💰 Bitcoin All-Time Highs!

Together with Public

Good morning,

Yes, it’s Friday — and we normally publish our newsletter on Thursdays. We had a very busy week, so we appreciate your patience. We’ll be back to our normally scheduled programming next Thursday!

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

1. ⭐ Bond investors are worried about a Trump presidency (inflation).

2. ⭐ We shared six tax-saving strategies you can implement before year-end.

3. ⭐ Bitcoin has broken out to new all-time highs!

4. ⭐ Consumer sentiment remains low, despite all-time highs in the S&P 500.

5. ⭐ Tech leaders & CEOs congratulated Trump on his victory.

6. ⭐ Join 490 other podcast listeners inside the Rich Habits Network!

Market Overview

Charts of the Week

The Federal Reserve cut interest rates by -0.25% on Thursday.

Yesterday’s rate cut brought interest rates to 4.75%, which marks the lowest level since February 2023. According to the CME FedWatch Tool, the market expects interest rates to be cut again by -0.25% in December. They’re also betting on another -0.50% to -1.00% in cuts to take place during 2025.

Despite the Federal Reserve cutting rates twice now since September, mortgage rates are skyrocketing — up +0.95% in only a few short weeks. Additionally, 10-year treasury note yields rose by +0.8% since Monday.

What’s causing the disconnect in rates?

There’s an old adage in the markets that goes a little something like this… “Stock investors are optimists, while bond investors are pessimists.”

After Donald Trump won the Presidential election, stocks soared. Stock investors are saying to themselves “Lower corporate taxes means more corporate profits — stocks go up!” Simultaneously, bond investors are saying to themselves “All of this excitement about deregulation and tariffs could mean higher inflation — I need a higher return on my bonds to account for that!”

That’s the disconnect — bond investors expect to be paid more in interest in exchange for lending their money to the government… interest they hope will offset future inflation.

Does any of this matter if the stock market just keeps going up?

Higher interest rates absolutely have an impact on the stock market, especially when it comes to valuation multiples (how much an investor is willing to pay to own a share of a company’s annual profits).

For now, stock investors seem much more focused on the potential of a corporate profits boost (we went into much more detail about this in last week’s edition), deal making, and deregulation rather than medium-term inflation.

The more bond investors continue to worry about potential inflation impacts, the higher 30-year mortgage rates might rise — as mortgage rates have historically been tied to 10-year yields.

Together with Public

Public launches the Bond Account, offering a 6.94%* yield.

You may know Public as the all-in-one investing platform where you can build a multi-asset portfolio of stocks, options, bonds, and more. Now, Public has taken another step in making fixed-income investing more accessible with the launch of its Bond Account.

At a time when bond yields are at their highest levels in years, the Bond Account allows you to lock in a 6.94%* yield. In just a few clicks, you can now invest in a diversified portfolio of ten investment-grade and high-yield bonds that generate 20 interest payments annually.

With the Fed preparing for what many expect to be a series of rate cuts, the Bond Account offers a timely opportunity to lock in today’s historically high bond yields.

In Case You Missed It…

👉 Episode 89: Our Favorite Tax-Saving Strategies for 2024

In this week’s episode of the Rich Habits podcast (linked here) — Robert and Austin shared their six favorite tax-saving strategies for 2024. You still have time to implement these strategies before the end of the year, so be sure to give the episode a listen!

Here were their strategies:

1. Tax-Loss Harvesting — if you’re sitting on a few losers in your portfolio, don’t forget about this strategy before the end of the calendar year. By selling your stocks at a loss, you’re able to offset other capital gains (as well as up to $3K in earned income).

2. Health Savings Account — by contributing up to $4,150 per year to this account, you’re able to write the contributions off against your taxable income. The HSA is triple tax advantaged — which means your contributions are tax-free, they grow tax-free, and you can spend your profits tax-free.

3. Donating Stocks — sitting on some unrealized capital gains? Consider donating a portion of your profits to a qualified non-profit and enjoy that warm fuzzy feeling of helping others while also lowering your tax bill. It doesn’t matter your cost-basis, what matters is the current price of the donated investment — allowing donors to really make their dollars count!

4. Maxing Out Retirement Contributions — according to the IRS, we’re allowed to contribute up to $23,000 toward our 401(k) retirement accounts as well as $7,000 toward our Traditional IRAs. Both of these contributions are tax-free, which means you’re able to write them off against your taxable income.

5. Home Office Deduction — work from home on your side hustle or small business? Don’t forget to write off your home office! For simple math, take the square footage of your home office and multiply it by $5 — up to $1,500 total. That’s a few hundred in taxes saved!

6. Adjust Your Withholdings — find yourself always getting massive ($1,000+) tax refunds? Adjust your federal withholdings to make sure more of your hard-earned cash is deposited into your bank account every paycheck.

These are just the cliff notes — be sure to listen to the entire episode to get all of the details!

