Image Source: My time over in Europe has finally come to an end, and as I fly over the Atlantic Ocean heading back towards the United States, I was just thinking of some economic word play behind the word currency. I’ve also been working on a new Mastermind class and trading pattern that I’m eager to show you in the coming weeks. So stay tuned… Periodically, I like to modify the spelling of words to hammer home a point. One example of this is when I spell patience as “pay-tience” to reinforce the importance of always making decisions with a level head in financial markets. So, now, I want to introduce you to my modified spelling of the word currency as “current-seas.” At first thought, you might be thinking – what the heck does this have to do with financial markets? But hear me out on this, because it bestows an important lesson with respect to capital flows…
The Smarter Way to Look at MoneyI’ve explained in previous newsletters how capital is like matter from science class – it is never created or destroyed – it merely flows from one country, sector, or asset class to another. I want to take this general principle to the next level in this week’s article, specifically with respect to the word flow. Why? Because water, as a chemical compound, or an element (if you wish to hold a more esoteric understanding of it) flows.Water comes in three forms: solid, liquid, and gas. It has no shape either, as it basically fills the void of whatever object it’s in or in whichever direction it’s flowing. Thus, I would encourage you to view money, or even what I like to call “global capital,” through a similar lens. Water that is stagnant becomes putrid and a breeding ground for disease, whereas water that stays on the move is cleaner and generally safe to drink. And in today’s inflationary macroeconomic environment, money is the same way. Now I’m not saying you need to go out there and trade every five minutes to keep your money on the move. The point I’m trying to make here is that if your money isn’t earning at least 3.5% per year, which represents the annual inflation rate, it’s stale and costing you in terms of financial health.Fortunately, short-term T-Bills are offering 5.5% annualized returns right now.But here’s the bigger problem – anybody with eyes and a memory knows that inflation is actually much higher than being reported. And I’m not going to waste your time arguing about the integrity of the government’s economic data. The fact of the matter is – it’s what the market uses to reach conclusions. The onus is on you, the individual, to take your financial destiny into your own hands.Fortunately, there are multitudes of ways to earn [much] more than 5.5% in financial markets, and within reasonable risk. There are a couple sectors that come to mind in this instance. But never forget – the more you risk, the more you can make. Nothing is truly risk-free in markets. But the way you go about taking said risks – either through price or time – can make a big impact on how you sleep at night. I look forward to sharing more about this with you in the future.Until next time…ciao!More By This Author:If You Thought Markets Sucked This Week… You’re RightHow Retail Could Get RavagedThe Expected Move Is Keeping Markets Here… But Volatility Lurks
