Nothing Lasts Forever đź
Quote Of The Week đ
âThis too, shall passâ
For those moments of extreme sadness, where it feels like a struggle to get through the next day. Remember, âThis too, shall passâ.
For when youâve accomplished your greatest challenges and couldnât be happier. Remember, âThis too, shall passâ.
The moral of the saying is rooted in the belief that no matter what we are going through, we should teach ourselves to remain grounded, calm and patient in the face of both adversity and euphoria.
Life is a rollercoaster of experiences and emotions. Tom Hanks eloquently breaks down the above saying as one of the pieces of advice he wish heâd known earlier in his journey.
Whether you feel like youâre at rock bottom or on top of the world:
Remember, âThis too, shall passâ.
Market Overview đ
The US stock market snapped its longest losing streak in decades with both indices registering strong gains this week. The UK stock market joined in the festivities and is now within touching distance of its all time high.
This uptick doesnât mean that there wonât be tough times ahead over the next few months as the war in Ukraine sees no signs of ending and inflation is still prevalent in most western countries. However, as always, trying to time the market is a foolâs errand.
Cryptocurrencies didnât get as much love from investors with Bitcoin slightly lower but Ethereum trending almost 10% down in the last week. With the a major upgrade due in August that will reduce energy consumption by over 99% on the Ethereum network, with the price down over 50% year to date, current levels could present a long term buying opportunity.
What does all this mean for your portfolio? I often got asked over the last few years âwhenâs the best time to invest?â. The best time to invest was ten years ago, the second best time is today.
No one has a crystal ball to know which directions the markets will go in the short term but a consistent action plan to invest* weekly / monthly is often the best route to building a strong portfolio over the long term.
*Start investing from as little as ÂŁ10 at eToro, one of the easiest to use investment platforms.
Nothing Lasts Forever đ”
If there is one thing that is evident in the story of human civilization, itâs that nothing lasts forever. The sun sets on the greatest empires of the world, from Egypt and Rome in the ancient world to the Spanish and British in more recent history.
Itâs not much different for our money. The status for the reserve currency of the world has changed 7 times in the last 800 years. Reserve currency status is closley linked to the dominant power in global affairs at the relevant time period.
What is a reserve currency? A reserve currency is a large amount of currency held by a countryâs central banks and major financial institutions to use for international transactions, including investments and international debt obligations.
The Spanish Real became the de-facto reserve currency of the world in the 16th and 17th centuries after the discovery and exploitation of the Americas by the Spanish. The Pound Sterling took on the status in the 19th century as the British empire expanded its footprint in Africa and Asia.
Therefore, it may not come as a surprise that the current reserve currency of the world is the US Dollar. According to the International Monetary Fund (IMF), central banks across the world held 59% of their reserves in US Dollars in 2020.
The US Dollar has held the status as the worldâs reserve currency since the end of World War 2 and its arrival on to the world stage as a global superpower following the invention (and subsequent use in Japan) of nuclear weapons.
Will the US Dollar retain its position?
China is currently planting its tentacles inside many countries inside Africa, who may become reliant on the Chinese Renminbi to facilitate trade and repayment of debts. Whether this translates to wider adoption by other nations is yet to be seen but considered unlikely.
For those with a belief in decentralization, Bitcoin could be the answer, given that it is the only challenger that has non-reliance on governement organisations as custodians of our money and is gaining greater institutional adoption by the day.
Whilst history doesnât neccessarily repeat itself, it often rhymes. The only certainty is that there will be change.
Investing 101 đ
Iâve been sharing key investment strategies, background on cryptocurrencies and some of my largest investments in the newsletter.
AMAZONâS REVENUE BREAKDOWN
Amazon is one of the largest companies in the world and is also one of my largest investment holdings. From humbe beginnings in starting out as an online book store in 1994, the company currently has almost half a billion dollars worth of annual sales.
Whilst almost 70% of its revenues are linked to its Online Stores and Third Party Seller Services, there is 30% of revenue (over $140bn worth!) that is built up from a combination of Amazon Web Services (the internetâs go to cloud service provider), Subscription Services such as Prime and Advertising revenues.
Despite Jeff Bezos stepping down as CEO last year, the companyâs laser like focus on placing long term growth over short term initiatives allows it the competitive advantage to continue its monstrous growth journey.
Like the rest of the market, Amazonâs stock has taken a beating, down over 32% this year and currently trading at $2,303 per share. With the company looking to enter the pharmaceutical and healthcare spaces in the US over the next few years, this pullback could be an opportunity to invest* in Amazon for the long term.
*Disclaimer: This is not investment advice and is purely for educational purposes. I am sharing investment ideas. Please do your own research before making investing decisions.
What Iâm Reading đ
If youâve bought something online in the last few years, you will have noticed a variety of differnt options to pay. The most intriguing of those will have been the âBuy Now, Pay Laterâ checkout option.
Whilst spreading the cost of items over a longer timeline may seem sensible at first, this article ('Buy now, pay later' is sending the TikTok generation spiraling into debt) covers how this trend is encouraging the current generation to unnecessarily take on debt that they have little understanding of and will struggle to pay back.
The moral of the story? Only make purcahses you can afford today.
Did You Know? đ°
If you think inflation is running rampant within your local economy at c.9-10%, spare a thought for the people of Zimbabwe in 2008, when inflation was increasing 79 billion percent month on month.
Wheelbarrows of cash were required to make every day purchases such as buying bread or milk. It was almost impossible for commerce and trade to be conducted in the local currency, the government even printed a 100 trillion dollar note!
The causes of the hyperinflation crises were rooted in corruption and mismanagement of the money supply, with the country eventually reverting to using the US Dollar (the worldâs reserve currency) as itâs standard means of exchange.
Question For You đ
What are you stressing over today that wonât matter a year from now?
âThis too, shall passâ
Thank You đ
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