💰 5 Fact Friday: Home Improvements That Actually Pay Off

STOCKS
1. David Tepper's Top Holdings 🔍

Ever wondered what stocks catch the eye of a billionaire investor? Enter David Tepper, founder of Appaloosa Management and owner of the Carolina Panthers.

He's arguably one of the greatest hedge fund managers of our time. Here's a look at Tepper's biggest holdings as of his most recent 13F disclosures:

At first glance, Tepper's portfolio might not surprise you. His heavy concentration in tech/growth stocks like the Magnificent 7 isn't exactly groundbreaking.

However, his big bets on Chinese stocks are where his contrarian nature shines through. Tepper's inclusion of Alibaba, Pinduoduo, and Baidu highlights his willingness to take risks where others shy away.

Chinese returns have rivaled U.S. returns over the past two decades, but many investors now consider China uninvestable. Goldman Sachs' wealth management team put it plainly: “Our view is that one should not invest in China.”

The reasons include:

• Slowing economic growth over the next decade

• Weakening real estate, infrastructure, and export markets

• Lack of clarity in China’s policymaking and data releases

• Concerns regarding financial accounting standards

The Takeaway

Tepper’s choices highlight a key lesson: great investors often venture where others don’t.

The more you diverge from conventional wisdom, the more differentiated your investment outcomes will be. Straying from the crowd can yield higher rewards, but it also comes with greater risks.

SPONSORED

Invest and Help Keep Kids Safe with Gryphon Security

Parents today face unprecedented challenges as kids spend upwards of 8 hours per day in front of screens, leading to poor sleep, high blood pressure, obesity, and mental health issues. Cybercrimes against children have risen by 20% in 2022, and home networks are increasingly prone to cybercrime.

Gryphon offers an AI-powered network protection service with a robust mesh WiFi system and an intuitive mobile app, safeguarding families online easily.

Recent accomplishments:

• Over $12M in total revenue since launch.

• 3x growth in paid subscribers over the past 2 years.

• Over 80K Gryphons sold protecting families and small businesses.

• 10 patents awarded covering advanced network protection.

• Featured in Forbes, Tom's Guide, PC Mag, and Wall Street Journal.

Learn more and Invest in Gryphon Online Security

MARKETS
2. S&P 500 Outshines Hedge Funds 🏆

This year, the S&P 500 has left hedge funds in the dust. Surprised? You shouldn’t be.

The S&P 500 routinely outperforms Wall Street experts, especially after accounting for fees.

Hedge funds charge high fees (2% management + 20% performance), which eat into returns. Meanwhile, S&P 500 index funds like $VOO are virtually free with a mere 0.03% fee ($3 per year per $10,000 invested).

Warren Buffett famously made this point back in 2007.

He bet hedge fund manager Ted Seides of Protégé Partners that an unmanaged, low-cost S&P 500 index fund would outperform an actively managed group of hedge funds over ten years, after deducting fees, costs, and expenses.

Uncle Warren was, of course, correct.

By September 2017, Seides conceded. His hedge fund investments had only earned $220,000 in the same period Buffett’s low-fee investment gained $854,000.

Today, the same rings true.

The S&P 500 was up more than 16% through June. Hedge funds returned about 5% on average.

Even renowned hedge funds like Ken Griffin’s Citadel and Bill Ackman’s Pershing Square returned 8.1% and 5.7% over the same period.

In fairness, this is to be expected right now. In a booming market driven by a few key stocks, passive index funds capture most gains without taking on excessive risk.

Hedge funds thrive in a different kind of environment—volatile, sideways markets known as “stock pickers” markets. They also don’t generally seek to maximize returns; they seek to balance return and risk.

This is especially clear over the past three years:

As you can see, hedge funds successfully mitigated losses in the 2022 downturn. However, they also missed much of the upside in the subsequent rebound.

The Takeaway

If you're looking to maximize returns with minimal fuss, consider the wisdom of Warren Buffett: Stick with the S&P 500. It's cheaper, simpler, and more often than not, a winning strategy.

However, bear in mind that the S&P 500 is vulnerable to market fluctuations, so always hold equities with a long-term view. Hence Buffett’s 10-year bet duration.

Know The Community: Poll Question 💬

I want to make sure 5 Fact Friday is hitting the mark for YOU! To do that, I’ll be running polls each week to learn how I can improve.

Please take a moment to share your feedback, and let’s build an even stronger community together! 👇️

ECONOMY
3. Why the Fed Targets 2% Inflation 🎯

Inflation is inching toward the Fed’s 2% target. But what’s with the fixation on this particular number? Here’s a breakdown of the economics at play.

Why Not Zero Inflation?

