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What to Expect and How to Invest

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What to Expect and How to Invest

The market talk this week is … Tesla.

Tesla’s groundbreaking Robotaxi event is coming Thursday, October 10.

To get the market in a frenzy, last week Elon put out this tweet:

What to Expect and How to Invest

And just like the market, we’re excited to find out what surprises he has in store.

Banyan Hill analyst Andrew Prince joins me this week to take a deep dive into Tesla’s technology.

Plus, don’t miss our special video presentation this Thursday, October 3, at 7 p.m. ET

To find out the best way to invest in Tesla’s Robotaxi Day click here for details.


Click the link above to automatically register. By reserving your spot, you will receive event updates and offers. We will not share your email address with anyone. And you can opt out at any time.


Click the thumbnail below to start watching:

 

(Or read the transcript here.)

Until next time,

Ian King cryptocurrency bitcoin expert at banyan hill publishing signature

Ian King
Editor, Strategic Fortunes

Navigating cryptocurrency regulations | World Finance

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Navigating cryptocurrency regulations | World Finance

Navigating cryptocurrency regulations | World Finance

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Author: Vikki Davies, Features Writer


Despite its meteoric rise, the cryptocurrency market operates within a regulatory grey area in many jurisdictions. The decentralised and borderless nature of cryptocurrencies poses significant challenges for regulators, who must grapple with issues ranging from investor protection to money laundering and financial stability. James Burnie, a partner at legal firm Gunner Cooke advising on financial services regulation says: “The nature of the Web3 industry has been intrinsically global, as it is easier than ever for a company based in one jurisdiction to sell to clients in another. As regulation has come in, originally this meant that companies were able to engage in regulatory arbitrage as they could structure their setup to avoid more onerous regimes. Such companies could offer cheaper products; however this was often by having lower standards than companies within a jurisdiction would have to abide by.”

To counteract this outcome, regulators have started to take a more expansive approach to their jurisdiction, meaning that the offering of a product into a country is seen as an activity that can be regulated. “The consequence of this has been to drive up the cost of compliance for the Web3 industry, making it harder for the industry to thrive. The key issue in the next few years is therefore how to balance the cost of compliance with ensuring proper standards and it is clear in this respect that the global regulatory system is far from settled as to how to handle this issue,” Burnie adds. Jill Wong, a Partner at international law firm Reed Smith, agrees that there are intricate legal challenges associated with regulating cryptocurrencies. Wong, based in Hong Kong, highlights the difficulty of fitting cryptocurrencies into traditional financial laws, leading to regulatory gaps.

“In Hong Kong, as in other jurisdictions, it has not been straightforward to fit cryptocurrencies into traditional securities and banking laws or other existing regulations in relation to money services,” she says.

“As Hong Kong has functional regulation, the regulator may be different depending on the activity being carried out. It can get complicated. However, with recent new regulatory initiatives aiming to fill regulatory gaps, the regulatory landscape is becoming clearer; crypto-exchanges should now apply for a licence and in the near future, stablecoin issuers and OTC crypto-fiat conversion businesses are likely to be regulated.”

The decentralised nature of cryptocurrencies complicates enforcement and investor protection efforts, highlighting the need for cross-jurisdictional collaboration among regulators. Wong’s colleague Brett Hills, also a Partner at Reed Smith, says: “There are huge challenges to legislators and regulators in designing, implementing and enforcing effective and proportionate regulatory regimes governing cryptocurrencies and indeed other digital assets. And it is therefore not surprising when regimes have not been effective and proportionate.”

Categorising cryptocurrencies
Cryptocurrencies present several regulatory challenges. They have some similar and some different features to existing financial assets. Questions arise as to whether particular digital assets fall into existing categories (securities, commodities and so on) or new categories need to be developed to appropriately cater for them.

Cryptocurrencies are also owned, bought and sold on a global basis; regulators operate within jurisdictions. That then raises the question of how a local regulator deals with offshore activity. Regulators are generally more protective of retail customers and investors, many of whom have bought cryptocurrencies.

Regulators worldwide are grappling with defining cryptocurrencies and determining their regulatory status, often resulting in fragmented and inconsistent regulatory approaches. Research from the Financial Conduct Authority highlights the complexity of the situation. While 90 percent of crypto users understood what cryptocurrency was, only 58 percent claimed they had, “a good understanding of how cryptocurrencies and the underlying technology works.”

A further 12 percent of crypto users falsely believed that crypto investments have some sort of financial protection. This lack of consistency can be confusing for businesses and investors alike, as they navigate a landscape where rules may differ significantly from one jurisdiction to another.

Implications of regulatory decisions
Recent court rulings and legislative changes have profound implications for cryptocurrency regulation. In jurisdictions like the EU and the UK, efforts are underway to craft specific regulatory frameworks for digital assets. The EU’s Markets in Crypto-Assets Regulation (MiCA) is an example of this. The UK is following a similar path but phasing in the introduction of its regulatory regime so that it can build upon and learn from previous phases.

In the US, regulators have sought to apply existing regulatory categories to digital assets and related firms such as exchanges resulting in regulation driven by enforcement. MiCA in the EU and the new UK regime aim to provide clarity and predictability for businesses and customers, fostering a conducive environment for industry growth.

However, challenges persist, particularly in jurisdictions where regulation is driven by enforcement actions, such as the US. The lack of clarity stemming from enforcement-driven regulation creates uncertainty for businesses and investors, hindering industry development and innovation. Hill says: “In most jurisdictions, the view was that most cryptocurrencies fall outside the traditional categories of financial products such as securities and electronic money. As a result, in some of those jurisdictions, legislators have been able to design regulatory regimes that specifically apply to cryptocurrencies and other digital assets.”

Wong adds: “In Hong Kong, cryptocurrencies have been recognised by the courts as ‘property’ which can be the subject of a trust in a liquidation context. Hong Kong courts have also on multiple occasions granted freezing injunctions over cryptocurrencies as asset preservation measures. These provide welcome certainty for traders and investors.”

The impact of regulatory clarity
Regulatory clarity plays a pivotal role in shaping the development of the cryptocurrency industry. Uncertainty leaves businesses and investors grappling with regulatory risks, impeding investment and innovation. Conversely, clear and transparent regulatory frameworks provide certainty, fostering trust and confidence in the market.

Jurisdictions that offer regulatory clarity and certainty attract businesses and investment, positioning themselves as preferred destinations for cryptocurrency-related activities. As the industry matures, stakeholders increasingly prioritise jurisdictions with robust regulatory regimes, conducive to sustainable growth and innovation.

Regulators worldwide are grappling with defining cryptocurrencies and determining their regulatory status

Burnie says: “The problems of uncertainty generally leave firms with the choice of either ignoring the regulatory risk, meaning that there is a greater chance of repercussions should it materialise, or to spend on contingencies designed to reduce the risk, which may or may not be successful.

“As such, the preference will always be for greater clarity and certainty and indeed we have seen firms actively move into those jurisdictions which provide certainty. This has been a selling point for regulators seeking to promote their jurisdiction and indeed we have assisted both the Mauritius FSC and the Kazakhstan AFSA with developing regulatory frameworks for cryptoassets, designed to give certainty and thereby attract business to the regions.”

Advice for businesses and investors
Navigating the regulatory landscape of cryptocurrencies requires strategic foresight and careful consideration of legal and regulatory risks. Experts advise businesses to seek professional legal guidance early, understand target markets and prioritise regulatory compliance. Moreover, businesses must adapt to regulatory changes and proactively engage with regulators to shape the evolving regulatory landscape.

Investors should conduct thorough due diligence, focusing on regulated exchanges and service providers with reputable credentials. Understanding the risks associated with cryptocurrency investments is paramount and investors should exercise caution while navigating the volatile market.

Hill says: “Businesses and investors navigating the regulatory landscape of cryptocurrencies will need to think through their product offering clearly and produce a document setting out its key features for their advisors. They would be wise to take professional legal and regulatory advice early to stay ahead of any potential pitfalls or risks.

“It is also important to consider and demarcate what are the must-haves and the nice-to-haves for a product or service. Changing a product’s design can result in a very different regulatory outcome so knowing where to be flexible can go a long way to achieving the desired result.”

