A volatile market is something that can be observed without necessarily even being quantified, because when you watch the $QQQ go from down 2% prior to open to up 3% by market close, we know something’s up—we know we’re seeing volatility.That’s great and all, but being able to measure it concretely adds another layer of understanding and context to what’s going on for&nbsp;any given stock, fund or broad market.Some terms to know<ul><li>The VIX: The $VIX is an index created by the Chicago Board Options Exchange specifically for tracking volatility within the S&amp;P 500 index. Without going into the complicated methodology that would easily take a long whitepaper to explain,&nbsp;the VIX tracks expected volatility within the index, and the higher it ticks, the more volatility the market anticipates. 12-20 is a relatively normal range, while over 20 is a high volatility rating. For reference, it reached 82.69 in March of 2020.</li><li>The beta: The beta of a stock or fund essentially measures how volatile it is relative to the broad market. A beta of 1 means that a stock mirrors the volatility of whatever index is used to represent the overall market (i.e., S&amp;P 500). A beta greater than 1 means that it's more volatile than the overall market, and a beta less than 1 means it's less volatile.&nbsp;The penny stock $SNDL, for example, has a beta of 5.29 right now, which is really high, and Home Depot has a beta of 1.04. You get the gist.</li><li>Standard deviations: Standard deviation&nbsp;is simply a statistical measure of market volatility and helps determine the&nbsp;spread of asset prices from their average price. When prices move wildly, standard deviation is high, meaning an investment is more volatile and therefore riskier. A normal distribution is a symmetrical, bell-shaped distribution where the mean, median and mode are all equal. The standard normal distribution is a normal distribution represented in z scores.&nbsp;It always has a mean of zero and a standard deviation of one.&nbsp;The&nbsp;Empirical Rule&nbsp;states that&nbsp;99.7% of data observed following a normal distribution lies within 3 standard deviations of the mean.&nbsp;</li></ul>

A volatile market is something that can be observed without necessarily even being quantified, because when you watch the $QQQ go from down 2% prior to open to up 3% by market close, we know something’s up—we know we’re seeing volatility.That’s great and all, but being able to measure it concretely adds another layer of understanding and context to what’s going on for any given stock, fund or broad market.Some terms to know

Measuring Market Volatility

INVESTING

We often hear that there’s nothing new under the sun, but right now, it sure as heck feels like we’re in the midst of a never before seen, post-modernist economy of sorts, where old economic morals come to die.&nbsp; Financially speaking, it’s looking pretty bleak out there at times, but between all the negative sentiment there remains some hope and strength in a surprising place—the dollar.The bad: the economy is iffyProblems: Between mountains of problems like a pandemic, money printing, propping up, shortages, inflation, global conflict, and the ever-increasing, seemingly insurmountable cost of living to top it all off, it’s fair to feel like we’re in dystopian times.Inflation:&nbsp;Per the latest <a href="https://www.bls.gov/cpi/" target="_blank">BLS figures</a> from April, inflation clocked in at&nbsp;8.3% over the last 12 months, with energy prices soaring over 30%. The producer price index (PPI), which measures&nbsp;the average change in sales price&nbsp;received by domestic producers of goods and services,&nbsp;might be even more telling and recently came in even higher at 11%.&nbsp;Just to live: The median average sale price of a home in the US has <a href="https://fred.stlouisfed.org/series/MSPUS" target="_blank">gone up $106,000</a> over the last two years. Accounting for average interest rates, insurance, and property taxes, the average, base level monthly cost of owning a home has quickly gone from $1,483 to $2,259, a hefty 53% increase.Markets: Markets don’t like uncertainty&nbsp;and we’ve got a lot of that right now. The entire market has taken a beating all year and hurt investors far and wide while we weigh out all of these catalysts and fear a recession.The good: the US dollar Conventional wisdom would lead us to believe that during times of high inflation, the US dollar would be devalued by rising prices, decreasing&nbsp;its purchasing power. Nevertheless, the dollar is up 7% against the renminbi,&nbsp;10% against the Swiss franc, and 12% against the Japanese yen.How is this possible? Well, even though other nations might be experiencing similar, although different, ramifications in the wake of the pandemic, the US is addressing them differently on the monetary policy front.The Fed is raising rates at a&nbsp;fast clip, and those subsequently higher yields on&nbsp;10-year treasuries we’re seeing as a result are allowing the dollar to flourish. With tighter conditions&nbsp;the Fed is imposing, US debt securities are retaining and attracting noteworthy demand.Why it matters<ul><li>The US is better off than some others: Covid-related lockdowns are still ongoing in China and other places around the world. And the aftermath&nbsp;already left behind in other nations has oftentimes been worse than the already rough outcomes we’ve seen here— more emerging markets are suffering the most.&nbsp; </li><li>Cheaper imports could alleviate inflation: A stronger dollar means less expensive imports. So in the midst of ongoing supply shortages on both the product and labor fronts, a stronger dollar could help alleviate some upward pricing pressure, and hopefully have knock-on effects on inflation.&nbsp; </li><li>US markets still offer superior returns: Whether right or wrong, good or bad, the US markets have consistently outpaced their rivals, with the S&amp;P 500 lapping international counterparts like the Stoxx Europe 600 by hundreds of percent over the last decade. And so far this year, the Shanghai Composite stock index is down 16%. Inevitably, this draws in mutual funds and ETFs during&nbsp;dicey times.</li></ul>

