The Boring Invstr - Your Simple, Digestible Weekly Investing & Finance Newsletter

Welcome Back to The Seventh Edition of The Boring Invstr!

This week, we will be covering three major themes impacting the financial world 5 months into 2023.

Two of these you probably have heard a lot about already.

Hopefully, you will be able to obtain a new nuance about these two topics.

The third theme is one you probably have heard little about but has since grown over the past month posing a threat to disrupt the financial world.

Theme 1: Inflation

Leading up into 2023, inflation was already a huge problem peaking last summer.

Inflation has since decreased in the early months of 2023 but has caused debate over the rise in the costs of goods and services.

While you can blame supply chain issues, COVID, or the war in Ukraine as causes of inflation, the true cause of inflation ultimately boils down to the amount of money actively floating in the economy and a lack of innovation.

The graph below from Visual Capitalist illustrates this theory.

The costs of education, medical services, and childcare have risen because of the lack of system innovation in how they work.

If advances in technology were the cause of higher prices, you would be hypocritical towards the technological improvements that have caused TVs, phones, and software to become cheaper.

A rise in demand would not be attributed to rising costs because you could argue there is more demand for phones, software, and new technology than for college.

The simple solution to a complex problem is allowing changes to the foundation of how healthcare, college, childcare, and housing work.

Printing more money to try and solve the costs of these services for the people that need them the most won’t benefit society in the long term.

You must realize printing more money makes prices rise. This would be counterintuitive to solving the high costs of consumer goods and services.

Theme 2: Rising Interest Rates

After many interest rate hikes over the past year, the Federal Reserve is expected to slow interest rates and eventually pause interest rate hikes.

Here are a couple of things we have seen because of rate hikes:

• Higher mortgage rates: Higher mortgage rates make it more difficult for people to buy homes.

• Higher credit card interest rates: Higher credit card interest rates decrease incentives to borrow more money.

• Higher car loan interest rates: If your loan term is longer and you make the minimum payments per month, it is more expensive to finance a car.

• Conflicted stock market: We have seen periods of growth and periods of decline.

While it is great to compare how we have responded compared to previous inflationary periods, as the graph below shows, what will ultimately dictate the direction of the economy is how US lawmakers decide to tackle debt.

If lawmakers can’t come to a solution, no one knows how bad the economy could get.

Any country that has defaulted on its debt in recent history has taken years if not decades to recover.

Who knows what would happen to interest rates if the US defaulted on our debt.

If lawmakers come to a solution to the debt ceiling, we will most likely continue on the path we are currently on.

Theme 3: Artificial Intelligence (AI)

Artificial intelligence (AI) is rapidly changing the financial industry.AI is being used to automate tasks, improve decision-making, and personalize investment portfolios.

About a month ago, a Florida professor released a study surrounding ChatGPT and its abilities to interpret news headlines and determine the headline's sentiment.

While many financial firms have been experimenting with artificial intelligence and large language models for years, many AI platforms have been released in the past month allowing retail investors access to automation and access to financial data more quickly.

Some Of These Platforms Include:

• LevelFields AI - AI Software Trained on Years of News Headlines, Company Profiles, And Upcoming Events to Generate Alerts for Investors

• EdmundSEC - AI Search Engine for Financial Documents Saving Investors Time

• NumerAI - An AI Quant Hedge Fund Giving Investors Access to Hedge Fund Quality Data Allowing Them to Use Machine Learning to Predict the Stock Market. They Also Run “The Hardest Data Science Tournament in The World”

These three softwares have the potential to revolutionize the financial industry.

As AI continues to develop, it is likely to have an even greater impact on the way invest and manage our finances.

These are just a few of the top financial themes we are witnessing in 2023.

As hard as it is to continuously educate yourself on the newest AI, economy, or finance news, I challenge you to find three credible and insightful sources of information you can count on.

Ideally, each source should be on a different platform. For example, I use Twitter, news articles, and email newsletters.

I hope you found this information informative along with a bit of nuance.

If you found this newsletter helpful, you can find more insights on my Twitter @theboringinvstr.

Thanks for reading and see you next week!