Dmitry Matousov MBA, CFP, Financial Advisor: WFA Financial Network

Good morning,

I did not read Dune growing up. My only exposure to it came through the recently released Dune movies, parts one and two. These are fascinating stories, especially when watched on the big screen. However, the movie is not the subject of the story. The desert in Dune is fascinating. Hills and troughs rolling gently into the horizon. Everything seems so peaceful—until a sandstorm approaches, or you make too much noise, and the sandworms lurking beneath the surface come after you. For most people, sandworms are just another version of the boogeyman, and so are the sandstorms. Most do not believe in either until they are face-to-face with a sandworm, leaving them no choice but to act like the proverbial deer in the headlights.

I can hear many of you sighing: "Here he goes again with his negativity." Whatever. I believe in seeing things for what they are rather than hiding under a rock until someone steps on it, smashing you. Shifts are happening in the world that are pieces of a much bigger puzzle. For a very long time, the Federal Reserve and other central banks kept interest rates low. This caused a huge imbalance in the financial system. To make any return on massive bond portfolios, many banks implemented maximum allowable leverage. After all, when you pay close to zero interest on short-term deposits, banks can earn much higher interest by lending or buying longer-duration bonds using leverage and making a decent return.

Fast forward to March 2023, and we encountered one of the least-covered banking crises of our times, with realized and unrealized losses exceeding those of the Global Financial Crisis of 2008-2009. What preceded this crisis by almost one year was the sharpest rate increase in the history of the Fed. Imagine the effect on overpriced, leveraged, long-term bond portfolios and loans, causing hundreds of billions in unrealized losses among US and international banks. US banks have access to the window of shame, sorry, the Fed Liquidity Window—foreign banks do not, at least not in most cases and not on the same terms. Now, more than a year later, the dominoes are starting to fall. This is a topic we will discuss further in the next report.

To be continued…

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn or via email at [email protected] or by calling my direct line at (424)295-9015.

Good morning:

Hypotheticals are just that—hypotheticals, so please don't take the below too seriously and try to laugh.

Pretend for a moment that a friend of mine lives in the Great Banana Republic (GBR), a fictitious yet very prosperous nation somewhere in the world. It has a stock market and a few indices. The main index is Bananas 503, comprising the top companies in GBR. My friend is very concerned about his Banana Company stock, the top stock in the Bananas 503 index.

He asked me to look into it and give him my opinion. All the data, though fictitious, is readily available on the Bananas 503 Index web page.
Being a good friend, I went to look at the numbers. As I have stated before, numbers tend to tell the true story about a company and reveal if anything fishy is going on behind the scenes. The Banana Company had not developed any new products in almost a decade. After all, modifying bananas is not easy—people are used to a certain variety and tend to stick with it.

Recently, the company announced a collaboration with a certain firm that will make bananas smart. I am not sure that I, or anyone else, can understand how smart bananas will affect the consumer. Nevertheless, the stock market was optimistic, propelling BC’s stock higher.

Looking at the earnings, I noticed that for the last five years, the growth was pretty anemic. While the price of BC stock grew by more than 400%, BC’s earnings and revenue went up by only 45% and 66%, respectively. I started to wonder what was causing such a run in the price and found out that BC was buying back its stock—lots of it—thus increasing its value.
In addition, BC reduced its shares float, i.e., the number of trading shares, by slightly more than 30%. This might explain another 100% of the stock growth, though it was artificially engineered. As for the other 250%, that part can be explained by P/E expansion. Thus, only 60% of the growth was due to the company growth, and the rest was due to financial shenanigans.

Learning all of the above, what kind of advice should I give to my imaginary friend?

Have a great day!

Good morning,

A few years back, I visited New York and had dinner with some friends, including a pension fund manager. The conversation turned to the markets. I tend to ask a simple question when I talk to Wall Street analysts and managers: what keeps you up at night? His answer surprised me. He said his main concern was the real estate market in China. I didn't understand what a US-based pension fund had to do with real estate in China. Just as many foreign banks and funds had exposure to the real estate bubble in the US in the mid-to-late 2000s, many US pension funds and endowments wanted exposure to one of the hottest real estate markets in the world.