We often hear that there’s nothing new under the sun, but right now, it sure as heck feels like we’re in the midst of a never before seen, post-modernist economy of sorts, where old economic morals come to die.   Financially speaking, it’s looking pretty bleak out there at times, but between all the negative sentiment there remains some hope and strength in a surprising place—the dollar.The bad: the economy is iffyProblems: Between mountains of problems like a pandemic, money printing, propping up, shortages, inflation, global conflict, and the ever-increasing, seemingly insurmountable cost of living to top it all off, it’s fair to feel like we’re in dystopian times.Inflation: Per the latest BLS figures from April, inflation clocked in at 8.3% over the last 12 months, with energy prices soaring over 30%. The producer price index (PPI), which measures the average change in sales price received by domestic producers of goods and services, might be even more telling and recently came in even higher at 11%. Just to live: The median average sale price of a home in the US has gone up $106,000 over the last two years. Accounting for average interest rates, insurance, and property taxes, the average, base level monthly cost of owning a home has quickly gone from $1,483 to $2,259, a hefty 53% increase.Markets: Markets don’t like uncertainty and we’ve got a lot of that right now. The entire market has taken a beating all year and hurt investors far and wide while we weigh out all of these catalysts and fear a recession.The good: the US dollar  Conventional wisdom would lead us to believe that during times of high inflation, the US dollar would be devalued by rising prices, decreasing its purchasing power. Nevertheless, the dollar is up 7% against the renminbi, 10% against the Swiss franc, and 12% against the Japanese yen.How is this possible? Well, even though other nations might be experiencing similar, although different, ramifications in the wake of the pandemic, the US is addressing them differently on the monetary policy front.The Fed is raising rates at a fast clip, and those subsequently higher yields on 10-year treasuries we’re seeing as a result are allowing the dollar to flourish. With tighter conditions the Fed is imposing, US debt securities are retaining and attracting noteworthy demand.Why it matters

The Economy Is Iffy, But The Dollar Is Strong 

ECONOMY

Giphy—MasterChef Junior, Let's Hope For The Best

Trying to call a market bottom is not for the faint of heart, and you risk the threat of widespread mockery for the potential reward of being seen as a prophet. However, that doesn’t mean it isn’t still intriguing to peek under the hood and see what the foreseeable future might bring.Looking for signs of the bottom <ul><li> Few above water: The 200 day moving-average is viewed as a technical long-term trend indicator across the markets that investors use to analyze price trends.&nbsp;A stock that is trading above its 200 day moving average is considered to be in a long term uptrend.&nbsp;Right now though, only about 30% of stocks are above this line, which makes us wonder if there’s only a little further to fall.</li><li>Volatility spikes: This hasn’t been a slow and steady bear market for sure, and a lot of whipsawing has gotten us to this point. This has led to consistent spikes in the <a href="https://www.askfinny.com/bites/measures-of-market-volatility-628b0d4c4d?" target="_blank">VIX volatility indicator</a>, and caused it to remain in the “high” range for a while now. Although not quite to the extreme peaks seen in other previous bear markets and blips, we’re <a href="https://www.cboe.com/tradable_products/vix/" target="_blank">not too far off</a>, meaning peak fear could have arrived.</li><li>Low sentiment: Investor sentiment has just <a href="https://www.aaii.com/sentimentsurvey" target="_blank">eclipsed its worst rating</a> since 2008, and the market’s counteracting forces have a tendency to eventually even out fear over time, especially when it hits a new low like this. This doesn’t mean the market should flip tomorrow, but historically, it does indicate we might be at or near the worst of it.</li><li>Historic ratio return: Over the last 10 years, the S&amp;P 500’s average forward P/E ratio has been 16.9, and it strayed far north of that over the last couple years. A high P/E ratio may indicate that&nbsp;a stock's price is high relative to its earnings and potentially overvalued.&nbsp;Now, it’s back down below 18 for the first time since 2020, leading some investors to believe that this could be the finish line for a much needed trimming.</li></ul>What this may mean for you? If you need to retire ASAP, it might be time to dial back. If you’ve got 30 years, you could probably proceed with business as usual. If you like to trade actively, your strategy might need adjusting, and if you don’t invest at all, the best time to start is still now.

Trying to call a market bottom is not for the faint of heart, and you risk the threat of widespread mockery for the potential reward of being seen as a prophet. However, that doesn’t mean it isn’t still intriguing to peek under the hood and see what the foreseeable future might bring.Looking for signs of the bottom What this may mean for you? If you need to retire ASAP, it might be time to dial back. If you’ve got 30 years, you could probably proceed with business as usual. If you like to trade actively, your strategy might need adjusting, and if you don’t invest at all, the best time to start is still now.

Has The Market Bottomed?

