Post by Admin/YBB on Dec 21, 2020 21:04:35 GMT -6
Pg 7, Up and Down Wall Street: Dual record highs – for the stock market and for Covid-19 cases and deaths. Much of 2021 returns may have been pulled forward by this market. Institutional cash is the lowest since 2013. Staying invested with appropriate allocations should work but moderate expectations. Reopening trades with cyclicals may be more profitable than crowded tech and work-from-home [WFH] trades. Shorting dollar to buy Bitcoins may be stretched already. Individual trading in stocks and options has increased significantly and that may be from Dunning-Kruger Effect that says people are overconfident but are not aware of this. Zero-commission trading with apps adds fun factor for people at home.
The Fed promised to continue easy money policies and indicated that it is not concerned yet with high stock P/Es. Fed policies are more favorable to borrowers. With $18 trillion in bonds globally at negative yields, investors are forced to take more risks. Consider replacing stocks with long-term calls; pair with selling puts to reduce costs. Other ideas include mREITs [MORT, etc], muni CEFs and gold [for hedging]. Risks: Big techs haven’t discounted regulatory risks they face in the US, EU and China; high institutional consensus on US and EM equities that leaves little room for errors; new Covid-19 strains emerging; serious side effects of Covid-19 vaccines; high refusal rates for vaccinations [current indications 34%].
Pg 11, Streetwise: Stocks with big growth dreams/potential in 2021 are online gaming and gambling DraftKings/DKNG and payment aggregator and processor Square/SQ.
[Due to post length limitation, Up and Down Wall Street, Streetwise and Cover Story (now only in online designation) that are in Part 1 won’t be repeated in Part 2.]
Pg 12-13: NBA season begins on Tuesday.
Combined video and chat Glip from cloud-based communications company RingCentral/RNG is taking on Zoom/ZM, Webex/CSCO, Teams/MSFT, Hangouts/GOOGL, WORK [bought by CRM].
Walmart/WMT has a pilot program using Gatik autonomous trucks. It has partnered with social-media app TikTok, launched subscription service Walmart+, partnered with SHOP, invested in online retailer Flipkart [India].
Data this week: Consumer confidence, existing home sales, Richmond Fed manufacturing survey on Tuesday; personal income & consumption, new home sales, durable goods orders on Wednesday.
Closed: US stocks close early at 1 PM Eastern and bonds at 2 PM on Thursday. All global markets closed on Friday, December 25.
Bullish: Comcast [CMCSA; yield 1.8%; high debt but declining; EBITDA down sharply due to Covid-19; a good reopening play; businesses include broadband (Xfinity), TV (NBC, Sky), film studios (DreamWorks, etc), streaming (Peacock), theme parks (Universal); conglomerate discount; dual-class stock allows CEO Roberts to control 33% of voting power; activist Peltz/Trian owns 0.3%; breakup or major restructuring unlikely; pg 19].
Bearish: See other stories.
Pg 14: There may be consolidation among regional banks. Interest rates will remain low and financial technology is becoming complex and expensive. Already announced deals are HBAN + TCF, FCNCA + CIT, PNC + BBVA. Acquisition targets include RF, CADE, etc. Acquirers include PB, BXS, etc.
Pg 14: Robinhood IPO may be in 2021 at about $20 billion valuation. The commission-free online/app broker is growing fast, has 13 million customers, $1 billion in revenues and no profits. It has regulatory clouds related to fiduciary rule [it inappropriately approved investors for aggressive trading, especially options] and large payments for order flows [that result in poor trade executions; 80% of its revenues]. It may diversify into advisory services and cash management, but will its hyper-trading clients stay?
Pg 23: Bitcoin tripled to 23,000+ in 2020. Apps [Robinhood, Coinbase, Cash App/SQ] and online services [PYPL] are making investing and using cryptocurrencies easy but beware of high fees [up to 2%] and bid-ask spreads. Each site has restriction on what one can do with cryptocurrencies. There are Bitcoin ATMs. Bitcoin trade on loosely regulated exchanges 24/7. But there is limited access to Bitcoin in traditional brokerages and there is no Bitcoin ETF [due to SEC reluctance]. There are Grayscale Bitcoin Trust/GBTC and Bitwise 10 Crypto Index/BITW on pink-sheets/OTC. Crypto hedge-funds include Pantera Bitcoin Fund, etc.
Pg 31: Barron’s top 10 stocks for 2021 [value tilt]: GOOGL, AAPL, BRK-A/B, KO, ETN, GS, GHC, MSGE, MRK, NEM. [It is noted that its 2020 list with value tilt was very disappointing]
Pg 35: 2021 may be challenging for techs. With mass vaccinations, rotation from growth to cyclicals will follow. Some growth areas will remain strong [cloud, 5G, EVs] but investors will pay more attention to valuations. Attractive areas: IPOs; cloud; reopening trades; M&A; selected big techs [MSFT, AMZN].
Pg 36: Christopher Lees and Nudgem Richyal comanage global equity JOGEX with eye on upside/downside capture ratio [U/D CR]. Fund is concentrated and looks for businesses in tough sectors or regions. They exploit changes that often come quickly. Portfolio has 3 themes now, digitization, deglobalization, decarbonization. They made several adjustments in 2020 to respond to Covid-19.
