🤑 72% Chance of Gains

& Goldman Sachs' Breadth Index...

Together with Moby

Good morning,

A quick breakdown — in case you don’t have the time.

  1. History tell us the S&P 500 will continue to rise this year.

  2. We discussed the #1 cause of bankruptcy in the United States.

  3. Goldman Sachs’ Breadth Index is near record lows.

  4. Nike experienced their worst trading day ever.

  5. American Express is spending $400M to buy Tock.

  6. Protect your family with term life insurance from Suriance.

Market Overview

As of market close 7/2/2024

Charts of the Week

To understand the importance of the above chart, you first have to understand an investment term called price-to-earnings ratio. This term essentially helps investors figure out if a company’s stock price is overvalued or undervalued compared to both its peers and its own historical trading data.

The price-to-earnings ratio essentially tells us “On a per share basis, this is how much of the company’s profits are owed to investors.

As you can see above, AI-related stocks are trading at P/E ratios much higher than the rest of the S&P 500 — stating that investors are willing to pay a hefty premium to own these names.

However, this makes a lot of sense. During the last 12-18 months, AI-related stocks like Nvidia and Google saw their earnings-per-share skyrocket as everyone began buying their high-margin products and services (specifically Nvidia).

Well, what about the rest of the market?

As you can see in the second chart, during the last three months several sectors of the stock market delivered negative returns to investors. However, the only sector of the stock market to deliver negative returns for investors year-to-date is real estate — catalyzed by higher interest rates.

Finally, the third chart is something we want each and every one of you to read and understand. As published by Carson Investment Research last week, throughout history when the S&P 500 delivered returns above 10% during the first six months of the year — the remaining six months are usually very green (even during an election year).

The S&P 500 delivered +15% returns for investors during the first half of 2024, and we can’t wait to see what happens throughout the next six months!

As you all know by now, we love sharing brands that actually add value to our audience during our podcast. In the spirit of adding another one to that list — we want to introduce you to Moby.

It’s an up & coming research platform used by over 5 million investors to help them make better-informed investment decisions. Between their consistent market updates and individual stock picks — it’s been really great becoming weekly users ourselves.

We love reading their daily email updates and the Moby stock picks have been ridiculous over the last few years. Their 2023 Picks had an average return of over 30%; their 2022 Picks had an average return of over 35%; and their 2021 Picks had an average return of over 28%.

In Case You Missed It…

In this week’s episode of the Rich Habits podcast (linked here) — we had the pleasure of hosting Russell McBryde and Todd Russell from Suriance.

Last year we hosted George Kamel on the show to debunk the misinformation out there about term life insurance vs. whole life / indexed universal life insurance. This episode was just as valuable.

Here’s what we discussed:

  1. Our Personal Situations — Aging parents are inevitable, something both of us have been impacted by. Austin is currently his father’s primary caretaker, and Robert had to pay hundreds of thousands of dollars to long-term care facilities during the last few years of his mother’s life. By coming to terms with this inevitability, you can begin to prepare yourself financially.

  2. Disrupting a Stale Industry — Long-term care insurance has been a boring topic for its entire existence. Only until after you realize you need it do most people begin to take notice. Fortunately, long-term care policies have evolved over the years to be incredibly customizable and affordable.

  3. Free Consultations — Russ and Todd from Suriance want to help. If you’re someone who’s still in their 20s and 30s, time is on your side. If you’re in your 50s or 60s, it’s not too late. You can either self-insure and pay for long-term care facility costs out of pocket, or enroll in a long-term care insurance policy from Suriance. Regardless of your decision, do your research and have a plan. If you want to actually talk to a human about this, click here to set up a call with Russ and Todd’s team.

👉 Our Channels to Follow

Please make sure you are following & subscribed to the show — we’re publishing new episodes on nearly every platform. If you want to watch the video episodes, tune in on Spotify :)

Below are links to our primary channels:

Robert’s Callout

Continuing the conversation from earlier in our newsletter, AI-related names are carrying the S&P 500 index higher on their own!

As shown above, the Goldman Sachs Breadth Index is at very low levels — which means only a handful of stocks are in the green, while countless stocks are flat or in the red. The top 5 companies in the Nasdaq-100 have accounted for 60% of the index’s total return year-to-date.

This is why we always tell our listeners to build their base with index funds and ETFs before you begin to add single stocks to the mix. Index funds can be carried higher by mega-winners, whereas single stocks can be a gamble.

Austin’s Callout

America’s most established athletic company is not doing well.

Nike has fallen flat on their face as the company tries to grow their profits using a 3-leg strategy — redirection back into wholesale, doubling-down on in-house brands like Air Jordan, and better control of inventory. Unfortunately, this strategy isn’t working.

Their wholesale division is supposed to boost sales (who doesn’t like a good discount?) — but too much of this and their margins begin to collapse. In-house brands remain iconic, but finding the right franchise to sell them through has been hard for the company (and China isn’t interested). Finally, inventory has continued to increase.

Nike is having a bit of a mid-life crisis.

Guidance is what’s crushing the Swoosh Gang the most. Nike cut its full-year guidance and expects sales to fall -10% during this quarter alone. Sales in China are soft and the company is worried about “uneven” consumer trends across the globe.

Robert and I probably aren’t helping with all of the Lululemon, Rhoback, and Vuori that we wear while recording… haha.

The stock is down -12% over the last 5 years and Nike investors are furious. If you’re a Nike bull for the long-term, this may be the opportunity you were waiting for. I’ll be sitting this one out.

The Rich Habits Radar

  • 👉 AMEX already owns Resy, and now they’re buying Tock.

  • 👉 The Boston Celtics are going up for sale, likely at a $5B+ price.

  • 👉 NEOS revealed a ~13% annualized distribution rate for $IWMI.

  • 👉 Walgreens is closing a “meaningful percent” of its 8,600 stores.

  • 👉 Boeing is facing a DOJ judgment, while making a $4.7B purchase.

  • 👉 Amazon, Walmart, Target & more are flush with 4th of July deals.

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  • Suriance — Protect your family with term life insurance

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Disclaimer: This is not financial advice or a recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.