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Occasionally you come across a statistic that is truly jarring. This chart shocked us, and was magnified by the accompanying information that the debt was 38% personal loans and 14% credit card debt. Credit card debt typically carries an interest rate of 15-20% so it seems there are some high conviction investors in the market at the moment!
This transition to a dramatic increase in leverage amongst younger investors is a recent trend driven by day trading since COVID struck, an environment in which markets have more or less only risen. The unfortunate reality is that leverage cuts both ways. We don’t know when a change in market direction will occur, but it inevitably will. We just hope those in their early days of building wealth have taken some chips off the table by then.
Farewell, Millennial Lifestyle Subsidy
A fantastic and thought-provoking article that touches on a few themes we have discussed in Insights over the years. The central question is: what happens to the app economy (Uber, food delivery, etc.) when companies actually decide they have to turn a profit? The answer, unfortunately, is that prices need to go up.
We will be watching with interest how this trend unfolds, and sincerely hope we aren’t about to lose all our cheap rides and food.
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The Stockdale Paradox
A brief read on Jim Stockdale’s take on his time in prison camp. Slightly depressing, highly insightful.
Oh, it’s easy. I can tell you who didn’t make it out. It was the optimists.
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Meet Your Next Angel Investor. They’re 19
We can’t help but feel this ties into our main chart this month. We just hope these weren’t the ones using credit card debt.
Everyone obviously hopes to get returns, but most of the time you’re going to lose your money.
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Cathie Wood’s Bad Spring Is Only a Blip When the Future Is So Magnificent
This is the first long-form read we have found on Cathie Wood and ARK Investment Management. It does a great job summing up the firm and its impact on the current retail trading driven market.
It’s a lot. And it may be familiar to anyone who remembers that other spasm of tech-stock fever, the dot-com bubble. But Wood’s got a riff ready for that, too. “The dream was right. It was just 20 to 25 years too early,” she often says. Now, “the seeds are beginning to flourish. We are ready for prime time.”
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