“There is nothing outside of yourself that can ever enable you to get better, stronger, richer, quicker, or smarter. Everything is within. Everything exists. Seek nothing outside of yourself.”
― Miyamoto Musashi, The Book of Five Rings
Let’s do a little exercise today, ask yourself this question.
What is my financial identity?
Answering this question can help you build wealth and make sound decisions in the market.
Are you…
A risk-taker seeking rapid capital growth? (And the stress that can come with it.)
Or are you a patient portfolio builder, looking for peace of mind and stability?
This is one of the first things a professional financial advisor will do when you sit down with them.
They call it “risk-profiling” and it’s really just an exercise in self-reflection.
Different markets reward different psychologies.
I’d even argue, financial advisors are kind of like psychologists.
And any psychologist will tell you that in moments of turmoil, it’s good to switch off the TV, put down the phone and examine your internal world.
Call today’s note a bit of financial therapy – because gee whiz the world of politics is screaming at us right now.
So let’s look at how to discover your financial identity.
In a world where everyone wants to know who you are, look within…
In Friday’s Fat Tail Daily Charlie Ormond wrote to you about Worldcoin and the prospect of widespread biometric surveillance.
Trust me, it’s a scary prospect that in the future governments and companies will rely on your body’s “data” to identify you.
Well, they already are.
But today, we’re pushing away negativity.
I come bearing a message of hope this morning for Aussie investors like yourself.
One that could help you build the wealth you want.
For the hope enthusiasts out there, please hang in there.
We’re going to take a quick detour into the world of US politics.
So…
Apparently “something” happened in the US recently and then people of all persuasions got angry when they saw things on the internet.
I’m not trivialising here; I am reducing events to a simpler form to make a point about financial markets.
And trust me, the cycle of events will repeat.
As an Australian-American I am also pained by the tenor of discourse.
But I want to show you an important trick I use to turn the pain off.
Remember, our job as investors is to take the emotion out of our decisions.
So today I want to focus on the first of three things Aussie investors like yourself can do to break away from this cycle.
The market doesn’t care, use this trick to relax
Try and realise that recent political events are just “noise” for investors like me and you.
Seriously…
I find there is something incredibly soothing about sitting down with a coffee to look at the market, poke around some charts and start reading the annual reports of a few micro-cap companies.
You can do this too, at home or on your lunch break at work.
Put another way, doing your “homework” has never been so fun.
Or so crucial.
The market is, roughly speaking, an apolitical beast.
It doesn’t particularly care about the crazy things that happen in the world of politics or what some random influencer has to say about [insert crazy thing].
Case in point, check out this photo I took of a US news show on January 6th 2020:
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| Source: Lachlann Tierney |
That’s right, while another US “thing” was happening the Dow was quietly tacking on 1.2% that day.
A key US stock market index merely shrugged.
If the market were a person that day, it would be saying “Whatever dude, interest rates are low.”
Maybe it’s a Buddhist thing, and the market has cultivated perfect detachment?
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But yes, I am suggesting that paying attention to financial markets (and not politics) can be the basis of a healthier media diet and improved mental wellbeing.
Your financial wellbeing too!
You can use it as a solace and refuge from the horrors of social media and the endless cycle of monetised attention and anger.
And guess what?
If you pay attention and dig deep into the inner workings of a company…
The market will often reward you.
Everyone says knowledge is power, but in the market, knowledge is actually money.
And self-knowledge, when it comes to your financial identity?
Well, that’s just more money in your pocket.
So do the wise thing today, switch off the noise and get back to the joys of “homework”.
It’s what I’m doing today, pouring over reports and doing market scans.
The best thing about it?
I now get the privilege of sharing the product of that “homework” with readers like you.
I’ve just spent four years in the wilderness working behind the scenes at a leading small-cap/micro-cap firm …
So it’s great to be back at Fat Tail Investment Research, and tomorrow I’ll share my next tip for Aussie investors, along with some of the signals I’m seeing in the market.
(Pssst…by the way…)
Right now, the market for risk capital is improving with the US Fed looking likely to cut rates.
And the RBA is also under pressure to cut rates too, which could improve things further for the tiny, high potential companies I recommend in Australian Small-Cap Investigator and Fat Tail Micro-Caps.
Check those out if you’ve examined your financial identity and discovered you have a taste for greater risk (and potentially, greater reward).
Warm regards,
Lachlann Tierney,
Australian Small-Cap Investigator and Fat Tail Micro-Caps
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Murray’s Chart of the Day –
Ethereum v Bitcoin
Source: TradingView
[Click to open in a new window]
For the last four years bitcoin has been outperforming ethereum.
But this quarter saw a changing of the guard with a sharp jump in Ethereum happening over the past couple of months.
U.S. spot Ether ETFs have been posting record weeks since mid-July (e.g. US$2.1Bn in a single week).
A quick look at the long-term relationship between ethereum and bitcoin since 2015 (chart above) shows us that a quarterly buy pivot will be confirmed at the end of this quarter.
The last two times we saw a signal like that from this level Ethereum outperformed bitcoin for the next year or so.
With ethereums moat increasing due to having the largest smart contract developer base and as staking takes supply out of the market, more institutional buying could see ethereums outperformance continue.
Regards,
Murray Dawes,
Retirement Trader and International Stock Trader
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