Burnie adds: “Often we see businesses implode either because they seek to achieve too much (spreading resources too thin), or there is poor execution (for example a lack of understanding of the target market for the product). For example, different marketing rules exist in different jurisdictions, so simply seeking to be ‘global’ is generally less successful than targeting resources in a particular jurisdiction. Given the sometimes fickle nature of the markets, it is also worth building a funds war-chest in case of another crypto-winter.”

The future of cryptocurrencies
Cryptocurrency regulation remains a complex and evolving domain, shaped by technological innovation, market dynamics and regulatory scrutiny. While challenges persist, regulatory clarity and collaboration offer a path forward for industry stakeholders, and as Burnie outlines, this has been achieved in Mauritius and Kazakhstan. By navigating the regulatory landscape with diligence and foresight, businesses and investors can unlock the full potential of cryptocurrency while ensuring responsible growth and innovation in this transformative space.

Musings on Markets: Country Risk: My 2024 Data Update

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Musings on Markets: Country Risk: My 2024 Data Update

After the 2008 market crisis, I resolved that I would be far more organized in my assessments and updating of equity risk premiums, in the United States and abroad, as I looked at the damage that can be inflicted on intrinsic value by significant shifts in risk premiums, i.e., my definition of a crisis. That precipitated my practice of estimating implied equity risk premiums for the S&P 500, at the start of every month, and following up of using those estimated premiums when valuing companies during that month. The 2008 crisis also gave rise to two risk premium papers that I have updated each year: the first looks at equity risk premiums, what they measure, how they vary across time and how best to estimate them, with the last update in March 2024. The second focuses on country risk and how it varies across geographies, with the focus again on determinants, measures and estimation, which I update mid-year each year. This post reflects my most recent update from July 2024 of country risk, and while you can read the entire paper here, I thought I would give you a mildly abridged version in this post.

Country Risk: Determinants

    At the risk of stating the obvious, investing and operating in some countries is much riskier than investing and operating in others, with variations in risk on  multiple dimensions. In the section below, I highlight the differences on four major dimensions – political structure, exposure to war/violence, extent of corruption and protections for legal and property rights, with the focus firmly on the economic risks rather than on social consequences.

a. Political Structure

    Would you rather invest/operate in a democracy than in an autocracy? From a business risk perspective, I would argue that there is a trade off, sometimes making the former more risky than the latter, and sometimes less so. The nature of a democracy is that a government will be less able to promise or deliver long term predictable/stable tax and regulatory law, since losing an election can cause shifts in policy. Consequently, operating and investing in a democratic country will generally come with more risk on a continuous basis, with the risk increasing with partisanship in the country. Autocratic governments are in a better position to promise and deliver stable and predictable business environments, with two caveats. The first is that when change comes in autocracies, it will be both unexpected and large, with wrenching and discontinuous shifts in economic policy. The second is that the absence of checks and balance (legal, legislative, public opinion) will also mean that policy changes can be capricious, often driven by factors that have little to do with business or public welfare. 

    Any attempt to measure political freedom comes with qualifiers, since the biases of the measuring service on what freedoms to elevate and which ones to ignore will play a role, but in the figure below, I report the Economist’s Democracy Index, which is based upon five measures – electoral process and pluralism, government functioning, political participation, democratic social culture and civil liberties:

Based upon the Economist’s democracy measures, much of the world remains skewed towards authoritarianism, changing the risk exposures that investors and businesses face when operating in those parts of the world. 

b. War and Violence

    Operating a business becomes much more difficult, when surrounded by war and violence, from both within and outside the country. That difficulty also translates into higher costs, with those businesses that can buy protection or insurance doing so, and those that cannot suffering from damage and lost revenues. Drawing again on an external service, the Institute for Economics and Peace measures exposure to war and violence with a global peace index (with higher scores indicating more propensity towards violence):

While Africa and large swaths of Asia are exposed to violence, and Northern Europe and Canada remain peaceful, businesses in much of the world (including the United States) remain exposed to violence, at least according to this measure.

c. Corruption

    As I have argued in prior posts, corruption operates as an implicit tax on businesses, with the tax revenues accruing to middlemen or third parties, rather than the government. 

Again, while you can argue with the scores and the rankings, it remains undeniable that businesses in much of the world face corruption (and its associated costs). While there are some who attribute it to culture, I believe that the overriding reasons for corruption are systems that are built around licensing and regulatory constraints, with poorly paid bureaucrats operating as the overseers 

    There are other insidious consequences to corruption. First, as corruption becomes brazen, as it is in some parts of the world, there is evidence that companies operating in those settings are more likely to evade paying taxes to the government, thus redirecting tax revenues from the government to private players. Second, companies that are able and willing to play the corruption game will be put at an advantage over companies that are unable or unwilling to do so, creating a version of Gresham’s law in businesses, where the least honorable businesses win out at the expense of the most honorable and honest ones. 

d. Legal and Property Rights

    When operating a business or making an investment, you are reliant on a legal system to back up your ownership rights, and to the extent that it does not do so, your business and investment will be worth less. The Property Rights Alliance, an entity that attempts to measure the strength of property rights, by country, measured property rights (physical and intellectual) around the world, to come up with a composite measure of these rights, with higher values translating into more rights. Their most recent update, from 2023, is captured in the picture below:

Again, there are wide differences in property rights across the world; they are strongest in the North America and Europe and weakest in Africa and Latin America. Within each of these regions, though, there are variations across countries; within Latin America, Chile and Uruguay rank in the top quartile of countries with stronger property rights, but Venezuela and Bolivia are towards the bottom of the list. In assessing protections of property rights, it is worth noting that it is not only the laws that protect them that need to be looked at, but also the timeliness of legal action. A court that takes decades to act on violations of property rights is almost as bad as a court that does not enforce those rights at all.

    One manifestation of property right violation is nationalization, and here again there remain parts of the world, especially with natural resource businesses, where the risks of expropriation have increased. A Sustainalytics report that looked at metal miners documented 165 incidents of resources nationalization between 2017 and 2021, impacting 87 mining companies, with 22 extreme cases, where local governments ending contracts with foreign miners. Maplecroft, a risk management company, mapped out the trendline on nationalization risk in natural resources in the figure below:

National security is the reason that some governments use to justify public ownership of key resources. For instance, in 2022, Mexico created a state-owned company, Litio Para Mexico, to have a monopoly on lithium mining in the country, and announced a plan to renegotiate previously granted concessions to private companies to extract the resource.

Country Risk: External factors

    Looking at the last section, you would not be faulted for believing that country risk exposure is self-determined, and that countries can become less risky by working on reducing corruption, increasing  legal protections for property rights, making themselves safer and working on more predictable economic policies.  That is true, but there are three factors that are largely out of their control that can still drive country risk upwards.

1. Commodity Dependence

    Some countries are dependent upon a specific commodity, product or service for their economic success. That dependence can create additional risk for investors and businesses, since a drop in the commodity’s price or demand for the product/service can create severe economic pain that spreads well beyond the companies immediately affected. Thus, if a country derives 50% of its economic output from iron ore, a drop in the price of iron ore will cause pain not only for mining companies but also for retailers, restaurants and consumer product companies in the country. The United Nations Conference on Trade and Development (UNCTAD) measures the degree to which a country is dependent on commodities, by looking at the percentage of its export revenues come from a commodities, and the figure below captures their findings:

Why don’t countries that derive a disproportionate amount of their economy from a single source diversify their economies? That is easier said than done, for two reasons. First, while it is feasible for larger countries like Brazil, India, and China to try to broaden their economic bases, it is much more difficult for small countries like Peru or Angola to do the same. Like small companies, these small countries have to find a niche where they can specialize, and by definition, niches will lead to over dependence upon one or a few sources. Second, and this is especially the case with natural resource dependent countries, the wealth that can be created by exploiting the natural resource will usually be far greater than using resources elsewhere in the economy, which may explain the inability of economies in the Middle East to wean itself away from oil. 

