📷 One Photo Shows The Secrets Of The Wealthy

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What’s on the Menu 🍴

Everybody wants to know what it takes to get wealthy…

And well, we’re taking a look at what the data shows to be a clear picture of how to get there.

Let’s dive in:

• Breakdown Of Jerome Powell’s Jackson Hole Speech 🎤

• One Photo Shows The Secrets Of The Wealthy 📷

• What To Watch This Week 👀

• The 30 BEST Books on Stocks & Investing 📚

Today’s newsletter is a 5 minute read.

Breakdown Of Jerome Powell’s Jackson Hole Speech 🎤

Last week, we heard from Jerome Powell at the Jackson Hole Economic Symposium.

This is a grand meeting of central bank leaders from around the world.

It was a semi-quiet morning for S&P 500 price movement until we finally heard “J-Pow” give us his thoughts.

There’s not much he said in this speech that the market hasn’t already heard… but, it did tell us a couple very important things:

1. The Federal Reserve is NOT going to raise their inflation target from 2% to 3%.

Powell was very clear.

Even though the market has hinted to the Fed to simply move the inflation goal post and call victory, they refuse.

The 2% inflation target is here to stay and the Fed will not stop until this target is reached.

So does this mean more pain ahead from higher rates?

This leads us to the 2nd major takeaway from the speech:

1. The Fed is leaving themselves a HIGH amount of flexibility with rate policy. Their tone reflects a large amount of uncertainty.

The word “uncertainty” was said throughout the entire speech and Powell made it clear to the market that he knows the risks of getting monetary policy wrong.

Powell stated, “These uncertainties, both old and new, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little.”

He even ended his speech with the following quote:

“As is often the case, we are navigating by the stars under cloudy skies.”

It looks like the market has been pretty consistently predicting that we will NOT see a rate hike in September.

After listening to the speech, it does seem that holding rates steady will be likely.

The bottom line?

We don’t even think the Federal Reserve themselves know how this is all going to pan out for the economy and markets.

One Photo Shows The Secrets Of The Wealthy 📷

Many people try to find the “secrets of the wealthy”.

They want to do what the rich do so they can have financial freedom.

But, one photo shows us that asset holders in the bottom 50 percentile group might be missing out on an important strategy the wealthy use!

This is a breakdown of the types of assets held by people of different wealth levels:

The wealth level that is the most important is the bottom 50%. This is the asset holder that we really want to see grow and thrive.

But, we can see that 52% of assets held by the bottom 50% are real estate assets.

Now, this sounds great… but, take a look closely at the top 1%, or even the top 10% for that matter.

We see big orange bars representing a very important asset class: EQUITIES (aka: stocks).

The amount of equities owned by the bottom 50% is tiny at only 2.2% of their total assets.

In fact, consumer durable goods are a bigger percentage of their assets than equities 🥴.

Comparing this to the top wealth percentile group, equities simply make up a much larger percentage of wealthy people’s assets!

It’s interesting to watch the asset composition change as wealth increases, but the main lessons we can takeaway are the following.

Wealthy people:

1. Have real estate become a much less percentage of assets as wealth is allocated to other assets and retirement plans.

2. Diversify their assets very strategically to protect from risk (you don’t see allocations that are too “concentrated or high” in any one asset).

3. Take more risk with private businesses as they gain more wealth (which makes sense because they build their “risk capacity”).

4. Have a very sizable percentage of wealth in equities compared to those in lower percentile groups.

What is fascinating about this data, is that investing in equities (aka: stocks) is one of the MOST ACCESSIBLE ways to grow wealth.

You don’t have to be super rich, and there’s no barrier for people to invest in stocks (besides having cash to invest, of course).

Yet, the people who need to invest in stocks the most, seem to not be doing it.

They’re prioritizing owning a home, and consumer durable goods.

Although owning real estate is an important stepping stone in a wealth building journey, diversifying outside of real estate is a must to make it to the next level of wealth.

The proof is in the data.

What To Watch This Week 👀

Can you believe August is already almost over?!

That means it will be a jam packed week for economic data releases, including key unemployment and manufacturing reports in the US on Friday.

We’ll also get a peek at preliminary August inflation numbers in the EU, and we’ll find out if there’s been any improvement in the weak manufacturing sector in China.

Other areas of focus for us this week include:

• JOLTs job opening data (Tuesday)

• US Personal Income & Spending (Thursday)

• Core PCE inflation data (Thursday)

• More retailer earnings including Lululemon, Chewy, and Best Buy

• Earnings reports from enterprise software companies Salesforce, Crowdstrike, Okta, and MongoDB

And while Jerome Powell’s Jackson Hole speech didn’t move bond markets much last week, we still need to keep an eye on long term bond yields and weakening regional banks.

Will stocks and crypto put the recent correction behind them or will they roll over?

Hopefully we’ll have a much better idea after this week!

The 30 BEST Books on Stocks & Investing 📚

Our very own StockGeek walks us through more than 30 of his favorite books on stocks & investing.

These were essential in his journey as a professional hedge fund investor 📚

Delicious Bites 😋

• Wells Fargo Overcharged Clients $27 Million in Fees

• The Fed is drowning the Government with major interest costs

• Pets are like humans now

Food For Thought 🧠

"Know what you own, and know why you own it."
- Peter Lynch

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.