Together with Public

Happy Thursday,

The stock market has been a complete rollercoaster this week. Read on for the full breakdown!

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

1. ⭐ Trial the Rich Habits Network for FREE for 7 Days (seriously)!

2. ⭐ The Consumer Price Index (inflation) fell by -0.1% in March.

3. ⭐ We discussed the “Art of Staying Rich.”

4. ⭐ The 10-Year Yield came roaring back this week.

5. ⭐ Earnings compression is the biggest risk to the stock market.

6. ⭐ Amazon’s CEO said generative AI will change all customer experiences.

Market Overview

Chart of the Week

The Consumer Price Index fell -0.1% in March; the 12-month rate is now +2.4%.

Headline inflation eased more-than-expected in March as President Trump has been playing hokey pokey with tariffs against U.S. trading partners. As a quick reminder, the consumer price index is what the media is talking about when they say “inflation.” It measures a broad array of goods and services across the U.S. economy including food, energy, vehicles, medical care, transportation, and more.

Declining energy prices kept inflation down, as we experienced a -6.3% drop in gasoline prices during March. Shelter prices, the most stubborn component of inflation, increased just +0.2% in March (+4.0% on an annual basis) — the smallest gain since November 2021.

The nature of the tariffs have led economists to expect a significant bump in inflation, but that assumption is now less clear. With that being said, US Core CPI Inflation is back below +3% for the first time in 4 years. This should be enough for the Fed to resume cutting interest rates in June.

Together with Public

Today’s Rich Habits Newsletter is brought to you by Public — the platform where real investors can manage their wealth. It’s designed with all the asset classes and tools you need to level up your portfolio. 

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In Case You Missed It…

👉 Episode 112: The Art of Staying Rich

In this week’s Monday-morning episode of the Rich Habits Podcast (linked here) — Austin and Robert shared their perspective on the “Art of Staying Rich.”

Here’s what they talked about:

1. Live Below Your Means — This is hands-down the best advice anyone could ever act upon. By living below your means on a monthly basis, you create margin in your budget to save and invest — allowing you to build wealth over time. The key is to not let lifestyle creep ruin your chances of retiring with dignity. Consider automating your saving and investing every month; out of sight, out of mind!

2. Appreciating Assets vs. Depreciating Assets — Cars, boats, and jet skis… these are all money pits disguised as status symbols. According to Kelly Blue Book, cars lose -39% of their value in the first three years. And if you’re taking on high-interest debt to own one of these depreciating assets, that’s a double whammy. Before you make a big purchase, ask yourself “Will this add or subtract from my net worth?”

3. Diversify Your Investments — During times of market volatility (much like what we’re experiencing thus far in 2025) diversification is your shield. By diversifying your investments, your portfolio is somewhat protected when the US stock market takes a beating. Real estate, fine artwork, precious metals, and other non-correlated asset classes ensure long-term wealth building.

👉 Q&A: Market Volatility, Raising Money from Investors, & Our Fav Credit Cards

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

We answered questions from: Alex, Danny, Daniela, Aaron, Zachary, and Samuel.

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

The 10-Year Yield came roaring back this week.

After falling nearly -1.0% since President Trump’s Inauguration on January 20th, the 10-year yield on US Treasuries came roaring back — climbing +0.5% just this week. As a reminder, bond yields are inversely correlated to bond prices. The reason the yield has been trending lower year-to-date is because of the stock market’s uncertainty. As investors sell their volatile stocks for stable bonds, the prices of those bonds tend to rise (supply and demand).

However, when Trump announced his 90-day pause on tariffs, investors aggressively sold their bonds in favor of stocks — causing bond prices to fall and yields to rise (as shown above).

President Trump has made it clear that lower interest rates is one of his top priorities. On April 4th, Trump called on Jerome Powell to “cut interest rates” via a post on Truth Social. In an interview at the White House yesterday, Trump basically confirmed the bond market was the reason for the 90-day pause, stating “I was watching the bond market. It’s very tricky. If you look at it now it’s beautiful.”

Austin’s Callout

Earnings compression is the biggest risk to the stock market.

Over the last several boom and bust market cycles in the stock market, the P/E ratio of the S&P 500 has peaked as high as 24X and bottomed as low as 9X. These peaks and troughs are then amplified by higher/lower earnings expectations by the banks on Wall Street.

Two things happen during economic recessions — investors get scared and corporations make less profit. When investors get scared, the “P/E ratio” (as shown on the Y-axis of the graph below) shrinks — in our case, from 23X in January to 19X now. When corporations make less profit, their “earnings per share” (as shown on the X-axis of the graph below) decline — in our case, from $270 in January to possibly as low as $250 now.

To start the year, Wall Street was expecting $270 in earnings per share by the S&P 500. We were trading around a 23X P/E ratio ($6,150 in late-February). If we experience an economic recession, not only will scared investors cause the P/E ratio to compress to below 16X, but the earnings per share expected by Wall Street could also decline to $250 or lower.

I’m not saying the S&P 500 will go down to $3,680 from the $5,260 it’s trading at right now (-30% decline from current prices) — but math tells us it’s very possible. Be prepared for anything. I do not believe we’re out of this volatility just yet. Approach the market with patience and a lack of emotion. Please have a plan to automate your investing, and do not have knee-jerk reactions. Remember, single stocks always fall harder than indices.

The Rich Habits Radar

• 👉 Oil prices plunged to four-year low — Brent crude dropped below $60.

• 👉 Delta pulled its FY25 guidance due to economic uncertainty.

• 👉 Apple supposedly flew in iPhones from India to the U.S. to avoid tariffs.

• 👉 Amazon’s CEO said that generative AI will change all customer experiences.

• 👉 TSMC posted Q1 revenue of $25.5B — up +42% YoY.

• 👉 Musk slammed Trump’s top trade advisor, Peter Navarro.

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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. Alpha is an AI research tool powered by GPT-4. Output from Alpha is not investment advice and should be verified for accuracy. 

*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 8.20% yield is the average, annualized yield to worst (YTW) across all ten bonds in the Bond Account, before fees, as of 4/10/2025. 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. See Bond Account Disclosures to learn more.

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