📉 The Recession Indicator has Triggered

Together with Public

Good morning,

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

1. ⭐ The Volatility Index spiked to 65 this week.

2. ⭐ What NOT to do during times of market volatility.

3. ⭐ The “Sahm Rule” recession indicator was officially triggered.

4. ⭐ Amazon delivered $53 billion in free cash flow last year.

5. ⭐ Nvidia (rather quietly) made a lot of YouTubers very angry.

6. ⭐ Explore the most powerful student loan search: Sparrow.

Market Overview

Chart of the Week

The Volatility Index spiked to 65 during Monday’s chaotic sell-off.

The CBOE Volatility Index (VIX), often referred to as Wall Street’s "fear gauge," experienced a significant surge on Monday — reaching its highest level since the pandemic market plunge in March 2020.

The spike coincided with a sharp global equity sell-off and a notable drop across all major indices following a disappointing July jobs report. Traders rushed to add downside protection through put options, leading to an initial scramble that drove the VIX higher.

Senior wealth advisor Jim Carroll noted that traders were shifting out of short-term options into longer-term ones during this period of market instability. Despite the subsequent cooling of the VIX, the index remains well above its longer-term average of 20, reflecting continued market volatility.

So what the heck do we do now?

The first thing you all need to remember is that you’re being tested. Every legendary investor and every business leader with a boatload of their own stock all faced the same feeling on Monday.

Stocks go up, and stocks go down. Seeing red in your portfolio can feel painful. However, if you’re willing to hold your investments for the long-term then you’re probably seeing stocks, ETFs, and cryptocurrencies you love on a -15% off sale!

Tactically speaking — this volatility will likely continue. As you’ll read in the rest of this post, the economy is facing a few blaring issues. Not to mention global conflict, it’s an election year, and the Japanese Carry Trade is unwinding.

While we have no idea when the market might “bottom,” our plan remains the same — dollar cost averaging into the ETFs we know and love. Personally, we’re focusing on NEOS’ ETFs as this volatility fuels their income generation for investors.

For example — QQQI (NEOS Nasdaq-100 High Income ETF) has a distribution yield of nearly 15%. That means even if our timing isn’t perfect and the Nasdaq falls further, we’re getting that tax efficient ~15% distribution throughout the next year regardless of price action.

Other areas of interest include Bitcoin, Gold, Health Care, Utilities, and Defense. This is all about riding out the volatility and sticking to the plan — which is why NEOS ETFs are attractive to us during these times: SPYI, QQQI, IWMI, BNDI, and CSHI.

Together with Public

Public was one of the first companies to believe in Rich Habits. As the podcast, this newsletter, and the overall following all continue to grow — we want to make sure the spotlight remains on this special sponsor.

Public allows you to invest in stocks, bonds, options, crypto, and more — all in one place. Their platform is very clean — and you can use advanced tools / AI-powered insights to make informed investing decisions.

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Oh – and they are reliable during the most volatile of times…

In Case You Missed It…

👉 Episode 76: Markets Are Crashing… What NOT To Do

In this week’s episode of the Rich Habits podcast (linked here) — Robert and Austin discussed the recent volatility in the stock and crypto markets, as well as shared a few things NOT to do…

1. Do NOT Listen to the News — let’s face it, we’ve all fallen victim to turning on CNBC and getting sucked into doom and gloom commentary. Don’t get us wrong, we want everyone to be informed investors — however, we don’t want you to fall for crazy clickbait titles and end up panic selling your investments.

2. Do NOT Stop Dollar Cost Averaging — during volatility is when investors should get excited! We’re able to continue to deploy our capital when our favorite stocks and indices are trading at a discount. Dollars cost averaging means buying the ups and the downs.

3. Do NOT Time the Market — during times of heightened volatility, you might feel tempted to try and time the market. Don’t make this mistake — 78% of day traders lose money over a 12-month time period.

In summary, volatility is scary. But by having a plan with your money, keeping the CNBC talking heads off your TV, and continually buying the ups and downs you’re going to be just fine. Every single market correction in history has turned into a new all-time-high eventually!

👉 Pre-IPO and Angel Investing Webinar on Thursday, August 15th

Thanks to the 700+ of your that have already signed up for our webinar on 8/15 (one week from today). Join us as we host our next big webinar — all about pre-IPO & angel investing! We’ll leave ample time for questions from the audience, too!

👉 Q&A: Should I Buy an Investment Property, YieldMax ETFs, & Investing in My 70s

Here’s a link to the Q&A episode that was posted THIS MORNING.

We answered questions from Carson O, Braulio P, Alex J, Cody W, Mike W, Brett S, and Asmahdaka

Reply to this email with your questions so that we can answer them in the next week’s edition! Be sure to watch the video version of our podcast on Spotify — or simply listen on Apple Podcasts, or wherever you listen to podcasts.

Robert’s Callout

The Sahm Rule has been triggered.

The “Sahm Rule” is a recession indicator created and named after Claudia Sahm, a macroeconomist who worked at the Federal Reserve and the White House Council of Economic Advisers.

According to the Sahm Rule, the early stages of a recession is signaled when the three-month moving average of the US unemployment rate is half a percentage point (0.5%) or more above the lowest three-month moving average unemployment rate over the previous 12-months.

Now with the unemployment rate at 4.3%, the Sahm Rule has officially gone into effect.

The Sahm Rule is widely recognized for its accuracy, simplicity, and ability to quickly predict the onset of an economic recession. Below you can see a table that shares the specific dates the Sahm Rule was triggered, what the unemployment rate was, and then when a recession officially started after it was triggered.

In some instances, a recession didn’t start for another 8-months. In other instances, a recession started as soon as 30-60 days later. Now that the Sahm Rule has been triggered, we have no idea how long until an official recession is announced.

Austin’s Callout

Amazon’s AWS hits $26.3 billion in revenue.

During times of market volatility and economic uncertainty, images like the one shown above help me realize that I’m investing into durable businesses — no matter the stock price.

Amazon reported earnings last week — and it was a mixed bag.

However, Amazon seems to be positioned to deliver sustainable operating margin growth over a multi-year period that exceeds their Megacap peers including Meta Platforms and Alphabet. The underlying revenue mix shift to higher-margin business segments like AWS and Advertising is structural and will contribute to billions of dollars in incremental profit each year.

The company has delivered $53 billion in free cash flow to shareholders over the last 12-months, and this is expected to accelerate throughout 2025 and beyond.

As investors, it’s up to us to see beyond the near-term volatility and have faith in the underlying fundamentals of the businesses we own equity in.

The Rich Habits Radar

• 👉 Google’s search business could face a monopoly breakup.

• 👉 Elon Musk and X CEO Linda Yaccarino declared war on advertisers.

• 👉 Disney’s streaming business finally turned a profit.

• 👉 Airbnb lowered their revenue expectations by -$170M for 2024.

• 👉 Nvidia was controversially caught scraping YouTube data to train AI.

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