Monthly Newsletter: February 2023

👋 Hey there, hope you’re having a good weekend! Welcome to the WalletBurst monthly newsletter for the month of February 2023.

Market update

🥾 Understanding the ‘Boots Theory’ of Socioeconomic Unfairness

• The boots theory of socioeconomic unfairness is the idea that people who can afford a higher upfront cost for an item actually end up saving more time and money over the long run.
• Some examples of this are buying a high efficiency laundry machine rather than going to the laundromat, and buying a reliable new car with a warranty, rather than continually fixing an older, less-reliable car.
• This theory aligns closely with the subreddit r/buyitforlife which highlights durable, quality, and practical products that are well-worth their often higher price.
• “Its cheap to rich and expensive to be poor”

📉 What rising rates are doing to asset prices (and why)- Newsletter by Travis Jamison

• Rising interest rates mean that all assets – from real estate to e-commerce businesses – have to fall in price to take into account the risk premium.
• When you can get a 5% yield on risk-free US Treasury Bills, buying real estate with a 6% cap rate or a business with a 9% cap rate simply isn’t worth the additional risk.
• A key takeaway is that whenever possible, own assets where the asset value has less of an impact on you than the cashflow that it generates.

US 2 year treasury bill yield over the last 25 years

📉 An interesting thread by Tyler Tringas about the impact of rapidly rising interest rates on venture capital.

I think folks are sleeping on one of the biggest and most obvious "zero interest rate phenomena" that's going to get vaporized slowly and then all at once: Andreessen Horowitz

Here's my thesis:

— Tyler Tringas (@tylertringas) February 19, 2023

📊 Employee Stock Purchase Plan (ESPP) simulator

• Handy tool that allows you to simulate different scenarios of participating in an employee stock purchase program (ESPP).

🤑 An Ongoing Stimulus in the Economy For Years to Come – A Wealth of Common Sense

• This article examines the impact that ultra-low mortgage rates during the pandemic could have on the economy going forward.
• Did you own a home before the pandemic started or not?
• I did not – and I still don’t (I live in an attic studio in the SF bay area😅) – and not buying a property out-of-state in 2020 is one of my biggest regrets in life thus far.
• “… those who locked in ultra-low mortgage rates are receiving an ongoing form of stimulus.”

New on WalletBurst

Nothing new this month…