I always say I care more about what’s going on in my house than what’s going on in the White House. So if people are worried about their finances, what are some smart steps they can take this year to prepare themselves
Ed Bowsky is an internationally recognized expert in investment and wealth management. He is known for the ESPN 30 for 30 documentary titled “Broke,” which highlights the financial issues that professional athletes face after their careers end. The film illustrates how a lack of financial literacy and poor money management can lead many athletes, who have earned millions, to the brink of bankruptcy.
Ed Bowsky is a managing partner at Chapwood Investments and the creator of the Chapwood Index. This index, updated twice a year, reflects real changes in the cost of living in the U.S., unlike the official Consumer Price Index (CPI), which Bowsky believes inadequately represents price increases. The Chapwood Index tracks the cost of 500 essential goods and services in 50 major U.S. cities, and the results show that the cost of living is rising much faster than the CPI indicates.
Bowsky also notes that people living on fixed incomes experience reduced purchasing power each year, even if they meet all their financial obligations. Therefore, he recommends focusing on creating income streams that can provide a steady cash flow, rather than relying solely on a fixed salary.
He predicts that in 2024, the Federal Reserve will likely lower interest rates, which will positively impact interest-sensitive investments, including utilities and biotechnology stocks. Bowsky believes that the greatest growth potential in 2024 will be in small-cap stocks, particularly those capable of increasing their profits.
Additionally, Bowsky warns that many pension funds in the U.S. may face funding issues, which could result in around 30% of people being unable to retire as planned. This means that many will be forced to continue working, as their pensions may not be sufficient for a comfortable retirement.
Bowsky advises people to consider additional income sources, such as side projects or participating in organizations that offer such opportunities. This can be a way to protect against economic hardships that may arise in the future.
I always tell people that they need to become income producers. If you are an income producer, you will be paid for your productivity, not based on someone else’s opinion.
Investment Perspectives for 2024: Risk Analysis and Promising Assets with Ed Bowsky
I love learning new things. Even though I have Attention Deficit Disorder, I enjoy having something new to think about. I always stay updated on global events. People respect the knowledge you possess.
In analyzing risks, I created calculators for portfolio analysis and risk assessment on our site ‘Investment Forensics’. We use the term ‘variance drag phantom tax’ (VDT). The more variance in a portfolio, the greater the drag on returns. Most people don’t know how to measure risks, but we do.
Too much money in circulation leads to inflation. When more of anything is printed, its value decreases. The U.S. has printed 80% of all its money in the last 3-4 years. Therefore, the value of the dollar has decreased, and the cost of goods has risen. This creates inflationary pressures.
The U.S. national debt has reached $34 trillion. If it accrues 5% interest, servicing the debt would consume $1.5 trillion in taxes, which could be spent on societal needs like helping the homeless, improving roads, and schools. This could also become a national security issue if other countries, like China, decide to stop buying our debt. This could affect the funding of the military, police, and fire services.
We need to pay attention to politics and how it impacts our lives, businesses, and communities. Looking at the market for 2024, I would say that in a climate of declining interest rates, the most attractive investments will be in utilities. Falling natural gas prices may lead to increased profits and dividends in this sector.
On a private level, investments in wine and liquor could also be interesting. Wine and whiskey barrels can provide good returns. However, it’s important to remember that these are investments, not consumption.
If you have the opportunity, try to avoid coffee and cigarettes, like I do, and focus on healthy habits. I hope this helps you make informed investment decisions.
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