What Makes You Smile?

This was week number nine of working from home. Slowly, more of our regular lives and routines are returning, and I’ve found myself thinking, choose wisely what you add back into your life.

Amongst the challenge and difficulty this past couple of months, we have also been given a gift.

Something from outside our control has forced us to change our habits. Many of us went from busy, mobile, and stressed to bored, isolated, and stressed. Then something interesting happened…we un-stressed; we walked; we read, we watched mindless Netflix, and hopefully we slowed down and thought about our lives.

I imagine we are all ready to get back to more of our normal lifestyles again, but maybe we should take some time to think about a balance between the before and after lifestyles of the past two months.

Early in 2016, I recall starting to consider what I would want to change in my life as I started to envision retirement. Working with people planning their retirement for the past 30+ years has allowed me to see a lot of different “dreams” of what that life can look like.

A really fascinating part about this job is watching people plan what they believe will make them “happy.”

Ironically, few are able to plan this happiness very well.

The reality I see when working with people in their late 70s and 80s is what actually made them happy had little to do with their retirement goals and objectives that they thought would make them happy.

For the vast majority of older people I speak with, the keys to their happy lives and retirements were:

1. Healthy bodies,
2. Quality family/friend relationships, and
3. Remembering the simple things in life that made them smile.

For sure, sometimes an expensive trip or their beautiful boat or car was a highlight, but rarely was it what made them truly smile.

So often, smiles were simple times and places; relationships and moments shared with others, and family and friends who cared for and supported each other.

One of the rich side effects of the last two months is everybody’s life stopped for a while. That has now broken a lot of good and bad habits we all had.

So as you get excited about getting back to normal, let me offer three things I have challenged myself with at this time:

1. Stay vigilant in social distancing and washing your hands. This virus infection is not done and as people let down their guard and normalize, we are definitely going to see a second wave of infections.
2. Be deliberate in adding back things into your routine. Ask the question of yourself, was this really time well spent? Should I add more time to it if it was quality time? If you decide something is not for you any longer this is a fabulous time to break the tie with that activity.
3. Remember the things that made you smile the past two months. I’ll bet some of those things will be easy to hang on to if you make the conscious effort to keep them.

Let’s see if life can be less cluttered and more enriched as we normalize as a society this summer.

Google Earnings

Disclosure: I neither own directly, nor trade shares of GOOG

It was fascinating to me to watch the way Wall Street processed Google’s earnings this past week.

Understand that a significant amount of Google’s revenue is advertising revenue. If businesses are challenged and short of cash flow, then one would think advertising revenue would be tough to estimate.

To their credit, this is exactly what Google said was happening in their conference call discussing earnings.

I have been reading a lot trying to discover how the online advertising world might change post-COVID because this revenue is a huge driver of the tech giant’s stock prices.

The results: Online advertising revenues are likely to shift drastically in the post-COVID world.

Below I pulled the summary statement from an article that looked at online advertising revenues from both “public” and “private equity” sources.

….The reason for giving readers the context for what has gone on in these tech companies’ funding is because it is a circular argument and the pie is shrinking, due to an economic shutdown. Tech can’t just easily steal market share now. It’s too big to grow at a larger rate like the past. Alphabet’s digitals ads business and Amazon’s hosting business aren’t dependent on the economy and the consumer. They are far more dependent on the large pools of venture money (“large doses of effortless money”) thrown to new business ideas that most commonly need people, space, hosting and (depending on the business) digital ads. If venture capital funding and IPOs dry up, so will the façade of financialized demand.

This is a long story…far too long for one of my weekly comments. The key concept to understand is almost all of the private equity funding to companies is dead. How it comes back remains to be seen.

Google and these types of companies that rely on advertising revenue have no idea how much or when this revenue might return.

So you are probably saying, what does that have to do with me? I don’t own Google or Facebook or risky technology companies like that?

The image below shows the market capitalized weightings of the S&P 500 index. It is a stark reminder just how much technology exposure passive investors are saddled with using exchange traded funds and managed portfolios.

*Note: Alphabet is Google

Hmmm, makes you think doesn’t it?

Finally, the graphic below has been floating around the Twittersphere for weeks.

I leave it up to you to decide where you believe we are on the chart right now.

Gold/Stock Market Performance – Oil - Bitcoin Halving

Gold/Stock Market Performance –

The correlation between gold and stock markets has continued to remain strong. There are gathering signs that the BEAR market rally is starting to top.

The chart below shows the S&P500 for the last 30 days trading. The black box on the chart depicts “the range” area. As of Friday morning, the stock market has fallen back into its trading range.

It is my expectation that gold will correct along with stocks early in this correction.

What I am watching for is a point where stocks continue to go lower or go trendless, and gold makes its way above $1735 US.

This break of gold from stock prices could happen over the next several weeks.

I will continue to refer to this relationship in coming letters as I believe it is an important key to the next phase of the gold BULL market.

Oil –

The oil markets may represent the most messed up financial situation I have ever seen outside of the technology bubble of 2000.

Fundamentals and prices are in complete disarray. The governments supporting these companies via bond purchases and outright bailouts has created a significant price dislocation from fundamentals.

At some point I have interest in buying oil related investments but I have no interest in these names today at these prices.

Bitcoin Halving –

Below is a definition as to what “halving” means.

Bitcoin block reward halving will take place in exactly 10 days from today. Miners within the Bitcoin network are rewarded with some Bitcoins for the blocks they produced. However, every four years (roughly 210,000 blocks), this reward is reduced by half. At the moment, miners are receiving 12.5 BTC but after halving, they will receive 6.25 BTC per block mined. Halving happens to control inflation within the Bitcoin network.

 

This is just for your information…