Mindset Matters

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“Mindset is everything because it touches, impacts, and influences quite literally every aspect of your life.”

Your mindset is the filter through which you see the world. It is comprised of your beliefs, attitudes, emotions, and perceptions that inform your thoughts, habits* and decisions. Mindset encompasses both your conscious and unconscious thoughts as well as how you view yourself. It, your mindset, determines how you spend your time, who you spend your time with, what decisions you make, and where you invest your resources (time, talent and treasure).

Your mindset is an important part of your toolkit for success. Like glasses, they can either obscure your path or bring clarity to the road ahead. Thus, taking an active approach to understanding and crafting a positive mindset is important. Most people don’t realize that they’ve been programming their mindset through their experiences and perceptions. If you constantly feed your mindset with negative perspectives, your outlook will be negative. Garbage in, is garbage out.

On the other hand, cultivating a healthy wealth mindset will help you stick to your financial goals and you find ways to increase your earning potential. And, there are two key inputs that shape your mindset: the environment (or people) you spend time with and the media (written and verbal) you consume daily.

There’s an old saying in financial circles that you’re the average of the five people you spend the most time with. If you want to be fit, hang out with friends who exercise. If you want to think big and aspire to build wealth and change the world, then you must consume inspiring positive media and hang out with people who have great purpose and big audacious goals.

Just as you are the average of the five people you spend the most time with, the same is true for your ideas and aspirations.

A wealth mindset is a set of beliefs, habits, and behaviors that separates the wealthy from the rest. A wealth mindset will guide you to make the most of the money you have. It is essential to effectively and successfully save for the future, invest for the long term, build wealth and achieve financial freedom. A wealth mindset means spending less than you earn, making wise investments in assets, and looking for ways to improve financial well-being with minimal risk.

A wealth mindset matter matters because 60 percent of Americans live paycheck to paycheck, according to Dave Ramsey. And as of 2018, 175 million Americans actively use credit cards. A majority of these credit card holders engage in impulsive spending behavior, wasting money they don’t have on items they don’t need.

“Wealth is a mindset!”, writes Shynna Key, author of “Wealth Is a Mindset”. She encourages you to “keeping it real” with your current financial position, identifying challenges, and taking responsibility for changing the way you view wealth. She opines that you must begin by examining “…what we have been taught as it relates to money and wealth. Though finances are a very private area for most to discuss, it is a crucial topic that will help us to understand the root of our financial ‘woes’ as well as the fruit of our financial ‘favor’; which is essential to our overall growth of wealth.”

“If you correct your mind, the rest of your life will fall into place.” – Lao Tzu

To accumulate wealth and achieve financial freedom, you must first be and think like the wealthy. By doing so, you will develop the habits and take the necessary actions to attract the resources to you. You must be someone first; someone who has what he or she needs in order to take the inspired action. To become a wealthy, you must be an individual who thinks and manages money like the wealthy. For example, “the average wealthy person spends 10 times more time planning their finances than the average middle-class individual”, explains Thomas J. Stanley, author of “The Millionaire Next Door”.

Money and wealth can buy freedom…financial freedom. Very few wealthy people became wealthy overnight. Building wealth is a deliberate process that requires patience and planning.

If you want to be wealthy, you’ll need to develop a wealth mindset. Start by defining your financial goals: how much money do you want to have in a year’s time? Five year’s time?

To realize your financial goals, you’ll need to develop a wealth mindset, create and follow a plan, and continue to learn and grow. And remember, the road to wealth is bumpy and filled with detours and misconceptions.

In many ways, the health of your finances, as well as your physical health, depends on your mindset and emotional well-being. Thus, it’s important to make it a priority and to take time for you. When you focus on purpose, potential, curiosity and collaboration, you will experience increased energy and well-being. Because, what you focus on…expands!

“We are what we think. All that we are arises with our thoughts. With our thoughts, we make the world.” – Unknown

References:

  1. https://wealthfit.com/articles/wealth-mindset/
  2. https://wealthconnecters.com/wealth-mindset
  3. https://www.audible.com/pd/Wealth-Is-a-Mindset-Audiobook/B07MWHKS46
  4. Draper, Taylor, “Mind Matters”, Costco Connection, May 2021, pg. 17.
  5. https://bydeze.com/why-mindset-is-everything/
  6. https://nevadapartners.org/2021/05/21/12-real-differences-between-a-wealthy-mindset-vs-a-poor-mindset/

“Be kind, for everyone you meet is fighting a hard battle.” – Socrates

* Habits are consistent, unconscious patterns. They constantly express our character and result in our effectiveness or ineffectiveness. Habits are deeply ingrained and we are constantly pulled in their direction.

Tai Chi

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“We are what we think. All that we are arises with our thoughts. With our thoughts, we make the world.” – Unknown

Originally developed as a martial art, Tai Chi is typically taught as a series of slow, low-impact movements that integrate the breath, mind, and physical activity to achieve greater awareness and a sense of well-being.

Tai chi is an ancient Chinese tradition that is currently practiced as a graceful form of exercise. It involves a series of movements performed in a slow, focused manner and accompanied by deep breathing. Each posture flows into the next without pause, ensuring that your body is in constant motion.

