Thursday, January 30^th, 2025

Learn How Millionaires Reach Seven (7) Figures

The Federal Reserve recently reported that the “AVERAGE” NET WORTH of American families topped $1 million for the first time, surging 34% from $749,000 in 2019.

INFLATION INCREASED sharply over this period, too.

Yet, even after INFLATION, real “AVERAGE” WEALTH was UP 23%, according to the FED’s Survey of Consumer Finances.

This is something to celebrate. (Perhaps especially if you’re one of these new millionaires.)

MONEY gives you CHOICES – not least of all the “FREEDOM” to choose how to “LIVE YOUR LIFE”

Yet the “GRINCH” isn’t just a fictional character created by Dr. Suess. Many are ANGRY about the U.S. rising WEALTH.

Why???

Because “PROSPERITY” creates “INEQUALITY”…. and that’s “UNFAIR”.

Or is it???

Let’s take a closer look at what is happening and why.

That nation’s “AVERAGE” household NET WORTH of more than $1 million is skewed by the relatively small number of multimillionaires and billionaires.

About 16 million Americans – just over 12% – have a NET WORTH that EXCEEDS $1 million. Approximately 8 million families are multimillionaires.

These households tend to have HIGHER incomes. They generally earn/generate between $150,000 and $250,000 a year.

Yet millions of families with RETURNS IN “MIDDLE CLASS” incomes have also joined The Seven-Figure Club.

What are they doing that other middle-class families aren’t???

They are being “SMART” about MONEY...

That means they are PAYING DOWN HIGH INTEREST DEBT, CONTRIBUTING to an IRA or 401(k), BUILDING EQUITY IN THEIR HOME and, EARNING/GENERATING BETTER-THAN-AVERAGE RETURNS IN THE STOCK MARKET.

Over the past few years, in particular, Americans accumulated trillions of dollars more than they were on track to save BEFORE the PANDEMIC.

COVID-19 “RELIEF” and “STIMULUS” spending – along with a government “SHUTDOWN” that prevented them from blowing it – is one reason.

Investments increased and interest rates INCREASED. As a result, the total assets in MONEY MARKET FUNDS recently hit a record of nearly $6 trillion.

That’s good news. But only if you were a investor.

RESIDENTIAL REAL ESTATE continued to INCREASE in “VALUE”. Also good – but only if you own a home.

STOCK PRICES are considerably HIGHER than they were in 2019.

Still more good news if you are one of the 61% of Americans who own EQUITIES, either directly or through MUTUAL FUNDS and ETFs.

In short, the recent jump in the number of millionaire families had something to do with government “LARGESSE”.

But it had more to do with PERSONAL FINANCIAL DECISIONS.

Let’s set aside for a moment the families who earn too “LITTLE”l to save/invest.

We should have compassion for these people.

Tens of millions of Americans with “AVERAGE” or ABOVE “AVERAGE” INCOMES– consumers who splurge on designer brands, drive late-model cars, eat out regularly and treat themselves more than occasionally – made a conscious decision NOT to SAVE or INVEST.

Some would say they are “REAPING WHAT THEY SOW”!!!

More to the point, they did NOT “SOW”…

After all, making “FRESH” investments is like PLANTING SEEDS.

Just as the “TINY” ACORN turns into a “MIGHTY” OAK, small investments – left alone to COMPOUND over YEARS or even DECADES – will turn an “AVERAGE” investor into a millionaire or multimillionaire.

The people who “SAVE” and “INVEST” become WEALTHY. They also leave those who don’t further behind…

BUT, “UNEQUAL” doesn’t necessarily mean “UNFAIR”!!!

All that’s needed to become a millionaire – or turn a million-dollar portfolio into a multimillion-dollar fortune – is to SAVE, GENERATE REVENUE/INCOME, INVEST and, COMPOUND.

Yes, it takes “DISCIPLINE” and “PATIENCE”.

For example, only 1% of families under 35 are MILLIONAIRES. BUT, that INCREASES DRAMATICALLY WITH AGE…

By ages 55 to 64, more than 1 in 5 families are millionaires. In fact, 11% of those in this age group have a NET WORTH of OVER $5 million.

Don’t get me wrong. There is still plenty of ECONOMIC “STRUGGLE” in the U.S.