The first signs of an imploding real estate bubble in China started to appear following the COVID-19 pandemic in 2021-2022. The growth rate peaked at roughly 11% annualized in Q1 of 2019. Many builders were unable to finish projects due to a lack of demand for residential real estate, leading to an inability to raise additional funds. The People's Bank of China (PBOC) tried to backstop the real estate market, but it seems the effort proved to be too big even for the Communist-led regime. They decided to relax the requirements to qualify for lending, causing anger among those who had to come up with a higher down payment and have a better financial position to qualify for a loan. That worked for some time, but it was not enough either.

Currently, the markets are in freefall. There are several reasons for this. First, there are significant differences between residential sector investors in the US and China. While US investors buy real estate to rent out and generate income, Chinese investors buy properties but do not rent them out to avoid devaluing the property. There is a belief that a new condo is worth more because no one has lived there. Second, the sector experienced tremendous growth over the last two decades. Many investors could not afford to buy properties in major cities, similar to what happened in the US in 2006-2007. They turned to smaller or newly built cities that were never occupied. China is filled with newly-built cities with no one living there. Third, based on a recent conversation with a Chinese businessman who lives between Shanghai and Santa Cruz, many factories have closed, and people who lost their jobs are moving back to more rural areas to live with their families. This leaves big cities and vacant real estate behind, exacerbating the glut. (Source: https://economictimes.indiatimes.com/news/international/world-news/migrant-workers-moving-out-coastal-cities-as-crisis-grips-chinese-economy/articleshow/106608226.cms?from=mdr)

With the real estate sector being responsible for 30% of the Chinese GDP, the decline will be felt both in China and around the world. This is good news because the cost of building materials might finally stabilize, and it will affect growth globally. China was the one remaining growth engine expanding above the anemic 2% to 3% rate the major world economies have experienced since the COVID-19 pandemic. As for the pension fund managers exposed to the sector, I am sure they are wide awake at night praying for a saving grace.

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn or via email at [email protected] or by calling my direct line at (424) 295-9015.

Good morning,

Late in the morning, my phone rang. It was Robert Levine, my source in the commercial real estate world of the greater Los Angeles area. We bounced around a few ideas, and as always, the conversation turned to commercial real estate. This time, we spoke about shopping plazas in California and in general. Here are some insights from our conversation, as well as recent articles and stats.

First, some basics. Most shopping plazas have what is known as an anchor tenant. This can be Walgreens, Ralphs, Walmart, or any other main retail store or restaurant. The anchor tenant generates traffic for the smaller tenants, such as restaurants, dry cleaners, liquor stores, and bakeries. The anchor tenant also provides the lion's share of rental income for the plaza.

What happens to the shopping plaza when the anchor tenant leaves? Aside from reducing the rental income by 20-50%, it takes away the traffic from the rest of the tenants in the plaza. Most of them will not survive for long. Replacing the anchor tenant takes time, and by the time the new anchor tenant moves in, the rest of the plaza's occupants might be out of business.

So far, in the first four months of 2024, 2,600 stores have announced closures. Foot Locker, Macy’s, Dollar Tree, CVS, Walgreens, and the now-bankrupt 99 Cent stores are closing locations across the US. Restaurants such as Boston Market and Applebee’s are closing hundreds of locations too. The above figure, on an annualized basis, is 40% higher compared to 2023 (Source: https://www.zerohedge.com/personal-finance/retail-bloodbath-more-2600-store-closings-have-been-announced-so-far-2024). If I were a betting man, I would probably not bet against the rising trend of store and restaurant closures.

What does this mean for the economy? More small businesses, which are the main source of employment, will have to shut their doors, causing unemployment to rise. By the way, last Friday, we received one of the most reliable recessionary indicators: once the unemployment rate goes up by 0.5% above the lowest rate, we are in the recession.(SOurce:https://www.npr.org/2023/11/12/1212175542/sahm-rule-recession-unemployment-rate #:~:text=The%20Sahm%20Rule%20has%20observed,the%20beginning%20of%20a%20recession.) Will this be the case this time? We shall see…

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn, via email at [email protected], or by calling my direct line at (424) 295-9015.

Have a great day, and try not to get run over by the bulls or the bears on this glorious FOMC decision day!