Tai chi has many different styles. Each style may subtly emphasize various tai chi principles and methods. There are variations within each style. Some styles may focus on health maintenance, while others focus on the martial arts aspect of tai chi

Tai chi is low impact and puts minimal stress on muscles and joints, making it generally safe for all ages and fitness levels. In fact, because tai chi is a low-impact exercise, it may be especially suitable for an older adult who otherwise may not exercise.

Although tai chi is slow and gentle and doesn’t leave you breathless, it addresses the key components of fitness — muscle strength, flexibility, balance, and, to a lesser degree, aerobic conditioning. Here’s some of the evidence:

  • Muscle strength. Tai chi can improve both lower-body strength and upper-body strength. When practiced regularly, tai chi can be comparable to resistance training and brisk walking. It strengthens both the lower and upper extremities and also the core muscles of the back and abdomen.
  • Flexibility. Tai chi can boost upper- and lower-body flexibility as well as strength.
  • Balance. Tai chi improves balance and can reduce falls. Tai chi also improves muscle strength and flexibility, which makes it easier to recover from a stumble.
  • Aerobic conditioning. Depending on the speed and size of the movements, tai chi can provide some aerobic benefits.

When learned correctly and performed regularly, tai chi can be a positive part of an overall approach to improving your health and overall well-being. The benefits of tai chi include:

  • Decreased stress, anxiety and depression
  • Improved mood
  • Improved aerobic capacity
  • Increased energy and stamina
  • Improved flexibility, balance and agility
  • Improved muscle strength and definition

While more research is needed to determine the health benefits of tai chi. Some evidence indicates that tai chi may also help:

  • Enhance quality of sleep
  • Enhance the immune system
  • Help lower blood pressure
  • Improve joint pain
  • Improve symptoms of congestive heart failure
  • Improve overall well-being
  • Reduce risk of falls in older adults

During the past 50 years more than 500 trials and 120 systematic reviews have been published on the health benefits of Tai Chi, according to National Institute of Health. Systematic reviews of tai chi for specific conditions indicate:

    There is excellent evidence of benefit for preventing falls, osteoarthritis, Parkinson disease, rehabilitation for chronic obstructive pulmonary disease, and improving cognitive capacity in older adults.
    There is good evidence of benefit for depression, cardiac and stroke rehabilitation, and dementia.
    There is fair evidence of benefit for improving quality of life for cancer patients, fibromyalgia, hypertension, and osteoporosis.

Further systematic reviews of general health and fitness benefits show:

  • There is excellent evidence of benefit for improving balance and aerobic capacity in those with poor fitness.
  • There is good evidence for increased strength in the lower limbs.
  • There is fair evidence for increased well-being and improved sleep.

There is abundant research and scientific evidence supporting the health and emotional well-being benefits of Tai Chi, according to the National Institute of Health.

“Health is our greatest possession. Contentment is our greatest treasure. Confidence is our greatest friend.” Lao Tzu

References:

  1. https://pubmed.ncbi.nlm.nih.gov/28661865/
  2. https://www.mayoclinic.org/healthy-lifestyle/stress-management/in-depth/tai-chi/art-20045184

China’s Challenges According to Jamie Dimon

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China’s Communist Party leaders believe that America is in decline. They believe this not only because their country’s sheer size will make them the largest economy on the planet by 2030 but also because they believe their long-term thinking and competent, consistent leadership have outshone America’s in so many ways, writes Jamie Dimon, CEO, JP Morgan in his 2020 annual letter to shareholders.

The Chinese see an America that is losing ground in technology, infrastructure and education – a nation torn and crippled by politics, as well as racial and income inequality – and a country unable to coordinate government policies (fiscal, monetary, industrial, regulatory) in any coherent way to accomplish national goals. Unfortunately, recently, there is a lot of truth to this, in the next 40 years, according to Dimon.

In recent years, China has been dealing with many challenges to its economic expansion, including pandemic-related curbs, an energy crunch, and an unprecedented crackdown on private enterprises. These challenges and the Communist government’s reaction led to 4% growth in China for the fourth quarter, according to JP Morgan.

Additionally, the government actions against COVID-19 have also kept domestic demand for goods and services suppressed, putting a lid on imports.

However, Dimon opines that “China will have to confront some serious socioeconomic and geopolitical issues”:

  • The Chinese lack enough food, water and energy to support their population;
  • Pollution is rampant;
  • Corruption continues to be a problem;
  • State-owned enterprises are often inefficient;
  • Corporate and government debt levels are growing rapidly;
  • Financial markets lack depth, transparency and adequate rule of law;
  • Income inequality is higher than in the rest of the world; and
  • Their working age population has been declining since 2012.
  • Capital outflows has caused the regime to tighten capital controls.
  • Lower rates make Chinese financial markets less attractive to global and domestic capital.

Additionally, China will continue to face pressure from the United States and other Western governments over human rights abuses (especially against the Uyghur population), democracy and freedom in Hong Kong, and activity in the South China Sea and Taiwan. The Uyghurs are an ethnic Muslim minority in China that have allegedly endured forced labor and other human rights violations.

Autocratic and authoritative leadership works well when you can manage top down and you are starting from a very low base. China’s recent success definitely has its leadership feeling confident.

