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How To Make Tough Financial Decisions in Minutes

By Blog, Entrerpreneurship, Founders, Press, Wealth Management

Why I Use Decision Trees

In this issue, I will show you how you can use a “decision tree” to make the most challenging decisions confidently, saving time and money. I have had a “decision tree” integrated into my financial planning practice with clients since reading about it in Harvard Business Review 7 years ago. While inflationary pressures mount and the dollar’s purchasing power rapidly erodes, you should be aware of the long-term financial impact of today’s decisions. 

What is a “decision tree?”

It is a graphical tool that helps you visualize the possible outcomes of your decision-making process. Often, we are either overthinking it or winging it when it comes to decisions. Which one are you? I’m a little bit of both sometimes, but I also lean into my “gut instincts,” too, so I might be a “winger!” 

Here’s what a decision tree looks like for a business owner deciding if she should expand her business or do nothing:

There are templates you can sign up and use or just to get inspiration to build your own. I use a whiteboard and use different color markers. It keeps me away from electronics, so I’m not distracted.

How do you create a “decision tree?”

A decision tree is very effective if you’re weighing between two business decisions, but for personal finance, it can start with a question or a problem you’re trying to answer.  I’ll use myself, for example, “when do I move to Virginia?

Brainstorm possible options or solutions

Do I move in 1 year, 5 years, or 10 years? These are my options. So now I will begin to create my tree:

Move to Virginia > 1 year > 5 years > 10 years 

Should we stay or should we go? (Pros & Cons) 

Yes, let’s do it (Pros)

Virginia is where the Evans family began 4 generations ago in the foothills of Appalachia. We are part indigenous and Scottish farmers of timber, horses, livestock, tobacco, and mixed crops. A lot of our family are still down there. Virginians are very social and friendly, and the politics of late seem to lean conservative, which favors my family and me. 

No, let’s not move (Cons)

My son has important friendships and roots here in New York. To move him away within year 1 could hurt him spiritually and emotionally. By year 5, he will graduate high school and may still need roots here. My wife is a professional organizer, often going into people’s homes and businesses, so she could not be remote. She would have to start all over again in Virginia. She is also a city girl and will need time to adapt to a slower pace and lifestyle. Also, the politics in Virginia could change in 10 years out of our favor, and housing and property prices could increase over time, making a Virginia tentative move. 

What we decided (the outcome)

It looks like moving to Virginia in 10 years is the best decision.  But if I was worried about rising housing and land prices, I might consider buying land sooner rather than later and get zoning and building permits to start construction over the next 10 years. I would only do this because I know Virginia well, and my wife and son like it there. If we didn’t know Virginia, we would visit a few other places a few times to decide what we prefer based on our decision tree. 

And I found my political concerns are mostly at the local county levels, not state, and we’re looking into locations that support rural homesteading lifestyle vs. development. And for what it’s worth…I’ve been living in New York for the last 30 years. And if I can live here…I think I can live anywhere. 

So how about you?

What major decisions can you make in peace within minutes today? 

I’m honored to be on the journey with you.

Your friend,

Daniel Evans

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The Merge in Crypto Can Change Your Life.

By Blog, Cryptocurrency, Investing, Markets, Press, Wealth Management

While the Internet and how we interact digitally are being disrupted, you can build transformative wealth.

Total read time: 9 minutes

I missed the boat on the most significant bull run in financial history. My financial expertise and insights were born & bred at large wealth management firms. I was conditioned to scoff at new economic ideas like Bitcoin. Now, I have my firm. I’m integrating crypto market ideas into a traditional portfolio. And what an exciting time to do so.

Introducing, The Merge. I’m not going to miss this ride. And when you’re done reading this, neither will you.

What did we miss?

To appreciate the potential opportunity ahead of us, here’s what we missed in numbers.

I learned about Bitcoin from a 22-year-old on rideshare in an Uber. He asked if he could run something by me after I told him what I did for a living. He bought “something” for $0.40, and the price was now $500. In other words, his $400 investment in Bitcoin became $500,000. He asked me if it was real. I had never seen anything like it. He was afraid to touch it. I said the only way to know its objective is to try to cash it out. By now, he knows it’s real. But when did he know it was real? Did he sell it at $500? Did he sell it in a panic during the Pandemic when it was $6,200? If so, he would have earned $6.2 million on a $400 investment.