Yet many of these folks are lacking only “DIRECTION” and a “PLAN OF ACTION”. We’re happy to provide them here at the ASK THE WIZ WEALTH INSTITUTE (ATWWI).

A record number of Americans have reached “MILLIONAIRE” status. Many millions more would like to.

If you are one of them, stick with the ASK THE WIZ WEALTH INSTITUTE (ATWWI) and learn how to make WALL STREET pay you right here on MAIN STREET!!!

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Wednesday, January 29^th, 2025

Seven (7) Stocks That Will Get You “P.A.I.D.” If INFLATION Remains HIGHER For LONGER

Every month, investors get several “KEY” ECONOMIC INDICATORS that report the “TRAJECTOR” of INFLATION. The Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) Index MEASURES THE RATE AT WHICH PRICES FOR GOODS, PRODUCTS and/or SERVICESPURCHASED BY CONSUMERS ARE RISING.

A separate report, the Producer Price Index (PPI), tracks the rate of INCREASE in the COST FOR PRODUCERS TO PRODUCE THEIR GOODS, PRODUCTS and/or, SERVICES.

These reports are part of what the FED uses to determine the course of INTEREST RATES CUTS. When INFLATION is tracking ABOVE the FEDs preferred target of 2%, the FED may RAISE INTEREST RATES to “COOL” down the economy.

Conversely, if INFLATION is tracking LOWER than the 2% rate, the FED may CUT INTEREST RATES to “STIMULATE” economic activity.  

In 2021 and 2022, all three (3) measures hit levels not seen in nearly 40 years!!!

That means many investors had NEVER experienced INFLATION at such HIGH rates.

In 2023 and 2024, the RATE OF INFLATION has come DOWN, but it's still above the FED's target rate of 2%.  

But just like in 2021 and 2022, HIGHER INFLATION can create opportunities for certain stocks. In this “WIZ” DAILY JOURNAL I highlight seven (7) stocks that could deliver solid gains for investors, even if INFLATION stays HIGHER for LONGER. 

#1 - Walmart (WMT)

Walmart Inc. (WMT) stock has delivered an average total return of 30.67% during the five-year period of 2020 through 2024. That’s more than DOUBLE the 14.87% total return of the S&P 500 over the same period. The retail giant has shown that it can continue to GROW REVENUE and EARNINGS despite its core consumers dealing with generationally HIGH INFLATION and INTEREST RATES. 

Past performance isn’t always indicative of future results. BUT, there’s plenty of evidence to suggest that WMT will continue to be one of the retail stocks to OUTPERFORM the market. In 2024, the company noted that it was capturing the dollars of HIGHER-INCOME CONSUMERS who were looking for VALUE. This was particularly important as the company reported that its “CORE” consumer is spending the SAME AMOUT but buying FEWER items, particularly DISCRETIONARY items. 

Walmart is also becoming a significant E-COMMERCE player—it reported a 27% INCREASE in E-COMMERCE REVENUE in its most recent quarter. The company is also becoming a FREE CASH FLOW machine while still rewarding investors with a DIVIDEND that has been INCREASING for 52 CONSECUTIVE YEARS!!! 

At 38x FORWARD EARNINGS, WMT stock isn’t cheap. BUT, with plans in place to GROW or REMODEL over 150 stores in addition to ACQUISITIONS to INCREASE its ADVERTISING BUSINESS, WMT is well positioned for FUTURE GROWTH.  

#2 - JPMorgan Chase (JPM)

INFLATION is generally seen as a problem for banks because a significant portion of a bank’s REVENUE comes from INTEREST on the LOANS they service. BUT, INFLATION frequently leads to HIGHER INTEREST RATES and that can be HIGHLY PROFITABLE for a bank like JPM.  

The bank’s REVENUE and EARNINGS are UP YEAR-OVER-YEAR in 2024 despite YEAR-OVER-YEAR LENDING REVENUE BEING DOWN in both its Consumer & Community Banking and Commercial & Investment Bank divisions. This should get a lift if and when the FED LOWERS INTEREST RATES, even if the pace of those “CUTS” SLOWER THAN FIRST OUTLINED. 

Another “BULLISH” catalyst for JPM stock in 2025 comes in the form of LESS REGULATION, particularly the BASIL III ENDGAME that JPMorgan CEO Jamie Dimon has spoken out AGAINST.

