😳 Bear Market Territory

Together with Public

Good morning,

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

1. ⭐ Nvidia had the largest single-day loss of any company… ever.

2. ⭐ Budgeting advice from the expert behind “You Need a Budget.”

3. ⭐ Presidential seasonality research shows more red could be ahead.

4. ⭐ Private sector job growth is at recessionary levels.

5. ⭐ NFL betting is expected to reach $35B this season (sheesh).

Join the Rich Habits Network!

Since August 22nd’s email introducing the Rich Habits Network, we’ve added +194 more community members — and couldn’t be more excited!

Over the last few weeks…

• 218 questions have been answered inside of the Network

• 4 exclusive livestreams have been hosted by Robert and Austin

• 214 people have completed the 4+ hours of video coursework

We also just unlocked annual subscription access — which means if you didn’t make the cut to join at $77 / month, you can choose to subscribe annually and still receive that monthly rate.

Click the image below to watch a short explainer video and register to join.

Thanks again to those that have joined and we look forward to connecting directly with more of you!

Market Overview

Charts of the Week

Nvidia got crushed to start the week.

The company’s -$279 BILLION loss of market cap on Tuesday was the largest single-day decline for any company in history. According to Charlie Bilello (above) — that recent drop is bigger than the market cap of 474 companies in the S&P 500.

Down -17% over the last five days (at the time of writing) and -20% since mid-June — the darling of the stock market is officially in bear market territory. However, we’ve seen this story before (April 2024, October 2023, December 2022, etc.)

The primary catalyst was the company receiving a Department of Justice (DOJ) subpoena as they investigate antitrust activity.

There are concerns that Nvidia makes it difficult for their customers to switch to other suppliers and penalizes those that don’t exclusively use their AI chips. We’ll see if this has any merit… or if it’s merely showing that Nvidia dominates the AI game.

Insiders seemed to know this news was coming, as Nvidia was down well over -7% before the DOJ subpoena story came out. We’re curious to see if Nancy Pelosi made it out unscathed.

Then about 24 hours later — Nvidia denied that it was subpoenaed. The stock didn’t experience much relief from this news because everyone seems to be thinking the same thing — “WHAT?!”

That’s a lot of negative points — now let’s turn to the bright side.

Nvidia has been one of the most successful stories in the history of the stock market for a reason… they print cash. Its Q2 FY25 report showed Gross Profit of $22.6B and a staggering Net Profit (AKA Net Income) of $16.6B. That’s more than double the $6.18B of Net Profit they reported just a year earlier.

Oh… and it’s hard to ignore how much money Big Tech spends with them every single year:

The risks are real. This DOJ investigation will need to be flushed out. All of the companies shown above are trying to produce their own chips in the future to completely remove their reliance on Nvidia.

We both hold Nvidia and are holding it for the long-term, but we’re also mentally prepared for more downside after an epic run-up from this AI pioneer.

Together with Public

Public.com just launched a new product in its suite of yield accounts, offering easy access to high yield and corporate bonds. 

You can now open a Bond Account on Public and earn a 6.82%* yield with monthly interest payments. 

The best part is you lock in your rate at the time of purchase — meaning you can keep earning a 6.82% yield even after the Fed cuts interest rates.

In Case You Missed It…

👉 Episode 80: How to Be Intentional With Your Money

In this week’s episode of the Rich Habits podcast (linked here) — Robert and Austin spoke to…

1. Give Every Dollar a Job — Spending with confidence first requires you to have an understanding of how your funds are divided up. There’s nothing more important than actually taking the time to assign your dollars to different budget categories before the month even begins.

2. Embrace Your True Expenses — A big step you can take to future-proof your finances is thinking about the large, non-monthly expenses that have come up on your credit card statement and using a sinking fund to begin saving for them systematically.

3. Roll with the Punches — A lot of people make the mistake of thinking that once the budget is created it’s written in stone and if we don’t follow it perfectly it was a month wasted. Similar to being a coach, you should have a gameplan but also be open to switching things up after you learn new information about the team you’re playing against. Make the budget, but also be okay with switching around line items and categories when unforeseen circumstances happen.

4. Relationships Between a “Spender” & a “Saver” — Money is the #1 reason why marriages fall apart. It’s completely fine to only have one person in the relationship managing the budget, but both individuals should have a say into it’s monthly construction. Misalignment on goals is what causes problems. You must have a mutual understanding of what role you want money to play as your relationship grows.