MARKET OUTLOOK

If you had a dollar for every time someone entered the keywords “bear market” into their Google search bar over the last 12 months, you’d have more than enough money to put the phone down and take a breather.Google Search Trends of Keywords "bear markets"<img src="https://finny.s3.amazonaws.com/images/e35ab3da-413f-48ee-bc5a-8ee76cc49c9f.png">Despite the fear that these words may instill in some folks, bear markets are nothing new. Simply put, it's&nbsp;when major stock indexes like the S&amp;P 500 fall 20% or more from their most recent peak. They've occurred 14 times since 1926, which is on&nbsp;average once every 7 years. And typically, they last less than a year, so don’t panic and consider some&nbsp;tried and tested tips to survive these rough time.Bear market survival tips <ul><li>Avoid making impulsive decisions. Staying calm and avoiding knee-jerk emotional reactions is key during bear markets and highly volatile times. If you’re investing for more than a decade away, the wisest thing to do is to invest as if nothing has changed. Investors with a long time horizon can withstand short-term volatility in the markets. For example, assuming a $1,000 original investment in the S&amp;P 500 between 1/1/2009 and 12/31/2018, if you stayed invested the entire time, you'd have $2,775 left. But if you missed the 10 best-performing days during that period, your account value would be $1,722. And if you missed the 30 best-performing days in this 10-year period, you'd be left with $918. There’s something to be said for staying invested.</li><li>Build your positions regularly over time. With dollar-cost-averaging (DCA), no thinking is really required. You simply determine a set amount based on your net worth, income, and cash, and deposit it routinely into the investment(s) of your choice. Or even better, just set up auto-transfers. It reduces the time spent trying to strategize and find the best time, place, or amount to invest, creating an overall more serene experience. Let’s face it, it’s impossible to time the market. Over a 10-year period, only 25% of all active fund managers (i.e., professional stock pickers) beat their passive counterparts, according to Morningstar.</li><li>Change your strategy, diversify or play defensive: If you’re still actively participating in the markets and it’s just not working anymore, it might be time to find a new approach, a new sector, a new valuation process, greater diversification or go passive with a <a href="https://www.askfinny.com/bites/Why-the-3-fund-or-lazy-portfolio-actually-works-2022-Feb-01" target="_blank">lazy portfolio</a> — something to adjust. And if active is still your preferred investing style, defensive strategies and stocks in sectors like consumer staples and healthcare may fare more stable in times like this.</li><li>Re-assess your situation: If you’ve suffered outsized losses, it may be time to check whether you’re not exposed to more risk than you can realistically handle. Re-evaluate your investment policy, goals and your risk tolerance. Now is a good time to know what you own if you don’t already. As we say time and again, invest only what you’re willing to lose. &nbsp;</li><li>Or go contrarian: You know what they say, you either die a hero or live long enough to see yourself become a villain. &nbsp;If you know what you’re doing, now might be a prime opportunity to become a bear yourself. For instance, put options are one way you can bet against a stock or ETF and a&nbsp;call option&nbsp;is a bet that a particular asset will rise in value in the short term. Buying&nbsp;options is speculative though, and since they are what's called a derivative, they&nbsp;can expire and be worthless if you're not careful.</li></ul>

If you had a dollar for every time someone entered the keywords “bear market” into their Google search bar over the last 12 months, you’d have more than enough money to put the phone down and take a breather.Google Search Trends of Keywords "bear markets"Despite the fear that these words may instill in some folks, bear markets are nothing new. Simply put, it's when major stock indexes like the S&P 500 fall 20% or more from their most recent peak. They've occurred 14 times since 1926, which is on average once every 7 years. And typically, they last less than a year, so don’t panic and consider some tried and tested tips to survive these rough time.Bear market survival tips 

Some Bear Market Survival Tips

MONEY TIPS

You hear about it all the time, what was originally meant to be 'til death do us part' ended up in divorce, and one side took the kids and all the money. In all seriousness though, divorces can be unfair to anyone. No one enters into a commitment of marriage knowing that it’ll end, but it’s an unpleasant situation that can be made much worse by being unprepared for it.&nbsp;&nbsp; Unfortunately, many couples fail to entertain the idea at all. It’s ironic that bringing up a few extra legal documents is considered a bit taboo when marriage itself is a legal matter on its own, right? Nevertheless, marriage is a much more extensive commitment than is advertised on the surface, perhaps most importantly in the touchy subject of finances.Prenups may be worth the awkwardnessCreating a prenuptial agreement could even be likened a bit to life insurance. No one wants to think about having to make use of that life raft, but it's nice to know it’s there. Divorce court can be an expensive, arduous, and often-times unforgiving process that can sometimes end with an inequitable settlement if you’re not prepared.&nbsp; We think it’s always important to broach even the most uncomfortable of personal finance subjects for the sake of you and your partner’s future, together or apart. There’s no shame in being prepared for the worst, and working together for the best all the while.That being said, here are some things to know about prenups.<ul><li>Prenuptials can be a sign of trust: It’s never a good thing to be wary of bringing up any topic to your eventual partner. Committing to someone in this manner requires a deep level of trust and comfort, and so it’s important you’re able to discuss anything at all with your potential spouse. If you’re scared to mention the word prenup, there may be some work to do.&nbsp; </li><li>Prenups are pretty affordable: Considering the average marriage costs about $33,000, the average prenuptial agreement comes in anywhere from $1,000-$3,000 depending on your finances and could be a worthwhile addition.&nbsp; </li><li>In the case of a divorce, prenups make life much simpler: Having a well-defined and complete prenup can make the draining process of divorce litigation go much smoother than it does for those who are unprepared. A prenup eliminates a lot of ambiguity, which ultimately reduces the legal fees and time to get an already emotionally burdensome process completed.&nbsp; </li><li>Prenups can help protect your business, assets, and children: If you have children from a previous relationship, own a business, or even just valued possessions, prenups can protect those things. It can ensure your children receive a proper inheritance if you pass away, protect your business from being targeted in a divorce, and shelter your assets too.</li></ul>