What is Bitcoin?

You know what it is, but you probably don’t know how it works. To fully understand The Merge, you need to know. Bitcoin is a decentralized currency. The government does not print it. It’s not borrowed from a bank. In other words, there are no intermediaries between you and Bitcoin, as there are with cash. Intermediaries take fees and charge interest on money. They report large cash deposits to the government so that they can assess taxes. But when you turn your cash into Bitcoin, you can also liquidate your Bitcoin for money without any “middlemen.” A ledger is the only record of your transaction of the coin. It’s called the blockchain. And you are a number on the blockchain, not a name. You are anonymous.

The Birth of Ethereum

The heart of Bitcoin’s success is the blockchain. It allows every transaction to be anonymous. Every new transaction is a new link in the chain. The blockchain is designed, managed, and stored on large custom servers.

Three years after the birth of Bitcoin, a group of programmers figured this out. They created their blockchain. Unlike Bitcoin, they decided their blockchain would not be exclusive. They would create a blockchain that anybody can use to make their currency. It’s called Ethereum. It’s more than just a coin.

Unlike Bitcoin, it’s an ecosystem.

The Birth of Decentralized Finance (Defi), ICOs & NFTs.

Many apps and cryptocurrencies have been formed on the Ethereum blockchain. Decentralized Financial Applications (called “DApps”) are the most disruptive. In the same way, there are no banking intermediaries with Bitcoin. There are no merchant intermediaries with DApps.

To listen to music, we must go through a streaming platform. They charge a monthly fee and pay the artists a tiny royalty rate. With DApps, the artist can bypass streaming platforms entirely. You don’t need to apply if you need a loan. You can skip the bank to get a mortgage within minutes. There are “open banks” on the blockchain where you can “deposit” your currency. These crypto banks lend money against your “wallet” like a regular bank and pay you part of the interest.

The Ethereum blockchain has also been programmed to create smart contracts. These agreements are binding, like ones drafted by an attorney. These contracts allowed companies to raise capital to grow their company through their cryptocurrency. It’s called an Initial Coin Offering (ICO). In the contracts, they offer ownership in the company. And sometimes, it’s special offers, discounts, and memberships to coin holders.

Non-Fungible Tokens (NFTs) are similar. The asset behind the token is not a company. When you own an NFT, you own something unique. Artwork, music, memorabilia, or exclusive video. Owning an NFT gives you membership, special access to the artists, a share of the royalty, licensing of the underlying work, and even a percentage of the proceeds from selling the underlying asset.

Like a stock, you can buy and sell your ICO and NFT token to a third party, in a secondary market, like Open Sea. With Bitcoin and Ethereum, you buy and sell your coin directly from them on their blockchain.

Proof of Work vs. Proof of Stake

Everything I mentioned above has not gone mainstream yet. The electricity costs to manage high storage servers and mint coins for an ecosystem are too expensive and exhaust too many resources. It’s so bad that China had to stop crypto miners in their country. Minting coins and running servers were overwhelming the electric grid and creating blackouts. It’s also happening in California. The state has passed this cost on to taxpayers as a gas tax. The tax is the highest in the nation. Their mandate to be green energy independent will make it worse. But I digress.

Minting coins is called proof of work. When you pay cash for Bitcoin, you get a currency that is registered on its blockchain. But that’s one coin on one blockchain. Imagine multiple coins on one blockchain. Rising costs have become a barrier to creating currency on the Ethereum blockchain.

In response, programmers have created new blockchains based on proof of stake. With this development, you don’t need to mint a coin to be on the blockchain. The community on the blockchain validates your ownership. Once they do, the servers create a new link. This eliminates the rising costs and exhausting of resources of minting coins.

Solana is the blockchain responsible for this new development. The coin is widely known in the crypto market as the “Ethereum Killer.” Just like Ethereum, many applications can be created from it. This development has helped Solana win growing favor with ICO issuers and NFT creators. The coin has greatly increased in value.

The Merge

It was always believed that once a blockchain was created, it was permanent. For Ethereum to compete with Solana, it would have to merge its proof of work protocol with a proof of stake protocol.

This is impossible.

So, we thought.