👉 Q&A: Tax-Free Income for Kids, Our Frugal Life Hacks, & Franchise Dos and Don’ts

Here’s a link to the Q&A episode that was posted this morning.

We answered questions from the following members of the Rich Habits Network: Nicole T, Viral S, Priyanka K, Naresh P, Connor L, Donald S, Stephen C, Lesley S, Paige M, and Chris W.

The Rich Habits Podcast is available on Spotify, Apple, iHeart, YouTube, and wherever else you get your content.

Robert’s Callout

History says the next few months might be ugly.

As you can see above, the S&P 500 tends to experience immense volatility during the months of September and October during presidential election years. More specifically, we average a -4% sell off from early-September highs over a 6-week period.

Humans are creatures of habit, so seasonality is fun to research and can be helpful in assessing market trends. However — I want to be clear that seasonality is rarely something I use as an investment thesis.

We don’t know what’s going to happen tomorrow, next week, next month, or next year. Looking at historical trends can be healthy, but don’t become married to them.

If history does prove to repeat itself this time around — I want you to be prepared for volatility and red days in September and October!

Have a plan to dollar cost average and actually follow through with it.

Austin’s Callout

Private sector job growth is at recessionary levels.

According to Bank of America, the level of private payrolls as a percentage of total payroll growth is screaming “recession.”

You’ve heard us say this numerous times — the stock market is not the economy. They don’t always move together because the stock market is forward-looking and economic data is updates weeks or even months after the fact.

Here’s the reality — the economy is clearly not in the best shape. You could make the argument that the Federal Reserve has done a good job avoiding a hard-landing up to this point.

But it’s hard to ignore the fact that the unemployment rate is at its highest level since October of 2021 (4.3%), and that the number of Americans working two full time jobs has hit an ALL-TIME HIGH (464K).

It makes sense that consumer-focused stocks have underperformed over the last few years. When consumers weaken, spending is slashed, the economy slows further, the earnings of large companies suffer, and stocks can go down.

There’s a “chicken and egg” complex to the stock market and the economy. It’s always difficult to tell if the stock market has already “priced in” economic data before it comes out. You could be correct about an economic decline, but if it turns out being slightly better than what was “priced in” — stocks could actually go up. This is a similar story with the Fed’s rate cuts.

My summary — the economic data looks more and more bleak. However, I have no idea how much of that is “priced in.” I’m positioned accordingly in a diversified portfolio, and I’m very excited to dollar cost average funds if we see an increasingly weakened economy bring stocks down.

As you might remember from the Rich Habits Network livestream on Tuesday night, I’m very much focused on adding “Value Stocks” to my portfolio right now.

The Rich Habits Radar

• 👉 OpenAI might have Apple, Microsoft, & Nvidia in new fundraise.

• 👉 Snapchat CEO blames stock underperformance on slow ads biz.

• 👉 Canva is increasing its Teams subscription price by +300%.

• 👉 Disney removed its channels from DirecTV for the 2nd straight year.

• 👉 U.S. manufacturing has contracted for five months in a row.

• 👉 NFL betting is expected to reach $35B this season (sheesh).

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• Video Course — Use code “Newsletter” for 15% off

• Seeking Alpha — Optimize your portfolio

• Credit Card Matrix — Find your next favorite card to swipe

• Roi — Use code “Habits” and start tracking your net worth

• Dynasty — Protect your home in a trust

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.

Public Disclosure: Paid endorsement for Public Investing, Inc. Not investment advice. All investing involves the risk of loss, including loss of principal. Brokerage services for US Listed and registered securities, options and Bonds in a self-directed brokerage account are offered by Public Investing. ETFs, options and Bonds are available to US members only.

Bond investing carries risk including the risk that you lose some or all of your investment. High Yield bonds carry greater risk of default. All yields and prices are subject to change without prior notice. Public Investing earns a fee on every bond trade.

*A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this Account are used to purchase 10 fractional investment-grade and high-yield bonds in equal par value allocations. Yield represents avg. annualized rate of return across all bonds, before fees, for 9/04/2024. Yield can change daily, and yield at time of purchase may be different from yield shown. Return may be affected if you do not hold a bond to maturity, or if the issuer defaults or calls the bond. Bonds are securities, not FDIC insured, and may lose value. Fractional bonds come with additional risks and limitations. Public earns a fee on each Bond Account transaction. Bond Accounts are not investment recommendations; do your own research. See https://public.com/disclosures/bond-account.