You hear about it all the time, what was originally meant to be 'til death do us part' ended up in divorce, and one side took the kids and all the money. In all seriousness though, divorces can be unfair to anyone. No one enters into a commitment of marriage knowing that it’ll end, but it’s an unpleasant situation that can be made much worse by being unprepared for it.    Unfortunately, many couples fail to entertain the idea at all. It’s ironic that bringing up a few extra legal documents is considered a bit taboo when marriage itself is a legal matter on its own, right? Nevertheless, marriage is a much more extensive commitment than is advertised on the surface, perhaps most importantly in the touchy subject of finances.Prenups may be worth the awkwardnessCreating a prenuptial agreement could even be likened a bit to life insurance. No one wants to think about having to make use of that life raft, but it's nice to know it’s there. Divorce court can be an expensive, arduous, and often-times unforgiving process that can sometimes end with an inequitable settlement if you’re not prepared.   We think it’s always important to broach even the most uncomfortable of personal finance subjects for the sake of you and your partner’s future, together or apart. There’s no shame in being prepared for the worst, and working together for the best all the while.That being said, here are some things to know about prenups.

Are Prenups Worth Suggesting To Your Partner?

FAMILY FINANCES

Robert Shiller, Economist and Professor of Economics at Yale University

Valuing stocks is an inexact science to say the least, and it can oftentimes feel like trying to herd cats. No one knows for certain what the right price is for any given equity on the market, and we’re all mostly approximating with our own subconscious biases when we engage in price targeting.&nbsp;&nbsp; Nevertheless, we do still have some fairly objective, quantitative measuring sticks out there that can help us to evaluate individual stocks, or even markets as a whole, but here we want to zoom in on the CAPE ratio specifically.The mechanics&nbsp; Economist and Professor&nbsp;Robert Schiller developed the CAPE ratio back in 1996, and he did so in an effort to prove that stock prices were outrunning their earnings, especially through a historical point of view.&nbsp; It stands for cyclically adjusted price-to-earnings (P/E) ratio, which is essentially an elongated, more nuanced version of taking a simple P/E ratio of an equity.<ul><li>Instead of just dividing the stock price by the simplistic, earnings-per-share (EPS), the CAPE ratio divides the stock price by the average EPS over the last decade, adjusted for inflation.</li><li>For example, 🍎 Apple’s current P/E ratio is about 22.4, yet its CAPE ratio is much higher at 43.14.</li><li>A high CAPE ratio usually indicates that a company's stock price is higher than the company's earnings would indicate, making it potentially overvalued. And a company’s stock with a low CAPE ratio would indicate it may be undervalued.</li></ul>Its objective and flaw Simply put, the CAPE ratio aims to take out the recency bias from our stock valuations. By accounting for inflation and taking an average over a longer time span of 10 years, we usually get a lower average for companies that have grown recently, and maybe a higher one for those that were doing better a decade ago. This can reveal potential overvalued equities as a result.And since the CAPE ratio is backward-looking, without context, it might suggest that a growing company is overvalued due to recent performance, or that a dying one is undervalued due to how they did in the first 5 years of the period measured.The takeawayThe CAPE ratio is simply yet another valuation tool in an investor’s tool belt that should be used with discretion and context, and if done properly, can be a net positive on your valuation skillset.

Valuing stocks is an inexact science to say the least, and it can oftentimes feel like trying to herd cats. No one knows for certain what the right price is for any given equity on the market, and we’re all mostly approximating with our own subconscious biases when we engage in price targeting.    Nevertheless, we do still have some fairly objective, quantitative measuring sticks out there that can help us to evaluate individual stocks, or even markets as a whole, but here we want to zoom in on the CAPE ratio specifically.The mechanics   Economist and Professor Robert Schiller developed the CAPE ratio back in 1996, and he did so in an effort to prove that stock prices were outrunning their earnings, especially through a historical point of view.   It stands for cyclically adjusted price-to-earnings (P/E) ratio, which is essentially an elongated, more nuanced version of taking a simple P/E ratio of an equity.Its objective and flaw  Simply put, the CAPE ratio aims to take out the recency bias from our stock valuations. By accounting for inflation and taking an average over a longer time span of 10 years, we usually get a lower average for companies that have grown recently, and maybe a higher one for those that were doing better a decade ago. This can reveal potential overvalued equities as a result.And since the CAPE ratio is backward-looking, without context, it might suggest that a growing company is overvalued due to recent performance, or that a dying one is undervalued due to how they did in the first 5 years of the period measured.The takeawayThe CAPE ratio is simply yet another valuation tool in an investor’s tool belt that should be used with discretion and context, and if done properly, can be a net positive on your valuation skillset.

What is the CAPE Ratio?

