Finny logo

☕ Inflation is like watered down coffee

June 08, 2021 Sign up

Happy Tuesday. Let's get right to our personal finance and investing topics for today: 

  • Behind the scenes of your portfolio: inflation & policy
  • Fantasy sports and investing: are they similar?
  • Credit cards: fill my wallet with them, or just one?


Behind the scenes of your portfolio: inflation & policy

Inflation in the economy is like watering down coffee. The dollar becomes worth less and less potent as inflation increases. Despite that, inflation is a necessary part of a growing, stable economy that helps incite and suggest aggregate demand growth. 

Does that mean eventually gum will be $100 a pack? Theoretically yes, but it’s more likely the currency or country itself will be supplanted long before then. Governments try to manage inflation through monetary policy, ideally keeping it around 2% annually. 

The effects of inflation combined with what the Fed decides to do through its monetary policy both come together to drive some, if not most, of the broader sentiment surrounding the stock market. A contractionary monetary policy or rate hikes can send investors running for safe havens, while lower rates generally contribute to expectations of economic growth.

How it actually works: Anything can happen

The stock market is like one giant Rube Goldberg machine that tries to accomplish one thing through an innately over-complicated method. It’s an emotional being that contradicts itself at times, meaning that any irrational behavior can ironically be rationalized by playing the “markets are irrational” card.

We like to think low rates generally equate to growth and optimism in the market, right? Insert a pandemic and some irrational inflation fears to go with it, and you can then explain away why the last few months haven’t exactly been pleasant for a lot of sectors.

Anything can happen, and anything can be explained given the right combinations of variables. All of our rules and generalities are nothing but approximations.

Our current situation

  • Rates are low (0.00-0.25%) and expected to remain there for the near term future, with any concerns about rate hikes all having been put to bed for now. 
  • Comparing April 2021 with one year ago, the CPI indicates inflation to be up about 4.2%. It rose 0.8% in the month of April alone, and consumer spending was up 0.5% from March. 
  • The broad CPI doesn’t tell the whole story though. The energy index is up 25.1% over the last 12 months, used cars were up 10% in April alone and 21% in the last year, and obviously fuel is up substantially considering the low demand at this point last year. 
  • Both the Dow and the S&P held ground in May, each turning up just a bit green. The Nasdaq lost a hair but came out clean, and the RUT tacked on just 17 points. Overall, you could say the markets seem to be mulling it over and standing pat for the moment.

And all of this means?

Some investors are fearful that inflation will outrun itself with rates this low for too long, or that it could eat into both the future earnings and input costs of the businesses they’d like to invest in. On the optimist’s side of things, they see the inflation as proof of and reason for recovery from the pandemic, and this along with increases in vaccinations is helping to incite hope across sectors. 

That means, anything is possible and we can’t predict how the markets will react to inflation data or monetary policy at any given time. At best, we can forecast a bit and invest wisely into things that fit our criteria.


Fantasy sports and investing: Are they similar?

It’s almost impossible to escape an hour of television without seeing at least an ad or two for fantasy sports, which is essentially borderline gambling for those sports lovers who seek thrill by putting money on players, teams, and prop bets.

With some meme stocks and crypto projects created as jokes running rampant through the trending tickers, it may be time to ask, are fantasy sports and investing similar? The point of similarity has been made by the recent Gamestop rally and ongoing AMC Theatres tug of war, but this doesn’t capture the whole story.

The differences and similarities 

The dictionary definition of investment is this: “the action or process of investing money for profit or material result.” Does that not fit the description of gambling too? When it comes down to it, we’re talking semantics here, and these are certainly two different animals that happen to share similar qualities.

  • Fantasy sports are actually statistically much riskier, despite smaller starting investments. Most fantasy contests are effectively all-or-nothing games. Sure, there are some spots behind the top 5-10 that get paid, but the drop-off is steep, and in most cases, only the top 20% get any payout in the typical tournament-style large pool formats. 
  • Investing requires more research. The number of variables present in investing far outnumbers that of fantasy sports—matchup odds, injuries, and maybe weather against an unending list of both global macroeconomic and company-related variables. It’s mostly an apples and oranges comparison.
  • What do they have in common? Both may be considered hobbies for some. Undoubtedly, gambling should never be equated to investing. As long as your fantasy sports contest involves an outcome generated by the statistics of multiple and real-world athletes across real teams, then the contest is legit. And if both fantasy sports and investing are done responsibly, they can present opportunities to learn new things about statistics, finance and maybe even your risk tolerance to name a few.