Turns out, by Sept. 13, 2022, the Ethereum blockchain will merge with proof of stake, eventually phasing out proof of work completely.

This Transforms The Entire Crypto Market.

Bitcoin & Ethereum own 62% market share of the total crypto market. The Ethereum ecosystem of apps and cryptocurrencies is a big part of that percentage.

This merge doesn’t just affect the Ethereum currency but the entire ecosystem.

All the Decentralized Finance applications I mentioned above will start to accelerate their plans to launch and execute.

And with this market share, Solana, and other coins like them, become a moot point and begin to lose value. Large investors like Elon Musk and Tesla are already pulling out of Bitcoin. The only cryptocurrency holding all the upside now is Ethereum, and all the coins are built on their blockchain.

My Thoughts

At the time of this writing, Bitcoin is currently $21,000. Ethereum is at $1,600. I believe Ethereum will one day surpass Bitcoin in price. Merging with a proof of stake protocol cuts costs and conserves natural resources. It is a profit and a sustainable environment investment opportunity. The only thing stopping Ethereum’s momentum is government regulators. But the nature of the crypto market makes regulation difficult. China already has a “digital currency.” The United States is taking steps in that direction. It may accelerate. The government can only regulate crypto markets by phasing out cash.

The only way around that is to hold cash in a different currency. My custodian partner allows my clients to buy and sell stock in other global currencies. This is what makes my firm unique in this area.

Next Steps

Go out and buy Ethereum. How much? Depends on your risk tolerance. It is still speculative by nature. If you’re feeling you caught a case of FOMO, good. Me and you both. I’m not going to miss these opportunities again. Neither should you.

Thank you for reading.

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US plans fiscal spending

By Press

Key takeaways

  • Proposed fiscal spending would give the US economy a multi-year boost, reversing decades of public underinvestment

  • New spending would kick-in as the Fed winds-down pandemic support to a growing economy

  • Bipartisan disagreements may disrupt government funds short-term, creating market volatility, though in the longer run, multi-trillion spending supports the global recovery

  • Tactically we underweight US equities, preferring pan-European stocks that have lagged the US recovery, and so offer valuations that are more attractive.

Over the coming months, the political noise surrounding US spending plans may create some market volatility, but should not distract from America’s solid economic recovery. As the recovery matures, and the Federal Reserve prepares to withdraw its emergency support, a far-ranging USD 3.5 trillion fiscal package would deliver an unusually stable investment horizon.

As the pandemic’s impacts fade, the US economy is returning to its longer-term growth path. We expect gross domestic product to expand 6.6% for 2021, 4.6% in 2022, and closer to its long-run potential of 2% in 2023. This suggests that while the best of the post-crisis growth is behind us, growth is also consolidating closer to its average over time. At a smaller scale, this pattern is visible in the evolution of consumer prices as the post-lockdown surge in spending and demand slows. Core US consumer inflation rose 0.1% in August compared with the previous month. This was the measure’s smallest gain since February, as the mechanical ‘base effects’ of re-opening hotels and airports gives way to more cyclical inflation, driven by wages and rents, for example.

These ‘normalizing’ indicators back expectations that the Fed is poised to wind down – or ‘taper’ – its emergency spending by reducing monthly asset purchases, possibly starting late this year, or early next year. As long as employment also enjoys a broad recovery, tapering would be followed by raising interest rates, beginning in 2023, perhaps to around 2.5% by 2026.

As the Fed’s support is gradually withdrawn, the US economy is set to receive a new boost

A new boost

As the Fed’s support is gradually withdrawn, the US economy is set to receive a new boost. The arrival of the Biden administration in January signaled a new ambition in US economic policy with the ‘Build Back Better’ strategy. President Joe Biden’s experience of the end of the Great Financial Crisis in 2008/09, combined with the pandemic and low interest rates, left the current administration determined to reverse decades of public underspending. The country now plans the most extensive overhaul of infrastructure and social welfare in generations.

In August, the Senate approved new physical infrastructure spending worth USD 550 billion for roads, bridges, rail networks and broadband connectivity, thanks to the backing of 19 Republicans.