An early withdrawal is when you withdraw money from a tax-advantaged retirement account prior to age 59.5. Unfortunately though, when you withdraw money from an account that was designed purposefully to be tax-advantageous in nature, it makes sense that you’re not going to be able to withdraw that money without a penalty.&nbsp; Early withdrawals are often thought of as a last-ditch option. Sometimes unforeseen&nbsp;things happen, circumstances change, and we might just have to get that money out because there aren't any other better options.Some interesting stats and insights<ul><li>Over half do it: 51% of people who took a <a href="https://www.bankrate.com/retirement/retirement-savings-survey-november-2021/" target="_blank">recent Bankrate&nbsp;survey</a> said they took an early withdrawal from their retirement account, with 20% saying they did so due to the pandemic. 40% of Gen Z participants said they took a withdrawal after March of 2020, while only 6% of Boomers did.&nbsp; </li><li>The price to pay: Most retirement accounts will tack on a 10% additional penalty to your withdrawal, on top of including it in your taxable income for the year. Not only are we paying for it now, but paying later too by missing out on the potential tax-advantaged compounding gains that money would’ve made over the decades. For Roth IRAs though, you can withdraw any of your contributions (not earnings)&nbsp;tax-free and penalty-free.</li><li>Avoiding it: Although sometimes life happens, there are ways to avoid this situation if given enough time to prepare. Having an emergency fund and then some is a great place to start, but if you haven’t established that yet, even a brokerage account would be better to withdraw from than your retirement account. Look into other alternative ways to store your money where qualified expenses are not penalized, such as a Health Savings Account&nbsp;(HSA).</li></ul>

An early withdrawal is when you withdraw money from a tax-advantaged retirement account prior to age 59.5. Unfortunately though, when you withdraw money from an account that was designed purposefully to be tax-advantageous in nature, it makes sense that you’re not going to be able to withdraw that money without a penalty.  Early withdrawals are often thought of as a last-ditch option. Sometimes unforeseen things happen, circumstances change, and we might just have to get that money out because there aren't any other better options.Some interesting stats and insights

Early Withdrawals Are More Common Than You Think

PLANNING FOR RETIREMENT

The budding crypto industry is under perpetual scrutiny, and as a nascent market it arguably should be. By critiquing it, we’ll inevitably uncover some important cracks in the infrastructure, and it seems that we might’ve just found another.&nbsp; Coinbase, the industry's largest and most popular crypto exchange, recently acknowledged in their quarterly filings that, in the event of a bankruptcy situation, the coins that they hold for their users may not be safe from seizure.This brings up a couple of things to note <ul><li> Safety as a whole: For one, those who use Coinbase or any other similar exchange are already at risk of losing their assets in the event of a hack to their personal account, because the crypto itself is not insured the same way as dollars held on the exchange. By contrast, <a href="https://www.wsj.com/articles/coinbase-says-users-crypto-assets-lack-bankruptcy-protections-11652294103" target="_blank">up to $500K is insured</a>&nbsp;in traditional brokerages.&nbsp;This new omission leads to another layer being added to those concerns.</li><li>Crypto’s divergence from brokerages: In a traditional brokerage account, the securities that you hold in that account are not property of the brokerage firm itself and are legally segregated specifically for this reason, to avoid being the subject of bankruptcy proceedings. On Coinbase though, crypto assets are technically speaking, company property. This is a potential “crack” for the centralized exchange, and it remains to be seen whether or not that’ll ever be patched.</li><li>Let’s not overreact though: Headlines like this, and even the real concerns just mentioned, can often cause an overreaction in fear. Although valid concerns, let’s also remind ourselves that these obscure, unlikely risks don’t mean the demise of Coinbase or even crypto at all. With exchanges like these, your cash is insured, and they even have crime insurance in case of a complex heist. So yes, there are still some chinks in the armor like this one, but it might not be the end of the world.</li></ul>

The budding crypto industry is under perpetual scrutiny, and as a nascent market it arguably should be. By critiquing it, we’ll inevitably uncover some important cracks in the infrastructure, and it seems that we might’ve just found another.   Coinbase, the industry's largest and most popular crypto exchange, recently acknowledged in their quarterly filings that, in the event of a bankruptcy situation, the coins that they hold for their users may not be safe from seizure.This brings up a couple of things to note 

How Safe Is Your Crypto Really?

