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Welcome back to another week with Renaissance. The newsletter equivalent of Ray Dalio’s drunken ramblings……hard to take us all in sometimes, we endlessly talk about the macro of our investments, history, narratives, and every now and again we randomly mention China. 

Today at a Glance:

Macro Market: Recession Yay/Nay?

Rolling Stone Rugs NFTs

What AI Can Teach Us About Finance 

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The Renaissance Over-Under

Business, Money Markets & Financial News

Macro Market: Recession Yay/Nay? And What To Do With Your Equit…..ay 👀

Alright Renaissance readers, I’m gonna set your shit straight for you so you don’t have to! A lot of misinformation is going around about the financial outlook of the US and if there’s gonna be a recession…….it’s like the opposite of market munchausen’s syndrome out here. Gaslighting idiots into thinking things are okay.

Update: they are not okay.

- The US hit $1trillion in credit card debt and whatever anyone says, yes it is as bad as it seems. And increasing the debt ceiling was a terrible move at the same time.

- Some idiot economists say that this isn’t excessive (genuinely that’s the quote) if you add in wage growth. Yet…..wage growth can’t keep up with inflation.

- Which let’s remember they said was transitory - it’s been as transitory as your dad’s trip to the store for cigarettes when you were 10…….sure it’s about to end any second now!

- Wage’s can’t keep up with inflation, inflation isn’t coming down fast enough, and that’s kept the rates as high as Charlie Sheen on Two and a Half men at 5.5% (and that’s why we’re not getting our Bitcoin ETFs yet) - this is all predetermined!

- They say that delinquencies on credit cards are slowing (2.77% last quarter. For context it was over 6% in 2008 when there was an actual recession already occurring). That’s like saying the house fire is almost out, you didn’t need those family photo albums anyway.👀 The point is they’re up more than they should be!

- They say there’s no risk of a consumer debt crisis unless there’s a recession……Well. There certainly ain’t gonna be a roaring 2024 is there??

- A recession is far more likely than these jabronies are considering and they haven’t even done their homework Ray Dalio style and studied this!

- You, the reader, I bet you have your equities and bonds etc but what the hell do you do with them? Should you be buying into things right now or taking on excess spending/debt? Here’s the simple way to frame this - the best investments are asymmetrical ones. When you’re right you win a LOT. And when you’re wrong you understand the baseline capital you risked. Here, there’s no huge short term upside to risking capital and debt, and there’s a hell of a lot of downside if interest stays high and the US dips any further into a recession! It’ll trigger equity sell-offs to cover the costs.

- Mmm hmmm *clears throat…….welcome to my TEDtalk on why we wouldn't be taking on debt and investing heavy into equities for the foreseeable. 👏👏👏

- So I think I can safely say our biggest financial mistake was being around 12 in 2008 and not buying real estate. And that may be the only recession most of us actuallyyyyy experienced. BUT. Recessions happen all the time, we let ‘er rippp for a decade and then we have to cut the fat and make the world slightly more sane in this boom and bust cycle.

Somewhere out there, Ray Dalio’s nipples are hard reading this section (he’s absolutely reading Renaissance don’t crush our dreams🙄):

- The US has had the most recessions in history out of the G7, ‘cause they’re mad bastards really. The biggest obvious predictor of recession is (duh) monetary tightening i.e. rate hike babyyyyy, and the US is the most sensitive to inflation spikes out of the G7!

- Trivia time: Did you know that if US inflation goes up over 3% in 2 years, which it did, there’s a 77% chance of a recession. 🤓

- 4 recessions in 4 decades - they ain’t gonna keep those ratios any more! Black swan events for the US are going to become way more likely with natural disasters, climate change, global pandemics, war, geopolitics, their debt ceiling, and economic outlook compared to China.

- Recessions are like a wife’s mood swings, fuck knows what causes them but it’s usually a few things you’ve done and not just one 😂 

- If you get more than 1 key indicator, chances of a recession go way up! And we’ve had quite a few indicators kicking off in the last year:

- Inflation is absolutely living it up over 3%, the yield curve inverted, short term rates set 1.5% higher in a year, and oil increased 25% in the last year (in the last week or 2 oil prices have shot up like a priest’s robes at sunday school)🔥🔥🔥

- Odds are over 75% now for a recession according to history / the Ray Dalio method, and when it walks like a duck and quacks like a duck……it’s a recession 😩

- We don’t listen to people’s hot emotions or bullshit ideas of the moment, history has seen it all before, you’re just feeling it! So Renaissance readers, it doesn’t mean there will be one - but like we said, it’s asymmetrical and there doesn’t seem like the upside is here for you to keep it in equities for the foreseeable! And maybe stay away from debt right now or scaling up aggressively.

- The US is on the toilet and they’ve only got 1 sheet of paper left, and they’re gonna risk it. Act accordingly 👀

LITTLE BITS 😎

And if you haven’t heard or studied Ray Dalio’s investment history philosophy, really take a look - he’s incredible and maybe the best macro investor we’ve ever seen! He did the All-in podcast summit and he was great speaking about the US ‘empire’ falling back against China https://www.youtube.com/watch?v=7TGJRzRSzL4&t=1838s&pp=ygUPYWxsIGluIHBvZGNhc3Qg

Wall Street Memes Presale Enters Final Week After Raising Over $25 Million

The presale shuts in a week and the boys have absolutely smashed it - $25M! What this really shows is the power of a community that has strong brand narrative behind it and how monetizable this is in Web3.

