Morning Download 

Personal finance + economics + markets

Together with Fundrise

Good morning, investors! The world’s busy guessing the future of the markets while crypto remains stagnant, except for SEC chair Gensler getting grilled by Congress (more on that below).

Fun fact: There are more than 18,000 cryptocurrencies in existence. How many do you know of? 🪙 

Today we cover:

• Rising home prices.

• Is it a bear market?

• The importance of diversification.

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📊 Economy and News 

US home prices rose in July to record-high levels

US home prices went up in July, hitting new highs. This is the sixth month in a row that prices have gone up. Experts believe it is a strange phenomenon as high interest rates are supposed to push prices lower but prices are going up due to low inventory.

Prices rose 0.6% from the month before and 1% compared to July last year.

“The increase in prices that began in January has now erased the earlier decline, so that July represents a new all-time high for the National Composite [index],” said Craig Lazzara, managing director at S&P Dow Jones Indices, in a statement.

National home prices have jumped about 5.3% since the beginning of the year. Great news if you’re a homeowner. Not so great if you’re looking to buy.

Global hits:

• London’s real estate is in a recession with the share of empty space hitting its highest level in three decades.

• Evergrande stock crashes one more time. (Just in: Shares of Evergrande have been suspended)

• All is not well in Europe – Poland continues to be in trouble.

📈 Stocks

S&P 500 4,274.51 (0.023%)
DJIA 33,550.27 (-0.20%)
NASDAQ 13,092.85 (0.22%)
VIX 18.23 (-3.80%)
* Prices as of Seo 28th, 12:20 AM UTC

2023 is a bear market

A CNBC survey showed a majority of investors think that 2023 is a bear market, i.e. the bounce seen in 2023 is an indication of a bear rally.

Only 39% of investors believe we have entered a new bull market.

The year started on a very positive note. However, all major indexes have fallen this month with S&P500 now up only 11% since the beginning of the year after losing 5% in September.

About 41% of respondents believe we will see a recession in the middle of 2024 and 4% believe we’re already in a recession. Only 14% are confident of a ‘no recession’ scenario.

What do you think? Reply to this email and share your thoughts.

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🔐 Crypto

The big event in crypto today was SEC chair Gensler getting grilled by Congress, esp when he was asked about whether a digital Pokemon card would be considered a security. Worth a watch!

💵 Personal Finance

The importance of diversification

Diversification refers to not putting all your eggs in one basket, i.e.: to spread your investment across a variety of assets, geographic regions, and industries. It helps reduce the risk and protects your investment against inflation, political risks, and more.

Diversification, however, does not fully protect against losses. It only mitigates unsystematic risk and doesn’t protect against systematic risk.

Diversification strategy for your investment

Diversification involves a lot of things and one has to be careful when choosing. Here are a few diversification strategies to consider when investing:

Choose different asset classes

Choose different asset classes such as cash and cash equivalents, bonds, stocks, and real estate. These options come with varying levels of risk and returns, thus mixing these can be a great way to diversify.

Try different industries

If you are keeping an eye on the latest trends, you must know that the tech industry is on fire whereas the entertainment industry is suffering due to strikes. Similarly, the banking industry is also in trouble.

Anyone who has invested in a single industry would suffer losses, but if you invest in multiple industries, you’d be able to stay afloat and beat the market.

Keep adding every now and then

Make sure to constantly rebalance your portfolio. This is important because the market is dynamic and some of your investments will gain value over time and some may lose it. Know when to buy or sell an investment so you can enjoy high returns.

Look at alternative investment options

Alternative investments include these and more:

Commodities

Commodities are real assets that can prove to be good for investors interested in short-term investments. These typically include natural resources, such as oil, agricultural products, natural gas, and precious metals.

Private debt

Private debt is a form of investment that isn’t financed by a bank. The keyword here is ‘private’ as it refers to the investment instrument and not the borrower, as private debt is available to both public and private companies.

Collectibles

This is a controversial example because collectibles do not always offer good returns, but if you play it well, you can make millions investing in collectibles like wine and spirits, fine art, vehicles, coins, and stamps.

Private equity

Different from private debt, private equity is for people with a lot of money as you typically need millions to invest in private equity but returns can be exponential. However, the risk factor is also there.

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Try different locations

Diversification isn’t only about buying different assets, it’s also about trying different locations. Consider a mix of American, European, Asian, and other markets. With this trick, you will stay protected even if there’s a recession or uncertainty in one country.

Though beneficial, diversification isn’t endorsed by everyone. Check this video for more:

Why Buffett, Cuban and Munger all HATE Diversification : World's Greatest Investors

💰 Be a Better Investor

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