Regardless of Chinese Communist Party’s opinions regarding its inevitable economic rise, only 100 million people of its more than 1.4 billion population in China effectively participate in the nation’s one-party political system. No other developed nation has such low participation. Growing middle classes almost always demand political power, which helps explain why autocratic leadership almost always falters in a larger, more complex economy.

Under autocratic leadership, a major risk is the allocation of economic assets (capital and people), which are, over time, used to further political interests, leading to inefficient companies and markets, favoritism and corruption.

In addition, autocratic leadership diminishes the rule of law and transparency – damaging the ability to create a well-functioning financial system (this certainly restricts the internationalizing of the RMB).

Disruption of trade is another risk China faces. The United States’ trade issues with China are substantial and real. They include:

  • Theft or forced transfer of intellectual property;
  • Lack of bilateral investment rights, transfer of ownership or control of investments;
  • Onerous non-tariff barriers;
  • Unfair subsidies or benefits for state-owned enterprises; and
  • Lack of rapid enforcement of any disagreements.

China will only comply with international trade agreements and only do what is in its own self-interest. Near term, we should expect challenge and conflict to characterize the relationship between China and the West over a range of economic, human rights and strategic issues.

There may, however, be areas where we will simply never agree. As the two largest economies in the world, China and the United States should continue to have a long-term interest in collaborating where we can on critical global issues, including climate change, global health and stability on the Korean Peninsula.

China does not have a straight road to becoming the dominant economic power. To put this in perspective, America’s GDP per person in 2019 was $65,000 and China’s was $10,000. Even if we do a rather poor job at managing our economy (growing at 2%), our GDP per person in 20 years would be $85,000. And if the Chinese do a good job managing their economy, their GDP per person in 2040 would still be under $35,000. While China is well on its way to becoming a fully developed nation, it may face more uncertainty and moments of slower growth in the future (like the rest of us) than in the past.

For the near term, if China and the United States can maintain a healthy strategic and economic relationship, it could greatly benefit both countries – as well as the rest of the world.

Another factor is the Chinese currency, the renminbi (RMB). The renminbi cannot be freely moved around the world; it can leave China only in limited amounts and can be invested only as the Chinese see fit. Thus the renminbi is a long way from replacing the U.S. dollar as the world’s reserve currency.

The Chinese currency is subject to their internal politics, laws and regulations. While the Chinese have done a good job building their economy and are slowly moving toward a more transparent society and financial system, they are a long way from having a currency that is fully “convertible” like the U.S. dollar.

References:

  1. https://reports.jpmorganchase.com/investor-relations/2020/ar-ceo-letters.htm
  2. https://www.wsj.com/articles/slow-meltdown-of-china-economy-evergrande-property-market-collapse-downturn-xi-cewc-11640032283
  3. https://www.msn.com/en-us/money/markets/could-chinas-economy-collapse/ar-AAPypxS
  4. https://warontherocks.com/2021/12/could-chinas-massive-public-debt-torpedo-the-global-economy/

Commercial real estate bust.

While the U.S. economy is likely to grow 6% in 2021 and 4% in 2022, the highest rate in decades, analysts project.

China’s economy has been faltering despite it’s exceptionally strong trade surplus and it’s authoritarian government’s heavy hand on COVID-19.

Better Workouts Include the Brain and Body

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Movement is Medicine: ‘We can use our bodies as a tool to affect the way we think and feel, like a hotline to the mind.” Caroline Williams, researcher and author of ‘Move: How the New Science of Body Movement Can Set Your Mind Free’

“Movement affects your brain; but your brain also affects movement.”

Regular physical activity is an important part of a healthy mind, body and lifestyle. Not only is exercise good for your muscles and bones, but it is also an important part of keeping your brain healthy too. Exercise doesn’t only mean working out or playing sports, it just means moving your body and being active. A few other examples of exercise are: dancing, walking, biking, swimming, or throwing a Frisbee.

What happens in the body and brain during exercise: As your heart rate increases during exercise, blood flow to the brain increases. As blood flow increases, your brain is exposed to more oxygen and nutrients. Exercise also induces the release of beneficial proteins in the brain. These nourishing proteins keep brain cells (also known as neurons) healthy, and promote the growth of new neurons. Neurons are the working building blocks of the brain. As a result, individual neuron health is important to overall brain health.

Studies have shown that the connection between your brain and your body is a “two-way street” and that means physical movement can effectively change your brain for the better, explains Srini Pillay, M.D., Assistant Professor of Psychiatry at Harvard Medical School.

Your brain plays a major role in your physical and emotional well-being, and it directly affects your ability to exercise. Your brain was designed for survival and avoiding danger (fight, flight or freeze). Regular aerobic exercise can reduce anxiety by making your brain’s “fight, flight or freeze” system less reactive.

One way to trick your brain is doing a Gatorade swish, which misleads your brain into thinking your body is getting a jolt of energy from a sugary beverage, even if it isn’t. The act triggers the brain, which naturally wants to preserve energy for survival, into releasing dopamine to help jump start exercise based on the false promise is sugar, Dr. Jennifer Heisz, explains in Move Your Body; Heal Your Mind.

Movement can improve your cognitive functions and mental health. Regular physical activity and movement benefit more than just the body. They actually augment brain function. Movement supplies brain cells with oxygen, promotes the production of new brain cells, and aids in creating new synapses.