II. Life Cycle dynamics

    As readers of this blog should be aware, I am fond of using the corporate life cycle structure to explain why companies behave (or misbehave) and how investment philosophies vary. At the risk of pushing that structure to its limits, I believe that countries also go through a life cycle, with different challenges and risks at each stage:

Musings on Markets: Country Risk: My 2024 Data Update

The link between life cycle and economic risk is worth emphasizing because it illustrates the limitations on the powers that countries have over their exposure to risk. A country that is still in the early stages of economic growth will generally have more risk exposure than a mature country, even if it is well governed and has a solid legal system. The old investment saying that gain usually comes with pain, also applies to operating and investing across the globe. While your risk averse side may lead you to direct your investments and operations to the safest parts of the world (say, Canada and Northern Europe), the highest growth is generally in the riskiest parts of the world.

3. Climate Change

    The globe is warming up, and no matter where you fall on the human versus nature debate, on causation, some countries are more exposed to global warming than others. That risk is not just to the health and wellbeing of those who live within the borders of these countries, but represents economic risks, manifesting as higher costs of maintaining day-to-day activity or less economic production.  To measure climate change, we turned to ResourceWatch, a global partnership of public, private and civil society organizations convened by the World Resources Institute. This institute measure climate change exposure with a climate risk index (CRI), measuring the extent to which countries have been affected by extreme weather events (meteorological, hydrological, and climatological), and their most recent measures (from 2021, with an update expected late in 2024) of global exposure to climate risk is in the figure below:

Note that higher scores on the index indicate more exposure to country risk, and much of Africa, Latin America and Asia are exposed. In fact, since this map was last updated in 2021, it is conceivable that climate risk exposure has increased across the globe and that even the green regions are at risk of slipping away into dangerous territory.

Country Life Cycle – Measures

    With that long lead in on the determinants of country risk, and the forces that can leave risk elevated, let us look at how best to measure country risk exposure. We will start with sovereign ratings, which are focused on country default risk, because they are the most widely used country risk proxies, before moving on to country risk scores, from public and private services, and closing with measures of risk premiums that equity investors in these countries should charge.

1. Sovereign Default Risk

    The ratings agencies that rate corporate bonds for default risk also rate countries, with sovereign ratings, with countries with higher (lower) perceived default risk receiving lower (higher) ratings. I know that ratings agencies are viewed with skepticism, and much of that skepticism is deserved, but it is undeniable that ratings and default risk are closely tied, especially over longer periods. The figure below summarizes sovereign ratings from Moody’s in July 2024:

Moody’s Sovereign Ratings in July 2024; Source: Moody’s

If you compare these ratings to those that I reported in my last update, a year ago, you will notice that the ratings are stagnant for most countries, and when there is change, it is small. That remains my pet peeve with the rating agencies, which is not that they are biased or even wrong, but that they are slow to react to changes on the ground. For those searching for an alternative, there is the sovereign credit default swap (CDS) market, where you can market assessments of default risk. The figure below summarizes the spreads for the roughly 80 countries, where they are available:

Sovereign CDS Spreads on June 30, 2024: Source: Bloomberg

Sovereign CDS spreads reflect the pluses and minuses of a market-based measure, adjusting quickly to changes on the ground in a country, but sometimes overshooting as markets overreact. As you can see, the sovereign CDS market views India as safer than suggested by the ratings agencies, and for the first time, in my tracking, as safer than China (Sovereign CDS for India is 0.83% and for China is 1.05%, as of June 30, 2024).

2. Country Risk Scores

    Ubiquitous as sovereign ratings are, they represent a narrow measure of country risk, focused entirely on default risk. Thus, much of the Middle East looks safe, from a default risk perspective, but there are clearly political and economic risks that are not being captured. One antidote is to use a risk score that brings in these missed risks, and while there are many services that provide these scores, I use the ones supplied by Political Risk Services (PRS). PRS uses twenty two variables to measure country risk, whey then capture with a country risk score, from 0 to 100, with the riskiest countries having the lowest scores and the safest countries, the highest:

While I appreciate the effort that goes into these scores, I have issues with some of the scoring, as I am sure that you do. For instance, I find it incomprehensible that Libya and the United States share roughly the same PRS score, and that Saudi Arabia is safer than much of Europe. That said, I have tried other country risk scoring services (the Economist, The World Bank) and I find myself disagreeing with individual country scoring there as well.

3. Equity Risk Premiums

    Looking at operations and investing, through the eyes of equity investors, the risk that you care about is the equity risk premium, a composite measure that you then incorporate into expected returns. I don’t claim to have prescience or even the best approach for estimating these equity risk premiums, but I have consistently followed the same approach for the last three decades. I start with the sovereign ratings, if available, and estimate default spreads based upon these ratings, and I then scale up these ratings for the fact that equities are riskier than government bonds. I then add these country risk premiums to my estimate of the implied equity risk premium for the S&P 500, to arrive at equity risk premiums, by country. 

For countries which have no sovereign ratings, I start with the country risk score from PRS for that country, find other (rated) countries with similar PRS scores, and extrapolate their ratings-based equity risk premiums. The final picture, at least as I see it in 2024, for equity risk premiums is below:

You will undoubtedly disagree with the equity risk premiums that I attach to at least some of the countries on this list, and perhaps strongly disagree with my estimate for your native country, but you should perhaps take issue with Moody’s or PRS, if that is so.

Country Risk in Decision Making

    At this point, your reaction to this discussion might be “so what?”, since you may see little use for these concepts in practice, either as a business or as an investor. In this section, I will argue that understanding equity risk premiums, and how they vary across geographies, can be critical in both business and personal investing.

Country Risk in Business

    Most corporate finance classes and textbooks leave students with the proposition that the right hurdle rate to use in assessing business investments is the cost of capital, but create a host of confusion about what exactly that cost of capital measures. Contrary to popular wisdom, the cost of capital to use when assessing investment quality has little to do with the cost of raising financing for a company and more to do with coming up with an opportunity cost, i.e., a rate of return that the company can generate on investments of equivalent risk. Thus defined, you can see that the cost of capital that a company uses for an investment should reflect both the business risk as well as where in the world that investment is located. For a multinational consumer product company, such as Coca Cola, the cost of capital used to assess the quality of a Brazilian beverage project should be very different from the cost of capital estimated for a German beverage project, even if both are estimated in US dollars. The picture below captures the ingredients that go into a hurdle rate:

Thus, in computing costs of equity and capital for its Brazil and German projects, Coca Cola will be drawing on the equity risk premiums for Brazil (7.87%) and Germany (4.11%), leading to higher hurdle rates for the former.

    The implications for multi-business, multi-national companies is that there is no one corporate cost of capital that can be used in assessing investments, since it will vary both across businesses and across geographies. A company in five businesses and ten geographies, with have fifty different costs of capital, and while you complaint may that this is too complicated, ignoring it and using one corporate cost of capital will lead you to cross subsidization, with the safest businesses and geographies subsidizing the riskiest.

Country Risk in Investing

    As investors, we invest in companies, not projects, with those companies often having exposures in many countries. While it is possible to value a company in pieces, by valuing each its operations in each country, the absence of information at the country level often leads us to valuing the entire company, and when doing so, the risk exposure for that company comes from where it operates, not where it does business. Thus, when computing its cost of equity, you should look not only at its businesss risk, but what parts of the world it operates in:

In intrinsic valuation, this will imply that a company with more of its operations in risky countries will be worth less than a company with equivalent earnings, growth and cash flows with operations in safer countries. Thus, rather than look at where a company is incorporated and traded, we should be looking at where it operates, both in terms of production and revenues; Nvidia is a company incorporated and traded in the United States, but as a chip designed almost entirely dependent on TSMC for its chip manufacture, it is exposed to China risk.

    It is true that most investors price companies, rather than value them, and use pricing metrics (PE ratios, EV to EBITDA) to judge cheap or expensive. If our assessment of country risk hold, we should expect to see variations in these pricing metrics across geographies. We computed EV to EBITDA multiples, based upon aggregate enterprise value and EBITDA, by country, in July 2024, and the results are captured in the figure below:

Source: Raw data from S&P Capital IQ

The results are mixed. While some of the riskiest parts of the world trade at low multiples of EBITDA, a significant part of Europe also does, including France and Norway. In fact, India trades at the highest multiple of EBITDA of any country in the world, representing how growth expectations can trump risk concerns. 

