Grow Your Portfolio the Intelligent Way

Let’s Quarantine Like Isaac Newton 

By Jim Woods

You’re locked in, shut in and shut down — welcome to the quarantine club. And in this club, membership requirements basically consist of being an American during the age of COVID-19. So, what are you doing during this quarantine? Are you binge watching Netflix, lying around on the couch eating junk food and drinking more adult beverages than you should? Or, are you using this time to organize your life, read more books, spend more quality time with family and learn a new skill?

The truth for most of us is that we are doing a little bit of all of the above. Yet, what if we could really use this quarantine as a time to become great and to offer the world the best within us? What if there was an ultimate example of a person we all could aspire to that used his quarantine time to reinvent our understanding of the world?

What if we could quarantine like Isaac Newton? 

The year was 1665. That also was the year that bubonic plague ravaged England, extinguishing an estimated 100,000 lives. It’s also the year that Isaac Newton, then just a 24-year-old student at Cambridge University, was forced to leave campus and enter quarantine at his childhood home in the English countryside.

That quarantine lasted more than a year, but what Newton accomplished during that period is considered one of the world’s greatest feats of human achievement. In fact, this period has been called “Annus Mirabilis,” or the “Year of Wonders.”

And just what were those wonders? (Warning, do not attempt to compare your accomplishments to these, as doing so will no doubt make you feel like a total slacker).

He invented the modern field of optics. Conducting experiments with prisms, Newton was able to demonstrate that white light was made up of component colors we see in a common rainbow. At the time, it was thought that a prism altered light’s color. But Newton showed light was made up of these component colors. 

He identified the Laws of Motion and Universal Gravitation. The genesis for these theories came from Newton’s attempt to answer the question, “How does the universe work?” Here is where Newton’s apple comes in, as he once recounted the story of watching an apple fall from the tree outside his window and wondering why it fell to the ground and why it didn’t ascend into the sky. This observation ultimately resulted in the theory of Universal Gravitation, i.e. everything in existence is attracted to everything else — and that this force ties the universe together.

He invented calculus. I know that many high school students hate him for doing so, but in addition to greatly furthering the field of optics and identifying the laws of motion and gravity, Newton also wrote several papers on mathematical theory on what was then called “fluxions.” Those papers later became the base of the field of mathematical study known as calculus. 

Now, of course, I am not suggesting we can duplicate the magnitude of Newton’s achievements during our hopefully much shorter COVID-19 quarantine. Yet what I am suggesting is that we use our quarantine time to attempt to achieve what we haven’t been able to in the absence of our usual life distractions. 

In my own case, I have used this time to focus my professional life on identifying the investable sectors, stocks and exchange-traded funds (ETFs) that I think will thrive during this pandemic, and also when the economy returns to “normal.” In my recreational life, I have been playing piano, composing music and writing songs more than I have at any time in recent years. There’s something soothing about creating art during this lockdown, so if you’ve ever been inclined toward developing your artistic side, I submit to you that now is a fantastic time to do so. 

Finally, I understand that now is a time for sadness and for pain. This viral quarantine is something that no one really has a sense of how best to cope with, so we are all just winging it the best way we know how. Yet what we can do is what we should do, and that is to try to use this time to help ourselves be the very best humans we can be. 

So, starting right now, think of ways you can unlock your potential. Think of ways you can enhance your flourishing, and by extension, ways that you can help the world to flourish along with you. 

Be creative, be productive and be inspiring. Channel your inner Isaac Newton and focus your mind on achievement. Make your COVID-19 quarantine your very own year of wonder. 

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ETF Talk: Harnessing Cloud Computing

(Note: Today’s ETF Talk is the third in a series of funds designed to profit from the “stay-at-home” trend in COVID-19 America.)

While Steve Wozniak, an Apple (NASDAQ:AAPL) co-founder, once remarked that one should “never trust a computer you can’t throw out a window,” cloud computing is augmenting business performance.

Even though the market has recovered somewhat from the coronavirus-related crash in the middle of March and some countries around the world have begun to initiate plans to reopen their respective economies, the end of the epidemic-related lockdown remains uncertain. As a result, the focus of many investors has pivoted towards stocks and sectors that are doing well, despite the economic shutdown.