Regular exercise such as aerobic, resistance, flexibility, and balance exercises can reduce depressive symptoms. Exercise can be as effective as medication and psychotherapies.

Regular exercise may boost mood by increasing a brain protein called BDNF that helps nerve fibers grow.

Mindfulness during exercises and workout.

“A 12 minute walk alters metabolites in our blood, molecules that affect the beating of our heart, the breath in our lungs, the neurons in our brain.” explains Annabel Streets, “52,ways to Walk: The Surprising Science of Walking for Wellness and Joy, One Week at a Time.

Physical activity is ignored by experts who are too focused on addressing mental health issues from the neck up. “It’s low hanging fruit,” she says, “brain chemist, thought, behaviors might take years to address on the couch.” Dr. Ellen Vora, a New York psychiatrist.

“The brain is always working against you to not expend energy, but we can override it,” says Dr. Heisz.

Exercise can be turned into a powerful meditation practice states Anita Sweeney, author of “Make Every Move a Meditation: Mindful Movement for Mental Health, Well-Being, and Insight”. Exercise can be turned into a powerful meditative practice by focusing the mind on a single thought, object or sensation during exercise can help bring clarity and peace of mind. For example, focusing on your left foot hitting the pavement can help you focus.

Exercise is essential for those seeking better emotional well-being and better mental health. Both physical exercise and meditative movement are activities that you can do to improve the way you feel.

Studies have found that people who exercise daily are at greatly reduced risk of developing Alzheimer’s disease and dementia. Rudolph Tanzi, Kennedy professor of neurology and cofounder of the McCance Center for Brain Health at MGH, states, “It’s hard to imagine anything better for brain health than daily exercise, and our findings shed new light on the mechanism involved: protecting against neuroinflammation, perhaps the biggest killer of brain neurons as we age.”

References:

  1. https://www.wsj.com/articles/best-books-2022-workout-fitness-11641905831
  2. https://www.health.harvard.edu/blog/how-simply-moving-benefits-your-mental-health-201603289350
  3. https://www.dana.org/article/how-does-exercise-affect-the-brain/
  4. https://www.harvardmagazine.com/2022/01/right-now-brain-on-exercise
  5. https://www.discoverhealthfmc.com/blogs/understanding-how-your-brain-affects-your-movement

Inflation – The Elephant Affecting the Economy

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Historic inflation and interest rates hike fears are sinking many high growth technology stock prices. Inflation in 2021 was the consequences of rapidly rebounding demand in a supply-constrained world.

The fear of inflation and the the fear of subsequent Federal Reserve interest rate hikes are creating concern and panic among some investors. Rising interest rate and skyrocketing inflation worries are pressuring stocks. And by the Fed signaling raising rates in the future, it unsettles and sends both Wall Street and Main Street into a panic.

But, what is inflation?

Inflation is when consumer prices rise, goods and services become more expensive, and money loses value. Inflation reduces your purchasing power, eats away at your investment returns, and chips away at your wealth. Currently, Americans are experiencing the pernicious effects of inflation, especially in the areas of escalating food and energy prices.

2021 was one of the worst years for inflation that Americans have seen recently, with a 7% increase, the highest since 1982. For consumers, this means $1 at the beginning of the year was roughly worth only $0.93 at the end. While the impact might seem small when examining it on a dollar level, it represents a change in the purchasing power of retirement savings from January 2021 to December 2021. The Wall Street Journal’s Gwynn Guilford writes: “U.S. inflation hit its fastest pace in nearly four decades last year as pandemic related supply and demand imbalances, along with stimulus intended to shore up the economy, pushed price up at a 7% annual rate.”

American economist and Nobel prize laureate Milton Friedman opined that: “Inflation is always and everywhere a monetary phenomenon.”  In other words, inflation is invariably a case of too much cheap money and capital chasing too few goods, services and assets.

In the last twenty years, the United States witnessed a large accumulation of federal public debt under Presidents Bush, Obama, Trump, and Biden administrations. Federal debt climbed from 55% of GDP in 2002 to 105% in 2019. Additionally, the U.S. has also endured a decade plus of loose monetary policy overseen by the Fed which has pumped up asset prices.

As a result of the escalating public debt and loose monetary policy, the Federal Reserve most important immediate task, of its dual mandates, must be to get inflation under control and reduced. Since 1977, the Federal Reserve has operated under a mandate from Congress to “promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates”—what is now commonly referred to as the Fed’s “dual mandate.”

The Labor Department stated that the consumer-price index — which measures what consumers pay for goods and services — rose 7% in December from the same month a year earlier, up from 6.8% in November. That was the fastest growth in inflation since 1982 and marked the third straight month in which inflation exceeded 6%.”

Three sectors–energy/materials, financials and technology–may be viewed as inflation beneficiaries or, at the very least, inflation-agnostic assets:

  • Energy and materials are commodity-based, and oil, gas, and most commodities rebounded from prices that had fallen to a fraction of their pre-pandemic levels.
  • Financials, especially banks, are often viewed as inflation hedges since interest rates historically climb when inflation heats up. This reflects the eroding effect of higher prices on a currency’s value in the future, which is remedied by rate hikes on debt.
  • Technology is a more nuanced winner in the inflation game. The large tech players and most software companies have tremendous economies of scale. As their revenues scale, their costs, particularly labor, do not grow at nearly the same degree, cushioning profit compression from wage escalation.