Currency Effects

    You may find it odd that I have spent so much of this post talking about country risk, without bringing up currencies, but that was not an oversight. It is true that riskier countries often have more volatile currencies that depreciate over time, but this more a symptom of country risk, than a cause. As I will argue in this section, currency choice affects your growth, cash flow and discount rate estimates, but ultimately should have no effect on intrinsic value.    

    If you value a company in US dollars, rather than Indian rupees, should the numbers in your valuation be different? Of course, but the reason for the differences lies in the fact that different currencies bring different inflation expectations with them, and the key is to stay consistent:

If expected inflation is lower in US dollars than in rupees, the cost of capital that you should obtain for a company in US dollars will be lower than the cost of capital in rupees, with the difference reflecting the expected inflation differential. However, since your cash flows will also then have to be in US dollars, the expected growth that you should use should reflect the lower inflation rate in dollars, and if you stay consistent in your inflation estimates, the effects should cancel out. This is not just theory, but common sense. Currency is a measurement mechanism, and to claim that a company is undervalued in one currency (say, the rupee) while claiming that it is overvalued at the same time in another currency (say, the US dollar) makes no sense. To practitioners who will counter with examples, where the value is different, when you switch currencies, my response is that there is a currency view (that the rupee is under or over priced relative to the dollar) in your valuation in your valuation, and that view should not be bundled together with your company story in a valuation.

    As we noted in the last section, the place that currency enters your valuation is in the riskfree rate, and if my assertion about expected inflation is right, variations in riskfree rates can be attributed entirely to difference in expected inflation. At the start of July 2024, for instance, I estimated the riskfree rates in every currency, using the US treasury bond rate as my dollar riskfree rate, and the differential inflation between the currency in question and the US dollar:

My estimates are in the appendix to this post. In the same vein, inflation also enters into expected exchange rate calculations:

This is, of course, the purchasing power parity theorem, and while currencies can deviate from this in the short term, it remains the best way to ensure that your currency views do not hijack your valuation.

YouTube Video

My Country risk premium paper

My Data Links

UnionPay and Vietnam’s NAPAS Link QR Code Payment Systems

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UnionPay and Vietnam’s NAPAS Link QR Code Payment Systems

UnionPay International (UPI) and the National Payment Corporation of Vietnam (NAPAS) will enhance their collaboration on cross-border QR code payment interoperability.

The partnership will allow Vietnamese bank apps and e-wallets to use UnionPay‘s QR payment system on each other’s networks, facilitating seamless transactions across both countries.

This partnership is expected to improve payment convenience for Vietnamese travelers in mainland China, enabling them to scan UnionPay QR codes for payments.

It also strengthens UnionPay’s service capability for both inbound and outbound payments, benefiting users from both countries.

UnionPay and Vietnam’s NAPAS Link QR Code Payment Systems

The collaboration follows an earlier MOU, signed in August 2024, between the central banks of China and Vietnam to promote cross-border payment systems.

UnionPay’s global network spans 183 countries and regions, with over 69 million online and physical merchants accepting UnionPay cards outside China.

In Southeast Asia, over 90% of ATMs and POS terminals support UnionPay, and in Vietnam, 90% of POS terminals accept UnionPay cards, with 60,000 merchants supporting QR payments.

 

Featured image credit: Edited from Pexels

How Named Storms Affect Your Insurance Coverage

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How Named Storms Affect Your Insurance Coverage

How Named Storms Affect Your Insurance Coverage

When a hurricane is on the way, you have to act fast.

While you’re making an evacuation plan or stocking up on bottled water, the last thing you want to be thinking is, “Will my insurance cover what happens after this?”

Yes, hurricanes can be devastating – personally and financially. But anxiety can keep you from being present to what matters most. We want you to feel confident that your insurance can go the distance when disaster strikes.

For coverage questions about your specific policy, contact your local insurance agent.

Hurricanes and Insurance: 4 Frequently Asked Coverage Questions

A hurricane is on the way. Can I buy a new policy or make a last-minute change?

Typically, a hurricane watch is called about 48 hours ahead of tropical storm-force winds, according to the National Hurricane Center. Once that happens, it’s unlikely you’ll be able to get a new policy or make a policy change at the last minute.

It varies by state, but in most places, state regulations prohibit anyone from purchasing insurance coverage (or changing their current coverage) once an official hurricane watch or warning is called.

Flood insurance, which is purchased as a separate policy, has a mandatory 30-day waiting period before it goes into effect. That’s because flood insurance is federally regulated through the Federal Emergency Management Agency’s National Flood Insurance Program.

Does my homeowners’ insurance cover damage from hurricanes?

Always check your specific policy (or check with your Agent) to know what it does and doesn’t include. The big thing to remember is that coverage for flood and water is typically purchased separately.

  • Wind damage: Generally speaking, wind damage – including wind from hurricanes – is already included under the dwelling and other structures section of your homeowners policy, since it’s considered a covered peril.
  • Water damage: Damage from flooding or water is excluded in most standard homeowners policies. Coverage for water-related damage, like flooding or storm surges, has to be purchased separately – and there’s a 30-day waiting period before your policy will go into effect.

Does my auto insurance cover damages from hurricanes?

In most cases, your auto policy can cover hurricane-related damages to your vehicle if you have collision and comprehensive coverage.

Collision coverage can protect your vehicle (minus your deductible and up to market value) in the event of a collision with another vehicle or an object such as a barrier (Road conditions can be extremely dangerous before, during, and after a hurricane. For your own safety, please avoid driving unless it’s an emergency.)

Comprehensive coverage covers your vehicle (minus your deductible and up to market value) in the event of an accident that is not related to a collision – for example, if your car gets flooded or the wind snaps a tree limb that falls on your car. Comprehensive coverage is optional, so if you live in a hurricane-prone area, you might want to consider adding it to your auto policy.

What’s a named storm deductible? And does ERIE have one?

The deductible is the out-of-pocket amount you pay to your insurance company after a covered loss. If you live in a hurricane-prone area, some insurance carriers have deductibles that only apply to damages from natural disasters – for example, named storms or windstorms.

Many named storm deductibles are set up as a percentage of a home’s value – usually from 1 to 10 percent – instead of a fixed dollar amount. That means a homeowner with a home insured for $161,100 would shell out $16,100 if their named storm deductible was 10 percent. If you’re not financially prepared, it can be a big sticker shock. Some insurance companies make the percentage deductible mandatory for homes in high-risk coastal areas.

Other named storm deductibles may be set on an actual dollar amount. Sometimes, named storm deductibles are optional, and we let you choose an actual dollar amount for your named storm deductible – from 0 to $10,000 – based on your budget and how much risk you’re willing to retain.

We’re Here When You Need Us

When you’re with our agency, our policy is a promise to do the right thing. If a hurricane hits and you must file a claim, know that we’re here for you from the first question to the final follow-up.

We value your time, energy, schedule, and commitments. That’s why we do everything possible to make our claims process convenient and fast. Learn more about how to file a claim by contacting one of our local agents today.

Stay safe this hurricane season. Our local ERIE Agents are here to help answer your questions and help you feel confident about your coverage.

ERIE® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home offices: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York).  The companies within the Erie Insurance Group are not licensed to operate in all states. Refer to the company licensure and states of operation information.

The insurance products and rates, if applicable, described in this blog are in effect as of January 2024 and may be changed at any time. 

Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions. 

The insurance products and services described in this blog are not offered in all states.  ERIE life insurance and annuity products are not available in New York.  ERIE Medicare supplement products are not available in the District of Columbia or New York.  ERIE long term care products are not available in the District of Columbia and New York. 

Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.

Your ERIE agent can offer you practical guidance and answer questions you may have before you buy.

5 Reasons Why Is Investing Important For Your Rich Future

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5 Reasons Why Is Investing Important For Your Rich Future

5 Reasons Why Is Investing Important For Your Rich Future

In a world where financial landscapes are ever-evolving, the decision to invest isn’t just a choice; it’s a strategic move towards securing a more prosperous future. Whether you’re a seasoned investor or someone contemplating the idea of investing, understanding the top reasons to embark on this financial journey is crucial.

In this blog post, we’ll explore why is investing important and what are the compelling motivations that make investing a powerful tool for wealth creation and financial well-being.

