🦢Is Your Portfolio Protected Against “Black Swans”?

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Yesterday, we lost an investing legend.

Today, we look forward to protecting and growing our wealth.

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• Declining Rents Could Power The Consumer 🚀

•  Is Your Portfolio Protected Against “Black Swans”? 🦢

• Charlie Munger Tribute 👑

Today’s newsletter is a 4 minute read.

Declining Rents Could Power The Consumer 🚀

We’ve gone through a major housing boom over the past few years and we’re finally starting to see prices cool off.

What is more interesting is how declining rents could affect the economy going forward.

In the major housing markets, it’s clear to see year-to-date that rents have been trending lower:

44% of Americans rent over owning.

Declining rents are aligning with resigning of 1-year leases. So, many renters may end up in a situation where they can rent at a lower rate over the next few months.

This could lead to an actual INCREASE in disposable income for consumers as inflation continues to trend lower (housing is the largest component of the inflation calculation (Consumer Price Index).)

We’re talking some pretty big price changes in some markets. Check out Miami rent:

Median rent is $535 cheaper as of November 2023 versus January 2023. While rents increased mostly in 2022, they have been decreasing all of 2023.

I don’t think this should be ignored, especially as people question if the consumer can keep the spending in the economy up.

We want to see REAL personal disposable income continue to INCREASE as we see inflation DECREASE.

So, I don’t think it’s time yet to discount the strength of the consumer or the bull market yet.

Keep an eye on a lot of these trends moving into 2024.

Is Your Portfolio Protected
Against “Black Swans”? 🦢

In the realm of investing, a "Black Swan" is an unpredictable event that defies normal expectations and carries potentially severe consequences.

These events are characterized by their rarity, severe impact, and the widespread insistence they were obvious in hindsight.

The Dual Nature of Black Swans: Not Always Bearish

Contrary to popular belief, black swan events aren't exclusively negative.

While they often spell turmoil, they can also usher in positive, bullish long-term effects for markets.

For instance, an unexpected ETF approval could lead to increased mainstream adoption and validation of cryptocurrencies, potentially bolstering the market.

On the other hand, military attacks and fraud allegations can send market prices tumbling.

Potential Black Swan Examples In Crypto

The crypto world is currently abuzz with potential black swans - one bearish and one bullish.

Two of the most significant looming risks include:

1. The potential implosion of Binance, a major player in the crypto exchange market

2. The impacts of an ETF (Exchange-Traded Fund) approval.

Both events, with their unforeseen consequences, could significantly reshape the landscape of cryptocurrency trading and investment.

Preparing for the Unpredictable: Our Approach to Black Swans

At Daily Dough, we understand the importance of preparation.

When it comes to black swan events, especially in the volatile crypto market, our strategy involves thorough analysis and scenario planning.

Sure, we can’t predict all future black swan events, but we like to dive into macroeconomics, fundamentals, and global relations to craft plans that can withstand a range of unexpected events.

At the end of the day, it’s about managing risk to the best of our ability…

And by trying to anticipate a spectrum of scenarios, we want to equip our dough-growing readers with insights and strategies to navigate these turbulent waters, whether they bring challenges or opportunities.

Charlie Munger Tribute 👑 

Charlie Munger, the widely admired Vice Chairman of Berkshire Hathaway and business partner of Warren Buffett, passed away yesterday at the age of 99.

Munger was a successful investor and businessman but also a philosopher of life.

His humor & wisdom left a lasting mark on the world, leaving a legacy far beyond the wealth he helped create.

Here are some of our favorite Charlie Munger quotes:

1. Mistakes: "You're not learning anything if you're not making mistakes.”

2. Patience: "The big money is not in buying or selling, but in the waiting. It’s waiting that helps you as an investor and a lot of people just can’t stand to wait"

3. Lifelong Learning: "The game of life is the game of everlasting learning. At least it is if you want to win.”

4. Seizing Opportunity: "Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”

5. Reputation: "Remember that reputation and integrity are your most valuable assets – and can be lost in a heartbeat.”

6. Blind Spots: “Knowing what you don’t know is more useful than being brilliant.”

7. Teaching: “The best thing a human can do is to help another human being know more”

8. Compounding: “The first rule of compounding: Never interrupt it unnecessarily.”

9. Opposing Views: “You must force yourself to consider opposing arguments. Especially when they challenge your best-loved ideas.”

10. A Satisfying End: “The best ****armor of old age is a well spent life preceding it.”

Rest in peace, Charlie. 👑

Food For Thought 🧠

"The black swan theory describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight.”
- Nassim Nicholas Taleb

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.