In a book called “The Great Inflation”, the authors wrote, “Inflation is not an Act of God…inflation is man-made and can be started, prevented, regulated and stopped by human action.”

“To think that a stimulus of this magnitude wouldn’t cause inflation required believing either that such a huge adjustment was possible within a matter of months, or that fiscal policy is ineffective and does not increase aggregate demand. Both views are implausible”, says Jason Furman, former chair of President Obama’s Council of Economic Advisers.

Thus, slowing down in aggregate federal debt growth per capita, tightening monetary policy, and raising interest rates could be effective tools in stemming runaway inflation.

“If I was Darth Vader and I wanted to destroy the US economy, I would do aggressive spending in the middle of an already hot economy… What are you going to get out of this? You’re going to get a sugar high, the higher inflation, then an economic bust.” — Billionaire investor Stanley Druckenmiller, July 23, 2021

References:

  1. https://www.cnbc.com/2021/12/13/op-ed-these-3-market-sectors-shone-even-as-investors-grew-weary-of-hearing-about-inflation.html
  2. https://www.americanthinker.com/blog/2021/12/is_joe_manchin_right_about_inflation.html
  3. https://seekingalpha.com/article/4479557-how-to-better-understand-inflation-and-predict-its-direction
  4. https://www.marketwatch.com/story/why-did-almost-no-one-see-inflation-coming-11642519667

Sugar – Detrimental to Your Immune System Health

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The ‘worst food ingredient for your immune system’— sugar. Most Americans consume between 19 and 25 teaspoons of added sugars daily.

Metabolic disorders, like obesity and diabetes, have surged in the U.S. over the past several decades. Experts believe that sugar consumption is the major cause of obesity and chronic diseases, such as type 2 diabetes.

According to many immunologist, having diabetes means your body is in a chronic low-grade inflammatory state, which stresses the body’s innate immune system and makes it slower to jump on pathogens, like COVID19, when they enter the body. Chronic inflammation is an unhealthy and abnormal immune reaction in the body and added sugars are a key diet component known to exacerbate this type of inflammation.

When it comes to your immune system, it important that you understand that what you eat does matter a lot. And no ingredient is more detrimental to your immune system and physical health than added sugar.

From marinara sauce to peanut butter, added sugar can be found in even the most unexpected products. According to the Food and Drug Administration (FDA), added sugars include sugars that are added during the processing of foods (such as sucrose or dextrose), foods packaged as sweeteners (such as table sugar), sugars from syrups and honey, and sugars from concentrated fruit or vegetable juices. They do not include naturally occurring sugars that are found in milk, fruits, and vegetables. The Daily Value for added sugars is 50 grams per day based on a 2,000 calorie daily diet. For most Americans, the main sources of added sugars are sugar-sweetened beverages, baked goods, desserts, and sweets.

The American Heart Association (AHA) states individuals should limit their sugar intake to six to nine teaspoons each day, which is roughly the same amount of sugar in a single can of sugary soda: eight teaspoons.

Sugar is not just bad for your teeth. Too much sugar can contribute to chronic diseases, can affect the pH levels within the body, and can impact heart health and brain health. Basically, sugar can affect the health of both your mind and body.

In the US, added sugars account for up to 17% of the total calorie intake of adults and up to 14% for children, according to AHA. The 2020-2025 Dietary Guidelines for Americans recommend that you limit your added sugars consumption to 10% of total calories, making the current average consumption by Americans significantly higher than recommended.

Eliminating excess added sugar from your diet can not only help end this cycle of increasing metabolic disorders, but it can reverse it completely. Dialing back your sugar consumption is one of the most effective ways to improve your immune system and your overall health.

Preventative care, especially when it comes to an insidious disease like diabetes, it is recommended that the first step you take in your nutrition journey is to ask your health care provider to perform a fasting hemogoblin A1c test, even if your fasting blood glucose is normal.

Hemogoblin A1c tests measure average blood sugar over the previous three months, so even if your blood sugar is normal the day you see your doctor, the test can catch underlying issues.

According to Dr. Heather Moday, a board-certified allergist, immunologist and functional medicine physician, once you have an idea of where you stand on the blood sugar spectrum, you can take the steps below for better health:

  1. Cut back on added sugars. – This means eliminating candy, soda, cake and those seasonal flavored lattes from your diet. These foods and drinks don’t provide any nutritional value, and they contain massive amounts of sugar.
  2. Read the labels. – It is essential to check the amount of added sugar in every item in your pantry. The average American takes in about 17 teaspoons (71 grams) of added sugar a day, but the American Heart Association recommends no more than six teaspoons (25 grams) of added sugar a day for women, and nine teaspoons (36 grams) for men.
  3. Eat more fiber. – If sugar is bad, then fiber is the good. Fiber not only keeps your digestion regular, it also helps slow the absorption of sugar into your bloodstream, which protects you from sugar spikes. Lack of fiber is another reason why sodas, fruit juices and sugared coffee drinks are so detrimental to your health. They contain a ton of sugar and none of the blood-sugar-protecting fiber that fresh whole plant-based foods have. The best high-fiber foods are black beans and lentils, steel-cut oats, avocados, buckwheat, pears, raspberries, barley and flaxseeds.
  4. Chose nutrients over calories. – Instead of worrying about cutting calories, focus on adding more nutrient-dense foods to your diet, with lots of proteins and healthy fats. You don’t need to go low-carb, just choose the “right” carbs. In fact, eating carbs in the form of vegetables, beans, whole fruits, and nuts and seeds — all mineral- and vitamin-rich foods — is a great way to keep those hunger pangs at bay.