1. Wealth Accumulation and Long-Term Growth

The key is to adopt a patient and disciplined approach, understanding that the real benefits of investing often unfold over the long term. By harnessing the power of compounding, investors can witness their wealth snowball, generating returns not only on the principal investment but also on the accumulated earnings.

2. Inflation Hedge

Inflation is an inevitable force that erodes the purchasing power of money over time. Investing provides a hedge against inflation by potentially outpacing the rate at which prices rise. While inflation diminishes the value of currency, well-chosen investments have the capacity to maintain, or even increase, the real value of your wealth.

Investors can strategically select assets that historically have appreciated at a rate exceeding inflation, preserving the purchasing power of their money. This resilience in the face of inflation is a compelling reason for individuals to allocate a portion of their resources to investments.

3. Independence and Retirement Planning

Investing is a cornerstone of achieving financial independence and securing a comfortable retirement. Through disciplined and strategic investment practices, individuals can build a robust portfolio that serves as a financial safety net in their golden years.

Retirement accounts, such as 401(k)s and IRAs, provide tax advantages and incentivize individuals to consistently contribute to their future financial well-being.

The allure of financial independence is not just about amassing wealth; it’s about creating a life where you have the freedom to make choices without being solely dependent on active income. Investing allows you to cultivate the financial resources needed to retire comfortably and pursue the lifestyle you desire.

cost of retirement
Expected Cost of Retirement. Source: AAG

4. Diversification for Risk Mitigation

By diversifying, investors can potentially mitigate the impact of poor-performing assets while benefiting from the positive performance of others.

This strategy minimizes risk and adds resilience to an investment portfolio. While certain investments may experience downturns, a well-diversified portfolio can help cushion the overall impact, fostering stability and long-term growth.

By investing, you hold more assets, rather than keeping all of your savings in cash or saving accounts. This is why investing is a money diversification method by itself.

If you are just considering to step into investing world, it might be too early to think about diversification. There will be plenty of upcoming content from my side about it. For now, I will just give you the example of a very common diversification technique, which is 60% allocation to stocks and 40% allocation to bonds.

5. Passive Income Generation

Investing has the unique advantage of offering avenues for passive income generation. Income-generating assets, such as dividend-paying stocks, real estate, or bonds, provide a steady stream of passive income. This income is earned with minimal effort on the investor’s part, creating financial flexibility and reducing dependence on active income sources.

The allure of earning money while you sleep is a powerful motivator for many investors. Whether it’s dividends from a well-constructed stock portfolio or rental income from real estate investments, passive income can contribute significantly to an individual’s financial stability and quality of life.

Speaking about dividends…

Why Dividend Is Important as an Investing Strategy

In the world of financial strategies, dividend investing stands out as a melody of consistent returns and long-term financial harmony. It’s more than just a method; it’s a mindset that aligns with the principles of wealth creation and financial stability. Here are compelling reasons why dividend investing is a good choice for those seeking to cultivate a robust and reliable investment portfolio.

Steady Stream of Income

At the heart of dividend investing is the promise of a steady stream of income. Companies that pay dividends distribute a portion of their profits to shareholders, providing investors with a reliable source of cash flow. This consistent income stream can be particularly appealing, especially for those looking to supplement their regular income or build a reliable source of funds for future needs.

Unlike the unpredictable nature of capital gains, dividends offer a tangible and regular return on investment. This characteristic makes dividend-paying stocks an attractive option for income-focused investors who value financial stability.

Historical Stability and Resilience

Historical data demonstrates the resilience of dividend-paying stocks, especially during market downturns. Companies with a consistent dividend payment track record have often weathered economic storms more effectively than their non-dividend counterparts. The commitment to paying dividends is a sign of financial health and stability, indicating that a company has sufficient profits to reward its shareholders.

During market fluctuations, dividend-paying stocks tend to exhibit lower volatility compared to growth stocks. This stability can provide investors with a sense of security and a smoother ride through the ups and downs of the market.

For your reference, below is a list of Dividend Kings. These are companies that have paid and consistently raised their dividends for more than 50 years!

Compounding Magic

Dividend reinvestment is a powerful force in the world of wealth accumulation. By reinvesting dividends to purchase additional shares, investors leverage the compounding effect. Over time, this compounding magic can significantly boost the total return on investment. The more shares you own, the more dividends you receive, creating a cycle of wealth accumulation that can grow exponentially.

Dividend reinvestment allows investors to harness the power of time, turning small, regular dividends into a substantial source of wealth. This approach aligns with the philosophy that successful investing is not just about timing the market but time in the market.

Discipline and Long-Term Focus

Dividend investing encourages a disciplined and patient approach to wealth building. The mindset of selecting stocks based on their ability to generate sustainable dividends fosters a long-term perspective. Instead of being swayed by short-term market fluctuations, dividend investors focus on the fundamental strength of the companies in which they invest.

This disciplined approach aligns with the philosophy of building a resilient and enduring portfolio. Dividend investors often weather market uncertainties with confidence, knowing that their investment choices are grounded in the fundamentals of financial health and consistent income generation.

In conclusion, dividend investing emerges as a symphony of financial benefits, offering a reliable income stream, historical stability, compounding advantages, inflation resistance, and a disciplined long-term focus. While it may not be the flashiest tune in the investment orchestra, the melody of dividend investing resonates with those seeking a harmonious and sustainable approach to building wealth. As the dividends flow in, investors can enjoy the sound of financial well-being, one dividend at a time.

Conclusion on Why Is Investing Important

In conclusion, the decision to invest is a strategic choice that goes beyond the desire for wealth—it’s a pathway to financial empowerment and a more secure future. The top reasons to invest, from wealth accumulation and inflation protection to retirement planning, risk mitigation, and passive income generation, collectively make a compelling case for individuals to explore the diverse world of investments.

As you embark on your investment journey, remember that knowledge, patience, and a long-term perspective are your greatest allies. The road to prosperity may have its twists and turns, but with a well-informed and disciplined approach, investing can be a transformative force in shaping your financial destiny. Embrace the possibilities, cultivate your portfolio wisely, and step confidently into the realm of financial abundance.

FAQ about Investing

What Investing Is?

Investing is like planting seeds to grow your money over time. It’s a smart way to make your wealth grow or reach specific financial goals. Imagine you’re choosing different plants to grow in your garden, hoping they’ll flourish and give you a great harvest.

One common way to invest is through stocks, where you become a co-owner of companies. If the companies do well, your investment grows. Bonds are like lending money, and in return, you get back your money with a bit extra as interest.

Real estate, another option, is like owning a piece of land or a share in a property business. You can also invest in groups with mutual funds or ETFs, which are like having a variety of plants in your garden – some flowers, some veggies, spreading the risk.

There are also unique options like gold, cryptocurrencies (digital money), and other interesting choices, each with its own risks and rewards.

But, just like plants need care, investments need attention. They can go up and down, and it’s important to understand the risks. Diversifying, or having different types of investments, is like not putting all your eggs in one basket.

In a nutshell, investing is about making your money work for you, growing it over time, and being a bit like a smart gardener in the world of finance.

What Investment is the Best?

Finding the best investment is like picking the perfect tool for a job—it depends on what you want to achieve and what you’re comfortable with. Let’s break it down.

Imagine you have different tools in your toolbox, each serving a unique purpose. Similarly, there are various investments, like stocks, bonds, and real estate, each with its own strengths.

If you’re looking for long-term growth and can handle a bit of excitement, stocks are like the go-getters in your toolbox. They can go up a lot, but they might also jump around.

On the steadier side, bonds are like reliable tools that pay you back a bit extra (interest) for your trust. They’re not as flashy, but they can provide a more predictable return.

Real estate, well, that’s like having a property in your toolbox. It can give you income and might grow in value over time.

Now, there’s also the new kid on the block—cryptocurrencies. Think of them as the tech gadgets of your toolbox. They’re exciting and have potential, but they can be a bit unpredictable.

For a balanced approach, you might want to mix and match, just like using different tools for different tasks. This is called diversification, spreading your investments to reduce risks.

Remember, what’s “best” depends on what you’re comfortable with and what you want to achieve. It’s like choosing the right tool for a DIY project—there’s no one-size-fits-all. If you’re unsure, it’s okay to ask for advice from financial experts who can help you build your financial toolbox.