The approval process for further spending will not be easy. In total, the Democrats have proposed spending worth an additional USD 3.5 trillion. The bill would transform America’s social infrastructure by addressing the country’s inequalities. By many measures, including life expectancy, obesity, murder rates, infant mortality and education, the US trails every other developed nation. The bill includes tax credits, child and family support, paid medical leave and care, free universal pre-school, and climate initiatives. Senate majority leader Chuck Schumer has said the green initiatives in the bill alone could cut US carbon emissions to 45% below their 2005 levels this decade.

Tax hikes

Proponents argue that revenue-raising taxes can pay for this by reversing many of the Trump administration’s cuts from 2017. The changes include lifting the top rate of income tax from 37% to 39.6%, plus a 3% surtax on gross income of more than USD 5 million. They would also increase corporate tax, proposing rates of 28% or 26.5%, from 21%. That compares with a 39% rate before the Trump era’s cuts. The plan also increases capital gains tax and broadens the definition of investment income. In total, taxes may raise as much as USD 2.9 trillion, which combined with estimated growth in the economy, raising a further USD 600 billion, would be enough to cover the spending proposals.

The Democrats’ narrow control of Congress, means they have a window of opportunity to pass legislation

The bill’s detractors, including former Treasury Secretary Larry Summers, argue that the spending would be inflationary, triggering a sharp interest rate response from the Fed. Republican Senator Chuck Grassley last week described the bill as “snake oil socialism,” saying it would “drastically change our way of life, expand government control of the economy and our lives, open our borders and redistribute money to satisfy socialism’s definition of equality.”

Congress is now entering a political process to hammer out the package, but the debate splits along partisan lines. The Biden administration, plus the Democrats’ narrow control of both the Senate and House of Representatives, means they have a window of opportunity to pass legislation, with or without Republican support.

The Biden administration can use a so-called ‘budget reconciliation’ process to pass the bill with the support of all 50 of the Democrats in the 99-seat Senate. Still, among Democrats, there are frictions over potential compromises. ‘Progressives’ see the USD 3.5 trillion bill as the minimum investment needed, and ‘centrists’ worry about inflationary effects and debt.

Debt and default

When Ronald Reagan left the White House in 1989, gross national debt stood at USD 1.5 trillion. Today, in the wake of the Covid pandemic, that figure is nearly USD 29 trillion, and counting, raising questions about its sustainability. Yet while the absolute level of debt poses some stability risk, it is now more affordable as the cost of servicing that debt as a share of GDP has fallen along with declining interest rates.

Still, Congress needs to approve any increase in spending that would breach the US’ debt ceiling, which sets a limit on the amount of money that the Treasury can borrow.

Without Congress’ agreement, Treasury Secretary Janet Yellen has warned that the US may find itself in a partial technical default on part of its debt in October. “Neither delay nor default is tolerable,” Mrs Yellen wrote on 19 September, with an “overwhelming consensus… of both parties is that failing to raise the debt limit would produce widespread economic catastrophe” of the government running out of money to pay its debt. Congress is scheduled to debate raising the ceiling this week. Republicans have rejected the request for bipartisan agreement and point to a procedure for the Democrats to push through the increase unilaterally.

Longer-term gains

The process of turning the Biden administration’s key spending bill into legislation and discussions around debt will prove noisy. The principle danger is that Democrats underestimate the difficulties in securing some Republican support, or alienate some of their own party. We expect this process to create some short-term market volatility.

We should keep in mind that eventual legislation by the year’s end would provide for trillions of dollars in infrastructure and social spending to boost an economy where the outlook for jobs and economic growth is already sound. For investors, that potentially provides a supportive longer-term environment for the years ahead. In the near term, it is difficult to see any great risk of a domestically-induced accident that would de-rail the world’s biggest economy.

The Fed advancing its horizon for a first interest rate increase, and global growth concerns, have driven the US dollar’s recent strength. If the world’s economic rebound were delayed, the US stimulus may create the conditions for another period of ‘US exceptionalism,’ and a stronger dollar. While the Congress’ stimulus debates may also further strengthen the US currency, the expected global recovery and rising US deficit should eventually weigh on the dollar.

Our investment stance continues to favor risk assets as US strength underpins the global rebound. Tactically, we underweight US equities because we believe that other regions, such as Europe and the UK that have lagged the US recovery, offer stronger growth potential at more attractive valuations.

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