March 28, 2021

10% of Global GDP Flows Through the Suez Canal 🚢

Mesh Lakhani Headshot
Mesh Lakhani

Hey All,

Welcome to Talk Money Weekly - where I cut through the noise and curate the best money-related topics from the web.

Announcement: We've got a new podcast based on this newsletter coming out soon! It will start off as a weekly 4-6 min commentary on a newsworthy topic of the week. This will be different from our seasonal narrative series and bonus interviews. You'll get more of my personality and opinion (not sure if that's a good thing). Yay or Nay? (Respond, so I know I'm doing the right thing)

The second half of season 3 is almost complete. In the meantime, you can listen to the first six episodes of here.

📈 Markets & Business

A Ship Walks into a Suez Canal (Bad Joke?)

So by now, I’m sure we’ve all heard of what’s happening with the big cargo ship in the Suez Canal.  A 200,000 metric ton ship is stuck, stopping a major part of the global supply chain.  The ship had an electrical failure and stopped working. The momentum kept it going and it got stuck into the side of the canal and lodged in deeply into a sand barrier.

10-12% of global trade moves through the Suez Canal. Other ships now can’t get through, and it’s costing something like $400M per hour. The end of this All-In Podcast episode covers the issues with these small failures that end up having such a major impact on the world.

We saw the same thing happen with Chinese exports when COVID hit, and we’ll see it over and over again. It brings into the importance of distributed supply chains and not being dependent on one source. Check out this tweet thread for a history lesson on the Suez Canal.

Robinhood & SoFi Offer Retail Investors Access to IPOs

IPO’s are somewhat of a controversial subject. Typically when companies go public, they hire an investment bank like Goldman Sachs, and shop the company around to other funds and wealthy people at a set price- the IPO price. Then when the shares are public for you and me to trade, there’s usually a bump in price because of the built-up demand.

These days, IPOs are shooting up in value when they’re allowed to be publicly traded, leaving a lot of money on the table for earlier investors. We as retail investors miss out on that upside because we aren’t offered those IPO shares. This is also why some companies like Spotify have decided to do a direct listing, cutting out the middlemen.

Now, Robinhood and SoFii (see news on SoFi here), two platforms that offer the trading of stocks, will allow us retail investors to buy companies at the IPO price. This is a good thing because retail investors are now much more meaningful in volume. Companies can raise a significant portion from us if a Robinhood is offering the IPO. We are able to get (hopefully) a lower price on the stock, and it does level the playing field.

This is also great marketing for Robinhood whose reputation got skewered during the whole Gamestop fiasco. They plan to offer shares of their own IPO to Robinhood users. I do see these IPO offerings getting oversubscribed and filled fast, so we’ll just have to see how it plays out.

How Much Can you Make with a Laundromat?

I love these videos. I’ve always been curious about how people who own coin washing/drying machines and vending machines make do. This video shows an owner going through each of his machines, collecting coins and cash. He then breaks down how much he makes each month.

🏠 Real Estate

Home Prices Continue to Surge

In the first month of the Pandemic shut down, I never thought home prices were going to explode up and into the right. I honestly didn’t think much of anything at the time. The reality is, as soon as people realized they were going to be home for a long time, they wanted more space. Studios went to one-bedrooms, city dwellers went to the suburbs, and people migrated all over the place.

This has caused a HUGE surge in home prices everywhere. I’ve heard stories of not only places getting bid up sight unseen, but contingencies being thrown out the window and prices going for 20-30% above asking. It's never a been better time to be selling a home.

As a buyer, I’m not so sure. I’d rather wait till things go back to “normal.” Ie, I would assume I’ve missed the boat and would rather take advantage of rental prices (depending on the city). If I owned a home, I’d see if I could refinance for a lower rate. Because inventory is limited and demand is high, it seems like things are just too competitive, I'd rather wait for things to cool (people get vax'd, people return to work etc.)

Can’t wait to share our real estate episode that discusses this exact topic. Coming soon.

Are Home Inspectors Running a Scam?

For those of you who looking to purchase a home right now, or are in the process of looking, make sure you trust the realtor and their home inspector. I guess you never know who to trust.

This TikTok video is hilarious for calling out the BS job some of these inspectors do…which only cause more issues for a deal to go through. Trust, but verify.

🏛 Politics

Do Politics Get in the Way of Progress?

Investor Chris Sacca started his career off as a lawyer at Google focusing on new initiatives. He and his team wanted to bring free internet to poor neighborhoods, a cost of $20-25M that would be given as a gift. The local government didn’t allow it. Why? Politics.

This is not about red or blue. A lot of politicians are made from the same thread. Politics is a long game. It's a game of chess. You deny one thing because it affects another thing. You give one thing and expect something in return. If you watch the West Wing and/or House of Cards, it’s clear how much of a give and take it is. Everyone has an agenda, and it’s the people who suffer most.

We can all be honest and say we’re selfish as a species. What’s in it for us? It’s hard to trust anyone in government (and  Wall Street, Corporations, Influencers etc.), when you don’t know what their agenda is, or what incentivizes them. Why else would a $20-25M gift to the city’s poorest neighborhoods be denied? It’s unfortunate.

That's all the news from this past week! If I was to make this newsletter into a Youtube show, would you watch it?

If you haven't already subscribed to my podcast, Talk Money, do so here. New episode next Wednesday!

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