You now have yet another reason to consolidate your assets with my favored Fidelity Investments: Fidelity takes protecting your most valuable financial information seriously. Yesterday, it was announced that Fidelity is spinning off software start-up Akoya, a platform that gives customers more control over how their bank-account information is shared. Without a service like Akoya, apps can scrape your account gaining access to information you may wish to keep private. “The platform,” explains Justin Baer in the WSJ, “aims to put an end to ‘screen scraping,’ the process where the app … [Read more...]
Is Commission Free Trading Feeding the Frenzy in Speculative Stocks?
Lu Wang and Vildana Hajric suggest at Bloomberg that commission free trades are driving an explosion of trading from retail investors. They write: Their fingerprints are on Apple Inc.’s staggering rally. They piled into Tesla Inc. as it tripled, and turned speculative fliers like Virgin Galactic Holdings Inc. into some of the most heavily traded shares in the country. Why the enthusiasm? Some see a link to decisions by brokerages to cut commissions on trades to nothing. While it’s tough to know what’s causing what -- bull markets are fueled by new converts but also lure them -- trading … [Read more...]
Is there a Bubble in Socially Responsible Investing (ESG)?
Patrick Temple-West reports on the wide premium being given to the best ranked "environmental, social and governance" stocks. He writes: Companies with the best environmental, social and governance scores have opened up what one analyst calls a “monstrous” valuation premium, in a sign of rampant demand for the hot investment theme. Investors last year ploughed a record $21bn into socially-responsible investment funds in the US, almost quadrupling the rate of inflows in 2018, according to Morningstar, the data provider. Now, companies with strong ESG credentials are starting to show the … [Read more...]
A Bird in the Bush is Worth Two in the Hand
Yeah, you read that right. In today’s stock market where tall tales can ignite a speculative frenzy in individual names reminiscent of the dotcom bubble, companies that return cash to shareholders have been eschewed. Generating revenue and profits and paying dividends is apparently out of fashion in 2020. The chart below shows the YTD performance of three different groups in the Russell 1000 index (largest 1000 stocks). The first group is the highest 50% of dividend payers not counting companies that don’t pay dividends. The second group is the bottom 50% of dividend payers not counting … [Read more...]
Americans Flee the Big City Blues
According to the scholar Richard Florida, "the great urban revival is 'over.'" Americans are leaving "luxury" cities like New York, Los Angeles, and Chicago. Joel Kotkin writes at New Geography: Since 2010, urban inner rings, including central business districts, accounted for barely 10 percent of population growth in the nation’s 53 largest metropolitan areas. More revealing still, the country’s three largest metropolitan areas — New York, Los Angeles, and Chicago—are now losing population. Since 2012, suburbs and exurbs, which have seven times as many people as the core, are again growing … [Read more...]
Tech Bubble Echos in the S&P 500 Twenty Years Later
Twenty years after the Tech Bubble decimated investors' savings, there are echos of it in the S&P 500. Reuters' Noel Randewich and lewis Krauskopf report: At the height of the dot-com era, technology stocks accounted for over 35% of the S&P 500’s value. Today, the tech sector accounts for about 25% of S&P 500 market capitalization, according to Refinitiv Datastream. But combining the tech sector with the communications sector, which includes Internet-related companies like Alphabet, Facebook and Netflix (NFLX.O), the group accounts for 35% of the S&P 500. There is growing … [Read more...]
Germany Preparing for Hit from Coronavirus
Myles McCormick explains in the FT that Germany, Europe's largest economy, is preparing to take a hit from the effects of the coronavirus on China's economy. He writes: Investor sentiment in Germany dropped sharply in February as the effects of the coronavirus outbreak weighed on exporters, a survey revealed, adding to an increasingly gloomy picture for Europe’s biggest economy. The Zew survey of financial market experts found that sentiment about the outlook for the German economy fell 18 points this month to a reading of 8.7. This is well below January’s score of 26.7 and significantly … [Read more...]
Will Democrats Cripple Silicon Valley Growth Machine?
For decades Silicon Valley has been America's growth engine, but increasingly, Democratic candidates seem eager to cripple the tech industry in the name of fighting income inequality. Kiran Stacey and Kadhim Shubber report in FT: The race for the Democratic presidential nomination has fuelled trepidation in Silicon Valley, as arguments for breaking up the world’s largest tech companies gain traction among the field of candidates. Both Bernie Sanders, who won the New Hampshire primary, and his fellow progressive Elizabeth Warren, have called for a break-up of America’s largest technology … [Read more...]
You May Be Feeling Uneasy with Growth Stocks: You’re Not Alone
Some investors "could take Apple’s warning on Monday that it won’t meet revenue expectations for the current quarter as a sign that the growth stock run is over," notes Gunjan Banerji in The Wall Street Journal. Over the long-term, he continues, value stocks have outperformed growth stocks. He writes: As they grapple with a murky outlook, investors will turn their attention this week to the Fed’s latest meeting minutes and fresh reads on manufacturing. Meanwhile, results from Walmart Inc. on Tuesday will offer new insight into the health of the consumer. The run in value stocks “was short … [Read more...]
The Fed is Slowly Strangling Insurance Industry Profits
The prolonged low interest rates fostered by the Federal Reserve are slowly strangling the insurance industry. Nicole Friedman and Leslie Scism report for The Wall Street Journal: Insurance is a cyclical industry. During periods without catastrophic claims, insurers compete for customers by lowering prices. Following large natural disasters or other big losses, they typically raise prices or reduce exposure to certain risks. The current price increases are partly due to hurricanes, wildfires and other catastrophes in 2017 and 2018 that cost the global industry more than $200 … [Read more...]
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