CRYPTO

Dollar cost averaging can be loosely defined as systematically investing equal amounts of money over a period of time, opposed to just plopping a lump sum of money into the market at once. It’s quite likely the single most popular method of investing out there, and a reliable way to progressively invest your way towards retirement, or any other long-term financial goals you may have.&nbsp; It’s often assumed to be the gold standard of investing, so let’s take a closer look at this assumption and share some of the benefits and drawbacks of this renowned practice.The ideologyThe term dollar cost averaging was first coined by Benjamin Graham in his book titled “<a href="https://en.wikipedia.org/wiki/The_Intelligent_Investor" target="_blank">The Intelligent Investor</a>” and has therefore been around for over 70 years now, but its popularity has increased consistently over the last few years.Google search trends for term "dollar cost averaging"<img src="https://finny.s3.amazonaws.com/images/20a5e298-286c-4e5a-a854-3ecfb0d9dcf9.png">The benefits <ul><li> Objective and mechanic: When you invest in a DCA fashion, no thinking is needed. You simply determine a set amount based on your net worth, income, and cash, and deposit it routinely into the investment(s) of your choice. Or even better, just set up auto-transfers. It reduces the time spent trying to strategize and find the best time, place, or amount to invest, creating an overall more serene experience.&nbsp; </li><li>Mitigating the downside: If you had $100,000 to invest and you’d put it all into a total stock market index fund like $VTI on December 31st, 2021, you’d now have just about $81,000 left, so that sucks. However, if you had instead decided to invest $5,000 a month, your losses would be much less precipitous, because a gradual investment reduces the probability that you would invest at a market high. This can have real benefits, especially for those who may need those funds or are looking to retire soon. No one wants to lose 20% of their nest egg 6 months prior to retirement.</li></ul>Potential drawbacks <ul><li> Missing out: The main drawback is pretty straightforward in most cases. When you put off investing more than you can, you risk missing out on the extra capital gains and compounding benefits if the markets were to rise. Someone who invested $10,000 of their $100,000 before a 20% run-up would make only $2,000, while the investor who put in all $100k would’ve made $20k.&nbsp; </li><li>Being too passive: While passivity is a big part of the allure with DCA, it can also come at your own expense if the underlying investments are too lazily chosen. Averaging won’t ever make up for lackluster asset allocation, and no matter how passively we invest, dedicating time to making prudent choices will always pay off.</li></ul>Our take: Whether or not dollar cost averaging is right for you and your portfolio depends entirely on you, your situation, preferences, and more. For most investors though, it’s a suitable method, and far more responsible than not investing at all, which is perhaps the riskiest route to go.🧷 And here's a related lesson on this topic:

Dollar cost averaging can be loosely defined as systematically investing equal amounts of money over a period of time, opposed to just plopping a lump sum of money into the market at once. It’s quite likely the single most popular method of investing out there, and a reliable way to progressively invest your way towards retirement, or any other long-term financial goals you may have.   It’s often assumed to be the gold standard of investing, so let’s take a closer look at this assumption and share some of the benefits and drawbacks of this renowned practice.The ideologyThe term dollar cost averaging was first coined by Benjamin Graham in his book titled “The Intelligent Investor” and has therefore been around for over 70 years now, but its popularity has increased consistently over the last few years.Google search trends for term "dollar cost averaging"The benefits Potential drawbacks Our take: Whether or not dollar cost averaging is right for you and your portfolio depends entirely on you, your situation, preferences, and more. For most investors though, it’s a suitable method, and far more responsible than not investing at all, which is perhaps the riskiest route to go.🧷 And here's a related lesson on this topic:

Dollar Cost Averaging—The Pros and Cons

Giphy—Professor Robert Kelly in a BBC Interview

Working remotely was already becoming more and more realistic, but then the pandemic came along and massively accelerated that trend. Office buildings closed, businesses cut jobs, and those who still had jobs were often told they could, should, or must work from home.&nbsp; So, if that’s the case, why haven’t we seen investments in commercial real estate track along with less demand for such spaces? Businesses are seemingly not loosening their grip on life at the office, no matter what <a href="https://news.airbnb.com/airbnbs-design-to-live-and-work-anywhere/" target="_blank">Airbnb says</a>.The dynamics: remote work vs. commercial prices<ul><li>Remote work—uptick: The number of people working remotely has increased by almost 16x since 2009, and <a href="https://findstack.com/remote-work-statistics/" target="_blank">44% of that growth</a> has come in the last 5 years.&nbsp; </li><li>Remote work—market share: 16% of all companies globally are estimated to be fully remote, 58.6% of the total US workforce are now remote workers, and by 2028, 73% of all departments are expected to allow some form of remote work.</li></ul>Okay, we get it, remote work is on the rise and unlikely to ever regress, but what do large businesses have to say about that? <ul><li>Growing “work campuses”: Meta, Google, and other big name companies are still expanding their physical presence while commercial vacancy rates remain low in cities across the country.&nbsp;&nbsp; </li><li>Commercial prices: Green Street’s <a href="https://www.greenstreet.com/insights/CPPI" target="_blank">commercial property price index</a> was up 24% in 2021, and has risen by 35% from its 2020 low.</li></ul>So, what are we missing then? It’s hard to draw a clear conclusion without some more data, but here are a few things to note:<ul><li>Remote work isn’t always a success: Although 2020 might’ve finally given us license to realize it’s okay to do a lot of work remotely, there are also some personalities, family situations, positions, tasks, and industries that might suffer from such an approach. Although some needs can be answered outside the office, hybrid models are popular as well. Workers are mainly pleading for autonomy and flexibility.&nbsp; </li><li>Property type matters: Much of the commercial real estate being snapped up right now is tied to distribution and distribution centers, which are somewhat of an indicator that remote work/life and e-commerce are on the rise—not exactly an indicator that people are heading back to the office, but that different types of commercial space are in demand.</li><li>Businesses still need space: Not all work can be done remotely though, and that will depend not only on the industry or sector a company is in (i.e., labs, R&amp;D heavy tech companies) but also on the type of culture a company may be looking to build and promote.&nbsp; And with things opening back up after the pandemic, many businesses, including SMEs (small to medium enterprises), are finally able to expand again.</li></ul>

Working remotely was already becoming more and more realistic, but then the pandemic came along and massively accelerated that trend. Office buildings closed, businesses cut jobs, and those who still had jobs were often told they could, should, or must work from home.   So, if that’s the case, why haven’t we seen investments in commercial real estate track along with less demand for such spaces? Businesses are seemingly not loosening their grip on life at the office, no matter what Airbnb says.The dynamics: remote work vs. commercial pricesOkay, we get it, remote work is on the rise and unlikely to ever regress, but what do large businesses have to say about that? So, what are we missing then?  It’s hard to draw a clear conclusion without some more data, but here are a few things to note:

Why Is Commercial Real Estate Booming If People Are Working From Home?