Pg 38: Recent high-profile changes in SP500 by S&P Dow Jones [in TSLA, out AIV] would revive debate about major indexers. MSCI will adjust some of its indexes to conform with the US blacklisting of several Chinese firms. Nonfinancial Nasdaq 100 [QQQ] is also reconstituting and will include utility AEP after it recently switched to Nasdaq – that may be stretching its slogan “innovators on the world stage” quite a bit.
Pg 38: Dividends and buybacks will return in 2021. Dividend with dividend-growth will remain attractive. REITs should do better. FWIW, despite early fears, 2020 had only a minor decline in SP500 dividends; some companies that cut or suspended dividends have announced resumptions, some at lower levels.
Pg 39: After some initial bumps, 2020s should be good years. A lot would depend on Covid-19, its treatment(s) and related monetary and fiscal responses. For now, the US households are flush with cash due to the earlier CARES Act and lower opportunities to spend. They have paid down debt, bought durable household goods [most are one-time purchases], put money into bank deposits and money-market funds. Their home equity and investment portfolios have gone up. Much of the business sector is also in good shape – they have raised funds from stock and/or bond issuances and put excess cash into money-market funds [almost 30-35% of AUM]. New business formations are up. Risks include Covid-19 surges; small business failures; high unemployment; widening disparity between haves and have nots. Millions are struggling with rents/mortgages and food. The Government has to provide transitional support through monetary and fiscal policies.
Barry Ritholtz [blog The Big Picture] and Josh Brown [blog The Reformed Broker], Ritholtz Wealth Management. It is hard to be successful stock-picker, trader, market-timer, despite what apps like Robinhood may lead one to believe. Also, beware of market predictions. Their firm uses mostly low-cost index mutual funds and ETFs and have recently started using direct-indexing [in-house customized indexes based on Canvas from O’Shaughnessy Asset Management]; some active bond funds and specialty funds are also used. Market in 2020 has acted outrageously and has confounded most experts; pandemic, the Fed, early CARES Act, millions trading from home, all did their part. The firm doesn’t do much marketing, instead, clients find it.
Pg 42: Tony James, Blackstone/BX and Hartley Rogers, Hamilton Lane. Many retirement plans do not allow private-equity investments that may be highly profitable but are risky and illiquid. DOL issued new rules in June 2020 that allow this. Authors are leaders at private-equity firms and argue in favor of private-equity with proper safeguards and professional management. They next suggest that this can be done better in a national retirement savings plan similar to superannuation funds in Australia and other countries and suggest a complete overhaul of the US retirement system. [There are many good reasons to overhaul the US retirement system, but to do it just to permit private-equity? May be somethings were lost in heavy editing to fit the piece in the column space]
Extras from online Friday that didn’t make the paper version.
None
The Fed promised to continue easy money policies and indicated that it is not concerned yet with high stock P/Es. Fed policies are more favorable to borrowers. With $18 trillion in bonds globally at negative yields, investors are forced to take more risks. Consider replacing stocks with long-term calls; pair with selling puts to reduce costs. Other ideas include mREITs [MORT, etc], muni CEFs and gold [for hedging]. Risks: Big techs haven’t discounted regulatory risks they face in the US, EU and China; high institutional consensus on US and EM equities that leaves little room for errors; new Covid-19 strains emerging; serious side effects of Covid-19 vaccines; high refusal rates for vaccinations [current indications 34%].
Pg 11, Streetwise: Stocks with big growth dreams/potential in 2021 are online gaming and gambling DraftKings/DKNG and payment aggregator and processor Square/SQ.
[Due to post length limitation, Up and Down Wall Street, Streetwise and Cover Story (now only in online designation) that are in Part 1 won’t be repeated in Part 2.]
Pg 12-13: NBA season begins on Tuesday.
Combined video and chat Glip from cloud-based communications company RingCentral/RNG is taking on Zoom/ZM, Webex/CSCO, Teams/MSFT, Hangouts/GOOGL, WORK [bought by CRM].
Walmart/WMT has a pilot program using Gatik autonomous trucks. It has partnered with social-media app TikTok, launched subscription service Walmart+, partnered with SHOP, invested in online retailer Flipkart [India].
Data this week: Consumer confidence, existing home sales, Richmond Fed manufacturing survey on Tuesday; personal income & consumption, new home sales, durable goods orders on Wednesday.
Closed: US stocks close early at 1 PM Eastern and bonds at 2 PM on Thursday. All global markets closed on Friday, December 25.
Bullish: Comcast [CMCSA; yield 1.8%; high debt but declining; EBITDA down sharply due to Covid-19; a good reopening play; businesses include broadband (Xfinity), TV (NBC, Sky), film studios (DreamWorks, etc), streaming (Peacock), theme parks (Universal); conglomerate discount; dual-class stock allows CEO Roberts to control 33% of voting power; activist Peltz/Trian owns 0.3%; breakup or major restructuring unlikely; pg 19].
Bearish: See other stories.