Good morning,

Paraphrasing Warren Buffett, spending more time reading, thinking, and analyzing makes him a better investor. While I am not comparing myself to Buffett, in the last two weeks, I finished five books that had been sitting in my library for a year. Interestingly enough, these books were not about the economy or financial markets. Sometimes, it is necessary to read about people, their emotions, and their paths in life, rather than focusing solely on dollar signs or ones and zeroes.

After taking a break from writing, I am back to the reality of the markets and the economic backdrop. So far, I cannot see any improvement in the state of the US consumer, commercial real estate, brick-and-mortar retail, or mid-range and fast food restaurants. The only shining beacon I've noticed is the sudden decline in consumer credit card debt (Source: https://www.pymnts.com/credit-cards/2024/consumers-pay-down-some-credit-card-debt-april/). However, after looking more carefully, such a decline has often preceded many recessions in the past.

As for the markets, the concentration of the top five stocks in the S&P 500 Index has exceeded the peak reached in early 2000 by almost 10%, currently hovering around the 24% mark (Source: https://www.alger.com/Pages/OnTheMoney.aspx?pageLabel=AOM332 #:~:text=investors%20going%20forward%3F-,The%20top%20five%20stocks%20in%20the%20S%26P%20500%20have%20a,Amazon%2C%20Nvidia%2C%20and%20Alphabet). Qualcomm's split comes to mind, marking the market top in March 2000. As they say, history does not repeat itself, but events tend to rhyme. A few names cannot carry the whole market forever. Lilliputians will eventually overpower Gulliver. This is the case with large-cap and small-cap indices. Looking closely at both paints a very different picture.

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn, via email at [email protected], or by calling my direct line at (424) 295-9015.

Have a great day!

Good morning,

Perception shapes reality. Recent comments from the CEOs of major US companies provide a healthy dose of optimism regarding corporate profits. (Source: https://lnkd.in/gyjjWidm) However, corporate profits for US companies in 2023 grew by only 1.5% YoY, much lower than the 9.8% achieved in 2022 (Source: https://lnkd.in/gyXSJntr).

What are the earning trends we observe in Q1 2024? So far in 2024, US large-cap companies, the constituents of the S&P 500 index, have reported earnings growth of 5.8%, which is much higher than the previous year and aligns with the CEOs' optimistic outlook.

What about the Russell 2000 index? As of last night, the overall earnings growth for Q1 2024 was down 0.8% (Source: https://lnkd.in/gDNFwHYw). This is not as impressive as the large-cap companies. However, there's a caveat. Some project that Q1 2024 marks the end of the five-quarter recession for the Russell 2000 constituents (Source: https://lnkd.in/gvMFBFmp). There is no way to know for sure.

Historically, a higher degree of CEO optimism, especially supported by unprecedented share buybacks, leads to higher earnings. However, there is one thing that can shorten the bull market in earnings—the economic cycle. If and when it turns, it tends to cut down the CEO's optimism. Don’t believe me? Ask Jamie Dimon, who said he sees a hard landing and stagflation as a probable outcome last week. How's that for CEO optimism? (Source: https://lnkd.in/g5iVqr2W)

There will be no report for the next two weeks. I will update you if anything. As May ends, remember the old Wall Street saying: sell in May and go away. So here I am, going away. Stay safe!

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn or via email at [email protected] or by calling my direct line at (424)295-9015.

Have a great weekend!

Good morning,

After some consideration, I've decided to take a leap of faith and share a few chapters from my book, Short Guide for a Cynical Trader. I'm not sure if these posts will be well received, but I hope they will be. If there is enough interest, I will continue sharing from time to time. Your comments are greatly appreciated.

“Short Guide for a Cynical Trader”

“The journey of a thousand miles begins with a single step.”
Lao Tzu

“A man generally has two reasons for doing a thing. One that sounds good, and a real one.”
JP Morgan

1. Why the markets?

I got lucky in life. I was able to go from one passion of mine to the other without a blink. Well not exactly, but close enough for government work. My entertainment dream ended abruptly when the small independent filmmaking firm, led by Menahem Golan and Yevgeny Afineevsky, ran out of money. The year was 2002 and the markets had just hit the lowest point following the dot-com bubble burst. I was out of a job and out of money. My neighbor was a commodities trader and he took me under his wing. I started working in a real-world “boiler room,” making thousands of cold calls every week. But most importantly, I fell in love with the markets.