Can Investing Make You Rich?

Wondering if investing can make you rich? The short answer: it can, but it’s not a magic trick for instant wealth. Let’s break it down.

Imagine your money as a seed. When you invest, it’s like planting that seed, and over time, it grows into a money tree. The cool part is compounding—your money earns money, and that money earns more money. It’s like a financial snowball effect, but it takes time.

Diversification is like having different types of plants in your garden. You don’t put all your money in one place; you spread it around—some in stocks, some in bonds, maybe a bit in real estate. This way, if one plant (or investment) has a bad day, the others can balance it out.

Now, here’s the scoop: investing involves risks. Prices can go up, down, or do a little dance. That’s where patience comes in. Think of it as watching your garden grow. It’s not an overnight thing; it’s a gradual process.

No guarantees, though. You won’t get rich quick, and there might be bumps along the way. But, if you stay informed, diversify, and let your money grow over time, investing can be a tool for building wealth.

Remember, it’s not about timing the market perfectly; it’s about time in the market. Regular contributions and reinvesting your earnings add more fuel to your money tree.

So, can investing make you rich? It’s possible, but it’s a journey, not a race. With a bit of strategy, patience, and maybe a financial advisor as your gardening buddy, you’re on your way to growing some financial green.

Your Next Steps

The best thing you can do now is to learn more about the different asset classes and understand what fits you best.

For this, I invite you to read the following article:

Which Asset Class is Right for You

I hope this was useful for you and the information you learned in this article will help you to make your first steps in the investing world.

The CCi30 Index: Are We Near the End of The Downtrend?

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The CCi30 Index: Are We Near the End of The Downtrend?

I did not publish The Markets Compass Crypto Sweet Sixteen Study in its entirety last Saturday. I was a “little busy” with my daughter’s wedding on Saturday, but I want to share my thoughts on the technical condition of the broader cryptocurrency market utilizing price charts of the CCi30 Index*

*For those who are not familiar, the CCi30 Index is a registered trademark and was created and is maintained by an independent team of mathematicians, quants and fund managers lead by Igor Rivin. It is a rules-based index designed to objectively measure the overall growth, daily and long-term movement of the blockchain sector. It does so by indexing the 30 largest cryptocurrencies by market capitalization, excluding stable coins (more details can be found at www.CCi30.com.

The Market’s Compass Technical View is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

The CCi30 Index Cloud Chart with Momentum Oscillators

The CCi30 Index: Are We Near the End of The Downtrend?

When the CCi30 Index overtook the Upper Parallel (solid gold line) of the longer-term Inverse Standard Pitchfork which is drawn from a price pivot high (gold P1) to a price pivot low (gold P2) to price pivot lower high (gold P3) I added a second Standard Pitchfork (violet P1 through P3). Since the violet P3 low prices have walked the “tight rope” of the Lower Parallel (solid violet line). Last Friday the index overtook Cloud resistance at what is commonly referred to as the “twist” (the easiest point for prices to overtake Cloud resistance) and prices have held Cloud support since then (prices are as of yesterday). All four momentum oscillators suggest the index still has the wind at its back, but it may, in the very short-term be a tad extended. I now mark first short-term resistance at 14,375. The next Daily Chart reveals one concern.

The CCi30 Index Daily Cloud Chart with the MC Oscillator and the Custom Oscillator

The Custom Oscillator (lower panel) is an unbound momentum oscillator that has an embedded momentum calculation that removes the normalization range restrictions that are in the MC Oscillator (middle panel). That means that it is not bound between 0 and 100. I have highlighted three divergences. The first was in July, which was a bearish divergence and is highlighted with the red dashed lines. You can see what happened after that (red arrow). The second early September divergence is a bullish divergence highlighted with the green dashed lines suggesting a potential price low was in place and is highlighted with the green arrow. In the middle of this month a bearish divergence began to develop. The current bearish divergence is not as “full blown” as the one in July and is likely signaling only a shallow pullback of a lesser degree or a “pause to refresh” in the index. That short-term technical thesis is potentially reinforced by the weekly technical condition (charted below) that reflects the current position of the same two oscillators that printed a bullish divergence in the third quarter.

The CCi30 Index Weekly Cloud Chart with the MC Oscillator and the Custom Oscillator

Prices have remained mired in the multi-month downtrend (red dashed line) since March highs but there is one ray of hope for the cryptocurrency bulls, which is the recent bullish divergence between the two oscillators (green dashed lines). It should be noted that the divergence is less than perfect because of the time between the lows but it is nonetheless noteworthy. The week is not over yet, but the index has edged above the Lower Span of the Cloud. Three key hurdles remain. First is resistance at the downtrend from the March highs (red dashed line), second is the Upper Span of the Cloud model and lastly the Kijun Plot (the mid-point between the lowest low and highest high over the past 26-weeks) which currently at 14,775. If those hurdles are overtaken, I would be able to confidently declare that the CCi30 Index is “out of the woods” and on its way to higher price levels!

All of the charts are courtesy of Optuma whose charting software enables users to chart any price data such as the CCi30 Index.

To receive a 30-day trial of Optuma charting software go to…

www.optuma.com/TMC.

A three part tutorial on Median Line Analysis AKA Andrews Pitchfork and a basic tutorial on the Tools Technical Analysis is available on my website…

www.themarketscompass.com

The Market’s Compass Technical View is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.

Georgia rule that Election Day ballots must be hand counted after close of voting is tossed

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Georgia rule that Election Day ballots must be hand counted after close of voting is tossed

Georgia rule that Election Day ballots must be hand counted after close of voting is tossed

A judge has blocked a new rule that requires Georgia Election Day ballots to be counted by hand after the close of voting. The ruling came a day after the same judge ruled that county election officials must certify election results by the deadline set in law.

The State Election Board last month passed the rule requiring that three poll workers each count the paper ballots — not votes — by hand after the polls close. The county election board in Cobb County, in Atlanta’s suburbs, had filed a lawsuit seeking to have a judge declare that rule and five others recently passed by the state board invalid, saying they exceed the state board’s authority, weren’t adopted in compliance with the law and are unreasonable.

In a ruling late Tuesday, Fulton County Superior Court Judge Robert McBurney wrote, that the so-called hand count rule “is too much, too late” and blocked its enforcement while he considers the merits of the case.

McBurney on Monday had ruled in a separate case that “no election superintendent (or member of a board of elections and registration) may refuse to certify or abstain from certifying election results under any circumstance.” While they are entitled to inspect the conduct of an election and to review related documents, he wrote, “any delay in receiving such information is not a basis for refusing to certify the election results or abstaining from doing so.”

Georgia law says county election superintendents — generally multimember boards — “shall” certify election results by 5 p.m. on the Monday after an election, or the Tuesday if Monday is a holiday as it is this year.

The two rulings came as early in-person voting began Tuesday in Georgia.

They are victories for Democrats, liberal voting rights groups and some legal experts who have raised concerns that Donald Trump’s allies could refuse to certify the results if the former president loses to Democratic Vice President Kamala Harris in next month’s presidential election. They have also argued that new rules enacted by the Trump-endorsed majority on the State Election Board could be used to stop or delay certification and to undermine public confidence in the results.

In blocking the hand count rule, McBurney noted that there are no guidelines or training tools for its implementation and that the secretary of state had said the rule was passed too late for his office to provide meaningful training or support. The judge also wrote that no allowances have been made in county election budgets to provide for additional personnel or expenses associated with the rule.

“The administrative chaos that will — not may — ensue is entirely inconsistent with the obligations of our boards of elections (and the SEB) to ensure that our elections are fair legal, and orderly,” he wrote.

The state board may be right that the rule is smart policy, McBurney wrote, but the timing of its passage makes implementing it now “quite wrong.” He invoked the memory of the riot at the U.S. Capitol by people seeking to stop the certification of Democrat Joe Biden’s presidential victory on Jan. 6, 2021, writing, “Anything that adds uncertainty and disorder to the electoral process disserves the public.”

