The Emerging Transition Towards Cold Hard Cash

[Daily Financial Journal]( [TODAY'S DEAL: Honestly, you should get this book](mailto:editor@dailyfinancialjournal.com?subject=Give+me+my+top+stocks+for+2020&body=Give+me+my+top+stocks+for+2020) Todays Top News [The Emerging Transition Towards Cold Hard Cash] The Emerging Transition Towards Cold Hard Cash Lots of people are heavily investing their money into gold, cryptocurrency, stocks, ETFs, and whatever financial instrument you can name off the top of your head. But one instrument ALWAYS stands out during pandemics and recessions: Cash! Personal Capital recently conducted a survey of their American client base, and 29% of them have more cash (or liquid assets) than they did prior to the COVID-19 crisis. Unlike every other means of money, cash can be used immediately and it is ALWAYS at your disposal. Short of an armed robber breaking into your home, nobody can steal it away from you. It’s yours to keep and use as you see fit. Whether your income is rising, stagnant, or completely gone due to your employer cutting costs at every corner, there’s no such thing as having “too much cash” at your disposal. At minimum, it will keep your bills paid, food on your table, and a roof over your head until you can restore a reliable means of consistent full-time income. Think of it as a lifeline! Here’s another good reason to keep cash you probably didn’t think of… During any economic recession, stocks in certain industries will take a sharp dip towards the bottom before making a slow climb towards the top. It’s pointless to try and time exactly when the bottom will be, but you can certainly detect when a stock has reached a low point by looking at the market for a few minutes per day. And when you find those stocks, you have a once-in-a-decade opportunity to buy some awesome stocks at discount prices. Get your hands on the deal, don’t touch your investments, and watch it slowly rise over time. Of course… if your emergency fund contains less than six months’ worth of living expenses, you might want to put some of your cash there first before you start thinking about how you want to invest it. Are YOU keeping more cash and liquid assets than before the COVID-19 pandemic? If so, is it a little or a lot more? Reply to this newsletter and tell us how you’re hedging your bets! Investing [Buffett Is Bullish on Bank of America, and He’s Just Getting Started] Buffett Is Bullish on Bank of America, and He’s Just Getting Started A few weeks ago, Buffett became the largest shareholder in Bank of America with a total somewhere around the $25 billion mark (11.8% ownership). The only other company in the Berkshire Hathaway portfolio that has a larger holding is Apple. But thanks to special permissions he got from the Federal Reserve a few months ago, his stake can now go as high as 24.9%. Which means he can have a stake in 1/4th of the company. Why Bank of America, out of all the other Wall Street cats in existence? A few reasons come to mind upon closer inspection… Bank of America just so happens to be one of the few banks who had a fairly solid Q2 2020, with fewer loan losses (only 4.7%) and fairly strong capital ratios. Not only does it have enough capital to stay protected for several quarters of economic hardship, but it can also afford to pay out generous dividends to its investors. Consistency is the name of the game for Buffett, who is famous for making long-term decisions that play out over several years. Even if banks like JPMorgan achieved record revenues of $33.8 billion in Q2 2020, Bank of America continues to show stability as a portfolio investment. Don't Miss This [You Get a Bike, You Get a Bike… EVERYONE Gets a Bike!] You Get a Bike, You Get a Bike… EVERYONE Gets a Bike! There has never been a better time to walk out your front door, dust off your bicycle, and go out for a ride in the invigorating summer weather. After all, it’s one of the only modes of transportation left where catching COVID-19 is fairly unlikely. The demand for bicycles is surging, as evidenced by two major international bike companies. A combined market capitalization of $10 billion is shared between Giant and Shimano, the two world’s largest producers and manufacturers of bicycles and their components. Following a plunge in mid-March, their share prices have been soaring ever since. And mind you, these are not cheap bikes. We’re talking about premium models priced anywhere between $600 and $1,500. They’re flying off shelves so fast that global shortages are becoming a real thing for the bike industry… a very similar story to the worldwide panic-buying of toilet paper several months ago. Bicycle retailers around the world are seeing