Sugar does occur naturally in all foods that contain carbohydrates, such as fruits and vegetables, grains, and dairy. Consuming whole foods that contain natural sugar is okay, according to Harvard Medical School. Plant foods also have high amounts of fiber, essential minerals, and antioxidants, and dairy foods contain protein and calcium. Since your body digests these foods slowly, the sugar in them offers a steady supply of energy to your cells.

However, problems do occur when you consume too much added sugar — the sugar that food manufacturers add to products to increase flavor or extend shelf life. “Excess sugar’s impact on obesity and diabetes is well documented, but one area that may surprise many men is how their taste for sugar can have a serious impact on their heart health,” says Dr. Frank Hu, professor of nutrition at the Harvard T.H. Chan School of Public Health.

Bottomline is that too much added sugar can be one of the greatest threats to cardiovascular disease and metabolic health. And, your consumption of added sugar must be drastically reduced or eliminated from your diet to improve both your cardiovascular and metabolic health.

The goal isn’t to completely eliminate dessert or sweets from your life, but to bring your added sugar intake into a healthier range.

References:

  1. https://www.cnbc.com/2022/01/15/this-is-the-worst-ingredient-for-your-immune-system-says-immunologist-and-health-expert.html
  2. https://www.fda.gov/food/new-nutrition-facts-label/added-sugars-new-nutrition-facts-label
  3. https://www.eatingwell.com/article/7869775/what-happens-to-your-body-when-you-cut-out-sugar/
  4. https://www.sugar.org/diet/diet-sugar-in-moderation/
  5. https://www.cnbc.com/2022/01/15/this-is-the-worst-ingredient-for-your-immune-system-says-immunologist-and-health-expert.html
  6. https://www.health.harvard.edu/heart-health/the-sweet-danger-of-sugar
  7. https://www.niddk.nih.gov/health-information/diagnostic-tests/a1c-test

The Purpose of Education

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“Education must enable one to sift and weigh evidence, to discern the true from the false, the real from the unreal, and the facts from the fiction. The function of education, therefore, is to teach one to think intensively and to think critically. We must remember that intelligence is not enough. Intelligence plus character–that is the goal of true education.”

– Dr. Martin Luther King Jr., Excerpted from Morehouse College Student Paper, 1947

Dr. King believed “…education has a two-fold function to perform in the life of man and in society: the one is utility and the other is culture. Education must enable a man to become more efficient, to achieve with increasing facility the ligitimate goals of his life.”

Moreover, he stated, “Education must also train one for quick, resolute and effective thinking. To think incisively and to think for one’s self is very difficult. We are prone to let our mental life become invaded by legions of half truths, prejudices, and propaganda. At this point, I often wonder whether or not education is fulfilling its purpose. A great majority of the so-called educated people do not think logically and scientifically. Even the press, the classroom, the platform, and the pulpit in many instances do not give us objective and unbiased truths. To save man from the morass of propaganda, in my opinion, is one of the chief aims of education. Education must enable one to sift and weigh evidence, to discern the true from the false, the real from the unreal, and the facts from the fiction.”

“The function of education, therefore, is to teach one to think intensively and to think critically. But education which stops with efficiency may prove the greatest menace to society. The most dangerous criminal may be the man gifted with reason, but with no morals.”

Each year on the third Monday of January, the nation observes Martin Luther King, Jr. Day and reflect on the work that still needs to be done for racial justice and equality in America.

MLK Day is the only U.S. federal holiday designated as a National Day of Service to encourage all Americans to volunteer to improve their communities and to improve themselves.

Dr. Martin Luther King, Jr. was a man of deep and abiding faith, compassion, and dedication.  He reminded us all that “human progress never rolls in on wheels of inevitability,” and that “the time is always ripe to do right.”  He challenged all Americans to live up to the ideals enshrined in our founding documents – that we are all created equal, endowed with unalienable rights to life, liberty, and the pursuit of happiness.

In 1963, Reverend Dr. Martin Luther King, Jr., stood on the National Mall and shared a dream that has continued to inspire a Nation:  To bring justice where there is injustice, freedom where there is oppression, peace where there is violence, and opportunity where there is poverty. 

As we remember and celebrate Dr. King’s life and legacy, let’s recommit ourselves to embracing the standard he set, to honoring the legacy that lives on, and to solving the challenges that remain.

“If you can’t fly then run, if you can’t run then walk, if you can’t walk then crawl, but whatever you do… you have to keep moving forward.” Dr. Martin Luther King, Jr.

