Retail investors flocked to markets during coronavirus volatility. Many were lured to trading by platforms like Robinhood, offering "free" trades. It turns out that trading still comes at a cost. Richard Henderson reports for the Financial Times: Citadel Securities and its majority owner Ken Griffin are among the big winners from a boom in retail investing, cashing in on the zero-fee trading that has lured huge numbers of first-time investors to the US stock market. Chicago-based Citadel Securities accounts for 40 of every 100 shares traded by individual investors in the US, making it the … [Read more...]
Trading App Throws Jet Fuel on the Speculative Fire
The trading app, Robinhood, which has become a sensation among young (and some old) retail investors, is "throwing jet fuel on the speculative fires of coronavirus-era equity markets." That's according to Annie Mass and Sophie Alexander who write in Bloomberg: Rich hedge fund managers are talking about it. So are not-so-rich millennials. And fast-twitch gamers, and bored sports fans and -- in all likelihood -- some 15-year-olds you know. The “it” is Robinhood Financial’s trading app, which is throwing jet fuel on the speculative fires of coronavirus-era equity markets. Not since the … [Read more...]
Retail Investors Are Invading the Stock Market
Bloomberg's Sarah Ponczek reports on the surge of retail investing in stock markets. She writes: Everyone knows retail investors dived back into the market as stocks rebounded. Now, evidence is starting to build that their buying has become a key driver of the beaten-down shares that are dominating the rally. Companies that have been soaring are in many cases the same firms that have seen skyrocketing interest at brokerages popular with individual investors. Turnover is surging: average daily volume for these stocks has occasionally been 30 times what it was in 2019. Maybe small-time … [Read more...]
Harley-Davidson in Transition, Probably a Takeover Target
Debbie and I have put over 100,000 miles on our Harleys riding across the United States and Canada. My riding days are behind me, but as a devotee, I keep an eye on Harley’s business, as I have for years. If you’re one of my long-time readers, you know Harley was Young Research’s stock of the decade in the 1990s. In June 1998, I and millions of Harley-Davidson fans celebrated the company’s 95tht anniversary. I wrote then: For about $18,000, you can be astride a classic American cruiser, the Harley-Davidson Road King—if you can get one. This summer Debbie and I will ride our Harleys … [Read more...]
Get Ready: Your Survival Guy’s Guide to the Second Wave
Coronavirus Infects Stock Market: Part LIV You read the news: “Coronavirus reaches 100,000 deaths,” streaming across all forms of media yesterday and yet, not a peep just a couple of years ago when the flu killed 80,000. It’s like the media is taking a victory lap, cheering the virus numbers higher. A group of restaurants and bars in Rhode Island want government money to stay closed, claiming it’s stressful being open. Imagine all the pushy parents wringing their hands because little Jonny can’t play travel sports this summer. Talk about an aggressive group. They along with the … [Read more...]
Big Government Politics on the Shores of Newport and Beyond
Coronavirus Infects Stock Market: Part LIII Blue state governors have completely dropped the ball in the name of science, killing businesses and creating new health problems like anxiety and depression. In blue Rhode Island, we have our governor patting us on the head after a “successful” Memorial Day weekend. “The good news is, overwhelmingly, people were out and about doing the right thing,” she said during her daily news briefing. Tonight’s Newport City Council meeting will hear a resolution to require all pedestrians to wear masks on certain streets at all hours of the day. Councilwoman … [Read more...]
American Businesses Show the Way Forward Where Blue-State Politicians Fail
Coronavirus Infects Stock Market: Part LII During the coronavirus outbreak, the difference between heavy-handed local government, and private enterprises has been plain. Businesses are incentivized to protect their most important assets, their employees. Government officials are protecting their own reputations. In the early days of the virus, Leupold, an American business serving police departments and America's military elite took smart steps to protect employees. At The Federalist, Madeline Osburn reports on Leupold's response in an interview with company CEO Bruce Pettet. … [Read more...]
GMO on the Risk-Reward in Stocks and Competitive Capitalism
Jeremy Grantham’s GMO often offers useful insight. GMO’s head of asset allocation was interviewed by Barron’s recently. Below are some of the highlights. Emphasis is ours. Barron’s: You just more than halved the stock allocation in your flagship funds. What’s worrying you? Ben Inker: We were getting very nervous about how much the markets had gone up. The risk/reward trade-off for equities had really gotten a lot worse than it was in March. Value stocks at this point are trading at some of the widest spreads we have ever seen. The optimistic scenario is: We get a vaccine relatively … [Read more...]
“The Losses are Taking a Toll on Their Health”
Coronavirus Infects Stock Market: Part LI “You know what’s crazy,” a client told me yesterday, “is that investors spend more time buying a grill than picking a financial planner.” Friends of his are in deep financial trouble. The virus has made it even worse, and the losses are taking a toll on their health. Another client, who’s in my business, brings bond deals to market. He said every deal is oversubscribed with demand through the roof. We talked about how the retail investor has no chance to get in on these deals. When it comes to your bonds, you don’t want to be a retail buyer like … [Read more...]
Is There a Bubble in Growth Stocks?
Growth stocks are beating value stocks by the widest margin since the dotcom bubble. The top 5 S&P 500 stocks (all growth-oriented technology companies) now account for over 20% of the index—the highest weighting for the Top 5 in the S&P 500 in at least the last three decades. What’s more, for the first time in a decade, a net 20% of fund managers are expecting growth stocks to outperform value stocks. Sounds like a good time to lean into value especially those value stocks that pay and increase their dividends regularly. The Wall Street Journal's Akane Otani reports: Growth … [Read more...]
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