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Good morning,
A quick breakdown — in case you don’t have the time.
⭐ Nonfarm payrolls are shrinking, and it’s not just blue collar jobs.
⭐ We uncovered a sophisticated investing approach with Chris Demuth.
⭐ Gold is now outperforming the stock market over the last 5 years.
⭐ Inflation is unfortunately reaccelerating.
⭐ HIMS surpassed +100% returns YTD — nearly double those of PLTR.
Market Overview
As of market open, 2/13/2025
Chart of the Week
Nonfarm payrolls are shrinking, and it’s not just blue collar jobs.
Nonfarm payrolls are a monthly count of the number of people employed in the U.S. economy — excluding certain sectors like agricultural workers, military, volunteers, and unpaid household workers.
When we think about nonfarm payrolls decreasing, our mind typically goes to retailers closing their doors or construction workers that are being impacted by a sluggish housing market.
However, it’s clear that the decrease has extended into the tech sector:
Software developer jobs have plunged -70% from their peak in 2022, but this isn’t just about the economy or the end of “free money” — something bigger is happening. The hard reality is the traditional middle-class engineer is disappearing because they’re not needed anymore.
One skilled developer using AI tools like GitHub Copilot can now do the work of entire teams from just five years ago. That’s insane!
Microsoft just reported the highest revenue per employee in history, reflecting this shift.
The entry-level engineer as we knew them is becoming more obsolete. Instead, we now have product builders — people who happen to code but are focused on shipping full products, often solo, in just days. Meanwhile, elite engineers are thriving — making more money than ever.
However, their work has shifted to revolutionary technologies like AGI at OpenAI, rockets at SpaceX, and self-driving at Tesla.
Make no mistake — software development isn’t slowing “doing in” this country. The way in which Big Tech companies achieve their goals is what’s changing. And the middle-class engineers are the ones getting the short end of the stick.
Being a "software engineer" in 2025 doesn’t mean what it did in 2020. This serves as merely one example of how AI is changing industries.
We remain on the path of seeing a transformed workforce in the United States. We encourage you all to keep an eye on this downward trend of nonfarm payrolls as we head into a volatile 2025.
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In Case You Missed It…
In this week’s Monday-morning episode of the Rich Habits Podcast (linked here) — Robert and Austin interviewed Chris Demuth. He’s a stock analyst and veteran hedge fund manager that’s always hunting for value where others aren’t looking.
Here’s what they talked about:
Understanding Value — Chris doesn’t just look at stock prices, he is laser-focused on finding very unique opportunities. Chris looks at companies that are undergoing corporate change or other real-world events that are going to change the course of the company. For example, he made a killing off of holding Twitter (TWTR) heading into their acquisition from Elon Musk.
Risk Management and Position Sizing — A central theme is managing risk through proper position sizing. Chris’ experience has taught him how to carefully assess downside risks and allocate funds accordingly. The key is to size positions based on risk tolerance, understanding that even high-conviction ideas don’t have to represent a massive portion of your portfolio.
Maximizing Wins — Chris spoke about the importance of being able to admit that you’re wrong. Investors should make decisions with the flexibility to adapt and an understanding that not all bets will pay off. The ability to lose multiple times in a year and still have a profitable net outcome is essential for long-term success.
Chris Demuth is an extremely sophisticated investor. As Robert mentioned at the beginning of the episode, this is one of our more complex episodes and it might be helpful to re-listen to certain sections.
If you’re participating in single-stock picking — remember to manage your risk and understand your personal investment goals!
Here’s a link to Chris’ Seeking Alpha page and X account.
Here’s a link to the Q&A episode that was posted this morning.
We answered questions from: Elizabeth N, Mitchel S, McKinsey R, Nicolas N, Chris S, Matt M, Blake E, and JJ.
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
Gold is now outperforming the stock market over the last 5 years.
I hate to say I told you so, but Rich Habits listeners know that I’ve remained invested in gold for many years now. Over the last few weeks, demand has been surging.
In just two months, COMEX gold vault inventories jumped by +15 million ounces — a +115% increase, surpassing 2020 pandemic levels. January alone saw over 19,000 contracts delivered, a record-breaking buying spree.
Meanwhile, London gold vaults are being rapidly depleted, with withdrawal times stretching to eight weeks. The U.S. also shifted from being a net gold exporter to a net importer in late 2024.
And as you likely already understand — rising gold demand leads to higher gold prices.
When the market is uncertain about the future, large institutions often flock to the most reliable precious metal. When major institutions flock, demand surges. And when demand surges — prices rise.
Gold prices have soared +40% over the past year, defying rising interest rates and a strong dollar. This level of gold accumulation has never happened before — something major is unfolding in the global gold markets.
Even China is getting in on the action.
This is why I’m always talking about being diversified in long-term winners. I love stocks, Bitcoin, other cryptos, and alternative investments. At times — fake gurus have told me staying in gold meant I was missing out on upside.
My crypto is down over the past month, my stocks are flat, and my gold is surging. Diversification is what helps me sleep well at night!
Austin’s Callout
Inflation is unfortunately reaccelerating.
At an annual rate of +3.0%, we’re seeing hotter-than-expected inflation for consumers (shown above).
Car insurance is up +11.8%, transportation +8.0%, and even basics like dairy (+6.1%) and utilities (+4.9%) have seen significant price hikes. Rent, homeownership costs, and eating out continue to climb between +3-4% as well.
On top of that, the Consumer Price Index (CPI) just saw its biggest monthly jump since August 2023, rising +0.5%. Inflation has been compounding for over three years — and now it's accelerating… again.
To make things worse, we’re also witnessing surging inflation for producers (shown below). In fact — Thursday’s Producer Price Index (PPI) data revealed its highest level since February of 2023…
Over the past year, the all-items Producer Price Index increased +3.5% — well ahead of the Fed’s objective. Futures pricing indicates the market now does not expect the Fed to cut interest rates again until October.
Coming into this year, we wanted to see a landscape in which we were focusing on jobs data — not inflation. The market likes when things are predictable, and the base case for 2025 was that inflation would slowly, yet surely, decrease.
At the moment — this is not the case. Inflation updates from this week further support that volatility is here to stay.
No — this doesn’t mean I’m selling out of my positions.
It means that I’m expecting even more volatility than originally expected — and I’m definitely going to pay closer attention to Trump’s tariff activities + how much federal spending will truly be slashed.
Here’s a quick breakdown I wrote a month ago explaining why interest rate cuts are good for the stock market, and how reaccelerating inflation is prohibiting them. Remember, this is with one month old data.
The Rich Habits Radar
👉 Inflation rose to +3% in January — with egg prices hitting record highs.
👉 Robinhood’s record Q4 saw revenue surge to over $1B for the first time ever.
👉 Meta has traded green for 18 consecutive days – a record for Mag 7 stocks.
👉 HIMS surpassed +100% returns YTD — nearly double those of PLTR.
👉 Trump is prepping reciprocal tariffs, called Thursday “a big one.”
👉 McDonalds posted biggest U.S. sales decline in 10 years — still +5% YTD.
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