Hi Everyone,
Thank you for your patience — we ended up skipping last week’s newsletter in preparation for Christian Blackwell’s wedding! Christian is the executive producer of the Rich Habits Podcast, and Austin’s long-time business partner.
Christian (not pictured), Austin, Chris Camillo, Robert, and Eric Toone all had a blast hanging together in Richmond, VA!
Additionally, thank you for all of the incredible feedback we’ve received on our “Rich Habits Radar” Friday Episodes — we’ve had a blast filming them!
Make sure you’re following us on Spotify, Apple, YouTube, or wherever else you watch the show! We want you to get notified when each new episode is released.
A quick breakdown — in case you don’t have the time.
⭐ The Leading Economic Index has collapsed; no recession has been declared.
⭐ We learned about the GENIUS Act and what it means for our money.
⭐ The U.S. Stock Market hits its most expensive valuation in history.
⭐ Chinese Stocks experience largest ever monthly inflow from hedge funds.
⭐ Nvidia's stock fell after missed data center revenue.
Market Overview
As of market open 8/28/25
Chart of the Week
The Leading Economic Index has collapsed; no recession has been declared.
The blue line above represents the Leading Economic Index — a forward-looking measure of the strength of the US economy. By tracking 10 key economic components, the Leading Economic Index identifies recessions 6-12 months before they officially happen.
The red line is the Federal Funds rate. During 2020, the Federal Reserve cut the Federal Funds rate dramatically in efforts to stimulate the economy. After the country experienced red hot inflation (due to supply chain constraints, money printings, etc.) the Federal Reserve hiked interest rates at the fastest pace in 40 years.
As you can see above, every time the Leading Economic Index has declined by more than 10% (1974, 1979, 1991, 2001, 2008, and 2020), the Federal Reserve aggressively began cutting interest rates to stimulate the economy in efforts to sidestep a recession.
For 50 years, without fail, the Fed cut interest rates if the LEI dropped by more than -5% from it’s recent all-time high… until now.
The latest cycle — 2022 through 2025 — is anomalous: the LEI has collapsed persistently, even deeper than in some prior recessions, yet the NBER hasn’t declared a downturn.
Last week, Jerome Powell took the stage in Jackson Hole to announce his recent policy shift — now laser-focused on ensuring unemployment stays as low as possible. Remember, the Fed has a dual-mandate: keep inflation low while simultaneously keeping unemployment low.
Given the recent policy shift, inflation very well could rear its ugly head back up. Additionally, what’s happening behind the scenes isn’t good for the Leading Economic Index — slow wage growth and increased delinquencies on debt (small and mid-sized banks).
What’s the solution?
Be a net-buyer of assets — we’ve talked about this a lot over the last several months inside of the Rich Habits Network, and the Fed’s “flip flop” has only solidified its importance.
If inflation reaccelerates, cash won’t save you — equities, gold, and Bitcoin will. You need to own assets that increase in value over time.
In Case You Missed It…
In this week’s Monday-morning episode of the Rich Habits Podcast (linked here) — Austin and Robert sat down with Nick Elledge, the co-founder of Stablecore.
Nick is an accomplished entrepreneur and stablecoin expert. Considering the GENIUS Act was just enacted into law, we thought no better time than now to learn about stablecoins from people building in the space!
Here’s what they covered…
The GENIUS Act Sets Clear Rules — they must be fully backed one-to-one with safe assets, can only be issued by regulated financial institutions, are not FDIC-insured deposits, cannot pay interest, and are not considered securities. This framework aims to avoid collapses like Terra Luna and FTX while legitimizing stablecoins in mainstream finance.
Stablecoins Promise Lower Payment Costs — traditional processors like Stripe charge business owners up to 3% and process $1.4 trillion annually. By using stablecoins, business owners can save tens of billions in fees per year. Major players such as Visa, Mastercard, and Stripe are already investing in stablecoin infrastructure to stay ahead of the trend.
Tokenized Assets Are Coming — Looking ahead, tokenized deposits and tokenized assets (like stocks, ETFs, and real estate) will allow 24/7, instant, global settlement while retaining FDIC protection and yield. Nick views this shift as the future of finance, with Stablecore working to power banks through that transition.
As you all know, we take pride in hosting industry experts on our show — allowing all of us to learn together. We look forward to having Nick back on soon!
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!
Robert’s Callout
The U.S. Stock Market hits its most expensive valuation in history.
For the first time in history, the stock market hit a new all-time high when comparing it’s trailing price-to-earning, forward price-to-earning, cyclically-adjusted price-to-earnings, price-to-book, price-to-sales, enterprise value-to-EBITDA, q-ratio, and market capitalization-to-GDP.
What does all of that mean?
The stock market, and the stocks inside of it, can be “valued” in a handful of ways. Some investors like to use a multiple on profits, others a multiple on sales, and even a multiple on EBITDA. There’s a ton of ways to try and find the intrinsic value of the company.
The above chart uses eight different ways simultaneous to value the US stock market. Historically speaking, the US stock market has never been more expensive than it is right now — according to those eight valuation metrics.
To some, this could be alarming — we even heard from Howard Marks last week that the S&P 500 isn’t attractive right now. Historically, anytime investors bought the S&P 500 at 23X price-to-earnings (where it sits today) their annual return over the next 10 years was between -2% and +2%.
On the flip side, whenever the Federal Reserve began cutting interest rates within 2% of an all-time high in the S&P 500 (our current reality) we experienced a +13.9% return over the next 12-months.
The US stock market is frothy, there’s no ifs, ands, or buts about it.
This is why we preach diversification. Don’t just be invested into US single stocks — include real estate, precious metals like Gold and Silver, cryptocurrency, and maybe even some international names.
Having a well-diversified portfolio is the key to long-term wealth building.
Austin’s Callout
Chinese Stocks experience largest ever monthly inflow from hedge funds.
With the US stock market at its highest valuation in history, we’re seeing hedge funds pile into international markets — specifically Chinese equities — at the fastest pace ever. Compared to US stocks, Chinese valuations are extremely cheap — sitting at only 11X price-to-earnings compared to the S&P 500’s 23X price-to-earnings.
Historically speaking, these Chinese names would trade for between 8-13X price-to-earnings — making their current 11X valuation par for the course. Hedge funds are piling into Chinese stocks because they’re dirt cheap relative to US stocks, and likely because of fresh government support signals. The extreme move also reflects years of bearish positioning being unwound.
Personally, I have a little bit of Chinese exposure in my own portfolio.
Alibaba (BABA), as well as the FXI and KWEB ETFs are how I’m positioned for this move. FXI is up +29% year-to-date, while KWEB is up +31% year-to-date — tripling the performance of the S&P 500 this year.
Don’t over do it — having some allocation to international names, like China, should be thought of as a short-term strategy. Over the long-term, these international names dramatically underperform the S&P 500.
The Rich Habits Radar
👉 Nvidia's stock fell after missed data center revenue.
👉 Abercrombie & Fitch beat Q2 earnings with record $1.2B sales.
👉 Cracker Barrel reversed its logo rebrand after backlash from customers.
👉 Global M&A activity surpassed $1T in August — busiest month since 2021.
👉 Five Below's stock rose as value-seeking consumers boosted sales.
👉 CrowdStrike shares dropped 6% after a cautious Q3 revenue forecast.
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