💸 Boomers vs. Millennials: The Rising Costs of Dreams

What’s on the Menu 🍴

Competing narratives, generations, and ideas are everywhere when it comes to money…

And today we’re diving into a few important battles.

Let’s go:

• Tesla: Dueling Narratives 🤺

• New Housing Prices Are Dropping Like It’s Hot 🔥

• Boomers vs. Millennials: The Rising Costs of Dreams 💸

Today’s newsletter is a 4 minute read.

Tesla: Dueling Narratives 🤺

Large cap tech stocks have posted solid year to date performance, with the Nasdaq-100 index up 9% through late March.

So you might be surprised at the worst performing stock year-to-date in the S&P 500 index: Tesla.

Tesla is suffering from a combination of:

1. Weak US auto demand, exacerbated by high financing rates

2. Intense EV competition in China & Europe leading to price cuts

3. Hertz selling off its Tesla rental car portfolio at a loss and

4. Slow ramp up of Cybertruck production

Some investors have also been disappointed with the pace of product rollouts such as the Roadster & Semi.

Analysts who track real time Tesla production trends are pointing to the potential for a decline in year-over-year deliveries in Q1.

Wall street analysts have also begun to downgrade their Tesla price targets lately:

Tesla still trades at a big valuation premium to every other automotive stock in the market, so if its revenue is now shrinking there’s concern the bottom could fall out on the stock.

However, there are two longer term narratives that may buffer or even reverse the decline:

1. the market potential for the Optimus humanoid robot program and

2. the newest version of Tesla’s “Full Self Driving”/Autopilot software

Tesla fans & customers have been raving about the newest 12.3 version rollout of FSD on the X platform this week.

CEO Elon Musk is also now mandating Tesla salespeople give FSD demos to new potential customers:

FSD software comes with high margins for Tesla, so it could actually contribute much needed incremental earnings for Tesla at a tough time for the company.

Humanoid robots on the other hand are more of a long term potential story that are years away from generating meaningful revenue for Tesla (if ever!).

The addressable market is theoretically enormous of course…

As Q1 comes to a close in the coming weeks, and delivery numbers get reported in April, it will be very interesting to see the push and pull between the bull and bear narratives on TSLA.

Will the FSD & humanoid narratives overpower the current slowdown in Tesla’s business?

What’s your opinion?

We’d love to hear from our readers about their take on Tesla the company and TSLA the stock!

New Housing Prices Are
Dropping Like It’s Hot 🔥

It’s finally happening … housing prices for new homes are dropping significantly.

In recent time, it felt new housing was really the only game in town. New home sales were actually increasing while existing home sales continued their decline:

People in existing homes weren’t going to sell and give up their jaw dropping low interest rate mortgages.

Some of these people locked in mortgage rates under 3%!

So… that led to a busy season for homebuilders.

You can see that reflected in the gains for the major homebuilder stocks:

Builders were buying down interest rates, and reaping the rewards of the demand and high median housing prices.

But, the music is being turned down, and the median price of a new home has dropped almost -20%.

When the median new home goes from $496,800 at the high, to $400,500 currently, that’s a big delta that can really help affordability on a mortgage.

Yes, even with higher interest rates!

Granted, we still have a long way to go for affordability in many major cities, but, it’s a start.

Could lower interest rates in the future help this price trend lower continue?

Most likely, it could do the opposite. It could help affordability in a drastic way that pushes a lot of buyer demand which could hold prices up.

But of course, it could also lead to more supply on the market when existing homes hit the market at a faster rate!

It feels like a tougher result to predict now, but, I imagine buyers are welcoming the lower median housing price none the less.

Boomers vs. Millennials:
The Rising Costs of Dreams 💸

A few weeks ago, we wrote about the fact that the “Average American Dream” costs about $3.4 Million.

This has a lot of people asking:

“Is the American Dream dead?”

Today this image from Professor Galloway is making its rounds around social media:

It shows that for baby boomers, the average cost of a house was about 3.5X the median household income…

And for millennials, it costs about 6.25X current incomes.

That’s 78% more expensive for the average person to buy the average house today.

One thing to mention is mortgage rates are lower now than in the 70’s and 80’s…

But lower rates don’t make up for the massive gap between wages and costs of living.

And get this…

The average American earner ($75k minus taxes) would take over FIFTY YEARS to earn enough to pay for the average major costs of living ($3.4M).

No wonder the feeling of “hopelessness” is at an all-time high with Millennials and Gen Z.

So, we have two options:

1. Accept the average life and feel the squeeze

2. Do everything possible to grow our dough and get in the top 1%-10% of earners and investors

That’s exactly why we started the Wealth Building Community, to help our members get a head start on being able to afford their dream lifestyles.

The 3 goals we focus on ever day are:

1. Maximizing cash flow so we have “rocket fuel” for our investment portfolios

2. Focus on the highest ROT (return on time) activities to increase returns

3. Build an EVP (escape velocity portfolio) where the annual profits exceed the cost of our dream lifestyle

And THAT’S how we get true financial freedom!

Food For Thought 🧠

"Only those who will risk going too far can possibly find out how far one can go.”
- T.S. Eliot

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.