JPM stock has averaged a TOTAL RETURN of around 20.5% over the past five (5) years. That's ABOVE the S&P 500 and speaks to the bank’s ability to PERFORM for its customers and its shareholders no matter what’s happening in the economy.  

As of Mid-December, 2024, JPM stock was trading at a DISCOUNT to PROJECTED EARNINGS. BUT analysts are RAISING their PRICE TARGETS for the stock. 

#3 - Visa (V)

Visa Inc. (V) is evidence that CONSUMER SPENDING is holding up, even among those most impacted by INFLATION. VISA delivered HIGHER YEAR-OVER-YEAR REVENUE and EARNINGS in EVERY QUARTER OF ITS 2024 FISCAL YEAR.  

This performance came DESPITE what would appear to be nearly IMPOSSIBLE comparisons. In its most recent quarter, V also rewarded shareholders with $5.8 billion in SHARE REPURCHASES and a seven (7)-cent INCREASE in its DIVIDEND, which was an INCREASE of over 7%. 

At this point, it’s nearly impossible to bet AGAINST the CONSUMER heading into 2025. Even if there is a “SOFTENING” in LOWER-INCOME CONSUMERS, INFLATION has been LESS OF A PROBLEM with HIGHER-INCOME EARNERS. It’s also important to remember that VISA’s role as a PAYMENT SERVICING PROVIDER means it does NOT have to SET ASIDE MONEY FOR CREDIT LOSSES, DELINQUENCIES, ETC.

Although the CONSENSUS PRICE for V stock is only 2.5% HIGHER than the stock’s CLOSING PRICE in MID-December, 2024, some analysts have RASIED their PRICE TARGET for the stock to $360 and $375, respectively, which would market GAINS of OVER 15% or 20%. 

#4 - Caterpillar (CAT)

Caterpillar Inc. (CAT) is another stock that’s likely to PERFORM even if INFLATIONARY PRESSURES continue. Despite a two-year contraction in the MANUFACTURER’s PMI, CAT has continued to deliver ”STRONG” results.

In its third quarter 2024 EARNINGS REPORT, REVENUE FELL SLIGHTLY YEAR-OVER-YEAR. However, the company continued to beat YEAR-OVER-YEAR EARNINGS NUMBERS.  

The INDUSTRIAL EQUIPMENT maker is a “BENEFICIARY” of the INFRASTRUCTURE SPENDING that’s been making its way into the economy. Much of that spending is contractually obligated through 2025, which should keep the company’s “TOP” and “BOTTOM” lines HEALTHY!!!. 

However, CAT stock has delivered an ANNUAL AVERAGE RETURN OF OVER 38% in the last five (5) years… AND despite a return of over 28% in 2024 (which is in line with the S&P 500), analysts are RAISING their PRICE TARGETS. JPMorgan Chase gives the stock a PRICE TARGET of $515, which is 28.8% HIGHER than its closing price during MID- December 2024.

#5 - Sherwin-Willliams (SHW)

To some investors, owning stock in a “PAINT” company may seem as EXCITING as “WATCHING PAINT DRY”.

BUT, institutional investors have been STARTING or ADDING to their positions in The Sherwin-Williams Company (SHW) in the past 12 months. 

The enthusiasm for SHW stock is based on an EXPECTED RECOVERY IN THE HOUSING MARKET DURING THIS YEAR (2025).

BUT, even if “STICKY” INFLATION causes that “REBOUND” to take longer than expected, institutional investors believe that the market for HOME IMPROVEMENT is already RECOVERING.

PAINT is a COST-EFFECTIVE HOME IMPROVEMENT. DEMAND should remain “STEADY” if the FED continues to LOWER INTEREST RATES INDEPENDENT OF INFLATION.

As of MID-December, 2024, SHW stock was fairly valued at the midpoint of its Q4 2024 guidance. But analysts are projecting 12% EARNINGS GROWTH in 2025 and have started to RAISE their PRICE TARGETS. The Sherwin-Williams analyst forecasts  show Morgan Stanley with the HIGHEST PRICE TARGET of $450, which is a 15% GAIN. 

#6 - McKesson (MKC)

McKesson Corp. (MKC) is a leader in HEALTHCARE, which has been an “EVERGREEN” sector for over 15 years. However, the reason MKC makes this particular list is the stock’s “BETA” value.  

