocks to skip 1 second to keep our time as accurate as it is today. Or maybe we can go back to the stone ages of just following night and day 🤷🏾♂️. Why is this happening? Like with everything else that is going wrong with our planet, Climate Change is the culprit. Melting solar icecaps are playing a role in the speed change of the Earth's rotation.
Looking Ahead
Economy
It's Jobs' Week. This week will be all about the Labor Market as we get a ton of information on how things have changed since last month.
Tuesday - JOLTS (Job Openings and Labor Turnover Survey) report released. There has been a declining number of people quitting their jobs and a slight increase in layoffs.
Wednesday - The ADP Jobs report for Private Payrolls will be released. It typically foreshadows the Friday report
Friday - Nonfarm payrolls. The report will give all the (as the kids say) tea on the strength of the economy.
Company
End of Disney* Drama on Wednesday at the annual shareholder meeting. After over two years of a proxy war between Bob Iger, current Disney CEO, and Trian Management. Trian wants two board seats. Shareholders shall decide who wins.
Sports I Love
Giannis Story
Over the weekend, I watched the Giannis documentary on Prime. I had heard bits of his story from various interviews he had done. However, seeing his entire story was amazing. It is well worth a watch if you are a Giannis fan or a basketball fan or just a fan of seeing people change the destiny of their family and then stick to their family.
Man U Does The Man U
Pay attention to the time the goals were scored. Man U always finds a way to snatch despair from the hands of joy.
Extras
Your home for meme stock trading is trying to grow up. Robinhood is trying to become a one-stop financial company for you. Last week, Robinhood announced a 3% cash-back credit card. Previously, Robinhood introduced an Individual Retirement Account that gives a 3% match.
*I am a tiny shareholder in this company.