After a solid couple years of&nbsp;saving and stashing, the days of living frugally may be behind us for now,&nbsp;according to market research firm&nbsp;Euromonitor International. In their annual <a href="https://go.euromonitor.com/white-paper-EC-2022-Top-10-Global-Consumer-Trends.html" target="_blank">global trends report</a> on&nbsp;spending behavior, consumers are more aware of their spending and looking to new and alternative ways of buying things.&nbsp;So where's&nbsp;the money&nbsp;going this year?<ul><li> Becoming eco-conscious: 67%&nbsp; percent of consumers surveyed by Euromonitor said they’d been trying to do something every day that had a positive impact on the environment. Okay, we believe you, and the numbers bear it out. 55% said they’d be willing to spend more on eco-friendly products, and AUM held by ESG funds has rocketed the last few years, so spenders are putting their money up.&nbsp; </li><li>Second-hand items become cool again: You can’t help but feel a little naive when the new shirt you just bought for $50 is listed on Poshmark for $25 in basically new condition. Not speaking from personal experience or anything. According to Mercari’s late 2021 reuse report, the US secondhand market anticipated growth to $160 billion last year, and forecasts roughly that this will balloon to over $350 billion by 2030.&nbsp; </li><li>Metaverse goes from experimentation to reality: Facebook expected that their Metaverse project would cost $10 billion in 2021 alone, and their name change officially introduced the concept to the mainstream world, which is still trying to process it for the most part. Whether the world accepts it or not, people are both spending and making money in the metaverse, and the market&nbsp;is forecasted to continue growing at over a 40% CAGR clip&nbsp;through 2030.</li><li>Prioritizing happiness and self-care:&nbsp;As more people focused on their priorities and values over the last couple of years, with it came a realization and understanding that happiness and self-care matter. According to the report, 56%&nbsp;of consumers expect to be happier in the next 5 years. Spending on products to help with "mind and body" are expected to increase.</li></ul>

After a solid couple years of saving and stashing, the days of living frugally may be behind us for now, according to market research firm Euromonitor International. In their annual global trends report on spending behavior, consumers are more aware of their spending and looking to new and alternative ways of buying things. So where's the money going this year?

Spending Trends in 2022

MONEY MINDSET

Terra's (LUNA)

Stablecoins are meant to be a bridge between traditional and decentralized finance (DeFi). It's supposed to allow users of these coins to hold similar (if not same) value alongside the dollar—or whatever it’s backed by—and reap the defi benefits without the normal risk of volatility of a typical crypto coin.&nbsp; In the midst of all the crypto volatility last week though, one of the niche’s largest stablecoins, TerraUSD, suffered what’s known as being de-pegged or losing its link to the dollar, raising some&nbsp;concerns about projects like it.Why it happened <ul><li> Basics.&nbsp;TerraUSD (UST) is a stablecoin governed algorithmically by a protocol on the Terra blockchain. It maintains a peg to the USD thanks to incentives around Terra (LUNA), the Terra blockchain’s native cryptocurrency. In other words,&nbsp;UST is an "algorithmic" stablecoin&nbsp;because&nbsp;it relies on a complex set of code, and&nbsp;coupled with a floating token called LUNA, it all works together to balance supply and demand and stabilize the price. Fiat-backed stablecoins like&nbsp;tether and USDC, hold fiat assets in a reserve to back their tokens and keep prices stable.</li><li>Mechanics: UST would always be redeemable for 1 USD’s worth of LUNA even if its value dips below 1 USD. So, even if UST falls to 0.95 USD, you can quickly buy lots of it at a discount and redeem each UST for 1 USD’s worth of LUNA, turning a profit through arbitrage. In other words, if LUNA traded at 50 USD, each UST you bought for less than 1 USD would give you 1/50th of a LUNA, equivalent to 1 USD. The stablecoin is kind of like a smart thermostat, it balances itself around its target value of 1 USD through incentives. </li><li>Decoupling: With a lot of fear going around coupled with crypto’s recent woes and even rumors of an attack on UST, things eventually piled up, leading to $5 billion worth of UST coin being withdrawn from the Anchor protocol, which is a DeFi app that runs on the Terra blockchain. LUNA has since become worthless, and UST is now worth around&nbsp;9 cents relative to its $1 goal.</li></ul>Why the worry <ul><li> Stablecoin trust: A debacle of this magnitude with that much&nbsp;deviance from par value is a big deal to many, and will understandably make some wary of stablecoins. It also raises concerns as to whether or not we’ll be able to see a longstanding algorithmic coin too, as this event has unearthed new vulnerabilities in that methodology. Other types of stablecoins include fiat-backed, and crypto-backed which use reserves as collateral.&nbsp; </li><li>Pending regulations: Crypto regulation is already looming, and breakdowns like this are likely to add a little fuel to that fire. There are a lot of propositions floating around specific to these coins, ranging from new insurance requirements to interoperability and regulating them similarly to bank accounts. Crypto optimists maintain that such attacks make the ecosystem stronger and that regulation will drive further adoption.</li></ul>🪙 Want to&nbsp;review&nbsp;the core fundamentals of&nbsp;stablecoins?&nbsp;Take this bite-sized lesson on the topic:

