💎 Have International Stocks Lost Their Luster?

What’s on the Menu 🍴

Today we’re taking a look at some places you can put, invest, or spend your money…

And maybe some ways to grow your dough a little quicker!

Let’s jump in:

  • Consider These Investment Milestones Before Lifestyle Luxuries 📈

  • What to Watch This Week 👀 

  • Have International Stocks Lost Their Luster? 💎

Today’s newsletter is a 4 minute read.

Consider These Investment Milestones
Before Lifestyle Luxuries 📈

Last week I ruffled some feathers when I suggested some rules to help people build wealth.

The idea of sacrificing some of life’s pleasures until you hit milestones can feel restrictive, but in the long run, can it actually create MORE freedom?

Well, conventional wisdom often suggests a linear path:

  • save diligently

  • invest wisely

  • gradually upscale your lifestyle

But what if we flip the script and set financial milestones as gatekeepers to our spending habits?

Consider this radical yet remarkably simple approach:

  1. postpone dining out until you've invested a hefty $10,000.

  2. Hold off on that sleek new car or any depreciating asset until your investment portfolio bulges to $100,000.

  3. And that dream house? Make it a reward for crossing the $1 million investment threshold.

This method isn't just about delayed gratification; it's a strategic game plan to prioritize wealth accumulation over immediate consumption.

My logic comes from the difficultly to achieve each level:

$10k Goal vs. Fine Dining

For example, building your first $10K is very difficult, and fine dining bill of $250-$500 could eat up nearly 5% of this milestone in a single night!

And smaller numbers make compounding to life-changing wealth more difficult.

So, until you’ve cracked $10k, maybe consider holding off on the Wagyu beef steak and finest bottle of Malbec.

$100k Goal vs. a New Car

In 2024, the average price of a new vehicle is over $48,000!

So if you’re buying depreciating assets that are nearly HALF of your $100k goal, expect that to be a major headwind against your success.

Many people learned a hard lesson after buying a new car during the pandemic, often losing over 20% of their purchase as soon as they drove it off the lot!

$1M vs Your Dream Home

Many Americans hold a majority of their “wealth” in their primary home. But did you know that real returns on real estate (after inflation, taxes, insurance, and maintenance) is a pitiful 2%-3%?

So instead of splurging for that massive luxurious property, why not put that capital into a faster appreciating asset class until you join the seven figure club?

Agree or not, this approach gets the conversation started about the “opportunity cost” of lifestyle bumps today versus delayed gratification to secure a wealthier tomorrow.

What to Watch This Week 👀 

Last week was relatively quiet in the markets, but we did see a broader rotation into areas of the market that have been less popular such as small caps and energy.

This week we’ll get important unemployment reports in the US & Canada which always have the potential to move the market.

The bitcoin halving event, which happens once every four years, is nearly upon us:

Crypto prices & related stocks could experience higher volatility around the halving this month so we’ll be watching for that.

Commodities such as gold and crude oil marched higher last week, and could become a risk to the overall markets if they keep rising at a fast pace.

Besides the official jobs reports on Friday, important macro data releases this week include:

  • US ISM Manufacturing PMI (Mon)

  • Germany inflation (Tues)

  • US JOLTs Job Openings (Tues)

  • US ISM Services PMI (Wed)

  • Canada trade balance (Thurs)

  • Australia trade balance (Thurs)

  • Canada unemployment (Fri)

  • US unemployment (Fri)

  • Canada PMI (Fri)

Tesla will be in focus this week as the company reports Q1 deliveries.

Analysts have been taking their estimates down lately as a result of more competition, production issues, and weaker demand.

However, retail investors are getting more excited about the new autopilot software release.

We’ll keep an eye on TSLA, as well as the following assets & sectors:

📈 Rising Recently:

  • Energy (XLE / XOP)

  • Gold Miners (GDX / GDXJ)

  • Solar (TAN)

  • Crypto miners (WGMI)

  • Real Estate (XLRE)

📉 Falling Recently:

  • Large cap tech (QQQ)

  • Software (IGV)

  • Momentum (MTUM)

Have International Stocks Lost Their Luster? 💎

The U.S. stock market has been on FIRE.

As we keep smashing through new all-time-highs every week, it’s got a lot of people wondering why they should bother investing in non-U.S. (international) stocks.

Why would you not simply put all of your money in the best performing U.S. stock index?

U.S. stock indices do in fact get you international exposure from big corporations simply doing business globally. However, it may not be enough to give you a truly diversified portfolio.

The fact of the matter is, even though international stocks have lagged the U.S. in recent history, they’ve at certain times performed better than U.S. stocks.

We’re actually seeing outperformance this year of the Japanese stock index (Nikkei) vs. the S&P 500.

Take 2017 for example: International emerging markets were the top performing asset class, followed by developed international stocks. U.S. stocks followed behind that year.

In 2012, U.S. stocks also lagged behind international.

Emerging markets particularly, with their volatility, can provide quite high returns during the good times. They’ve been the best performing asset in 2009 and 2017.

With U.S. valuations quite high, investment managers might be looking to international stocks for a good deal.

Europe has been struggling with recession pressures and Asia is just starting to come back to life after the pandemic.

We very well could see international come alive again as they recover from the economic slowdown and we may see valuation expansion as investors get tired of the lack of value in U.S. stocks and go international.

The timing of returns in international stocks, could help offset any downturn in the U.S. Especially if interest rates move lower.

While I do see the case people are making for going all in U.S. stocks right now, I think it’s good to zoom out. The best performing asset class is not always U.S. stocks.

So, if your goal is to truly have a diversified portfolio, international stocks may be flashing value here to help you accomplish that goal.

Food For Thought 🧠

"To live a creative life, we must lose our fear of being wrong.”
- Joseph Chilton Pearce

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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.