References:

  1. https://www.whitehouse.gov/briefing-room/presidential-actions/2022/01/14/a-proclamation-on-martin-luther-king-jr-federal-holiday-2022/
  2. https://kinginstitute.stanford.edu/king-papers/documents/purpose-education
  3. https://www.dodea.edu/dodeaCelebrates/MLK.cfm
  4. https://gettingpeopleright.com/resources/10-martin-luther-king-jr-quotes-about-leadership/

Cathie Wood Dislikes Investing in Chinese Stocks

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“Pouring billions of dollars into China now is a tragic mistake.” George Soros

Cathie Wood, the CEO of Ark Invest, has slashed her company’s investment exposure to China in 2021. Her actions came as Beijing’ tightened its authoritarian grip on domestic businesses and the economy. These actions has rattled global investors, wiping trillion of dollars off the value of Chinese stocks and triggering fears about the future of innovation in China, especially with China experiencing serious economic slowdown and real estate turmoil.

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Wood revealed that her Ark Innovation ETF has significantly reduced its exposure to China. Sweeping regulatory changes have made the investment environment riskier in,China, according to a Financial Times report.  Additionally, the Chinese government has been accused by the U.S. and the international community of committing genocide specifically against the Muslim Uyghurs and other minorities which has resulted in several countries boycotting the 2022 Beijing Winter Olympics because of these allegations.

Almost every week late last year, China announced a regulatory crackdown aimed at reasserting its absolute control of its economy. The crackdowns included a banned on the ride-share company Didi from app stores a day after it listed on the New York Stock Exchange.

With Chinese authorities apparently focusing on social issues and social engineering at the expense of capital markets, Wood said, “We own very, very few stocks there [in China] because they’re unpredictable. They are grappling with what most governments are grappling with: the gap between rich and poor.”

Furthermore, Chinese authorities have been cracking down on cheap credit in an effort to cool the country’s real estate market that has been driven by speculation. These actions has caused China’s Evergrande Group, the world’s most indebted property developer, and other large property developers to default on bond payments. Wood is concerned that 75% of consumer savings in China is held in real estate, and real estate values have fallen in recent months. Her analysis: That the Chinese government is willing to risk the decline in real estate values and wipe out real estate investors in order to address the wealth gap.

Angel investor and entrepreneur Jason Calacanis commented: “I think the mad king is circling his wagons because he feels threatened. I’m talking about [Chinese President] Xi Jinping.”

President Xi Jinping’s has talked about “common prosperity” as a policy goal in China, and called on high-income Chinese enterprises to “return more [of their profits] to society”. These policies have been particularly focused on cracking down on the power of big private companies, such as e-commerce giant Alibaba and ride-hailing app Didi. Beijing’s policies have prompted investors to sell Chinese assets in 2021.

Moreover, Chinese companies in the technology, education and gaming sectors have faced an onslaught of draconian new rules relating to data privacy and workers’ rights in recent months. Chinese authorities have told the companies to “break from the solitary focus of pursuing profit or attracting players and fans.” Within the past several months, China barred online gamers under the age of 18 from playing on weekdays and limited their play to just three hours on weekends.

Cathie Wood is also circumspect about China’s demographics. China has been confronting the lowest fertility rates it has experienced in seven decades as well as a material gender imbalance. This is a growing concern to the Communist authoritarian government.

“I think President Xi is very unsettled that China’s three-child policy is not working. And that’s very forecastable,” Wood said.

Multinational U.S. companies have come under increased pressure both within China and internationally as they aim to comply with Xinjiang-related trade sanctions while simultaneously overlooking Chinese government’s crimes against humanity while continuing to operate in China. These companies issued marketing statements condemning the murder of George Floyd in the U.S. while turning a blind eye and remaining mute regarding genocide and mass murder in China.

Billionaire investor George Soros said BlackRock’s and other U.S. businesses who are investing billions of dollars into China now is a “mistake” and will likely lose money for the asset manager’s clients, according to an opinion piece in the Wall Street Journal.

“Pouring billions of dollars into China now is a tragic mistake,” Soros wrote in the op-ed. “It is likely to lose money for BlackRock’s clients and, more important, will damage the national security interests of the U.S. and other democracies.”

References:

  1. https://www.forbes.com/sites/kerryadolan/2021/12/03/investor-cathie-wood-on-bitcoin-why-she-sold-stocks-in-china-and-what-her-firm-is-buying-now
  2. https://www.cnn.com/2021/09/09/investing/cathie-wood-ark-china/index.html
  3. https://www.afr.com/markets/equity-markets/how-jack-ma-treatment-prompted-cathie-wood-to-quit-china-20211020-p591ia
  4. https://www.reuters.com/business/finance/soros-says-blackrocks-china-investments-likely-lose-money-wsj-2021-09-07/
  5. https://www.cnbc.com/2022/01/11/intel-deletes-reference-to-xinjiang-after-backlash-in-china.html

Diversification and Performance Over Ten Years

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Diversification comes from a very simple idea…don’t put all your eggs in the same basket.

2021 Performance Chart represents asset allocation quilt over the past 10 years:

EW = an equal-weighted portfolio of every asset on the quilt

The gap between the best and worst performing asset classes is huge. The best performing asset class (REITs) outperformed the worst (Emerging Markets (EM)) by more than 44% in 2021.

The average difference between the best and worst performer of the 10 asset classes used here since 2012 is 20.2%. The biggest difference between top and bottom performers came in 2013 when small cap stocks outperformed commodities by more than 52%.

This tells us diversification is not dead by a long shot but it also shows how many opportunities investors have to be either really right or really wrong if they go to the extremes in any one asset class or region.