Any stock with a “BETA” value BELOW 1 is considered a “LOW” BETA stock. This means that it has LESS VOLATILITY than the S&P 500.

“LOW” BETA stocks that show a STRONG CORRELATION WITH THE CONSUMER PRICE INDEX TEND TO HAVE MARKET BEATING RETURNS WHEN INFLATION IS RISING.

MKC stock has delivered an AVERAGE ANNUAL RETURN of 68% in the last five (5) years. Even with the RATE OF INFLATIONN “COOLING” last year (2024), the stock was still UP more than 23% going into the last two (2) weeks of 2024.  

Analysts are forecasting approximately 12% EARNINGS GROWTH in 2025, which correlates with the CONSENSUS STOCK PRICE, which shows a GAIN of the same amount. However, Citigroup recently RAISED its PRICE TARGET for MKC stock to $713 from $630.  

#7 - Chipotle Mexican Grill (CMG)

Chipotle Mexican Grill Inc. (CMG) has delivered an ANNUAL AVERAGE TOTAL RETURN OF OVER 59% IN THE LAST FIVE (5) YEARS!!!

That’s why, after a 50-for-1 STOCK SPLIT in June (2024) and the DEPARTURE of their popular CEO Brian Niccol, some investors may wonder if there is still room for CMG stock to run. 

HOWEVER, there is something to be said for leaving a company in better shape than when you got there... and Niccol has done just that. CMG remains the CATEGORY LEADER IN THE FAST-CASUAL SPACE and with the company’s CHIPOTLANE, it has “CRACKED THE CODE” on MOBILE ORDERING. In fact, DIGITAL ORDERS accounted for 34% of the company’s REVENUE in Q32024.  

The Chipotle analyst forecast shows a CONSENSUS PRICE TARGET OF $66.07, which is just a 2% increase from the stock’s closing price in MID-December, 2024.

HOWEVER, analysts are beginning to RAISE their TARGETS, suggesting expectations of HIGHER EARNINGS in 2025.  

PEACE & BLESSINGS
Kenneth Reaves, Ph.D.

Monday, January 27^th, 2025

At What Income Do Americans Move From “RICH” To “WEALTHY”???

A recent survey showed, the “AVERAGE” American would feel “RICH” – as in truly “WEALTHY” – at a net worth of $10 million because it would generate $1 million in ANNUAL INCOME BEFORE TAXES at a 10% RATE OF RETURN.

AFTER TAXES, you would be looking at roughly $650,000+/- without using TAX SHELTERS such as a SEP-IRA or PENSION.

If you think $1 million dollars is a lot of money, let's look at these scenarios:

1. 1.If you have a million dollars and you want to “BUY” a house, well ($800k) then you are down to $200k," this illustration highlights just how quickly money can disappear when faced with life's big expenses.

1. 2.Let take this a step further, Your “LOVED” one has a medical complication (ie: cancer), you are out of $200k in one (1) year due to NON-INSURANCE covered medical bills and/or balances. You're back to zero (0) again. My point??? A million dollars isn't what it used to be.

A million was a lot of money in 1960. If money “DEFLATED” at the rate that it has in the last 64 years, money is worth 10% of what it was then. So, if a millionaire was rich in 1960, he/she would need $10 million in 2024 to be considered “RICH”.

If you are still using the idea of $1 million as a benchmark for “WEALTH”, you are behind the times…

I have often explicitly stated that $10 million is the new $1 million. Here is what life is like for someone who retires with $1 million. If you stretch that money over 35 years of retirement, it equals about $28,571 per year or roughly $2,381 a month.

• The average rent in America is $2,000.
• You have $500 a month left over.
• You haven't eaten, you haven't gone out, you haven't bought one pair of shoes, you don't have health care, you don't have insurance and you definitely don't have a car payment.
• You have one car payment, you are NEGATIVE -$200 a month.

Soooo, you are the millionaire that can't afford ANYTHING!!!

So, what the solution to this problem???

Building “PASSIVE” income…

The “KEY” to ENDURING “WEALTH” is having the ability to generate REVENUE/INCOME while you “SLEEP”!!!

