Understanding Tax Rate

We are thrilled to announce that Arena Investor is expanding our service offerings with a cutting-edge integration into our tech stack: Elements (getElements.com). This addition is set to transform the way we serve our clients in financial planning, investment management, and through our unique "Financial Health Monitoring and Alerts" service.

‍Why Elements?

Elements is a leading financial monitoring and planning tool designed to simplify the complexities of managing wealth. It provides a streamlined and user-friendly experience, enabling clients to see the bigger picture of their financial health at a glance. With Elements, you gain a comprehensive view of your financial status, making it easier to make informed decisions and track progress toward your financial goals.

‍Value for Financial Planning Clients

For our financial planning clients, Elements offers a robust platform to track your progress in real-time. Whether you're focused on building wealth, planning for retirement, or managing day-to-day finances, Elements helps you stay on top of your financial goals. The tool allows you to monitor key financial indicators, such as liquidity, net worth, and debt levels, ensuring that you always know where you stand. By leveraging Elements, Arena Investor can provide more personalized and proactive advice, helping you navigate life's financial milestones with confidence.

‍Enhancing Investment Management

For our investment management clients, Elements provides an additional layer of insight into how your investments align with your overall financial health. The integration allows us to seamlessly connect your investment portfolio with other aspects of your financial life, ensuring that your investment strategy is aligned with your broader financial goals. With Elements, we can more effectively manage risk, optimize your asset allocation, and keep you on track toward achieving long-term growth.

‍Financial Health Monitoring and Alerts

One of the most innovative features of Elements is its ability to deliver timely and actionable insights through our "Financial Health Monitoring and Alerts" service. This integration enables us to keep a close eye on your financial health, alerting you to potential issues before they become problems. Whether it's identifying opportunities to optimize your cash flow or providing early warnings about financial risks, Elements empowers you to take control of your financial future.

‍Looking Ahead

At Arena Investor, our mission is to provide you with the best tools and advice to achieve financial success. The integration of Elements into our tech stack is a significant step forward in fulfilling this mission. We believe that by combining the power of Elements with our expert financial planning and investment management services, we can offer an unparalleled client experience that supports your financial journey every step of the way.

We are excited about the enhanced value this integration will bring to your financial planning and investment management needs. If you have any questions or would like to learn more about how Elements can benefit you, please don’t hesitate to reach out to us.

Thank you for your continued trust in Arena Investor.

Truly,
The Arena Investor Team

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

You’re the Hero.
    We’re the Guide.

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Note: Economics is the study of how society uses resources for the development, production, procurement, distribution, and consumption of tangible products (such as iPhones) and intangible services (such as Apple Music).

John Maynard Keynes

The most important name in today’s worldwide economic system is John Maynard Keynes. Keynes is the one who developed economics as we know it. He wrote “The General Theory of Employment Interest and Money” in 1936 in the UK. Similar to Copernicus seeking to understand the movement of the Sun, planets, and stars, Keynes wanted to understand unemployment because The Great Depression was such a problem in the 1930s, and the existing understanding of economics did not explain what was happening (or what could be done about it) very well enough for governments to partake in righting the economic ship during the storm.

Note: Come back later for more articles about other economists across the ages, such as The Austrian School of economics (also very significant).

Keynes wanted to understand

He wanted to know what existing economics at the time could not explain about The Great Depression – but he did so with an emphasis on unemployment and by taking snapshots of the economy, as if it was static. So what he developed is useful, but lacks usefulness on growth or inflation issues.

More specifically, Keynes wanted to understand how employment and prices affect each other; how government affected employment and prices; and more than anything, he wanted to know how to “control” (or at least influence economies/money), such as how to drive employment up. 

More or less, Keynes used existing approaches that microeconomists used when evaluating businesses, plus some new approaches to expand economic knowledge into something bigger: macroeconomics

Simply put, Keynes took what was small or local and made it big – big enough for governments to use. Naturally, macroeconomics includes microeconomics since the economy of each piece would be part of the economy of the whole.

Milton Friedman came later

He pointed out that Keynesian Economics could not explain the relationship between price levels and economic output. He called this “the missing equation.” Friedman melded classical economics understandings of Adam Smith (and others) with Keynesian Economics. Friedman concluded that the classic theories worked in the long-run, but Keynesian Economics works in short intervals.