year-on-year increases of 40-60% in bike sales over the past two months. Combined with major cities installing brand new bike lanes, demand shows no signs of slowing down anytime soon. The only question is whether they can keep up, and whether demand will stay like this for the next 1-2 years. The last thing you want these manufacturers doing is rapidly expanding their operations and overcompensating for a short-term trend. [Retail Bankruptcies: An Annual Record for the Past 10 Years] Retail Bankruptcies: An Annual Record for the Past 10 Years 2020 may forever be known as the year of the coronavirus, but you could alternatively call it the “year of retail bankruptcy” and still maintain the same level of accuracy. When 43 retailers file for bankruptcy in the first 7 months of the calendar year, something is fundamentally wrong. Or perhaps their lack of customer retention and struggles with paying off debt are finally catch up to them. Either way, it’s on pace towards being the highest number of annual retail bankruptcies in a decade. Just take a look at some of the companies going right under… - Modell’s Sporting Goods: Chapter 11 protection on March 11, closing 140 stores and posting liabilities as high as $10 million - Brooks Brothers: Filed for bankruptcy on July 8, trying to salvage 125 stores and listing liabilities as high as $1 billion - Men’s Wearhouse: Chapter 11 bankruptcy filing yesterday, shutting down 500 stores and listing liabilities as high as $10 billion - RTW Retailwinds: Filed for bankruptcy on July 13, with 378 retail stores at risk and listed liabilities as high as $500 million. Yikes. Several stores face permanent closure, sending hundreds of thousands of employees into unemployment. No matter if your company has been around for 5 years of over 100, nobody is immune to a recession-induced bankruptcy. NOBODY! [Wayfair, the “Amazon” of Furniture, Sees Shares Increase 1,200% Since Q1 2020] Wayfair, the “Amazon” of Furniture, Sees Shares Increase 1,200% Since Q1 2020 Wayfair is one of the hottest “must-know-about” online e-commerce stores, specializing in the sale of indoor furniture and appliances for homes. They only have two physical stores in existence, yet offer over 18 million products to its consumers. Their revenue for May 2020 was 90% from the year prior, and Wednesday’s earning report is anticipated to be so much higher. Experts predict earnings for Wayfair (ticker: W) to be at high as $0.82/share, with Q2 2020 revenue projected to be anywhere between $3.3 billion and $4 billion. Yesterday’s trading session saw Wayfair shares closing out at $284.85 after reaching an all-time high of $287.45 (+7.1%), and some investors project the share price going as high as $300. Considering its price of $23.52 in late March, this is a TWELVE-FOLD increase in the span of 3 months! The only issue for Wayfair is profitability. They burned through a lot of cash to attain the exponential growth they’re currently experiencing, making $9 billion in sales last year while losing $1 billion in the same year. Hopefully they can close out 2020 in a net profit. [$1 Million by Age 65? Why Not $2 Million Instead?] $1 Million by Age 65? Why Not $2 Million Instead? When people set retirement goals for their nest egg, $1,000,000 is always the very first number that pops up. Most of the back-of-the-napkin math done in the personal finance space always uses $1 million as the starting number. But many people are starting to set their goals higher to the $2 million mark by 65, especially since a new survey from Charles Schwab found that Americans consider a net worth of $2 million to be “wealthy.” The fundamentals are still the same: Start saving early, save aggressively, and save into the right account (i.e. something with a 7% annual ROI). All that changes are the numbers, and you’ll have to put away more. If you’re a 20-year-old and you start saving, you would need to set aside $600/month consistently until age 65 to reach the $2 million mark. A 30-year-old would need to put away $1,200 every month, a 40-year-old would need $2,700 stashed away once every 30 days, and the number is $6,800/month for a 50-year-old who starts investing. Procrastinating and waiting until later to start saving punishes you exponentially with each missed year. Especially if your end goal grows in size. Then again, perhaps your ideal retirement number is less than $2 million as you’re comfortable with living on less. Which brings me to the question I have for you: What is YOUR ideal number for your retirement nest egg, and why? Reply to this newsletter with your dream price tag! [Vote Now] PS. How useful did you find today’s update? 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