April 19, 2022

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TOGETHER WITH

Good day. The world's billionaires have amassed $5 trillion since March 2021 alone, according to Visual Capitalist. Can you guess who is the richest person in the world today? a. Larry Page (Google), b. Bill Gates (Microsoft), c. Elon Musk (Tesla, SpaceX). Follow the wave 🌊 below for the answer.

Our topics for today 👇

The idea of a wealth tax is becoming trendy
What’s crypto got to do with tech stocks?
Tips on how to save money on airfare

WEALTH & TAXES

The Idea of a Wealth Tax Is Becoming Trendy

Three things are certain. Death, taxes, and not knowing how the heck we should structure our tax system. Of course, everyone thinks they know the best way to organize how Americans are taxed, but if you really start crunching numbers, this gets really, really complicated.

In an effort to ensure everyone is paying their fair share in taxes, a lot of ideas have been floated over the years, but one that seems to stick around is the idea of a wealth tax, aimed at households whose income is both high, and a little atypical. Is it a good idea?

What do you know, Joe?

The latest: The US has never had a traditionally defined wealth tax in place, but it’s been gaining some momentum recently, and now Joe Biden has formally included a proposition for it within his 2023 budget. The proposal calls for a 20% tax on households worth more than $100 million, levied on atypical “income” like capital gains.
Why: The case is that wealthy individuals are able to effectively pay less in taxes than their more average American counterparts, largely due to the fact that the tax code treats assets more favorably than income. They’re able to borrow against their wealth, or opt for various other little tricks available only to them.
The odds: Well, they’re not good. Not only is this proposal likely to face significant pushback from members of Congress on both sides of the aisle, but it’s also up against some other, more obscure, legal caveats as well.

The bigger issues we’re trying to solve

The US government hasn’t been debt-free since 1835 when Andrew Jackson decided to pay it all off by selling Federal land out west and stopping spending on infrastructure. Since then, wars, depressions, more wars, and more spending have continually forced the debt upward, to a point where it’s now at 133% of America’s GDP, well beyond levels considered healthy or sustainable.

The country has also never seen wealth inequality like this before either. Although a mostly free-market capitalist economy will inevitably allow for some inequalities and upward mobility, it seems to have gotten to an extreme of sorts lately.

So, government spending is a real problem, and wealth inequality is perhaps an equally relevant one as well. Proponents of a wealth tax like this are kind of making an effort to kill two birds with one stone, but whether or not that would actually be effective is still questionable.

INVESTING

What’s Crypto Got To Do With Tech Stocks?

Originally, Bitcoin and crypto was posited to be a hedge against inflation, inversely correlated with the markets, an alternative asset of sorts that you could buy to protect your money during tumultuous times. It was supposed to be like gold, but better.

Well, apparently that division between crypto and the traditional markets is starting to become increasingly blurry, and a red day for the Nasdaq can just as easily become a bad day for Bitcoin hodlers as well.

So, what happened?

An interesting tweet (credits to Dylan LeClair) from April 6th denoted that, over the last 30 days, Bitcoin and the $QQQ had actually been trading at a 0.90 rolling correlation.

If you’re a stats nerd and know all about rolling correlations, that’s awesome. But for the rest of us, we just need to understand that hey, it looks like they’re highly correlated, so why?

There’s no surefire answer, but there are a few observations:

Traditional investors have become crypto traders. Over the last two years, the crypto markets witnessed their second memorable bull run, and this time it was in concert with a euphoric stock market at a time where risky investing, day trading, and meme stocks became a trend. This allure drew in both new traditional and crypto investors alike, and it inevitably formed somewhat of a shared community around that movement.
Crypto and stocks side by side in brokerages. Crypto has gone from being a nascent, obscure investment to something you can buy on many online brokerages like Robinhood, Webull, and more, making it even more closely associated with typical trading.
Additionally, crypto is viewed vaguely as “tech.” As it’s being lumped in with traditional investing, crypto inevitably has to be considered something, right? And what else would we classify it as other than tech, where we’ve seen the strongest correlations?

The problems with this going forward

This should be concerning for crypto fundamentalists, because the entire thesis behind most of the industry is to break free from traditional finance and its reliance on middlemen, and hopefully even serve as a safe haven whenever traditional markets falter.

Bitcoin’s unprecedented correlation with tech stocks begs the question of whether sentiment could spill over between the two markets. If each could weigh down or lift up the other at any time, does that then mean that Big Tech has now embraced crypto? The markets certainly seem to agree.

MONEY TIPS

Tips On How To Save Money On Airfare

Tax refunds are coming, the pandemic is receding, and the first flowers of spring have definitely started blooming, so it’s only natural that you’re thinking of treating yourself to a well-deserved trip to reset.

One thing you should know, though, is that airfares are going up. The Consumer Airline Index Report from Hopper sees fares increasing by 7% each month up until June. Still, some red-hot tips can help you save on your next getaway:

🎯 Pick your days wisely: You’ve probably heard this before, but it’s true to varying degrees. Different airlines and flight aggregators do tend to drop prices on certain days or offer lower fares on certain departure dates. MKM Partners airline analyst Conor Cunningham says that Tuesdays and Saturdays are the cheap days for now, but that can depend on your airline. It pays to watch ticket prices for a while before booking, and check out different dates while you’re at it.

💳 Open a new credit card: For the financially responsible, it might make sense to open another credit card that offers either travel rewards or a newcomers cashback welcome bonus before booking your trip. For example, if you book a $550 flight on a card that offers a $200 cashback when you spend $500 within the first three months, you just effectively got a 36% discount. Other cards may offer benefits that make sense if you’re traveling a lot—like frequent flyer miles, insurance, and more.

🧺 Bundle: It may be one of the oldest tricks in the book, but they say if it ain’t broke, don’t fix it. Bundling your flight, rental, hotel, or anything you need for the trip can end up saving you a good amount when compared to booking separately. And just in case, make sure the group you’re booking through has good customer service.

Save Fast

Budgeting & Saving

8 mins

🔥 TODAY'S MOVERS & SHAKERS

WeWork (+11.6%) was upgraded by Piper Sandler to overweight as the investment bank sees a path towards profitability for the coworking space company
American Campus Communities (+12.6%) as the student housing REIT, agreed to be bought by Blackstone for $12.8 billion
Plug Power (+9.4%), a hydrogen fuel cell firm, will be selling green hydrogen to Walmart; green hydrogen (unlike blue or brown) is produced using renewable energy
Bitcoin (BTC) +3.1% in the last 1 week to $41,304.87
Ethereum (ETH) +2.2% in the last 1 week to $3,097.14

This commentary is as of 9:45 am PDT.

🌊 BY THE WAY

Answer: Elon Musk, who's worth about $212 billion. Bill Gates is #4 and Larry Page is #6. Take a look 👀 at all the people on the list (Visual Capitalist)
📈 ICYMI: Mega caps are rebounding, so what? (Finny Bites)
🚀 Fidelity investments launches crypto, metaverse ETFs (Bitcoin.com)
Finny lesson of the day: What are some other ways you can save more for retirement?

Boost Your Retirement Savings

Retirement Planning

8 mins

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