During a hearing earlier Tuesday, Robert Thomas, a lawyer for the State Election Board, argued that the process isn’t complicated and that estimates show that it would take extra minutes, not hours, to complete. He also said memory cards from the scanners, which are used to tally the votes, could be sent to the tabulation center while the hand count is happening so reporting of results wouldn’t be delayed.

State and national Democratic groups that had joined the suit on the side of the Cobb election board, along with the Harris campaign, celebrated McBurney’s ruling in a joint statement: “From the beginning, this rule was an effort to delay election results to sow doubt in the outcome, and our democracy is stronger thanks to this decision to block it.”

The certification ruling stemmed from a lawsuit filed by Julie Adams, a Republican member of the election board in Fulton County, which includes most of the city of Atlanta and is a Democratic stronghold. Adams sought a declaration that her duties as an election board member were discretionary and that she is entitled to “full access” to “election materials.”

Long an administrative task that attracted little attention, certification of election results has become politicized since Trump tried to overturn his loss to Democrat Joe Biden in the 2020 general election. Republicans in several swing states, including Adams, refused to certify results earlier this year and some have sued to keep from being forced to sign off on election results.

Adams’ suit, backed by the Trump-aligned America First Policy Institute, argued county election board members have the discretion to reject certification. In court earlier this month, her lawyers also argued county election officials could certify results without including certain ballots if they suspect problems.

Judge McBurney wrote that nothing in Georgia law gives county election officials the authority to determine that fraud has occurred or what should be done about it. Instead, he wrote, state law says a county election official’s “concerns about fraud or systemic error are to be noted and shared with the appropriate authorities but they are not a basis for a superintendent to decline to certify.”

The Democratic National Committee and Democratic Party of Georgia had joined the lawsuit as defendants with the support of Harris’ campaign. The campaign called the ruling a “major legal win.”

Adams said in a statement that McBurney’s ruling has made it clear that she and other county election officials “cannot be barred from access to elections in their counties.”

A flurry of election rules passed by the State Election Board since August has generated a crush of lawsuits. McBurney earlier this month heard a challenge to two rules having to do with certification brought by the state and national Democratic parties. Another Fulton County judge is set to hear arguments in two challenges to rules tomorrow — one brought by the Democratic groups and another filed by a group headed by a former Republican lawmaker. And separate challenges are also pending in at least two other counties.

Dallas vs Houston: Which City is Right For You?

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Dallas vs Houston: Which City is Right For You?

You might be considering an apartment in Dallas or a house in Houston, as these two Texas cities offer a mix of Southern hospitality and big-city opportunities. Dallas is known for its booming business sector and modern downtown, while Houston offers a more diverse cultural experience with its world-class museums and thriving food scene. Whether you’re drawn to Dallas’ sleek urban energy or Houston’s blend of culture and affordability, choosing the right city to call home is an important decision.

From real estate prices and job prospects to cost of living and cultural experiences, there’s a lot to think about. In this Redfin article, we’ll explore the key differences to help you determine which city is best for your next home purchase.

Dallas vs Houston: Which City is Right For You?

Housing in Dallas vs Houston

Housing in Dallas

Dallas offers a diverse housing market with options ranging from modern downtown apartments to sprawling homes in suburban Dallas neighborhoods like Plano and Frisco. The city’s rapid growth has led to increased demand, but Dallas remains relatively affordable compared to other major cities. Buyers can find new developments, historic homes, and luxury high-rises throughout the metro area, making it a great choice for those seeking a mix of urban and suburban living.

dallas houses and apartments

Housing in Houston

Houston’s real estate market is known for its affordability and variety. Buyers have access to spacious homes in suburban areas like The Woodlands or Sugar Land, as well as luxury condos in the city center. Houston’s housing prices are lower than in Dallas, and the city’s lack of zoning laws allows for diverse housing styles throughout the area. Whether you’re looking for a townhouse, ranch-style home, or apartment, Houston offers a wide range of options.

suburbs of dallas

Cost of living in Dallas vs Houston

The overall cost of living in Dallas is about 8% higher than in Houston, with housing and transportation being the major factors that create this gap.

1. Utilities

Utilities in Dallas are about 12% more expensive than in Houston. Dallas’ larger size and higher energy demands contribute to increased utility costs, while Houston’s proximity to energy resources, particularly in the oil and gas industries, helps keep energy prices lower.

2. Groceries

Groceries in Dallas are roughly 1% less expensive than in Houston. While Houston’s larger population and diverse culinary scene provide a wide range of affordable grocery options, Dallas tends to have slightly higher prices for similar goods, despite its smaller population.

3. Transportation

Transportation costs in Houston are about 2% higher than in Dallas. Dallas’ growing public transit system and higher parking fees contribute to its transportation expenses, while Houston’s extensive highway network and more affordable parking options help offset some of its higher transportation costs.

4. Healthcare

Healthcare costs in Dallas are around 10% higher than in Houston. Dallas offers a range of specialized medical services that increase healthcare expenses, while Houston, home to the renowned Texas Medical Center, provides competitive healthcare options at slightly lower costs.

5. Lifestyle

Lifestyle expenses in Dallas are about 5% lower than in Houston. Dallas is known for its upscale dining, shopping, and entertainment, which come at a premium. In contrast, Houston offers a wide range of affordable cultural experiences and activities, making it a more budget-friendly option for entertainment.

houston texas houses and apartments

Dallas vs Houston in size and population: A tale of two Texas titans

Dallas and Houston, two of Texas’ largest cities, offer distinct urban experiences. Dallas spans about 385 square miles with a population of around 1.3 million, creating a dense urban core surrounded by sprawling suburbs. Houston, much larger, covers 637 square miles with a population of roughly 2.3 million, making it one of the largest cities in the U.S. by area. Houston’s vast size allows for a more spread-out, suburban feel with numerous parks and green spaces, while Dallas provides a more concentrated, fast-paced urban experience. Both cities boast modern skylines and sprawling metro areas, but Houston’s sheer size offers more variety, while Dallas delivers a more compact urban energy.

Weather and climate in Dallas vs Houston

Dallas’ climate and Houston’s climate both have a humid subtropical weather, with hot, humid summers, though Dallas tends to be hotter and drier, while Houston experiences more rainfall due to its proximity to the Gulf of Mexico. Winters in both cities are mild, though Dallas is more prone to colder spells and occasional snow or ice. Houston’s coastal location makes it more vulnerable to hurricanes and tropical storms during late summer and fall, while Dallas faces more inland weather risks, such as severe thunderstorms and tornadoes, particularly during spring and fall.

dallas texas downtown waterfront

The job market in Dallas vs Houston

Dallas: A major business and tech center

Dallas boasts a strong economy driven by finance, tech, and telecommunications industries. The employment rate in Dallas is around 67%, with a median household income of $70,000. The average hourly wage is $31.66, making it an attractive city for professionals in various sectors. Major companies like AT&T, Southwest Airlines, and Texas Instruments are headquartered in Dallas, offering robust job opportunities in business, tech, and engineering. The city’s lower cost of living compared to other tech hubs makes it a growing destination for both established companies and startups.

Houston: Energy and healthcare powerhouse

Houston’s job market is heavily influenced by the energy and healthcare industries. With an employment rate of 64% and a median household income of $63,000, Houston provides competitive wages, particularly in oil, gas, and healthcare. The average hourly wage is $30.54, which is attractive given Houston’s affordable housing market. Major employers include ExxonMobil, Memorial Hermann Health System, and Chevron, making the city a hub for energy production and medical services. Additionally, Houston’s growing port and logistics sector continue to drive job creation in transportation and trade.

woodlands texas parks houston

Transportation in Dallas vs Houston

Dallas: Car-focused with growing transit options

Dallas is predominantly car-focused, though public transit is growing with the Dallas Area Rapid Transit (DART) system, which includes buses and light rail. Biking is becoming more popular, especially with the expansion of bike lanes in downtown and urban areas. However, driving remains the primary mode of transportation due to Dallas’ expansive layout and suburban sprawl. Traffic can be heavy, but the city’s highway system is well-developed.

Houston: Car-dependent with expanding transit

Houston, like Dallas, is a car-dependent city, though the METRO system offers bus and light rail services for commuters. The city is working on improving bike infrastructure, but Houston’s size makes driving the most practical option for most residents. Traffic congestion is a major issue, particularly during peak hours, though the city’s vast highway network helps with navigation.