An electric mower, a portfolio grower

Graze—the world’s first fully autonomous, 100% electric lawn mower— is disrupting the $100 billion commercial landscaping industry.

And now it has the potential to grow your portfolio. 

Here are a few snippets on why:

  • Graze eliminates 50% or more of the labor costs and 75% of the fuel costs associated with traditional lawn mowing.
  • Machine learning and computer vision allow Graze to map job sites, plan and execute mowing paths, stop for obstacles (i.e. trees, people), and collect and apply data to further optimize for precision and efficiency.
  • $19.35mm in pre-orders via commercial contracts.
  • Over $6 million raised from more than 4000 investors.

Invest in Graze today—this round closes June 30.


Credit cards: fill my wallet with them, or just one?

With all the offerings available, it can be tempting to just open a credit card with every bank that ends up in your mailbox each week and take them up on every one of their sign-up bonuses. It seems like a win-win on the surface, but opening up a new line of credit requires taking some things into consideration first. 

Whether or not you should have multiple credit cards or not is not something that has a normative answer. It depends entirely on your finances, habits, history, preferences, and in short, you. That being said, here are the most important things to know before opening another account.

  • Reason to get another card: The lower your credit utilization rate, the better. A low credit utilization rate indicates you don’t max out your cards and burden yourself with debt, meaning you’re likely a responsible cardholder who banks can trust, and it also bumps up your credit score. Opening a new card will increase your credit limit, and assuming you don’t spend more than you already do, will subsequently lower your utilization rate. 
  • Reason not to get another card: Average account age. If you’re relatively young on the financial records like me, the age of your account is likely burdening your credit score a bit. Banks like to see longevity and consistency, and opening a new account can negatively impact this by lowering the average age of account when you start a new one at 0. (This is also important to note when you consider closing an old account.)
  • Reason to get another card: Perks, cashback, and rewards. If your credit card benefits kind of suck, then we’re here to tell you that you deserve better. You don’t have to dump your old card of course, because it can help keep your utilization rate low and your average account age up. Instead, acknowledge that this is a valid reason to shop around, and do just that.

📚 Forget what goes into your credit score exactly? Review it here, especially if you plan to take out a loan on a big ticket purchase in the next couple of years:


Today's Movers & Shakers

  • Stitch Fix (+12%) lost less than projected 
  • Contango Oil & Gas (+10%) after the firm agreed to an all-stock deal to merge with KKR owned Independence Energy
  • Coupa Software (-9%) after missing on profits even though revenues beat the street and the firm’s positive outlook
  • Thor Industries (+4%) in early trading as the RV maker topped the street on profit and revenue numbers
  • Chico’s FAS (+6.6%) after the firm responded to activist investor Barrington Cap saying that it is “doing everything to increase shareholder value and improve performance”
  • Fastly (-3%), the firm that “brought the internet down” this morning
  • Tesla (+3.5%) after the firm delivered 29% more cars in May (vs. April) from its Shanghai factory   
  • Firms linked to bitcoin are down but COIN is up 2%

This commentary is as of 9:25 am EDT.


  • Employees are quitting instead of giving up working from home (Bloomberg)
  • Getting promoted and tips on how to approach the comp discussion (Finny discussion post)
  • Finny lesson of the day. With talk about the economy and investing, are you curious about USD / currency effects and exchange rates? Take this intermediate-level quiz to learn more about it:

Finny is a personal finance education start-up offering free, game-based personalized financial education, a supportive discussion forum, and simple stock and fund tools (aka Finnyvest).  Our mission is to make learning about all things money fun and easy! 

The Gist is Finny's newsletter to our community members who are looking to make and save more money, protect their finances and be their own bosses! Finny does not offer investment or stock advice. The Gist is sent twice a week (Tues & Thurs). The editorial team: Austin Payne and Chihee Kim. Thanks to Ashu Singh for Today's Movers & Shakers.

*Sponsors or advertisers offer unique consumer services.  We're thankful for their sponsorship to enable Finny to offer free financial education. Here's our advertiser disclosure

If you have any feedback for us or are interested in sponsoring The Gist, please send us an email to

Copyright © Finny 2021. All rights reserved.
736 Paloma Ave, Burlingame CA 94010
Follow Us