Local isn’t universal

“What goes up must come down” is right locally (in your backyard), but on a bigger scale it is wrong . The meteorites from space that have landed on Earth did not come back down to their origin when they “went up.” They never came back down.

Building on Friedman’s work

An economist from New Zealand began working with 100 years of UK data on the relationship between unemployment and inflation. The economist’s name was AW Phillips, and his work became known as The Phillips Curve. This curve was adopted by economists worldwide and is now a major contributor to economics. It shows that as unemployment rises, wages increase, and when unemployment falls, wages decrease.

Friedman and fellow economist Edmund Phelps felt that manipulating monetary policy (such as managing inflation) was not the right way to manage unemployment and that unemployment should be left “natural” and unaltered by central banks, the banks of governments.

Then in the 1970s and 1980s the US experienced both high unemployment and high inflation. Phelps and Friedman then clarified the understanding to show that The Phillips Curve was true if inflation was unanticipated. If it was anticipated, then the conditions were different. This ushered in a whole new element to economics: Expectations are part of the equation in a significant way.

Nowadays, we see expectations set by world governments very deliberately so they can use it as another way to manage economic systems. Something like “a period of somewhat-higher inflation can be expected in the next two quarters,” is common to hear from a Fed Chairman (Federal Reserve Chairman) since this economic understanding came to be.

Of note, since the late 80s/early 90s, economic growth theory is what has dominated economist efforts (since inflation, employment, and prices were already being managed with Keynesian and Friedman understanding), and GDP expansion continued as a top priority.

Back to The Great Depression

Let’s not forget how the interest and need for macroeconomics got started: The Great Depression. The Great Depression was not just in the US. It was global. It started in the US in 1929 though, and by 1930 it had reached the UK. Half of Britain’s trade (sales around the world) disappeared, and in some areas unemployment reached 70%! No wonder efforts were made to understand economics better.

The US had an awful time through The Great Depression too of course, as did countless other countries. For the US, The Great Depression did not end until we entered WWII in 1941. The statistics and the stories are really sad, and to this day people and governments study, fear, and work to avoid the conditions that led to The Great Depression.

Note: The Industrial Revolution followed by The Great Depression followed by WWII followed by The Cold War firmly cemented Keynesian Economics into world governments for a variety of reasons.

Boom and bust

Economic booms (a hot economy) and busts (a cold economy) are now known as business cycles. You may think that you always want your economy hot, but that is actually not true. Booms can lead to bubbles and bubbles pop and you get busts. Understanding business cycles is just one piece of the economy. Another piece of the economy is understanding growth.

Note: As investors, if we understand where things have been we can better understand where things are going — and that’s a major strategic advantage.

Let’s talk about GDP

When you add up all of the goods (such as iPhones) and services (such as Apple Music) you get GDP (Gross Domestic Product). GDP is measured as Total County Production measured in dollars (if you’re the US). GDP has been growing for 200 years for capitalist countries.

Note: there is no purely capitalist country, but each country has rules and people that are more capitalistic than others.

GDP across decades has a very obvious upward trend

But GDP throughout the weeks, months, quarters, and a year can (and do) have significant ups and downs. It is within these ups and downs that successful investors thrive and profit.

Let’s talk about inflation too

The last concept to introduce in this article is inflation. For most people the word has nothing but negative connotations. But in the world of Keynesian economics inflation is a given, and it's managed with government actions. 

Simply put: inflation is a rise in prices. 

Often people think inflation is simply a devaluing of currency by printing too much currency, but consider this: if currency was devalued then prices would go up, no? They would. So devaluing currency is a type/cause of inflation, but there are other types/causes too.

It’s right to monitor and take appropriate action against inflation

When prices go up enormous amounts this is called hyperinflation. For instance, between WWI and WWII Germany had inflation of 230% per month at times! That means every day prices went up 4% on average. So if milk cost $1 on Monday, it cost $1.04 on Tuesday, $1.08 on Wednesday, $1.12 on Thursday, and $1.17 on Friday. By the end of the month milk would cost $2.30. By the end of the year milk would cost $8.20. And a $25,000 car would cost $180,020.60 if those hyperinflation rates happened to us today. No wonder it scares people.

