Even higher income earners are living paycheck to paycheck. And the gap between consumer credit and savings has reached a historic level.
â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â â February 27, 2023 |  [View Online]( |  [Sign Up]( The Greatest Fool âThe misfortune of the wise is better than the prosperity of the fool.â â Epicurus , Psychologists call it the âAnxiety Gap.â Today, we begin by applying it to consumer confidence. The gap between how anxious you are about inflation or rising interest rates and how anxious some other poor fool is depends upon where you reside in the monetary food chain. âAmericaâs economy is splitting consumers into two very different realities,â reads Fortune magazineâs William Daniel. On the one hand, âdespite near record inflation,â he continues, âAmericans continue to do what they do bestâspend. Even if it means leaning on savings and credit cards, all income brackets have been taking vacations and eating out at restaurants.â Weâve already noted here in the daily missive that even higher income earners are living paycheck to paycheck. And the gap between consumer credit and savings has reached a historic level. Trouble is, when people spend beyond their means, thereâs higher demand and more money is injected into the system â the two things the Powell Fed has vowed to crush in its âfightâ against inflation.   âReal personal spending rose 1.1% in January, according to the Federal Reserveâs favorite gauge,â Daniel notes. The figure is one among a few data points the Fed has interpreted as strength in the economy. Strength leads to a more sustained campaign to raise rates. POWERED BY DAILY MARKET ALERTS Will you miss out on this growth stock boom? A new megatrend in the fintech market is well underway. Mobile payments are projected to boom into a massive $12 trillion market by 2028. According to Motley Fool this growth stock could "deliver huge returns." Not only in the immediate future but also over the next decade. Especially since the man behind this company is a serial entrepreneur who has been wildly successful over the years. And this is just one of our [5 Best Growth Stocks To Own For 2023.]( CONTINUED... âEconomists fear that with interest rates set to remain âhigher for longer,â and inflation proving to be stubborn,â Daniel concludes, âlower and middle income consumers are beginning to feel pinched.â
 Weâre headed for an economy in which the American consumer splits into two very different camps: one for the wealthy and one for the working class. For the time being, consumer credit and depleting savings are staving off the Anxiety Gap. But thatâs unlikely to last. And then big retailers â like Walmart and Home Depot â will see their earnings get pinched, too. Bloombergâs MLIV Pulse survey, taken from a test size of around 2,200 participants, echoes Danielâs analysis. âInvestors are divided over where the US economy goes next,â Bloomberg reads. âLess than half see a soft landing, which respondents defined as inflation slowing to below 3% without growth slowing too much. More than a third expect a hard landing, and about 18% see no landing at all.â The Conference Board publishes the Consumer Confidence Index at 10am EST on the last Tuesday of every month. Tomorrow, weâll get the latest read on how the average spender has fared despite eight consecutive rate hikes. It will be a âlagging indicator,â of course, but it will be a piece of intel the data-driven Fed will file away for their next FOMC meeting on March 21.  Our goal is not to be a laggard, at all. Rather to forecast what we think will happen next. Investment Director at The Essential Investor Zach Scheidt claims that this yearâs January uptickâ what he calls a âResolution Rallyââ was propelled up by an economic principle called âThe Greater Fool Theory.â Youâre likely familiar with the term. The Greater Fool Theory suggests that one can make money buying overvalued assetsâââ stocks with a purchase price drastically exceeding the stockâs intrinsic valueâââif those assets can later be resold at an even higher price. âWhen the Greater Fool Theory comes into play,â Scheidt says, âand you can make money doing it, you better not overstay your welcome. When bull markets end, the greatest foolâ whoever paid the most for those speculative stocksâ theyâre the one who's going to be left holding the bag and taking the losses that everybody else profited from on the way up.â The theory works⦠until the market runs out of fools. If you donât know who the fool is, youâre the greatest one. âIt's a dangerous game to play,â Zach warns, âBut Addison, we've talked about this a lot.â He continues. I'm an investor at heart. I believe that's where you grow and protect your wealth over time. But I am more than willing to take on speculative positions here and there as a small part of my family's wealth because there are times that you can turn $5,000 into $15,000 over a few months period. You need a specific insight on what's going on with the stock, the economy or with the market, in general.
 I believe that there is a time and a place for speculation, and I believe that it can be a profitable strategy, but I don't think that itâs wise to make that your primary source of wealth or your primary source of income. Last week, the Dow, S&P 500 and Nasdaq all had their worst one-week performance of the year. Itâs likely the bull run between September 30, 2022 and February 14, 2023 has run its course. Stocks, especially tech and retail, are already overvalued. That 5-month rally drove price-to-earnings on the S&P 500 to over 28%. The modern historical average is only 19%. Thatâs before consumers of a wide variety of income levels get âpinched.â Take away: If youâre still hoping to "buy high and sell higher," beware. You donât want to be the greatest fool. Follow your own bliss, Addison Wiggin
The Wiggin Sessions P.S. There are 3 clear warning signs you can use to identify an economic bust in real time. Unfortunately, weâre seeing all three signs right now. Thatâs why tomorrow, Tuesday February 28th at 6PM EST / 3PM PST, Iâll run through all three signs in my first ever LIVE presentation for our readers. [Hereâs the link to get in.]( POWERED BY THUNDERCLAP RESEARCH The Daily Missive from The Wiggin Sessions is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Consilience, LLC. delivering daily email issues and advertisements. To end your The Daily Missive from The Wiggin Sessions e-mail subscription and associated external offers sent from The Daily Missive from The Wiggin Sessions, feel free to [click here.]( Please read our [Privacy Statement.]( For any further comments or concerns please email us at feedback@wigginsessions.com. If you are having trouble receiving your The Wiggin Sessions subscription, you can ensure its arrival in your mailbox by [whitelisting The Wiggin Sessions.]( © 2022 Consilience, LLC. 808 Saint Paul Street, Baltimore MD 21202. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after online publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Sent to: {EMAIL} [Unsubscribe]( Consillience, LLC, Saint Paul Street, 808, Baltimore, Maryland 21202, United States