Whether investing in REAL ESTATE via DIVIDEND PAYING REAL ESTATE INVESTMENT TRUSTs (REITs), TRADING/INVESTING EQUITIES or, creating other REVENUE/INCOME STREAMS focus on ensuring your MONEY WORKS FOR YOU 24/7/365 – not the other way around.

Many people UNDERESTIMATE the “POWER” of COMPONDING INTEREST!!!

Having a large amount of capital is a plus BUT regardless of this, even a small amount of startup capital, when invested intelligently, can yield a “TREMENDOUS” amount of capital.

LET TIME BE YOUR ALLY…

Ideally earning between $400,000 and $500,000 annually is a tall order for most people, but it's the kind of financial security you need to live comfortably today and with “STRATEGIC” INVESTIMENTS and COMPOUNDING INTEREST you can achieve this.

Of course, not everyone might agree with me. Plenty of people think $1 million is still a solid goal, with some surveys suggesting a NET WORTH of around $2.2 million is enough to feel “WEALTHY”.

However, you must OVERSTAND/UNDERSTAND that aiming for $1m (One million) might leave you STRUGGLING comfortably to make “ENDS MEET” in the long run.

REMEMBER TAXES!!!

ALSO remember, the government be taking a “BIG” chunk of your money too. Soooo, in order to transform from being “WELL OFF” (aka: RICH) to being truly “WEALTHY”, you need to OBTAIN and MAINTAIN well ABOVE $10m (Ten million).

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Wednesday, January 22^nd, 2024

The beginning of a new year presents an ideal opportunity to assess and realign your FINANCIAL “TRAJECTORY”.

One of the most valuable financial practices I have adopted is conducting a thorough review of my “NET” WORTH/ “LIQUID NET” WORTH and adjusting my FINANCIAL “STRATEGY” for the upcoming year.

This comprehensive process not only provides “CLARITY” about my current financial position but also helps shape informed decisions pertaining to my FINANCIAL “FUTURE”.

OVERSTANDING/UNDERSTANDING “NET” WORTH/”LIQUID NET” WORTH

The foundation of this annual financial review begins with a “NET” WORTH calculation, which provides a “SNAPSHOT” of my overall FINANCIAL “HEALTH”.

This calculation follows a “SIMPLE” principle:

SUBTRACT what I owe from what I owe NOTHING on/ “CONTROL” (aka: own)

While the concept is straightforward, the execution requires CAREFUL ATTENTION TO DETAIL AND COMPREHENSIVE RECORD KEEPING.

I maintain an EXCEL SPREADSHEET that categorizes each financial component, allowing me to track changes over time and identify trends in my FINANCIAL ‘JOURNEY”.

ASSET CATEGORIES and THEIR SIGNIFICANCE

Your “ASSETS” encompass everything of FINANCIAL “VALUE” in your possession.

RETIREMENT ACCOUNTS form a “CRUCIAL” component of these “ASSETS” for most people. Including various investment vehicles such as 401(k)s, TRADITIONAL and ROTH IRAs, and other RETIREMENT-SPECIFIC investments.

I have found that CONSOLIDATING these accounts with a SINGLE institution, in my case FIDELITY, significantly “STREAMLINES” the monitoring process.

“LIQUID” ASSETS play an equally important role in your financial portfolio. These include readily accessible funds in MONEY MARKET and CHECKING ACCOUNTS, along with SHORT-TERM investments like CERTIFICATES OF DEPOSIT and TREASURY BILLS.

The investment category extends beyond RETIREMENT ACCOUNTSR to encompass STOCKS, OPTIONS, BONDS, MUTUAL FUNDS and potentially more “SPECIALIZED” instruments like ANNUITIES or the CASH VALUE of LIFE INSURANCE POLICIES.

“TANGIBLE” ASSETS represent the “PHYSICAL” components of your WEALTH…

Your PRIMARY RESIDENCE, INVESTMENT PROPERTIES and LAND HOLDINGS fall under “REAL PROPERTY” ASSETS.

“PERSONAL” PROPERTY encompasses VEHICLES, JEWERLY, ART and other “PHYSICAL” items of “SIGNIFICANT” worth.

OVERSTANDING/UNDERSTANDING MANAGING LIABILITIES

A complete FINANCIAL “PICTURE” requires careful consideration of your “DEBTS”.