Pg 14: There may be consolidation among regional banks. Interest rates will remain low and financial technology is becoming complex and expensive. Already announced deals are HBAN + TCF, FCNCA + CIT, PNC + BBVA. Acquisition targets include RF, CADE, etc. Acquirers include PB, BXS, etc.
Pg 14: Robinhood IPO may be in 2021 at about $20 billion valuation. The commission-free online/app broker is growing fast, has 13 million customers, $1 billion in revenues and no profits. It has regulatory clouds related to fiduciary rule [it inappropriately approved investors for aggressive trading, especially options] and large payments for order flows [that result in poor trade executions; 80% of its revenues]. It may diversify into advisory services and cash management, but will its hyper-trading clients stay?
Pg 23: Bitcoin tripled to 23,000+ in 2020. Apps [Robinhood, Coinbase, Cash App/SQ] and online services [PYPL] are making investing and using cryptocurrencies easy but beware of high fees [up to 2%] and bid-ask spreads. Each site has restriction on what one can do with cryptocurrencies. There are Bitcoin ATMs. Bitcoin trade on loosely regulated exchanges 24/7. But there is limited access to Bitcoin in traditional brokerages and there is no Bitcoin ETF [due to SEC reluctance]. There are Grayscale Bitcoin Trust/GBTC and Bitwise 10 Crypto Index/BITW on pink-sheets/OTC. Crypto hedge-funds include Pantera Bitcoin Fund, etc.
Pg 31: Barron’s top 10 stocks for 2021 [value tilt]: GOOGL, AAPL, BRK-A/B, KO, ETN, GS, GHC, MSGE, MRK, NEM. [It is noted that its 2020 list with value tilt was very disappointing]
Pg 35: 2021 may be challenging for techs. With mass vaccinations, rotation from growth to cyclicals will follow. Some growth areas will remain strong [cloud, 5G, EVs] but investors will pay more attention to valuations. Attractive areas: IPOs; cloud; reopening trades; M&A; selected big techs [MSFT, AMZN].
Pg 36: Christopher Lees and Nudgem Richyal comanage global equity JOGEX with eye on upside/downside capture ratio [U/D CR]. Fund is concentrated and looks for businesses in tough sectors or regions. They exploit changes that often come quickly. Portfolio has 3 themes now, digitization, deglobalization, decarbonization. They made several adjustments in 2020 to respond to Covid-19.
Pg 38: Recent high-profile changes in SP500 by S&P Dow Jones [in TSLA, out AIV] would revive debate about major indexers. MSCI will adjust some of its indexes to conform with the US blacklisting of several Chinese firms. Nonfinancial Nasdaq 100 [QQQ] is also reconstituting and will include utility AEP after it recently switched to Nasdaq – that may be stretching its slogan “innovators on the world stage” quite a bit.
Pg 38: Dividends and buybacks will return in 2021. Dividend with dividend-growth will remain attractive. REITs should do better. FWIW, despite early fears, 2020 had only a minor decline in SP500 dividends; some companies that cut or suspended dividends have announced resumptions, some at lower levels.
Pg 39: After some initial bumps, 2020s should be good years. A lot would depend on Covid-19, its treatment(s) and related monetary and fiscal responses. For now, the US households are flush with cash due to the earlier CARES Act and lower opportunities to spend. They have paid down debt, bought durable household goods [most are one-time purchases], put money into bank deposits and money-market funds. Their home equity and investment portfolios have gone up. Much of the business sector is also in good shape – they have raised funds from stock and/or bond issuances and put excess cash into money-market funds [almost 30-35% of AUM]. New business formations are up. Risks include Covid-19 surges; small business failures; high unemployment; widening disparity between haves and have nots. Millions are struggling with rents/mortgages and food. The Government has to provide transitional support through monetary and fiscal policies.
Barry Ritholtz [blog The Big Picture] and Josh Brown [blog The Reformed Broker], Ritholtz Wealth Management. It is hard to be successful stock-picker, trader, market-timer, despite what apps like Robinhood may lead one to believe. Also, beware of market predictions. Their firm uses mostly low-cost index mutual funds and ETFs and have recently started using direct-indexing [in-house customized indexes based on Canvas from O’Shaughnessy Asset Management]; some active bond funds and specialty funds are also used. Market in 2020 has acted outrageously and has confounded most experts; pandemic, the Fed, early CARES Act, millions trading from home, all did their part. The firm doesn’t do much marketing, instead, clients find it.
Pg 42: Tony James, Blackstone/BX and Hartley Rogers, Hamilton Lane. Many retirement plans do not allow private-equity investments that may be highly profitable but are risky and illiquid. DOL issued new rules in June 2020 that allow this. Authors are leaders at private-equity firms and argue in favor of private-equity with proper safeguards and professional management. They next suggest that this can be done better in a national retirement savings plan similar to superannuation funds in Australia and other countries and suggest a complete overhaul of the US retirement system. [There are many good reasons to overhaul the US retirement system, but to do it just to permit private-equity? May be somethings were lost in heavy editing to fit the piece in the column space]
Extras from online Friday that didn’t make the paper version.
None