👉 Q&A: Selling a Business for $2.8M, $2K of Side Hustles in 3 Weeks, & How to Structure Your LLCs

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

This episode was really exciting as we were able to answer questions from countless podcast listeners — and one listener who just sold their business for $2.8 million! Congrats, Cindy :)

You can submit questions for these episodes by asking them inside of the Rich Habits Network, replying to this email, or sending us a DM on Instagram.

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

Robert’s Callout

Bitcoin hit new all-time highs ($76,500) — with more to come!

In response to the election results Tuesday night, the price of Bitcoin skyrocketed +$9,000 in 24 hours to new all-time highs. Earlier this year, President Trump attended the Bitcoin Conference in Nashville, TN. At this conference, we shared countless pro-crypto views and ideas as well as made a promise to fire anti-crypto SEC Chair Gary Gensler when in office.

As you all might remember, Gary Gensler has notoriously blocked Bitcoin ETFs from being listed on the NYSE. Throughout him and Jay Clayton’s (previous chair) tenure, they blocked more than 20 Bitcoin ETF applications dating back to 2017 before finally approving them earlier this year.

This approval was only made after a court ruled in favor of Grayscale Investments, which challenged the SEC’s earlier rejections.

As you can see in the image above, from the recent market cycle bottom Bitcoin is exactly where it’s supposed to be (purple line) in this market cycle. Assuming we follow historical return patterns, we could see a $100K Bitcoin sooner than we might think!

Austin’s Callout

Despite all-time highs in the stock market, consumer sentiment remains low.

According to the University of Michigan Consumer Sentiment Index — which measures the feelings and attitudes of consumers about their own financial situation, the general state of the economy, and their expectations for both the short-term and long-term economic future — remains near early-2023 levels.

This is an important reminder that the stock market is NOT the economy — despite new all-time highs in most every asset class… unemployment continues to rise, consumer sentiment remains low, and mortgage rates are marching higher.

In my humble opinion, this major disconnect is a wonderful illustration of the difference between the “Consumer” class and the “Investor” class. Consumers, who are up to their eyeballs in high-interest debt, remain pessimistic as they try and make ends meet — leaving nothing to be invested. Investors continue to experience back-to-back record years in the stock and crypto markets.

The Rich Habits Radar

• 👉 Tech leaders congratulated Trump on his victory across social media.

• 👉 The Fed cut rates by 25 basis points, Jay Powell says he won’t step down.

• 👉 Applovin rocketed +46% in a day after crushing its earnings report.

• 👉 Nvidia surpassed Apple again to become the world’s most valuable company.

• 👉 Reddit continues to soar as company posts first profit as a public company.

• 👉 Hims & Hers rallied after growing subscriber base to 2 million (+44% YoY).

Check ‘Em Out

Below is a list of our featured partners that we’ve vetted — with whom we have a personal relationship. Browse these exclusive offers curated just for you:

• Budgeting — Download our FREE Budgeting Template

• High-Yield Cash Account — Earn 4.6% on your savings

• Public — Trade stocks, options, and crypto

• Frec — Use direct indexing to invest & save on taxes

• Grifin — Automatically buy stock where you shop

• Acorns — Get $35 free when you subscribe

• Suriance — Protect your family with term life insurance

• 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 Disclosures: All investing involves risk. Brokerage services for US listed securities, options and bonds in a self-directed brokerage account are offered by Public Investing, member FINRA & SIPC. Not investment advice.

*This yield is the average, annualized yield to worst (YTW) across all ten bonds in the Bond Account, before fees, as of 11/8/2024. Because the YTW of each bond is a function of that bond’s market price, which can fluctuate, your yield at time of purchase may be different from the yield shown here and your YTW is not “locked in” until the time of purchase. A bond’s YTW is not guaranteed; you can earn less than that YTW if you do not hold the bonds to maturity or the issuer defaults.

A Bond Account is a self-directed brokerage account with Public Investing, member FINRA/SIPC. Deposits into this account are used to purchase 10 investment-grade and high-yield bonds. The 6.94% yield is the average, annualized yield to worst (YTW) across all ten bonds in the Bond Account, before fees, as of 11/8/2024. A bond’s yield is a function of its market price, which can fluctuate; therefore a bond’s YTW is not “locked in” until the bond is purchased, and your yield at time of purchase may be different from the yield shown here. The “locked in” YTW is not guaranteed; you may receive less than the YTW of the bonds in the Bond Account if you sell any of the bonds before maturity or if the issuer defaults on the bond. Public Investing charges a markup on each bond trade. See our Fee Schedule. 

Bond Accounts are not recommendations of individual bonds or default allocations. The bonds in the Bond Account have not been selected based on your needs or risk profile. You should evaluate each bond before investing in a Bond Account. The bonds in your Bond Account will not be rebalanced and allocations will not be updated, except for Corporate Actions.

Fractional Bonds also carry additional risks including that they are only available on Public and cannot be transferred to other brokerages. Read more about the risks associated with fixed income and fractional bonds. See Bond Account Disclosures to learn more

While corporate bond yields should fall in reaction to a Federal Reserve rate cut, we cannot know whether that will be true of the bonds in the Bond Account, how quickly bond yields will respond, or how much they will decline.