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7am Saturday

November 2, 2019

Good morning! Welcome to 7am Saturday reader Q&A edition. But, first a quick look at the market and interest rates…

Markets

📈 U.S. stocks hit fresh records – The S&P 500 reached another all-time high on Friday after a strong hiring report showed that there were more jobs added than forecasted. This increased confidence in the economy by offering hope that the strong job market will propel consumers to keep spending and extend the record-long economic expansion.

Economy

✂️ The Fed cut rates for the 3rd time this year – Wednesday’s 0.25% rate cut nearly reverses all of 2018’s increases. Last year the Fed increased rates four times for a total of 1.00% This year, they’ve cut rates three times for a total of -0.75%.

When the Fed cut rates on Wednesday the S&P 500 closed at an all-time high. The last time that happened was in January 1996. Prior to this year, the Fed had never cut rates with the Unemployment Rate below 4%. This week, they did so for the third straight meeting while the Unemloyment Rate remains at a 50-year low of 3.5%. Welcome to easy money!

Reader Questions

I had some questions from a few of you last week. Chances are that if you have a question someone else has the same question. So, occasionally I will anonymously share your questions along with my answer so everyone can benefit.

❓ I really like these emails, Mr. Adam. Thank You. Question – can you make them shareable on Facebook or is this exclusive to email?

I am glad to hear you are enjoying these emails. For now, these emails are exclusive to anyone who signs up. I’m thinking about also publishing them on my website, but haven’t yet. You are always welcome to forward the emails to your friends, but I don’t have an easy way to share on Facebook. I will give this some more thought.

❓ What do you think of Mr. Branson and Virgin Galactic going public on Monday.

I’m excited about Virgin Galactic’s IPO. It’s just another example of a company breaking through limits that many previously thought were impossible. Both Chamath Palihapitiya and Richard Branson are smart entrepreneurs.

As for investing in the stock…well I would limit it to a small % of a portfolio if at all. Unfortunately, I can’t give you investment advice because you are not a client, and I don’t know your whole situation. If you do want to invest in this, be sure to do your homework first.

The customer base for Virgin Galactic is going to be very niche and small with a price tag of $250,000 per ticket to travel into space. There are also risks for the company. Think about Boeing and the two recent crashes of its 737 Max. Boeing is a great company but is now struggling as an investment because of these crashes. Space travel is also dangerous, complex, and expensive. Not saying this won’t work out for investors, but just recognize it is a higher risk, more speculative investment. During the first five days of trading the shares dropped 20%. In the end I’m a fan of what the company is trying to do.

❓ In regards to autonomous cars and the future, what stocks do you currently like that are on the forefront to making it happen?

Unfortunately, I cannot give you investment advice. Since you’re not a client, and I don’t have complete knowledge of your financial situation nothing I talk about in this newsletter is a recommendation. These emails are for education purposes only.

That being said, I can share some names of companies that are publicly traded that are working hard at making autonomous cars possible. Here are some of the more well known companies that have self-driving projects:

1. Waymo – Waymo is a subsidiary of Google’s parent company Alphabet. Waymo began as the Google Self-Driving Car Project in 2009. Waymo’s mission “is to make it safe and easy for people and things to move around. We aim to bring fully self-driving technology to the world that can improve mobility by giving people the freedom to get around, and save thousands of lives now lost to traffic crashes.” (Visit their website to see why this is important.)
2. Tesla – All new Tesla cars come standard with advanced hardware capable of providing full self-driving capabilities in the future.
3. General Motors – GM purchased it’s self-driving division, Cruise Automation, in 2016 to jump-start its self-drving efforts. GM and Honda have also announced that they are joining forces to develop a purpose-built autonomous vehicle for Cruise that can serve a wide variety of use cases and be manufactured at high volume for global deployment.
4. Ford – Ford is working in collaboration with Argo AI to test driverless vehicles. Ford will have a fully autonomous vehicle in operation by 2021.
5. Uber – Uber’s self-driving project, Advanced Technologies Group, is one of the most prominent in the market. The company signed an agreement with Volvo to order about 24,000 XC90 SUVs which it will outfit with its self-driving technologies.
6. Lyft – Lyft operates an open platform that allows any company working on self-driving technologies to pick up customers who request rides on its app. GM also has a big ownership stake in Lyft.
7. ​Audi
8. Volkswagen – Just this past week, Volkswagen announced that they setup an autonomous driving subsidiary called Volkswagen Autonomy with plans to come to Silicon Valley and China in the next few years.
9. Intel – Intel technologies power autonomous cars.

This list is definitely not a complete list of every company working in this space as there are over 40 companies that are working on autonomous vehicles. Again, this is just a list to get you started on your own research. I’m not recommending that you buy any of these stocks. If you’re interested in investing in the future of driverless cars I suggest you do your own homework or talk to a financial advisor.

❓ What are 5 stocks you currently like from all sectors?

Again, I can’t give you investment advice. But, what I can do is share with you some of the stocks that we do own for clients. I will even share more than 5 with you.😊

Here are the Top Ten Holdings in our Focused Equity Portfolio:

Here are the Top Ten Holdings in our Focused Equity Income Portfolio:

Those two lists of our top holdings should give you a pretty good idea of what stocks we like. However, keep in mind that this is not a recommendation that you buy these stocks. Clients who are invested in these stocks have had a review with a financial advisor to make sure these portfolios are suitable for them. Furthermore, this is just a slice of the whole portfolio for these clients.

🙋 What’s your question? I love getting emails from readers. I enjoy your feedback and your questions help me get to know you and understand what’s on your mind. My goal is to make these emails as relevant as possible. Knowing your questions helps me know what to write about. So, please, ask me your question anytime. Simply hit reply to one of my emails to reach me. I may not always be able to reply right away, but I will do my best to get you an answer. If I share your question in an email you will always remain anonymous.

The Good Stuff

🦸‍♀️ A brand new blog I’m following – Check out this new blog from Jessica Hinks: The Everyday Advisor. Jess is a CERTIFIED FINANCIAL PLANNER™, and she also happens to be an Associate Wealth Advisor on our team at Hixon Zuercher Capital Management. When you visit her site be sure to download her Financial Planning Checklist to get started organizing your whole financial picture and begin making smarter financial decisions everyday.

🛍️ Amazon is now offering free grocery delivery for Prime members – The catch? Well, you have to live in one of the 2,000+ cities. They say they will continue to expand this service to more cities. So, it’s quite possible that there will be a day when you will never have to step foot in a grocery store again.

🏐 Volleyball update – The Liberty-Benton Eagles won the Regional Semifinal match on Thursday night. This afternoon at 2pm (EST) the #2 Eagles will play #1 Ottawa-Glandorf in the Regional Final for a chance to go to State. Follow me on Twitter for updates.

Make it a great day,

Adam

↩️ PS – If anytime you get an email from me and you want to share a comment or ask a question, simply hit ‘reply.’ I read every email, and try my best to respond.

📧 PPS – Thank you for all the feedback on these emails. I’ve had an overwhelming amount of positive replies to my new weekly email. If you’re finding these emails helpful, please forward them to your friends. Or, you can always direct them to 7amSaturday.com to sign up.