One such sector potentially could be cloud computing, especially since the coronavirus has shifted more and more white-collar work away from the offices and toward long-distance teleworking. Cloud computing software, including Microsoft’s Azure platform and Google’s Google Drive, help make teleworking feasible by providing employees with access to their work for sharing with their colleagues as never before.

The First Trust Cloud Computing ETF (NASDAQ: SKYY) is an ETF that tracks an index of companies that are involved in the cloud computing industry. The stocks are ranked by infrastructure, platform and software. A company’s weight in the index is its score divided by the sum of all scores. As a result, this ETF’s managers use no other screens and do not attempt to predict which cloud computing company is going to come out on top in the sector.

Some of this fund’s top holdings include Amazon.com Inc. (NASDAQ:AMZN), Microsoft Corp. (NASDAQ:MSFT), Alphabet Inc. Class A (NASDAQ:GOOGL), Oracle Corporation (NYSE:ORCL), Shopify, Inc. Class A (NYSE:SHOP), MongoDB, Inc. Class A (NASDAQ:MDB), Citrix Systems, Inc. (NASDAQ:CTXS) and Alibaba Group Holding Ltd. (NYSE:BABA).

This fund’s performance has risen after the recent market downslide. As of April 24, 2020, SKYY has been up 14.76% over the past month and down 5.73% for the past three months. It is currently up 1.08% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $2.86 billion in assets under management and has an expense ratio of 0.60%, meaning that it is more expensive to hold in comparison to many other exchange-traded funds.

In short, while SKYY does provide an investor with a chance to profit from the world of cloud computing, the sector may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

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What Makes A Renaissance Man Tick?

At the risk of sounding embarrassingly self-serving, I’ll first let you know that many readers and listeners to my podcast have asked me how I came to be called “The Renaissance Man.”

Well, it’s a nickname that was given to me by my friends in college, and ever since then, the moniker has just stuck. But what is a Renaissance Man, how does one become a Renaissance Man and what is it that makes a Renaissance Man “tick”?

In the new episode of the Way of the Renaissance Man podcast, the tables get turned, as I go from interviewer to interviewee, courtesy of my friends and “Position To Win” authors John Paul Mendocha and Gabe Bautista.

In this revealing interview, I talk about my educational and professional background, and how my experiences have shaped my approach to life. I also tell you why I love doing so many different things.

Most importantly, you’ll discover why the key to becoming a Renaissance Man is to focus on the ideas you love and then integrate those ideas into action. The combination of focus and integration is what allows one to celebrate those integrated ideas in action.

If you’ve ever wanted to find out what makes a Renaissance Man tick, then this special reprise interview from the “Position To Win” podcast is what you’ve been looking for.

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In case you missed it

Happiness in the Age of COVID-19

How does one find happiness in the age of COVID-19? I mean, if you are even the slightest sort of thinking and feeling person, you have no doubt been more than just a little sad these days, given that we’re living during the worst global pandemic in more than a century.

Yet, if you aspire to be the rational hero of your own life, as I do, then you must not let the doom and gloom defeat your spirit.

The great American novelist Nathaniel Hawthorne (the author of The Scarlet Letter and The House of the Seven Gables) once said, “Happiness is a butterfly, which, when pursued, is always just beyond your grasp, but which, if you will sit down quietly, may alight upon you.”

Well, for many of us, we’ve had a lot of time to sit down quietly and reflect on our lives during this lockdown. For some, that can be a discomforting proposition. Unfortunately, when many people look inside themselves, they don’t much like what they see. That’s one reason why drug and alcohol addiction relapses are increasing. However, for those of us who seek the path of greater happiness despite this viral cloud, there are many tools at our disposal.

One of my favorite tools is the work of my friend, the brilliant psychologist Dr. Joel Wade. I call Dr. Wade the “resident guru of happiness” on my “Way of the Renaissance Man” podcast. Dr. Wade has been a guest on the show multiple times, and he always delivers practical techniques on how to increase happiness.

In his latest podcast appearance, Dr. Wade told me about a few techniques he recommends on how to focus your mind on what actually makes you happy, how to look at a problem from “the outside” and why focusing on the negative is not a good problem-solving technique. I highly recommend Dr. Wade’s work, especially his superb book, “The Virtue of Happiness.” You can check out his website at DrJoelWade.com.