The consistency of the S&P 500 is impressive over the ten year period. For this entire 10 year period large cap U.S. stocks have been in the top 3 of these asset classes every single year, including the top slot for two of the past three years.

And the crazy thing about the outperformance is the volatility of annual returns is lower for the S&P than its equity counterparts:

  • S&P 500: 12.3%
  • Small caps: 14.7%
  • Mid caps: 14.0%
  • Foreign stocks: 14.8%
  • Emerging markets: 18.8%

Every type of investment has risk attached to it. This risk can evolve over time, but it exists. Risk is something an investor should always consider.

For investors, one of the most important considerations is how to manage investing and portfolio risk. Diversification is a proven and efficient way to manage investment risks.

Diversification is the practice of building a portfolio with a variety of investments that have different expected risks and returns. Diversification aims at spreading investments across a variety of asset classes.

The benefit of diversification in your investment portfolio is that it helps smooth portfolio returns over time: as one investment increases, it offsets losses from another investment, thereby providing more regular returns on investment under various economic and market conditions.

You can diversify your portfolio by investing an equally-weighted return for all 10 asset classes (minus EW) listed in the Performance Chart. These asset classes have varying levels of risk and returns, so including investments across asset classes will help you create a diversified portfolio. Diversified investment portfolios generally contain at least two asset classes.

Diversification can help protect you against events that would affect specific investments. Yet, diversification means that every year you miss out on both home runs and strikeouts regarding your investments. Thus, diversification means that your portfolio is never going to be the best performer in a given year. The equal-weight portfolio is basically always in the middle of the pack.

But a fully diversified portfolio of all ten asset classes is never the worst performance either.

This is the trade-off you make when trying to control for risk. Being diversified means always investing in both the best and worst performers each year. But, you will never having the best or worst performance in your portfolio.

Most investors know diversification is a smart move and is a key part of risk management, with the goal to preserve your portfolio’s value.

Diversification does not guarantee returns or protect against losses and can help mitigate some, but not all, risk. For example, systematic risks – which include inflation, interest rates or geopolitical events – can cause instability in markets and affect the broader economy and market overall.

References:

  1. https://awealthofcommonsense.com/2022/01/updating-my-favorite-performance-chart-for-2021/
  2. https://www.usbank.com/financialiq/invest-your-money/investment-strategies/diversification-strategies-for-your-investment-portfolio.html

Discounted Cash Flow

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Investments are the discounted present value of all future free cash flow.

Discounted cash flow (DCF) is a method of investment valuation in which future cash flows are discounted back to a present value using the time-value of money.

Present value (PV) is a financial calculation that measures the worth of a future amount of money or an investment’s future cash flow in today’s dollars adjusted for interest and inflation. In other words, it compares the buying power of one future dollar to purchasing power of one today.

PV is an indication of whether the money an investor receives today can earn a return in the future. Investors calculate the present value of a firm’s expected cash flows to decide if the stock is worth investing in today.

An investment’s worth is equal to the present value of all projected discounted future cash flows.

Discounted cash flow is a way of evaluating a potential investment by estimating future income streams and determining the present worth of all of those cash flows in order to compare the cost of the investment to its return.

When an investor is trying to determine how to spend capital, it is important to determine whether or not investments will result in a positive return. The DCF method allows an investor to determine the value of the future projected cash flow in today’s dollars. An investor can subtract the amount spent on the investment from the present value of future cash flows to calculate the net present value of the investment.

In other words, they can calculate how much money the investment will make in today’s dollars and compare it with the cost of the investment. NPV and Internal Rate of Return are the methods used in Discounted Cash Flow.

The Net Present Value (NPV) represents the present value of cash flow. The NPV can also be called as the difference between the present values of cash inflow and cash outflow. To calculate the net present value of an investment using the discounted cash flows method:

Example – an investor is considering investing in property that would cost his LLC $1,000,000 and he hold it for 5 years. What is the net present value of this investment using the discounted cash flows method?

The investor determined the discount rate to be 10%. With this information, he calculated the following future discounted cash flows:

  • Year 1 = $130,000
  • Year 2 = $150,000
  • Year 3 = $200,000
  • Year 4 = $210,000
  • Year 5 = $200,000

The total projected cash flows is $890,000.

The net present value of this investment is $890,000-$1,000,000 which is equal to -$110,000.

In this example, an investor should not make this investment because the original cost (cost basis) is greater than the value of the future discounted cash flow creating a negative return over the time period.

As in this example, the DCF is compared with the initial investment. If the DCF is greater than the original cost, the investment is profitable. The higher the DCF, the greater return the investment generates. If the DCF is lower than the present cost, investors should rather hold the cash.

An investor’s expected cash flows are at a discount rate that is actually the expected return. The discount rate is inversely correlated to the future cash flows. The higher the discount rate, the lower the present value of the expected cash flows.

The NPV represents the present value of cash flow and is generally used for comparing both the internal and the external investments of a company. DCF is a method to calculate the value of an investment based on the present value of its future cash flow.

References:

  1. https://www.myaccountingcourse.com/accounting-dictionary/discounted-cash-flow
  2. https://corporatefinanceinstitute.com/resources/knowledge/valuation/discounted-cash-flow-dcf/
  3. https://www.myaccountingcourse.com/accounting-dictionary/present-value