Morning Download 

Personal finance + economics + markets

Good morning, investors! We’re not too happy about the sluggish market but that’s the norm lately. In fact, the last 2 days were the worst 2 since March. Brace yourself, because it might get a little worse before it gets any better.

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Fun fact: There is a myth surrounding October in the stock market. There is even an effect called The October Effect.

People think that the stock market declines more during October than during other months. There were two big crashes in October. The Great Crash of 1929 and the Crash of 1987 were both in October. However, as we said, experts think it is just a myth.

Today we cover:

• Auto workers to expand their strike?

• The falling market.

• Investing in real estate.

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📊 Economy and News 

Auto workers prepare to expand their strike

The auto industry is still in a mess due to strikes that have affected production.

General Motors and Stellantis announced fresh layoffs this week causing the labor standoff to worsen.

Stellantis, on the other hand, provided a glimmer of hope for a breakthrough by giving the union a new contract proposal. Not much is known about the offer; however, it is believed that it mainly covers noneconomic issues.

Moreover, experts aren’t sure if the offer would be enough to satisfy union President Shawn Fain, who plans to announce new strike targets tomorrow if Ford, GM, and Stallantis fail to make a move.

What next? The strike could push new and used car prices and result in a shortage of car parts.

Possible winner? Surprisingly, Tesla [TSLA -2.62%] could come out the winner as the their average salaries are currently about half those paid at the 3 legacy auto makers. If the strike is successful, the big auto makers will see their expenses go up drastically, while Tesla’s will remain the same.

Ford is already projecting to lose $4.5 billion on their EV’s this year. The cars from the Big 3 will get more expensive. Meanwhile, Tesla has dropped the cost of their EVs to grab more market share.

Global hits:

• Swiss National Bank ends hike streak.

• Russia temporarily bans the export of petrol and diesel.

• India and Canada continue to fire shots at each other.

• US weekly jobless claims drop to eight-month low.

📈 Stocks

S&P 500 4,330.00 (-1.64%)
DJIA 34,070.42 (-1.08%)
NASDAQ 14,694.24 (-1.84%)
VIX 17.54 (15.85%)
* Prices as of Sep 22, 12:20 AM UTC

The stock market goes down AGAIN

All major indexes fell yesterday over fears of a government shutdown.

It was the third straight day of losses for the three indexes and the worst session since March for the S&P 500.

The U.S. 10-year Treasury yield hit a high of 4.494%, reaching its highest level since 2007 thanks to catalysts such as positive weekly jobless claims data.

“That’s kind of a warning sign for markets right now,” said Adam Turnquist, chief technical strategist at LPL Financial, of recent yield moves. He added that yields are “certainly weighing on risk appetite at this point.”

The chart below highlights yesterday’s major market movers:

🔐 Crypto

Bitcoin $26,585.10 (0.01%)
Ethereum $1,585.87 (0.01%)
Total market cap $1.09 (-1.2%)
* Prices as of Sep 22nd, 12:20 AM UTC

Here’s all you need to know about the crypto world:

• XRP may go up 250%.

• Vivek Ramaswamy Is drafting a 'Crypto Policy Framework'.

• Bitcoin slips once again.

• Ex-employee blames Sam Bankman-Fried's Alameda for Bitcoin's 2021 drop

💵 Personal Finance

Investing in Real Estate

Real estate investing can be a great way to build wealth over the long term. Here are some of the advantages of investing in real estate:

• Potential for high returns: Real estate has historically outperformed other asset classes, such as stocks and bonds, over the long term. This is because real estate is a tangible asset that is not subject to the same volatility as the stock market.

  Where to invest? Choose states where prices are affordable and increasing. New York, for example, has a very high appreciation rate – up to 15% in some areas – but it is not a very affordable option as the average house in the state costs over $700,000.

  Texas can be a better option with affordable rates and great growth potential. Some other good states include Maine and Connecticut where homes appear to be appreciating at a rate of 8%, more than double when compared to the country’s average of 3%.

• Cash flow: Rental properties can generate positive cash flow, which can be used to offset the cost of the mortgage, taxes, and other expenses.

  The average apartment rent in the U.S. is $1702, which is a decent amount of money. Moreover, it can increase easily if you have a good house in a decent location.

• Tax benefits: Real estate investors can take advantage of a number of tax breaks. Here are some of the top write offs and deductions investors enjoy:

  • Passive Income & Pass-Through Deductions

  • Depreciation

  • Capital Gains

  • 1031 Exchange

  • Self-Employment/FICA Tax

  • Tax-Deferred Retirement Accounts

  • Opportunity Zones

• Appreciation: Real estate values tend to appreciate over time, which can lead to significant profits when the property is sold. The market appears to be ready to go down, which makes it a good time to invest.

• Special Rates: You might be eligible for special mortgage rates if you are buying a property with the intention to use it as your primary house. Furthermore, there may be some other conditions, such as no previous home ownership.

  The government wants to increase homeownership rate in the country, which currently stands at 66%.

• Diversification: Real estate can help to diversify your investment portfolio and reduce your risk. Since real estate protects against inflation, it can prove to be a good option. Furthermore, you can diversify more by turning to real estate ETFs.

Of course, there are also some risks associated with investing in real estate. These include:

• High cost: Real estate can be a relatively expensive investment, especially if you are buying a single-family home. The median price for an existing home — one that's already standing, not new construction — was $410,200 in June 2023. You will find cheaper homes in the country but they're not always worth it.

• Illiquidity: Real estate can be difficult to sell quickly, especially if the market is slow. On average, it takes 30 to 90 days to sell a home. This can be an issue for people who require liquidity.

• Maintenance: Rental properties require regular maintenance and repairs, which can be costly. The average homeowner spends $1,400 to $2,300 on regular maintenance per year, excluding unexpected repairs.

• Tenants: Dealing with tenants can be a challenge, and there is always the risk of non-payment or damage to the property. Plus, you may not easily find a tenant as the vacancy rate in the country is over 10%.

Despite the risks, real estate can be a very rewarding investment. If you are willing to do your research and manage your property carefully, you can potentially generate significant income and build wealth over the long term.

Check this video for more on real estate investment:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.