SOMETHING INTERESTING

World-class wealth begins with world-class thinking. Your mind may be your most valuable asset, but it’s only a valuable tool if you wield it appropriately. You do this by approaching business and investing with positivity. I know, sounds silly and obvious, but attitude and mental approach is everything. You show me a man’s attitude, I can tell you his level of happiness and fulfillment. There is a self-fulfilling nature to your mental approach. We don’t find wealth, we create it. We don’t find happiness, we create it. (Click here to read).

MARKET MOVERS

  • Land prices are up 16% across the country, some markets even higher. Builders are bearing the skyrocketing price of land development and building materials, and are fine with it because people are still buying up houses and they can just pass these higher costs along. Check out this land survey chart.

  • Evergrande false alarm? Two key bits of news to note with the Evergrande debacle. 1) China’s government and central bank are pumping $90B in liquidity into the financial 2) Evergrande announced that it will pay its interest due on the 24th. Reports are unclear if they will pay in cash. The Evergrande situation is a big deal, but it's not likely to be this catastrophic “Lehman moment” that would create a global financial crisis. Listen more here (22:50).

  • The global chip crisis still burdening automakers. Auto assembly plants are pausing production or closing entirely. The stabilization of the global supply of semiconductors will likely come and allow for production to continue, but not enough for supply to meet demand. Tech is great...unless you’re unable to get the necessary resources for the parts. Read more here.

  • Housing demand high heading into the fall, despite fast-rising home prices and low inventory. Mortgage applications are the highest since April this year. The inventory situation is improving, with more new homes under construction and more homeowners listing their homes for sale. To see reported average rates for the different types of home loans, read more here.

WHAT TO WATCH

  • Big tax changes are brewing. President Biden and Democrats are pushing to mandate higher taxes for top earners. Here’s what they’re proposing: a 3% surtax on income above $5 million, changes to individual retirement account rules, a cut in the qualified small-business stock exemption, and the elimination of an estate-planning tool, among other changes. Plus, a higher capital-gains tax of 25% could go into effect retroactively. Not sure where the money for that $3.5 trillion budget bill was going to come from? Now we all know. Read more here.

  • The government won’t be shutting down...yet. The House of Representatives voted to suspend the federal borrowing limit to avoid a government shutdown by the end of the month, despite strong Republican opposition. The legislation would provide temporary funds to keep the federal government running until Dec. 3, extending the current Sept. 30 deadline. It also would suspend the debt limit through December 2022. However, this is moving on to the Senate and is not likely to get passed. We’re keeping a close eye on the developments, as it’s sure to affect markets. Read more here.

  • Here’s a fun new idea - Luxury modular homes. Yes, they’re actually a “thing,” and the trend is catching on. The draw? Much quicker construction timelines and ultra-luxury touches (for reference, a mod home in NY just sold for a cool $4.7M. Not bad.) Prefab manufacturer, Method Homes, reported their sales in 2020 were up by 50% compared to 2019 sales. In the luxury market, modular homes are speeding up build times...by a lot. For perspective, a high-end custom 4,000-6,000-square-foot traditional stick-built home could take 16 to 18 months to build. A modular home of a similar size could take less than a year. Not a bad solution to help curb the inventory crisis. Read more here.

  • Don’t want your data shared? Then you’re going to be bullish on Apple. Not only do they sell world-class products, but now also personal privacy protection. iCloud is building a private browser into iOS 15, solidifying privacy as one of Apple's stronger selling points. The company is now positioning itself as the anti-Facebook and anti-Google (smart move). These companies capture and monetize your data. Apple does not. The iOS private relay is still in Beta, but it’s worth noting its main feature: The ability to use Safari without being tracked. Huge win for Apple, bigger win for iOS users. Listen to more on the features of this here (2:18).

FINAL THOUGHTS

“Your success in investing will depend in part on your character and guts and in part on your ability to realize, at the height of ebullience and the depth of despair alike, that this too, shall pass.” - Jack Bogle

Worked up about Evergrande? Well...market corrections happen. It’s not a matter of if, but when. And, unfortunately, no one can consistently figure out the when, so the only thing you can do is recalibrate your portfolio or expectations ahead of time. You have two options, learn to live with the volatility of the markets, OR (and we think this is the better option), hedge your portfolio to withstand the bursts of volatility. Great perspective on this in this article. PS - we’ve shared a little bit about how we do this with our own portfolio in this previous digest.

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