Stablecoins are meant to be a bridge between traditional and decentralized finance (DeFi). It's supposed to allow users of these coins to hold similar (if not same) value alongside the dollar—or whatever it’s backed by—and reap the defi benefits without the normal risk of volatility of a typical crypto coin.   In the midst of all the crypto volatility last week though, one of the niche’s largest stablecoins, TerraUSD, suffered what’s known as being de-pegged or losing its link to the dollar, raising some concerns about projects like it.Why it happened Why the worry 🪙 Want to review the core fundamentals of stablecoins? Take this bite-sized lesson on the topic:

Trouble For Stablecoins

CRYTPO

When you’re new to something, a great way to learn is through experience. Well, the markets have seen a gluttonous amount of new investors flood into them over the last couple of years, and 2022 is proving to be the first learning curve for many.&nbsp; As we’ve exited the goldilocks zone of stimulus and easy money, the tide has begun to pull back and reveal the realities of our present economic situation. All of this fear has shaken the lofty markets into a bear cave, and it’s forcing investors to adjust.How far we’ve fallen We’ve covered the market’s fall from grace multiple times this year, and each time the losses have gotten bigger. We just saw our biggest single-day drop since the pandemic panic, and it’s becoming normal to watch any given index whipsaw by multiple percent a day.&nbsp; <ul><li> Basics: The S&amp;P 500 is down over 16% YTD, the Dow is down 12%, with the Nasdaq and the Russell small-cap down 25% and 22% respectively.</li><li>Ari-stock-racy: As of May 5th, just 35% of stocks within the S&amp;P 500 were north of their 200-day moving average. The Nasdaq is even worse, with only 20% of holdings hanging on for dear life. This is a pretty clear indication that the big names are mostly the only equities left with any say, while the rest have left thousands of investors "holding the bag," if you will.&nbsp; </li><li>Back to normal? The S&amp;P 500 has a decade-long average of trading at 17.1x its projected forward earnings, and even after this drawdown, it’s still sitting above that number of around 17.7—right back to where we were before&nbsp;2020's euphoria kicked in. It makes you wonder, maybe this haircut is warranted after all?</li></ul>Investors forced to reconvene&nbsp; Market activity in aggregate has seen a noticeable run-up over the course of the last two years, and this frenzy has bled over into a lot of things—from&nbsp;unhinged numbers around options and crypto to heightened trading volumes. Now, that’s changed though.&nbsp;<ul><li> Less activity: Fear is keeping a lot of investors on the sidelines for now. Even without any hard numbers on it, it’s clear to see that volume is down in a variety of areas, especially in more speculative plays. Coinbase just <a href="https://www.cnbc.com/2022/05/10/coinbase-coin-earnings-q1-2022.html" target="_blank">reported</a> having lost 2 million monthly users since Q4 of 2021, and we already know <a href="https://www.askfinny.com/bites/Has-The-NFT-Mania-Hit-Its-Peak-2022-Mar-22" target="_blank">the NFT slump</a> is here. Besides, what happened to a new meme stock clocking 100 mill in volume every day?</li><li>Optionless: Overall volume recorded for call options on individual equities has reached levels not seen since the end of 2019, signaling that overall bullishness could be reaching a near-term low, and that fear is setting in for many.</li><li>Bad vibes all around: The number of investors holding a bearish sentiment toward the markets is at its highest point since 2009, which is pretty ominous to say the least. At over 52%, we’re seeing numbers that we didn’t even reach in 2020.<a href="https://www.aaii.com/sentimentsurvey" target="_blank"><img src="https://finny.s3.amazonaws.com/images/97f7393e-1ee1-498a-ac83-145ff6e1b277.png" width="497" height="350" style="display: block; margin-left: auto; margin-right: auto;"></a></li></ul>(Source: <a href="https://www.wsj.com/articles/markets-2022-slide-has-already-changed-investor-behavior-11652002203" target="_blank" style="">WSJ</a>)

When you’re new to something, a great way to learn is through experience. Well, the markets have seen a gluttonous amount of new investors flood into them over the last couple of years, and 2022 is proving to be the first learning curve for many.   As we’ve exited the goldilocks zone of stimulus and easy money, the tide has begun to pull back and reveal the realities of our present economic situation. All of this fear has shaken the lofty markets into a bear cave, and it’s forcing investors to adjust.How far we’ve fallen  We’ve covered the market’s fall from grace multiple times this year, and each time the losses have gotten bigger. We just saw our biggest single-day drop since the pandemic panic, and it’s becoming normal to watch any given index whipsaw by multiple percent a day.  Investors forced to reconvene   Market activity in aggregate has seen a noticeable run-up over the course of the last two years, and this frenzy has bled over into a lot of things—from unhinged numbers around options and crypto to heightened trading volumes. Now, that’s changed though. (Source: WSJ)