Link to the rolling stone NFT hit-piece

NOSTALGIA OF THE DAY

Crypto Market & NFT News

Apparently The Rolling Stones Knows More About NFTs Than The Rest Of Us

TLDR; Rolling Stone magazine has a lot of fair points here when they say:

They found that 95% of the 73,257 NFT collections it looked at are worth a whopping 0ETH… leaving over 23 million users/holders with supposedly worthless assets.

So that’s the headline and story everyone’s off their tits about this week. But, Renaissance is feeling toxically contrarian these days so we’re calling bullshit! Here’s why:

- I do remember when Rolling Stone had their big article out about NFTs being the next big thing and promoting Bored Ape Yacht club… big change of opinion huh? What a shock for traditional media changing their opinion based on the exact current market state.

- Often times simply taking the opposing point of view from the static one the media is incentivised to put forward is actually the best investment move. Buffet 101 - when there’s blood in the streets, get buying! So actually, Renaissance is gonna put its stall out and say NFTs are a source of real value investing if you pick carefully, as this is their market bottom💥💥💥. Good projects and new ones will be the consumer point of contact for the next crypto bull run.

- Trading volume for NFTs was over $60M last week, that’s a whole lot for a whole lot of nothing 👀

- The average price of a bored ape is still $42K. Worthless collections?

- Bubble prices on a run up are not the settled price of assets and neither are the market bottoms - get ready for a second phase of NFTs with actual use cases applied. This asset class is no doubt written off by most on both sides of the fence, and they’ll sleep on the value.

- To help you out with first steps we took a look at the most watchlisted NFT collections: Nakamigos (1234), BAYC (1076), CyberKongz (876), Bitmap (851), Pixelmon (786), Azuki (661)

- Carefully picked ‘rares’ in these collections, angled at a good utility that can go up when the market does, will be a good call in the long run. Legacy never dies, and this space runs on nostalgia and memes.

Wealth Building, Personal Finance Hacks & FAT FIRE

 We’re all aware of ChatGPT. We have talked before about how this can be used effectively to streamline and improve your work and business.

So this week we thought we’d try something different. We thought we’d ask ChatGPT some burning financial questions and see what it thinks.

What is the most important investing lesson to learn?

The most important investing lesson to learn is the concept of diversification. Diversification means spreading your investments across different assets or asset classes to reduce risk. This is based on the principle of not putting all your eggs in one basket.

It looks like ChatGPT isn’t a fan of going all in on a random alt-coin named after something you saw on the Internet 🤦‍♂️…..but a fair answer none the less

If you had to start a business today, what business would it be?

Here are some ideas:

E-commerce Store with a Niche Product: Identify a specific niche or product category with high demand and start an online store. Focus on providing excellent customer service and marketing to attract and retain customers.

Sustainable or Eco-Friendly Products: With increasing awareness of environmental issues, there's a growing demand for sustainable and eco-friendly products. This could range from reusable household items to sustainable fashion.

Health and Wellness Services: Health and wellness are perennial concerns for people. Consider starting a business that offers services like fitness training, wellness coaching, or healthy meal planning.

Remote Work Solutions: Given the shift towards remote work, there's a demand for tools, software, and services that facilitate efficient and productive remote work environments. 

E-learning or Online Education Platform: Develop a platform for online courses, tutoring, or skill-building in a specific field of expertise. 

Health Tech and Telemedicine: Develop or offer technology solutions for the healthcare industry, such as telemedicine platforms, health monitoring devices, or medical software.

Virtual Events and Experiences: As events and experiences continue to adapt to virtual formats, there's a demand for innovative solutions for virtual conferences, workshops, and entertainment experiences.

……actually……not half bad. Some good ideas here, and quite a bit of overlap with business ideas we have discussed before!

What would your investment portfolio allocation look like?

A general suggestion for a diversified investment portfolio based on commonly recommended allocation strategies is the "age-based" rule of thumb:

Age-Based Allocation:

Equities (Stocks): Percentage = 100 minus your age. For example, if you're 30 years old, you might allocate 70% to equities (100 - 30 = 70). 

Fixed Income (Bonds): Percentage = Your age. Using the same example, a 30-year-old might allocate 30% to fixed income.

Alternative Investments (Optional, but can provide diversification):This category may include real estate, commodities, or other alternative assets. Allocation would depend on personal preferences and risk tolerance.

Cash and Cash Equivalents: A smaller portion may be held in highly liquid, low-risk assets like savings accounts or short-term bonds.

I don’t know about you but this is far too conservative for our liking. We can sometimes forget that most of investment information online is provided by boomers, and hence the data ChatGPT uses.

Describe Jim Cramer in 3 words

Energetic, Opinionated, Knowledgeable.

Knowledgeable. Knowledgeable! A top indicator that this AI thing still has a long way to go.

Meme of the Day

That’s a wrap for this week! Meet us on Twitter to talk all about it. Where we’ll send you jokes, tips, and all important news from the world of money, business and crypto and more! (@RenaissanceDly)