Travel in and out of Dallas vs Houston

Both Dallas and Houston are key travel hubs, offering robust connections for domestic and international travel.

  • Dallas: Dallas/Fort Worth International Airport (DFW), Dallas Love Field, DART, Amtrak, Greyhound, and Megabus.
  • Houston: George Bush Intercontinental Airport (IAH), William P. Hobby Airport (HOU), METRO, Amtrak, Greyhound, and Megabus.

houston museums

Lifestyle and things to do in Dallas vs Houston

A day in the life of a Dallasite

Life in Dallas combines big-city living with a touch of Southern charm. Mornings might start with a coffee from a trendy café in Deep Ellum before heading to work downtown. On weekends, residents can explore the growing arts scene, attend a Cowboys game at AT&T Stadium, or visit the Dallas Arboretum. For outdoor lovers, White Rock Lake and the nearby trails offer a break from the urban hustle, while the city’s vibrant nightlife keeps things exciting after dark.

Top things to do in Dallas:

Google Street View of the Dallas Arboretum

Dallas parks and green gems:

Google Street View of Reverchon Park

Dallas tourist attractions:

  • Reunion Tower
  • Perot Museum of Nature and Science
  • Dallas World Aquarium
  • Dealey Plaza
  • Dallas Zoo

A day in the life of a Houstonian

Living in Houston offers a blend of diverse cultures and suburban comfort. A day might start with a coffee in the Montrose district before commuting to work via car or public transit. Weekends can be spent enjoying Houston’s world-class museums, watching the Astros play, or visiting one of the city’s many parks. The Houston food scene is renowned for its global influence, with everything from Tex-Mex to Vietnamese cuisine available. Outdoor enthusiasts can enjoy the city’s parks or head to the nearby Gulf Coast for a day at the beach.

Top things to do in Houston:

Google Street View of Houston Zoo

Houston parks and green gems:

Google Street View of Buffalo Bayou

Houston tourist attractions:

  • Space Center Houston
  • The Galleria
  • Houston Museum District
  • Downtown Aquarium
  • Discovery Green

Food and culture in Dallas vs Houston

Dallas: Big flavors in a big city

Dallas is known for its bold, hearty food, with a strong influence from Tex-Mex and barbecue. The city’s food scene offers everything from classic Texas brisket to high-end steakhouses, alongside a growing number of international and fusion restaurants. Tex-Mex staples like enchiladas and queso are local favorites, while Dallas’ burgeoning craft beer scene adds a modern twist to the city’s culinary offerings. Culturally, Dallas shines with a mix of modern art galleries, theaters, and live music venues. The city is home to the Dallas Museum of Art, the annual State Fair of Texas, and a vibrant sports culture that brings residents together year-round.

Houston: A melting pot of global cuisine

Houston’s food scene is one of the most diverse in the country, reflecting the city’s multicultural population. Known for its exceptional range of international cuisine, Houston offers everything from Vietnamese pho and Indian curries to Tex-Mex favorites like fajitas and tacos. The city’s food culture is strongly influenced by its proximity to the Gulf Coast, with seafood playing a central role in many dishes. Houston’s cultural scene is equally rich, with world-class institutions like the Houston Museum of Natural Science and the Houston Symphony. Events such as the Houston Livestock Show and Rodeo, along with a vibrant performing arts scene, make Houston a true cultural melting pot.

dallas texas parks and things to do

Sports scene in Dallas vs Houston

Dallas: Football at the heart of it all

Dallas is a city where football reigns supreme, with the Dallas Cowboys being one of the most famous teams in the NFL. AT&T Stadium, also known as “Jerry World,” is an iconic venue that hosts fans from across the country on game days. Beyond football, the Dallas Mavericks provide NBA excitement at the American Airlines Center, while the Texas Rangers bring baseball action to nearby Globe Life Field in Arlington. Dallas also has a strong soccer presence with FC Dallas in Major League Soccer, rounding out a diverse sports culture that’s fueled by passionate fans.

arlington texas at&t dallas stadium

Houston: A sports hub rooted in diversity

Houston’s sports scene is diverse and dynamic, anchored by teams across multiple major leagues. The Houston Texans hold down the city’s NFL pride, playing at NRG Stadium, while the Houston Astros are a dominant force in Major League Baseball, with Minute Maid Park buzzing during baseball season. The Houston Rockets bring NBA excitement to the Toyota Center, and the city’s soccer fans rally behind the Houston Dynamo in MLS. Houston’s multicultural fan base and its successful sports franchises make the city a true hub for sports in Texas.

Maxio’s 2024 Benchmarking Report with VP of Strategy Jon Cochrane

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Maxio’s 2024 Benchmarking Report with VP of Strategy Jon Cochrane

Maxio’s 2024 Benchmarking Report with VP of Strategy Jon Cochrane

In this episode, CJ sits down with Jon Cochrane, VP of Strategy at Maxio, to unpack the latest insights from Maxio’s newly released benchmarking report. Maxio, known for its industry-leading SaaS metrics and billing solutions, serves over 2,400 subscription customers. Jon and CJ dive into practical takeaways from the report, revealing the real rate at which companies are growing, among other insights. They discuss trends in pricing, usage-based versus subscription models, and sector-specific performance, noting which sectors have excelled and which are falling back. The conversation also touches on consumer sentiment and B2B market performance. In addition, they explore the concept of “founder mode,” introduced by Paul Graham, and its influence on growth and innovation. Jon and CJ share their unconventional career paths, comparing how their backgrounds have shaped their approaches. This episode is a must-listen for finance professionals seeking both data-driven insights and career advice.

If you’re looking for an ERP head to NetSuite: https://netsuite.com/metrics and get a customized KPI checklist.

SPONSORS:

NetSuite provides financial software for all your business needs. More than 38,000 thousand companies have already upgraded to NetSuite, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you’re looking for an ERP platform ✅ NetSuite: https://netsuite.com/metrics and get a customized KPI checklist. 

Maxio is the only billing and financial operations platform that was purpose built for B2B SaaS. They’re helping SaaS finance teams automate billing and revenue recognition, manage collections and payments, and put together investor grade reporting packages. 🚀 Request a demo at www.maxio.com/runthenumbers for 10% off your first year.

Leapfin is accounting automation software that automatically prepares and posts reliable journal entries. High-growth businesses like Reddit, Canva, and Seat Geek choose Leapfin to eliminate manual tasks, accelerate month-end close, and enable accounting leaders to provide faster insights to help their companies grow. To automatically standardize your revenue data with measurable business impact, check out leapfin.com today. 

Mercury is the fintech ambitious companies use for banking and all their financial workflows. With a powerful bank account at the center of their operations, companies can make better financial decisions and ensure that every dollar spent aligns with company priorities. That’s why over 100K startups choose Mercury to confidently run all their financial operations with the precision, control, and focus they need to operate at their best. Learn more at mercury.com.

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.

FOLLOW US ON X:

@cjgustafson222 (CJ)

CONNECT ON LINKEDIN:

https://www.linkedin.com/in/jonathandcochrane/ (Jon Cochrane)

TIMESTAMPS:
(00:00) Preview and Intro
(02:55) Sponsor – NetSuite | Maxio
(05:44) The VP of Strategy Role at Maxio
(06:43) Maxio’s New Benchmarking Report
(08:08) The Rate at Which Companies Are Growing
(09:02) Practical Takeaways Provided by the Report
(10:11) How Maxio Sourced the Data
(11:24) The Role of Consumer Sentiment
(16:41) Sponsor – Leapfin | Mercury
(18:35) Growth in Transportation and Supply Chain Tech
(22:02) Cyber Insurance and CYA for the CFO
(25:55) Invoicing: Subscription Versus Usage
(30:21) Ratio of Stage of Company to Size of Invoice
(32:57) Five-Year Planning and Average Deal Size
(35:40) Break Points in the Average Price Point
(39:07) Subscription Versus Usage for Early-Stage Businesses
(41:22) Moving from Subscription to Usage-Based or Vice Versa
(42:16) The Path from Accountant to CFO
(50:07) Surprising Stories Though from Jon’s Audit Career
(53:24) Founder Mode
(56:56) Wrap