Here began my search for the holy grail of trading, which took me on a journey lasting the last twenty years. At times it was not easy. I almost ruined myself financially three times within a short span of 3-5 years. I thought I knew it all, and every time I convinced myself that I had figured it all out, the market showed me some tough love, crashing me to the bottom of my emotional and financial resources.

As the saying goes: “What does not kill us makes us stronger.” They forget to talk about the experience itself. Markets will make you happy and sad. They will lull you with quiet upside moves and then crash you down in a vicious decline. They will make you rich and then they will make you poor. You’ll feel it hates you, and you’ll feel that it loves you. But none of it is true.

If there is a perfect picture of the market, I think I found one on the National Geographic channel. There is a big school of mackerel swimming in the open ocean. Large bluefin tuna surround it and start feeding. The school is being attacked by the seagulls from above. The feeding frenzy is vicious. Then a huge whale comes up from the bottom. It opens its gigantic mouth and swallows the mackerel, tuna, and seagulls all together in one tasty meal.

Your chances of survival in the financial ocean are equal to a mackerel’s. Very few graduate to bluefin tuna. Even fewer manage to step up to being a whale. I do not say this because it cannot be done; it can. I just want you to understand your current place in the financial food chain.

©2024 Dmitry Matousov

*Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you need help reach out to me on [email protected] or by calling (424)295-9015.

Have a great day!

Good morning,

Over the weekend, I came across a statistic confirming some of the trends we've discussed over the last year. It takes $177,897 in gross income to have a decent life for a family of four in the US. Averages are tricky, as we previously discussed, but we can start by looking at the median household income in the US. The real median household income is $77,580 (Source: https://www.census.gov/library/publications/2023/demo/p60-279.html). The majority of households don't even earn 50% of the required $177k. What percentage of households earn $177k in gross income? You have to be in the top 16% of households to earn that kind of income (Source: https://dqydj.com/income-percentile-calculator/).

Living on the East and West coasts is much more costly than living in middle America. For example, I doubt a family of four can comfortably live in Los Angeles on a gross income of $177k. While everything is possible, just an estimate of costs aside from rent is roughly $5,000 per month. In reality, the cost of living is much higher, especially since many prefer private schools for their kids. Rent would be an additional $3-5k for a two to three-bedroom house or condo in a decent area. With insurance and inflation affecting the prices of goods and services, $177k for a family of four would not provide a comfortable living. Should I add the cost of medical insurance and copays? Can a family of four survive on this type of income? Absolutely, but this would not be comfortable living—more like living paycheck to paycheck (Source: https://www.numbeo.com/cost-of-living/in/Los-Angeles #:~:text=Summary%20of%20cost%20of%20living,New%20York%20(without%20rent).

The median household income in Los Angeles County stands at $82,516. It is much higher than in most of the US, yet only the top 15% of households earn more than $177k. The bottom 85% of households earn less than that. It seems like the gap between the top and the bottom getting wider. How long can this continue? There are always implications for society, whether political or otherwise. If we go back in history, most of the evils of the world came from the destruction of the middle class. The US is not immune to this.

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn or via email at [email protected] or by calling my direct line at (424)295-9015.

Have a great day!

Good morning,

The biggest question we need to ask is whether a US government default is possible. Then we need to determine the probability of such a default. Many argue that if the US were to default on its debt, it would demolish the financial system as we know it. Therefore, they believe the probability of such a default is zero. I agree with the first part but disagree with the second.

Here is a breakdown of the top five US debt holders as of 2022:

Federal Reserve: 39.47%

International investors: 23.29%

Retail investors: 13.96%

Mutual funds: 7.75%

Depository institutions: 5.46%

(Source: https://lnkd.in/eVNBh-vv)

A US government default would have catastrophic consequences both internationally and domestically. The top international holders of US debt are Japan and China, with combined holdings of roughly $1.8 trillion or 5.3%. While there is a tendency to "stick it" to China, Japan is one of our biggest allies in Asia, and we do not want to cause a financial meltdown there. Additionally, although international investors are the largest holders after the Federal Reserve, their holdings are not enough to ease the debt burden substantially.