These “LIABILITIES” typically include MORTGAGE OBLIGATIONS, CREDIT CARD BALANCES, PERSONAL/ STUDENT LOANS and, VEHICLE FINANCING.

OVERSTANDING/UNDERSTANDING the full scope of your “OBLIGATIONS” helps develop effective “DEBT” MANAGEMENT STRATEGIES and supports better FINANCIAL DECISION MAKING.

The Review Process: ANALYSIS and ADJUSTMENT

Once you have established your current “NET” WORTH, the next phase involves careful ANALYSIS of your FINANCIAL “TRAJECTORY”.

THIS REVIEW SHOULD EXAMINE YEAR-OVER-YEAR CHANGES IN BOTH ASSETS AND LIABILITIES, IDENTIFYING POSITIVE TRENDS WHILE “FLAGGING” AREAS THAT REQUIRE ATTENTION.

The analysis helps determine whether your SPENDING PATTERNS ALIGN WITH YOUR FINANCIAL “GOALS” AND IF YOUR TRADING/INVESTING STRATEGIES ARE GENERATING/YIELDING YOUR “DESIRED” RESULTS.

The insights gained from your FINANCIAL REVIEW(s) should inform you of required “STRATEGIC” ADJUSTMENTS you need to make in your trading/investing approach.

This includes maintaining an appropriate “BALANCE” between “RETIREMENT” and “ACCESSIBLE” funds, ensuring you are prepared for both LONG-TERM GOALS and UNEXPECTED EXPENSES.

As you progress through different “LIFE” STAGES, particularly approaching RETIREMENT, your TRADING/INVESTING STRATEGIES should “EVOLVE” to reflect changing “RISK” TOLERANCES and TIME HORIZONS.

While numbers form the core of this ANNUAL REVIEW, other crucial aspects deserve attention. REGULAR VERIFICATION of ACCOUNT BENEFICIARIES ensures your “ASSETS” will be DISTRIBUTED according to your wishes.

This SIMPLE but often OVERLOOKED step can prevent SIGNIFICANT COMPLICATIONS for your “LOVED” ones in the future.

THE LONG-TERM VALUE of ANNUAL FINANCIAL REVIEWS

Establishing this ANNUAL FINANCIAL REVIEW “TRADITION” offers benefits that extend far beyond the immediate satisfaction of OVERSTANDING/UNDERSTANDING your current position. It creates a framework for INTENTIONAL FINANCIAL DECISION MAKING throughout the year and builds confidence in your LONG-TERM FINANCIAL PLANNING.

Whether you prefer “TRADITIONAL” SPREADSHEET TRACKING or MODERN FINANCIAL APPLICATIONS, this “SYSTEMATIC” approach to financial planning provides the “STRUCTURE” needed for the ACQUISTION and MAINTENANCE of your ECONOMIC LIBERATION!!!

The process may seem “DAUNTING” initially, but the “CLARITY” and “DIRECTION” it provides make it an ”INVALUABLE” tool for anyone “SERIOUS” about their FINANCIAL “FUTURE”.

As markets fluctuate and personal circumstances change, this ANNUAL “TRADITION” serves as a cornerstone for maintaining FINANCIAL “STABILITY” and working toward your LONG-TERM FINANCIAL GOALS.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

Friday, January 3^rd, 2025

Trump-Induced Catalysts That Could Trigger a Market Correction in 2025

Record highs??? Don't get too “COMFORTABLE”….

The stock market's party in 2024 has left investors feeling “EUPHORIC”, with the major indices perched at “ALL-TIME” HIGHS.

BUT, like all good parties, this one is likely to end with a “WICKED” HANGOVER!!!

The catalysts for this market correction???

A potent cocktail of Donald Trump's ECONOMIC POLICIES, Elon Musk's “IMPULSIVE” ANTICS and, a sprinkle of market “HUBRIS”.

Listed below, I break down the three (3) ways these factors are setting the stage for a FINANCIAL “MELTDOWN”...and, more importantly, how YOU, ME, WE the ATWWI FAMILY can protect your portfolio when the “HOUSE OF CARDS” comes tumbling down.

1. Tax Cuts for the Rich, Paid by... Nobody

Trump's second round of proposed TAX CUTS, a sequel to the 2017 GOP TAX BONANZA, is widely criticized by most economists (the credible ones, anyway) as INFLATIONARY. The CUTS would disproportionately BERNEFIT CORPORATIONS and the ULTRA-WEALTHY while ballooning the NATIONAL DEBT to “UNSUSTAINABLE” levels.