1. Deflation Risk: Zero inflation is too close to deflation for comfort. Falling prices may sound good in theory, but in practice, it can be dangerous. When consumers expect prices to fall, they delay spending. This reduction in demand leads to lower growth, reduced investment, and ultimately, layoffs.

2. Debt Burden: With zero or negative inflation, the real value of debt increases. Borrowers have to repay loans with money that is worth even more than when they borrowed it. This discourages borrowing and spending, which are crucial for economic growth.

3. Monetary Policy: Central banks manipulate interest rates to control economic activity. With zero inflation, there’s little room to cut rates (and stimulate the economy) during downturns.

4. Inflation as a Lubricant: Mild inflation acts as a lubricant for the economy, by encouraging spending and investment.

Why Not Higher Inflation?

Some economists argue for a higher inflation target. Olivier Blanchard, the former chief economist of the International Monetary Fund, suggested that a 4% target could be optimal.

However, the most recent cycle of inflation has been enlightening.

Hilariously, economists have “come to realize” that Americans detest inflation. Disliking the devaluation of your own currency—what a surprise!

These out-of-touch economists seem to have forgotten that inflation hits each income group differently.

For those at the top of the income spectrum, higher inflation isn't a huge deal. They spend a smaller percentage of their income on living expenses. Plus, they often have financial assets that generate extra interest income, which can offset the increased cost of living.

Conversely, those at the lower end of the income spectrum spend a higher percentage of their income on necessities. They don't benefit from interest income and are hit hardest by rising prices, making inflation particularly painful.

The Takeaway

The 2% inflation target strikes a balance.

It's high enough to avoid deflation and its nasty side effects, yet low enough to keep the cost of living increases manageable for most Americans.

CRYPTO
4. Bitcoin Hits A Rough Patch 📉

Bitcoin is down 14% over the past 30 days, and if you're wondering why, you're not alone. Let's dive into the key factors behind this decline.

1. Interest Rate Cuts Pushed Back: The Federal Reserve's decision to delay rate cuts has throttled the crypto market. When rates are high, so is the opportunity cost of holding crypto. It’s no coincidence that your high-yield savings account wasn’t paying 5% during the last crypto bull run.

2. German Bitcoin Dumping: This month, Germany has dumped nearly $2 billion worth of Bitcoin seized from criminal activities. The government still holds almost $800 million more. This immense selling pressure has depressed prices and caused a bit of panic.

3. Mt. Gox Repayments: Mt. Gox was the largest Bitcoin exchange in 2014—until it was hacked. A full decade later, the Mt. Gox bankruptcy estate is finally set to return Bitcoin to creditors. That means 142,000 BTC will hit exchanges as early as this month. Investors fear that this release will create an overhang on the market.

The Takeaway

Bitcoin's recent downturn is a classic case of supply and demand.

Large holders like the German government, combined with the Mt. Gox repayments, are flooding the market with Bitcoin. Meanwhile, demand is tepid due to elevated interest rates.

While these factors create short-term volatility, they also highlight the importance of understanding market dynamics and the broader economic context when investing in crypto.

Stay informed, stay cautious, and always be ready for the ride.

SPONSORED
These Prime Day Deals Arrived Early 🛒

Amazon Prime Day is just a few short days away! While the main event kicks off on Tuesday, July 16, Amazon has already unleashed a flood of early Prime Day deals you can snag right now.

Here are a few of the bestsellers:

• Apple 2nd Generation Airpods: $69 (down from $129)

• Drone with HD Camera: $59 (down from $249)

• Shark Voice Control Robot Vacuum: $295 (down from $599)

• Insignia 50” 4K Smart Fire TV: $189 (down from $299)

Take advantage of these markdowns today! Or, prep your cart for upcoming deals from brands like Apple, Ninja, and Samsung.

REAL ESTATE
5. Most Valuable Home Improvements 🏡

Looking to renovate your home? The latest Cost vs. Value report is out, and it explains how homeowners can maximize their return on investment (ROI) in 2024.

Trends and Insights

1. Curb Appeal Is King: Eight out of the top ten high-ROI projects are exterior improvements. Improving curb appeal not only attracts buyers but also boosts your home’s marketability.

2. Location Location Location: These figures are heavily influenced by current market conditions. As a result, the Pacific and New England regions currently offer the highest ROIs, overtaking the Mountain region for the top spot.

3. Strategic Home Investments: Future sellers should prioritize high-ROI projects like garage door replacements and stone veneers. Surprisingly, more expensive upgrades to kitchens and bathrooms offer less than a 100% return.

Thanks For Reading!

Unlock Free Rewards 🎁 

You currently have 0 referrals, only 1 away from receiving The Million Dollar Roadmap.

Or copy and paste this link: https://read.themoneymaniac.com/subscribe?ref=PLACEHOLDER