Furthermore, such a default would make it impossible to finance future debt from any sources, whether international or domestic. Once you have failed your investors, it will take generations to regain their trust and get them to buy more US treasuries. This brings us to the main point: while a US default is possible, the probability of such an event, though not zero, is extremely low. Out of three options—growth, default, and inflation—we are left with the latter: inflation. As investors, we should act accordingly.

Have a great day!

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn or via email at [email protected] or by calling my direct line at (424)295-9015.

Good morning,

Our discussion on government defaults will resume on Wednesday.

It appears that this leap year is taking its toll, and we haven't even reached the halfway mark. Another titan of the investment world has departed, hopefully to a better place. On May 10th, the world bid farewell to James (Jim) Simons. I was fortunate to have heard Simons deliver the commencement speech at USC to math graduates about a decade ago. Knowing about someone is one thing, but experiencing their presence firsthand is quite another.

Simons's narrative is that of a scientist venturing into the realm of finance. While such transitions are commonplace nowadays, they were far less so in the 1970s. After earning his PhD in math from UC Berkeley, Simons worked for the NSA and various other institutions, including academia. In 1978, alongside his partner Howard Morgan, he established Monemetrics, which later evolved into Renaissance Technologies. Their journey wasn't without its challenges, but eventually, they managed to crack the markets' code.

Simons and his team possessed an uncanny ability to anticipate market shifts. The Medallion fund, managed by Renaissance Technologies, boasted an impressive annual compounded return of 62%, or 22.3% net of fees and expenses, without a single losing year between 1981 and 2019 (Source: https://www.cornell-capital.com/blog/2020/02/medallion-fund-the-ultimate-counterexample.html). Simons wasn't alone in this endeavor; he had a cadre of talented mathematicians, known as quants, working alongside him. Through meticulous research and risk management, the Medallion fund achieved remarkable success.

For those keen on delving into Jim Simons's life and career, I recommend reading "The Man Who Solved The Market" by Gregory Zuckerman (https://www.amazon.com/Man-Who-Solved-Market-Revolution/dp/073521798X). The book provides insights into Simons's academic background and his journey on Wall Street.

Have a wonderful day!

Another legend is gone... RIP Jim Simons

Simons Foundation Co-Founder, Mathematician and Investor Jim Simons Dies at 86 | Simons Foundation Simons Foundation Co-Founder, Mathematician and Investor Jim Simons Dies at 86 on Simons Foundation

Good morning,

I received several follow-up questions regarding the report on Wednesday. One of the questions pertained to the possibility of a US default. While I am not predicting such an event, I would like to briefly delve into the past and examine the history of nations defaulting on their debt.

Let's begin with an overview of trends and clusters. Most defaults occur either within one geographic area involving multiple nations or are triggered by events such as major wars. South American nations like Brazil, Argentina, and Colombia have experienced frequent defaults or debt restructuring over the past 200 years. Russia defaulted on its debt twice, once in 1917 when the Bolsheviks took over, and again in 1998, five years after transitioning to a free-market economy. An old Russian joke from those times compares economists to scientists: scientists try experiments on mice first, while economists apply theories directly to people.

There were significant defaults around the end of WWI and in the early 1930s following the Great Depression in the US. From 1931 to 1940, nearly every nation defaulted except for Asian and African countries that had no debt to default on. Asian nations defaulted in the late 1990s following the debt crisis, and African nations defaulted in the early to late 1980s. (Source: https://journalistsresource.org/wp-content/uploads/2012/12/MIT-Press_Sovereign-Defaults-and-Debt-Restructurings.pdf)

One of the most intriguing findings I came across: the US defaulted on its debt in the 1840s due to extensive canal building. The debt soared to over $81 million, leading nineteen out of 26 states to default. States like Pennsylvania, Illinois, and the territory of Florida were among those that defaulted. (Source: https://www.worldfinance.com/strategy/government-policy/top-5-worst-defaults-in-history)

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn or via email at [email protected] or by calling my direct line at (424)295-9015.

To be continued...

Have a great weekend!