Another interesting voice in this relatively new, yet eminently important field of “happiness” research is Arthur C. Brooks. A professor at the Kennedy School at Harvard University, and a senior fellow at the Harvard Business School, Brooks just debuted a column on the subject in The Atlantic. The new column is titled, “How to Build a Life,” which Brooks and Brooks describes it as a column that “aims to give you the tools you need to construct a life that feels whole and meaningful.”

In the first column, “The Three Equations for a Happy Life, Even During a Pandemic,” Brooks argues, correctly in my opinion, that because of the involuntary quiet caused by the COVID-19 quarantine, many of us have sensed an opportunity to think a little more deeply about life. “In our go-go-go world, we rarely get the chance to stop and consider the big drivers of our happiness and our sense of purpose,” Brooks writes.

In the column, which I definitely recommend, Brooks outlines what he calls his “three equations for well-being.” These can help you start managing your own happiness more proactively.

Equation One is: SUBJECTIVE WELL-BEING = GENES + CIRCUMSTANCES + HABITS

While Brooks says that he dislikes the idea of anything about his character or personality being genetically determined (as do I), he does say that the research is clear that “there is a huge genetic component in determining your ‘set point’ for subjective well-being, the baseline you always seem to return to after events sway your mood.”

Anecdotally, I find this to be true. One way to think about this is to consider the highest and lowest points in your life. Unfortunately, the happiness of an extreme high always seems to fade far too soon. Conversely, the relative evanescence of a broken heart also tends to fade in the same swift fashion. The point here is that, as humans, we have a tendency toward a return to stasis and an ability to get back to our subjective well-being set point regardless of the impact of major negative events such as COVID-19.

Equation Two is: HABITS = FAITH + FAMILY + FRIENDS + WORK

The key takeaway from this equation is, as Brooks puts it, “Enduring happiness comes from human relationships, productive work, and the transcendental elements of life.” And while habits such as faith, family, friends and work can be defined differently by everyone, Brooks argues that a healthy balance of each is what matters.

“Equation two is especially worth considering during our pandemic isolation. Ask yourself: Is my happiness portfolio balanced across these four accounts? Do I need to move some things around? Are there habits I can change during this pause?” I think this is a great exercise to conduct at any time in your life, but especially now. And if you find yourself out of balance, then make the necessary alterations.

Equation Three is: SATISFACTION = WHAT YOU HAVE ÷ WHAT YOU WANT

This is a tough one to navigate for most of us, especially for me. The reason why is that I have a voracious appetite for life experiences and for the things and the people that allow me to better celebrate my finite existence. The problem with this kind of appetite is that “what you want” can easily overshadow the “what you have.”

I try not to get caught up in trying to increase what I have to keep up with what I want, but it’s admittedly difficult. According to Brooks, “Many of us go about our lives desperately trying to increase the numerator of Equation Three; we try to achieve higher levels of satisfaction by increasing what we have — by working, spending, working, spending, and on and on. But the hedonic treadmill makes this pure futility. Satisfaction will always escape our grasp.”

Fortunately, over the past decade I’ve become increasingly grateful for my good fortune and for the things and people that enhance my life. And I’ve found that the more gratitude I have for what I’ve got, the happier I am — and the happier I am, the more I am grateful. Think of this as the anti-hedonistic approach to life and an approach that has served me well in recent years.

So, if you are feeling understandably unhappy in this age of COVID-19, why not take a little time to reflect on what happiness really is and how you can construct a life of purpose, virtue and flourishing?

Man is a being of self-made soul, so go out and make your soul as happy as it can be.

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Conrad’s Work Wisdom

“A man is a worker. If he is not that he is nothing.”

–Joseph Conrad

The country needs to get back to work. Not only because our economy needs to restart so that out-of-work Americans can earn a living again, but also because work, i.e. productive achievement, is a critical need for the human psyche. So, the sooner we can all get back to work, the sooner our national psyche can heal. 

Wisdom about money, investing and life can be found anywhere. If you have a good quote that you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my newsletters, seminars or anything else. Click here to ask Jim.

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