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Men change their rulers willingly, hoping to better themselves, and this hope induces them to take up arms against him who rules.
– Niccolo Machiavelli, The Prince
On 22nd February 2022, the White House made an announcement imposing sanctions on two major financial institutions in Russia: The V.E.B and the Military Bank. This wasn’t the first time. In 2014, the Obama government had imposed sanctions as well, but this time around, it was more serious – The measures effectively cut off Russia from Western financing and froze their assets. It was a massive blow… But what we might not have anticipated is that the move could boomerang on us as well.
There’s an unspoken agreement in the world right now about the dollar’s dominance – Since 1944, all other countries had pegged their value to the US dollar which was then backed by gold. In 1971, the Nixon government took the dollar off the gold standard creating an uneasy dependence on the dollar. Since then, every spot of turbulence in the US economy has caused shock-waves throughout the world. This is sometimes called the Dollar Milkshake Theory: When the Federal Reserve tries to fix things in the local economy by “slurping up the dollars”, it makes access to US dollars scarce for developing economies. This devalues their currencies and causes economic crises. But these concerns were not out in the open, till now…
There’s a saying in chess: “A threat is better than an execution.” When the US government imposed sanctions on Russia and froze its assets, it effectively signaled to other countries that it had the power to devalue their foreign reserves at any time. This set a chain of events in motion, as other countries began to team up and look for an alternative to the dollar. For the first time in nearly 100 years, the dollar’s top spot is being challenged, on multiple fronts. Here’s what it means for your investments, where it’s likely to go from here, and what you should know to keep your money safe:
A divided housing market
For the first time in history, we are seeing a split housing market, with prices rising in some parts of the country and dropping elsewhere. The ultra-rich are beating a quick path out of California as the government makes it more difficult to preserve wealth in the coastal state. This could cause luxury home sales and tax revenue to suffer. On the other hand, home prices elsewhere, like the East Coast, are slowly climbing as a result of the shift. Here’s everything you need to know about the market, and where it’ll go from here:
Lending crackdown
Last month, we saw Silicon Valley Bank collapse and Credit Suisse enter limbo after rate hikes began to take their toll on the banking industry. The worst of the crisis has been averted after the Fed shored up the liquidity of the banks, but that still leaves banks with the question: Where should they invest their money? With real estate seeming unattractive compared to money market funds, and with the government trying to revive the housing market with its own intervention, here’s what’s likely to happen next in the real estate market – and what it means for your money:
The Graham Stephan Show
You know what’s nerve-wracking? Walking up to strangers and asking them a simple question like: “Hey, what do you do for work, and how much money do you make?” Even more so, because so many people are doing this now, and you seriously risk annoying someone. But that’s exactly what Sharif Mohsin did, asking millionaires on Rodeo Drive what they do for a living – and honestly, some answers surprised me:
It doesn’t take much financial incompetence to upset Dave Ramsey – but this caller really had it coming, with a million dollars in student loan debt. Watch this one to find out what not to do, and also some valuable advice on how to keep your head in a bad situation and dig yourself out of it.
Then we have another student experience that is very different – a PhD student who went from 0 to making $27,000 a year, and is enjoying her newfound freedom living in Seattle. Making it work on that income is no mean feat, and you might want to check this one out for some tips.
The Iced Coffee Hour
We recently had one of our best guests ever on the Iced Coffee Hour podcast – Sahil Bloom is a former Private Equity VP who quit his job to go full-time on writing impactful content that helps people live a better life. His story is as inspiring and positive as the content he puts out, and there are a lot of gems in this episode that could turn your life around.
And as if that one isn’t enough, there’s another amazing episode for you to check out: Austin Ekler of the Los Angeles Chargers holds the record for the most touchdowns in the last NFL season, but the interesting part is that he should not have made it according to any statistic. How Austin went from there to being the physically strongest player in the NFL is a story of perseverance and dedication, which I highly recommend you check out:
So that’s it for my Sunday round-up. For the new folks here, in this newsletter, I give a quick recap of whatever you may have missed over the week on Sunday over all my different channels, and on Wednesday, I will be doing my deep-dive article on one of these topics.
See you next week with another bunch of exciting videos!
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