Good morning,

For those of my readers not familiar with Stan Druckenmiller, shame on you! For those who are, I highly suggest you watch an expert from his recent interview on CNBC. Here is the link: https://x.com/billackman/status/1787849622980804749?s=46. Stan is not being very kind to Jerome Powell and in my humble opinion, he is right. The Fed Chair is not a celebrity; he should not go on 60 Minutes. Instead, he should ensure that the economy and the money are sound.

We have discussed at length the presumed soundness of both on many occasions. In the last weeks, I heard from a few of my older friends that I am always negative. I guess I am. I might be reading too much and doing my math. Math is the only thing that does not lie, no matter who occupies the White House or Eccles Building. Numbers either add up or do not. And for years, the numbers have not been adding up.

The path we are currently on is unsustainable. Many of you may say that this isn’t so. Maybe you are right, maybe not. Let’s go over the numbers and see for ourselves. We increase our debt by $1 trillion every one hundred days. There are 365 days in a year. Thus, we are accumulating $3.65 trillion every year. The interest on the newly acquired debt at 4.5% is $164 billion. That equals to the last package the Congress signed for the Ukraine aid. The interest on our current debt crossed the $1 trillion mark in 2023. (Source: https://www.visualcapitalist.com/u-s-debt-interest-payments-reach-1-trillion/ #:~:text=The%20cost%20of%20paying%20for,spending%20during%20the%20pandemic%20crisis.) Every year this number will increase by $164 billion or 16.4% or 4.68% of the total US budget. At this point, debt service expenditure is the highest item on the budget behind healthcare and Social Security above Defense. (Source: https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/)

There are three ways to deal with debt: growth, inflation, or default. Three percent growth can hardly cover the increase in debt servicing, let alone reduce our debt. I hope that the government is not planning on defaulting any time soon. The only other way is to inflate, with all the consequences that we are currently observing. How good will it play for all of us? You can see and feel for yourself. Maybe now you understand why I might be a bit negative.

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn or via email at [email protected] or by calling my direct line at (424)295-9015.
Have a great day!

Good morning,

As the train approaches the station on the London Tube, the announcer cautions passengers: "Mind the gap." In recent months, there are numerous gaps one must be mindful of: the gap between the river and the sea, the gap between Ivy League education and the actual quality of education one pays for, and many more. I won't delve deeply into the "avocado toast" revolution and its causes; instead, I'd like to focus on the disparity between what the US consumer earns, their savings, and the cost of living. As of last quarter, this gap averaged $4,430.83 a year. (Source: https://lnkd.in/gFbVTMq8)

Savings rates, propelled by stimulus checks, skyrocketed to unprecedented levels. US consumers, confined to their homes, received massive fiscal support, commonly known as helicopter money. With limited spending opportunities due to stay-at-home orders and supply chain disruptions, consumers opted to save, driving the savings rate to 26%. (Source: https://lnkd.in/gWXnpkxr)

What followed was a familiar pattern. Following the Spanish Flu of 1918-1920, US consumers embarked on a major shopping spree. The same trend emerged at the end of 2020, until Uncle Jerome decided to intervene with one of the fastest and steepest rate increases in history. The shopping and spending spree came to a halt. Due to excessive shopping and spending, currency debasement and inflation, the Personal Savings rate declined to 3.2% in March 2024. (Source: https://lnkd.in/gWXnpkxr)

The result is a widening gap between income from employment and savings, and the cost of living. As we've discussed on numerous occasions, the $4,430.83 figure is merely an average. Depending on income level, this figure will have varying impacts. Someone earning $60k a year will feel it differently than someone earning $600k a year. This presents a real cause for the revolution of sorts.

Currently, the trajectory seems to be heading in the wrong direction. I'm unsure if the US consumer will increase the savings rate anytime soon. As Albert Einstein once said: "Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it." The principle of compounding applies to the rate of inflation as well. While some comprehend it, ultimately, we all pay for it.

Due to compliance regulations, I cannot provide personalized financial advice or market analysis on LinkedIn. If you or someone you know needs help putting their financial affairs in order, you can reach out to me on LinkedIn or via email at [email protected] or by calling my direct line at (424)295-9015.

Have a great day!