How Do We Get on the Ground Floor?
I hope you enjoyed the last long weekend of the summer! It’s time for back-to-school for kids of all ages, which means getting back into that post-summer routine.
In today’s email:
- Do the ultra rich have more access to investment opportunities or are we just looking in the wrong places?
- What are the Feds going to do and how will this affect my investments?
- Ready to “flip the bird” to these crazy markets, let’s check out the history of this gesture.
- What the heck is Bitcoin? Should this be a part of my portfolio? We ask Purpose Investment’s CIO Greg Taylor these questions and more.
The Scoop
**What Does Access Look Like? **
Recently, while driving with some friends who are doing quite well financially, I had the chance to listen in on an intriguing conversation. Both of them, independently, were approached with the opportunity to purchase SpaceX shares as part of a fundraising round. As you might know, SpaceX is still a private company, with a valuation that has recently been reported at over $220 billion.
This got me thinking about how the ultra rich continue to grow their wealth. Warren Buffett, a legendary investor, has likely turned down more investment opportunities than most of us will ever encounter. However, he doesn’t make his investments the way most people do. Investors who pour millions into a single opportunity often receive preferred pricing or early access when new shares become available. The ultra-wealthy play by different rules than most people.
When SpaceX eventually goes public, it could become one of the largest IPOs we’ve ever seen, and those who were invited to invest early stand to make substantial gains. Many of us have pondered the “what-ifs” of investing in Apple when the first iPod was released, or in Google when “Googling” became a part of our everyday vocabulary. While reflecting on these missed opportunities is interesting, it’s not particularly productive.
Today, there are more opportunities to get in on the ground floor of exceptional companies that aren’t yet publicly traded. Private equity firms, which invest in companies like Rolex, Mars Inc., and IKEA, typically receive their funding from pension funds, the ultra-wealthy, and endowments. These firms are often the ones invited to participate in these exclusive investment opportunities.
We’ve created a fund that provides access to many outstanding private companies, some of which are expected to go public in the coming years. Through an exhaustive due diligence process, we’ve partnered with several top-tier private equity firms that invest in these great private companies, and we’ve made this opportunity available to you.
Sometimes, it’s not about reinventing the wheel but rather observing what the most successful investors are doing and replicating that process.
Market Minute
Economists and investors spent much of last week parsing through speeches from central bank officials to try and determine where interest rates are going to head in the coming weeks and months.
In Canada, there are thoughts that the Bank of Canada will hold rates steady in the coming months. They have been citing ongoing concerns about inflation pressures despite a softer growth outlook.
Oil prices have continued to be volatile, which has impacted both the US and Canadian markets as of late.
In the US, we saw early week gains, pushed by tech stocks. The rally was somewhat subdued by mixed economic data, particularly in the consumer spending area. This softer consumer spending is a big red flag for the US, indication potential headwinds for the economy as the year progresses.
Trends to Watch
- Central Bank Communications: As we get closer to the US Federal Reserve making a statement on interest rates, this could have a major impact on markets. Most are anticipating a reduction in interest rates, but if it is less than expected or they push back lowering rates, it could shift investor sentiment.
- Economic Data Releases: In the US, jobs reports will be released, which will be a key factor. A strong report could reinforce the Fed’s narrative of a resilient economy. Unfortunately, even a strong report could be misleading as each report over the past couple of years has been skewed downwards after more reliable data comes out. In Canada, GDP numbers will be released for June and Q2. This as well will need to be analyzed with a open mind as several factors can make GDP look better than it really is. New Canadians, along with government spending factor in to GDP, but does not paint a full picture of the state of individual Canadians.
- Oil & Commodity: Oil prices are remaining volatile with ongoing geopolitical tensions and OPEC+ production cuts. With global risk sentiment fluctuating, the movement in gold prices will be a key barometer of investor sentiment.
The Lighter Side
I love the history of sayings and gestures. It’s amazing to me how these things evolve over time to become a societal norm.
In 1415, during the Battle of Agincourt between the French and English, the French were sure of their impending win as they greatly outnumbered the English. In anticipation of this win, the French vowed to cut off the middle finger of every Englishman they captured, since you can’t shoot an arrow without a middle finger.
The English used the wood from the Yew Tree for their bows, which shooting these arrows became known as “plucking the yew”.
After the English won the battle, they showed the French that they still had their middle finger and we’re heard saying that they can still “Pluck Yew”. The feathers on the arrow also led to the English giving the French “the bird”.
The CHPW Team
What does a diversified portfolio now need to hold? Should Bitcoin and Cryptocurrencies be part of your portfolio? And, honestly, what the heck are cryptos?
We had the opportunity to sit down with the Chief Investment Officer for Purpose Investments to ask those exact questions. Purpose was the first Bitcoin EFT in the world, so who better to answer these questions. If you ever thought about owning Bitcoin, or just want to know what all the hype is about, check out our conversation with Greg Taylor here!
Until next week, happy investing!
Trevor