Historically, the US has managed inflation well

In the last 100 years, our worst experience had been in the 1970s when inflation reached 7% from 1973-1975. However, in 2022 inflation met or exceeded 7.5%. 

The US government used many tools and decision-makers to keep it down and return to the 3-4% average we have had since 1946 (on the heels of WWII). Before WWII, the US averaged about 1.7% inflation.

Around the world though, countries have been far more adversely affected by inflation. As mentioned, Germany experienced 230% inflation per year. Israel saw 400% inflation in 1985; Argentina has seen 700% inflation; Bolivia saw 12,500% in 1984. There are many more examples, but Keynesian economics does indeed have the understanding, tools, and systems that manage inflation well.

Inflation is like cancer to economies — and it must be detected early and expertly managed. When inflation is detected, it gets everyone’s attention!

So that’s the introduction to economics. There is a lot more to follow, but we hope you liked what you read, and we hope you have learned something too. Is this enough understanding for you to go start investing in stocks with great success? No. But we can build to that.

The key concepts in this article to remember are:

• John Maynard Keynes “invented” macroeconomics for governments
• Government using macroeconomics to influence and manage a country’s economy
• Milton Friedman identified the relationship between prices and economic output
• AW Phillips identified the relationship between Unemployment and inflation, known as The Phillips Curve
• Phelps-Friedman established expectations as a key component of an economy
• Business cycles, GDP, and inflation as the major factors government considers
• Since the late 80s/90s, economic growth has become the priority for economists

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

You’re the Hero.
    We’re the Guide.

‍

We are thrilled to announce that Arena Investor has partnered with Altruist.com, an industry-leading custodian designed for the modern era, to elevate the investment management services we offer to our clients. Altruist is recognized for its advanced technology, intuitive design, and innovative custodial solutions, and trustworthy safe-keeping of people’s assets, making it the perfect partner for delivering a seamless and efficient investment experience for Arena Investor Investment Management clients.

‍Why Altruist.com?

Altruist has set a new standard in the custodial space with its user-friendly platform that is specifically tailored for the needs of today’s investors. Its modern, streamlined interface simplifies the process of reviewing your investments, providing you with clear, real-time insights into your portfolio, and beautiful performance reports. By integrating Altruist into our investment management services, Arena Investor is enhancing your ability to monitor your investments with greater transparency and ease.

‍Enhanced Investment Management Experience

The integration of Altruist brings a superior level of convenience to your investment management experience. The platform’s sleek design allows you to effortlessly navigate through your investment data, track performance, and stay informed about your portfolios. With Altruist, Arena Investor can offer a more engaging and informative investment management service, ensuring that you have all the tools you need to make informed decisions and stay on track with your financial goals.

‍Value for Investment Management Clients

As an investment management client, you will benefit from Altruist’s comprehensive and real-time data, which provides a clearer picture of how your investments are performing. The platform’s robust and ever-growing tools and insights enable us to offer precise and personalized investment strategies, suitable to your unique financial objectives. Whether you’re focused on building wealth, saving for retirement, or achieving long-term growth, Altruist’s technology enhances our ability to manage your assets effectively and align them with your broader financial goals.

Features such as tax-loss harvesting and rebalancing are key factors in our decision to integrate with Betterment.

The like-minded culture of providing ever-improving and ever-increasing value to customers and clients that Altruist uses is a beautiful match for Arena Investor’s same approach.

‍Looking Ahead

At Arena Investor, we are always striving to improve the services we provide and the value we deliver to our clients. Our partnership with Altruist is a significant step forward in this mission, allowing us to offer a more modern, efficient, and client-centric investment management experience. We believe that this collaboration will greatly enhance your ability to manage and grow your investments, providing you with the support and resources you need to achieve your financial aspirations.

We are excited about the benefits this partnership will bring and look forward to helping you navigate your investment journey with greater confidence and clarity. If you have any questions about how Altruist will enhance your experience with Arena Investor, please feel free to reach out to us.

Truly,
The Arena Investor Team

‍Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

You’re the Hero.
    We’re the Guide.