Sure, WALL STREET might “CHEER” in the SHORT TERM as BUYBACKS SURGE and CORPORATE PROFITS remain “ARTIFICIALLY” INFLATED.

BUT, what happens when INTREST RATES “CREEP” UP, and UNCLE SAM starts choking on those IOUs???

A “DEBT CRISIS” could “SPOOK” BOND MARKETS and send EQUITIES into a TAILSPIN.

ATWWI FAMILY “PIVOT”: ROTATE INTO DIVIDEND-PAYING STOCKS IN DEFENSIVE SECTORS LIKE UTILITIES and CONSUMER STAPLES.

THESE COMPANIES ARE LESS DEPENDENT ON TAX CUTS AND ARE TYPICALLY MORE RESILIENT DURING MARKET DOWNTURNS.

2. Tariff Tantrums: A Trade War Encore

Remember the “TARIFF WARS” of the late 2010s???

Trump's love affair with “PUNITIVE” TRADE MEASURES is back, this time aimed not only at CHINA but also at EUROPE, INDIA and, anyone else who dares to “SELL” goods cheaper than America can.

The tariffs are poised to push IMPORT COST HIGHER for U.S. COMPANIES, CRUSH GLOBAL SUPPLY CHAINS and, DRIVE UP CONSUMER PRICES—all while failing to address actual TRADE IMBALANCES.

The result???

MARGIN COMPRESSION for corporations and a potential “HIT” to EARNINGS that could rattle investor confidence.

ATWWI FAMILY “PIVOT”: CONSIDER EXCHANGE TRADED FUNDS (ETFs) THAT FOCUS ON EMERGING MARKETS POISED TO BENEFIT FROM TRADE DIVERSIONS, SUCH AS VIETNAM, INDONESIA or, MEXICO WHICH WOULD BECOME “WINNERS” IN THIS “CHAOTIC GAME” OF “TRADE CHESS”

3. Crony Capitalism on Steroids

The “COZY” relationship between Trump and corporate “TITANS” like Elon Musk is a “RECIPE FOR MARKET DISTORTIONS”.

Musk's “ERRATIC” BEHAVIOR—whether it's launching a “RISKY” new business initiative, ignoring the businesses he already owns, or ”FLIPPANTLY” commenting on X about GEOPOLITICS—only adds ”FUEL TO THE FIRE”!!!

In this environment, government policies increasingly “FAVOR” BIG NAME PLAYERS WHILE LEAVING SMALL AND MID CAP COMPANIES TO FEND FOR THEMSELVES...

This “FAVORITISM” erodes MARKET COMPETITION and creates SYSTEMIC “RISK” as the economy becomes too reliant on a few GIANTS.

ATWWI FAMILY “PIVOT”: DIVERSIFY INTO MID and SMALL CAP COMPANIES THAT ARE IN SECTORS WITH LOWER EXPOSURE TO POLITICAL “FAVORITISM”, SUCH AS ARTIFICIAL INTELLIGENCE (AI) and HEALTHCARE.

The STOCK MARKET has defied gravity for longer than anyone expected, but the laws of “FINANCIAL PHYSICS” have not been REPEALED. By nearly every valuation metric, the stock market is “FROTHY”.

A “CORRECTION” is long overdue and the policies emanating from Trump's playbook, enabled by Musk's “CARNIVAL OF CHAOS”, are likely to LIGHT THE FUSE!!!

For YOU, ME, WE the ATWWI FAMILY , NOW is the time to embrace “PRAGMATISM” over “BLIND OPTIMISM”.

REBALANCE OUR PORTFOLIOS, HEDGE AGAINST VOLATILITY and AVOID THE “TEMPTATION” TO CHASE “SPECULATIVE” GAINS.

The ride will get “BUMPY” in 2025… BUT, with the utilization of the right ATWWI STRATEGIES…YOU, ME, WE the ATWWI FAMILY WILL CONTINUE TO GET “P.A.I.D.”!!!

“BULL/BEAR WE DON’T CARE”…

PEACE & BLESSINGS,

Kenneth Reaves, Ph.D.