Together with Public

First off — a major shoutout to Public for their massive announcement this week!

Direct indexing is a way to invest that mirrors a stock market index, but with a twist. Instead of gaining exposure to an index, like the S&P 500 or Nasdaq-100, by purchasing shares of the ETFs that track them (VOO, QQQ, etc) — you’re literally buying the individual stocks that make of the index itself.

If you’re direct indexing the S&P 500, you own all 500 constituents of the index, not just one share of VOO. If you’re direct index the Nasdaq-100, you own all 100 constituents of the index, not just one share of QQQ. Same exposure, same performance.

Their platform then gives you customization options to add or subtract specific names, as well as the ability to automatically conduct tax-loss harvesting on underperforming positions.

Direct indexing is typically reserved for the wealthiest individuals — requiring $100K+ of assets to get started on most platforms. On Public, you can start with just $1,000. It’s incredible to see retail investors winning once again thanks to Public!

Here’s a fun quote we saw shared online yesterday. We hope you like it :)

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Read on for this week’s breakdown of the markets!

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

Investors are now pricing in 3 rate cuts in 2025.

ADP private payroll data was released yesterday, and it’s not pretty.

During the month of September, the US private sector shed -32,000 jobs, the worst print since March 2023. If that’s not bad enough, they revised the August private payrolls from a gain of +54,000 down to a loss of -3,000.

In August, Jerome Powell took the stage in Jackson Hole, WY to share the Fed’s latest perspective on interest rates. For the first time in years, the balance of the Fed’s dual mandate — inflation and employment — is shifting.

Since 2022, the Fed has been laser-focused on bringing down inflation. Now, with inflation holding closer to the 2–3% range and unemployment beginning to tick higher, Powell made clear that risks to the labor market have become more important than inflation.

He described the labor market as being in a “curious kind of balance,” where both supply and demand are cooling — raising the danger that “downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.”

Unfortunately, we’re starting to see those risks play out.

In response, the Fed is using the only tool in their tool belt: interest rates. By cutting rates, the Fed hope to encourage borrowing and spending — catalyzing businesses to invest and hire, and ultimately cushioning the job market.

Today’s Rich Habits Newsletter is brought to you by Public, the investing platform that combines a broad range of asset classes with the tools you need to build and manage your wealth. 

From stocks to bonds, options, crypto, and more—it’s all here. You can even generate fixed income with a suite of yield accounts. If you’re looking for more than just a place to trade, discover the investing platform that’s as serious about your money as you are.

👉 Episode 137: Trying to Build The Next Trillion-Dollar Company

In this week’s Monday-morning episode of the Rich Habits Podcast (linked here) — Austin and Robert sat down with Ilya Pozin, founder and CEO of Telly.

Ilya is a serial disruptor who helped create Pluto TV, the Free Ad-Supported Television (FAST) market, which now reaches over 80 million viewers and generates $1B+ in annual revenue. With Telly, he’s taking disruption further — giving away dual-screen TVs for free, funded entirely by advertising.

Here’s what they covered…

As always, the goal is simple: we want to bring you insights from entrepreneurs redefining their lines of work. Ilya’s perspective offers a rare look at how vision, grit, and strategic risk-taking can potentially change an entire television industry.

👉 Q&A: My Dad Gifted Me A House, Closing Credit Cards, & Mortgage Worries

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

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!

Government shutdowns are historically ‘nothing burgers’ for the stock market.

Government funding lapsed early Wednesday morning after the White House and lawmakers failed to reach a spending deal, triggering a shutdown that is expected to halt some federal services and put hundreds of thousands of federal workers on furlough.

On the surface, this sounds like a terrible thing for the stock market. After all, a government shutdown negatively impacts small business owners by -$1B in economic value across the country every single week.

But, what does history tell us?

Historically speaking, the stock market tends to recover and trend higher just fine — even when you include the government shut down in 2019! During the government shutdown, it’s a coin flip as to what the S&P 500 will do — green or red. However, over the subsequent year the S&P 500 is in the green 86% of the time with an average return of +12.7%.

Consumer discretionary stocks are breaking out.

Sometimes instead of solely focusing on the price performance of the S&P 500 or specific sectors of the stock market, I like to hone in on how one sector of the market is performing in relation to another.

Historically speaking, some sectors of the market perform better than others during certain economic times.

For example, during times of prosperity consumer discretionary stocks do well — as more Americans are spending their discretionary income on goods and services. During times of recessions, consumer staples and healthcare tend to do well — as those companies are able to continually generate profits given the fact their goods and services are considered necessities.

Above is a chart that I find fascinating — it illustrates the relative strength between consumer discretionary stocks when compared to consumer staples. Remember, consumer discretionary stocks outperform during times of prosperity — which is exactly what this chart is showing us as the relative strength is hitting new all-time highs.

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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.

Public Disclosures: All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Public Investing, Inc., member FINRA & SIPC. Cryptocurrency trading services are offered by Bakkt Crypto Solutions (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative and involves a high degree of risk. Cryptocurrency holdings are not protected by the FDIC or SIPC.
As part of the IRA Match Program, Public Investing will fund a 1% match of: (a) all eligible IRA transfers and 401(k) rollovers made to a Public IRA; and (b) all eligible contributions made to a Public IRA up to the account’s annual contribution limit. The matched funds must be kept in the account for at least 5 years to avoid an early removal fee. Match rate and other terms of the Match Program are subject to change at any time. See full terms here.

See terms and conditions of Public’s ACATS & IRA Match Program. Matched funds must remain in the account for at least 5 years to avoid an early removal fee. Match rate and other terms of the Match Program are subject to change at any time.