The 2 good investments I made last year
The 2 good investments I made last year
Welcome to “Not Pretty, Not Rich,” a newsletter about money and the economy.
It’s Tuesday, January 19, 2021, and here’s this week’s rundown:
News recap
A look back at a couple of my 2020 investments
The cost of crises
Numbers and links
News recap
Biden goes big: The incoming president announced a plan for a $1.9 trillion stimulus package to combat the pandemic-induced recession. And it includes $1,400 stimulus checks. Can it get signed into law, though?
Labor market woes: We’re still in an economic crisis. Unemployment claims shot up to 1.15 million last week. And in December, we lost 140,000 jobs. It may get worse before it gets better, too.
Money talks? Following what happened at the Capitol on January 6, many big companies and are halting donations to political figures who apparently had a hand in fomenting the insurrection. It’ll be interesting to see what, if any, effect that has.
A look back at a couple of my 2020 investments
I didn’t do much investing last year, given everything that was going on, but I did do a couple of things that, in hindsight, have worked in my favor:
I started collecting coins and precious metals
I bought clean energy stocks
As for what motivated those actions? As far as coins go, I was sifting through a jar of change we had one day, and started pulling out the state quarters. Then I wanted the whole set…then the National Parks quarters…then others. I knew (and still know) very little about coins, but I know now that older U.S. coins (pre-1965) are made of 90% silver, and are worth more than face value. The same goes for “wheat pennies.”
So, I know have a small pile of those, some American Silver Eagles, and even some silver bars.
Even though I didn’t “invest” with intent in silver, (I suppose the pandemic drove me to find a new interest), it turned out to be good timing. That’s because silver prices were way up last year:
While I don’t really think I’ll start hoarding precious metals, it’s kind of cool to have some precious metals and little pieces of history — and that they should retain value and hopefully appreciate with time.
And if I’m going to collect anything, I guess collecting actual money as an investment isn’t a bad idea.
As for clean energy stocks, I made a calculated bet. I thought it was likely that Joe Biden would win the election, and that his victory would probably be a boon to green and clean energy companies. So, I looked around, and ended up buying some shares of ICLN when they were trading for less than $12. That, too, paid off:
While it’s always possible that those shares could lose their value, I thought it was an interesting little investing experiment that I was able to conduct. I’m not going to spend hours pouring over charts or annual reports, or even try to make a quick buck daytrading.
But I think that if you can look at the writing on the wall, you can come away with some informed opinions. For me, it seems pretty clear that the clean energy industry is going to be a focal point in the coming years, and thus, incredibly valuable. Doing a little bit of research indicates that the experts think the same.
I could be wrong, but it’s that type of thinking that guided my decision. Now, I haven’t made any money (because I haven’t sold anything), and even if I do, it won’t be that much since I didn’t make a large initial investment. And it’s also important to note that clean energy investments have performed pretty poorly over the past several years. So it’s still possible that it ends up being a losing investment.
In all, though, I think that experimenting a little bit with your portfolio is a good idea — so long as you are able to pay your rent, fund your 401(k), and cover all the rest of your bases.
With that said, if you have any old coins, send them my way.
The cost of crises
A few newsletters back, I wrote about how I thought that concerns (feigned concerns, mostly) from Republicans in Congress would be used to hamstring the incoming Biden administration.
With Biden nearly in office (he may be by the time you read this), it’s becoming clear that his plans for another huge stimulus package are going to run head-on into significant obstructions. The national debt is big — we’re approaching $28 trillion as of mid-January — and under the Trump administration, it grew by roughly $8 trillion.
ProPublica recently published a new analysis of the national debt, and Trump’s role in expanding it. Despite promising to pay it all off within 8 years, we’ve gone the opposite direction — something many people saw coming.
Here’s a visual from ProPublica’s piece:
Now, I wanted to highlight this because the growing national debt isn’t all Trump’s fault. And it wasn’t really Obama’s fault, either. While both presidents enacted policies and plans that had hefty price tags (with little or no way to pay for them), they both faced monstrous economic situations: a financial crisis and subsequent economic meltdown, and a pandemic-induced recession.
And those two events have largely propelled the national debt to grow from around $10 trillion in 2009 to almost $28 trillion only eleven years later. And you can rest assured that it will grow further during the Biden administration.
But these are the cost of crises. Economy-wide destruction doesn’t come cheap, and when recessions happen, there doesn’t seem to be much of a choice than to throw money at them. It hasn’t seemed to have a negative impact on the stock market (it’s bolstered the markets, in fact), and so far, hasn’t led to inflation.
Trump, though, was piling up more debt for three years before the pandemic hit. Obama came into office as the financial crisis was unfolding. So, there are clearly differences in how these crises can be approached, and what leaders and policymakers can do to financially prepare the country during times of relative calm.
All that said, it appears that the COVID recession is getting worse and that it’ll require some more large-scale government intervention and spending to get us out. But that intervention will come with a big price tag, and it won’t be as easy of a sell for Biden as it was for Trump.
Numbers and links
$220 million: The value of the Bitcoin that one man owns but can’t access — because he forgot the password. He has two guesses left before he’s locked out forever. (NYT)
-25%: The recent plunge in value for Bitcoin. Is the dream dead? (Marker)
$900 million: What Spotify has paid over the past two years acquiring podcasts (like the Joe Rogan Experience). Is the bet paying off? (Bloomberg Businessweek)
5.2%: The aggregate reduction for 2021 police budgets among the 50 largest U.S. cities. (Bloomberg CityLab)
60%: The percentage of business closures due to COVID that have now become permanent. (CNBC)
Some employers are handing out cash bonuses to workers who get the COVID vaccine. (WSJ)
“Americans are told to give their all—time, labor, and passion—to their jobs. But do their jobs give enough back?” (The New Yorker)
“Not Pretty, Not Rich” is a newsletter about money, finance, and the economy. You can connect with me through my website, Twitter, LinkedIn, or send me an email at sammbecker@gmail.com. Also, if you enjoy this newsletter, I’d really appreciate it if you would share or forward it to others.
And remember, the contents of this newsletter are not meant to be taken as advice. It’s informational and entertainment only.