It’s the second week of December and we’re already starting to see some new records in the stock market, all thanks to yesterday’s stock market performance.
Here are the most important numbers you need to know about…
- Dow Jones: +0.4%
- S&P 500: +0.3% (closing above 3,700 for the first time)
- NASDAQ: +0.5% (new closing record)
- Pfizer: +3.2% (new high over the past two years)
- BioNTech: +1.9%
But why would the stocks rise up on such a seemingly random day?
For starters, we have a series of good news from Pfizer regarding their COVID-19 vaccine candidate:
- Thursday marks the day when the FDA decides whether the vaccine will get emergency use approval
- A 90-year-old woman was the first person in the world to receive the COVID-19 vaccine, which was publicized on national television
- Preliminary data from their Phase III clinical trial shows that the vaccine is effective at preventing COVID-19 infection just 7 days after the first dose (out of a two-dose treatment)
In the meantime, it appears as if a small amount of progress has been made regarding negotiations for the second stimulus package.
Even though the total amount of $908 billion remains unchanged, it appears as if some areas have reached mutual consensus. One of such areas was the amount to be allocated to small business loans via the Paycheck Protection Program.
At the same time, there is a bipartisan effort happening to extend government spending for another week. This will allow the government to remain operational until December 18th before shutting down, rather than the current deadline of December 11th.
Then again… nothing is set in stone until President Trump puts his signature on the dotted line of the final proposal. It’s an extremely volatile situation and anything can happen between now and this Friday.
But all in all, Tuesday was a good day for the stock market. Gains were made and there is no reason – at least not so far – to anticipate that the record gains made in November won’t be maintained once 2020 comes to a close.
This is not investment advice on my part, but now would be a good time to keep your positions and celebrate the holidays as much as you can.
Reflect on all the ways in which you managed to survive the COVID-19 pandemic and the ensuing lockdowns. Be grateful for the fact that technology allows us to stay in touch with our family and friends. And most importantly, set some new personal finance goals for 2021.
What did YOU think about yesterday’s stock market performance? Will we keep making record gains for the final month of 2020, or are we due for a small crash? Reply to this newsletter and share your predictions with us!
Numerous Outages Across SEVERAL Trading Brokers Happened Yesterday
Another possible reason to stay out of active trading this month would be the recent outages that took place yesterday.
From The Financial Times:
“Interactive Brokers said it had experienced a ‘significant failure’ in a data storage system and it was working with a vendor on ‘analysis and recovery’… it expected services to be restored ‘promptly’ after an outage stretching over several hours.
Robinhood, which has become synonymous with the boom in retail trading this year, also endured an outage on its website and app that prevented clients from accessing their accounts. ‘This morning, some customers may have experienced a short disruption in trading due to a technical issue,’ the company said, adding that it was ‘now completely resolved.’”
Unfortunately, this is just one day among the several this calendar year where server crashes and outages took place. Other brokers such as TD Ameritrade, Fidelity, and Charles Schwab have also run into some unforeseen problems.
Even though trading volume has exploded this year, these outages are going to seriously bite these brokers in the ass. You can only screw up so many times and for so long before customers get fed up and switch platforms.
The fact of the matter is that these companies have had MONTHS to resolve these issues. And so far, they are doing a terrible job. It almost makes you want to get out of trading completely and just join the long-time investors who only touch their portfolios once a month (if at all)!
Could a Single ETF Leave You With a 7-Figure Retirement Portfolio?
The Motley Fool never ceases to amaze me with their extraordinary recommendations. And yesterday’s article penned by contributor Sam Swenson was no exception to this usual practice.
His claim: If you start investing in the Vanguard Small Cap Index ETF right now with a dollar-cost averaging strategy, you could end up with a very fruitful portfolio once you retire.
Here is how he makes the case for this index fund…
- The ETF deals with companies having a market capitalization of $300 million to $2 billion (i.e. small cap companies, hence the name)
- These small cap companies have huge explosive growth potential to become large cap companies in the future
- The ETF is extremely cheap, with an expense ratio of just 0.07% (versus 1.10% for other small cap funds)
- Provides diversification in a portfolio largely focused on middle-cap and large-cap companies
- The ETF stops you from “picking” winners or losers, instead investing into a large collection of small cap companies
Swenson recommends supplementing this small cap index ETF alongside a portfolio of assets such as a middle cap index ETF (ex. S&P MidCap 400) or a large cap index ETF (ex. S&P 500 index fund). No more than 20%, he says.
So, it’s food for thought to the investors who are looking to add some diversification to their portfolios.
Within 1-2 Years, We’ll Know Who the Streaming Monopolies Will Be
With the unprecedented success achieving by streaming companies due to the COVID-19 pandemic keeping everyone locked down at home, you have to wonder who will emerge as the monopolies of the online streaming industry.
According to David Zaslav, CEO of the multinational media company Discovery, we’ll know the answer in precisely 1-2 years. According to an interview with CNBC:
“Zaslav said he assumed Netflix and Disney would emerge as global streaming winners, given the leads they’ve built. Beyond that, only one or two other services that focus on scripted series and movies will be able to gain the global scale necessary to compete, he said. The others will need to band together, either through mergers or partnerships, he said.
Zaslav’s goal is to turn Discovery+ into the third major global streaming service after Netflix and Disney, he said… the company’s emphasis on international programming through the years, such as Eurosport, may cause other large media companies to view Discovery as a essential merger partner or acquisition target.”
Zaslav even announced a rather ambitious goal for his company: Have Discovery+ in 100 million homes worldwide in five years. With this prediction, he very obviously wants to be one of the monopolies that effortlessly crushes its competitors.
Then again… when you look at the hard numbers of these streaming companies, his predictions aren’t the least bit surprising. Even before the pandemic, Netflix was already too big to fail and Disney is the king of entertainment.
So for those of you investing in streaming companies, now you know who the winners are going to be!
How Much Does Bad Health Cost America? $575 Billion Every Year!
The COVID-19 pandemic has been eerily insightful with respect to just how out of shape the average American is. On top of our economic health taking a sharp nosedive, so too has our personal health.
And before you mistake me for a personal trainer going on a rant, just take a look at the numbers recently compiled by Forbes:
- $575 billion every year is lost due to poor worker health in America (lost productivity in the form of chronic diseases, debilitating injuries, and worker absence)
- For every dollar spent on health benefits, $0.61 is lost to poor worker health
- US employers spend $950 billion every year on health care benefits
- Poor worker health leads to 1.5 billion days’ worth of lost productivity
Want to know the truly sad part about all of this data?
It’s based on numbers from the Integrated Benefits Institute and their analysis of the US Bureau of Labor Statistics data between 2015 and 2019, spanning 66,000 employers. These statistics DO NOT include the losses suffered during the COVID-19 pandemic in 2020.
For the sake of your employer, but more importantly for the sake of your own self, start prioritizing your physical and mental health. I can promise you that it will be one of the greatest ROIs you experience in 2021 and beyond.
For New Yorkers, Ordering Products Online Just Got WAY More Expensive!
If it wasn’t already expensive enough to live in New York City, you now have an extra cost to deal with. And it’s all thanks to Assemblyman Robert Carroll, the man who wants to add on an additional charge to the products you order online.
“New York City residents could face a $3 surcharge on package deliveries — with an exception for food and medicine — under a proposed bill aimed to help fund the financially insolvent Metropolitan Transportation Authority (MTA).”
In addition to helping the MTA generate an additional $1 billion per year in revenue, Carroll believes this new move will directly benefit local small businesses:
“A delivery surcharge would incentive some consumers to patronize neighborhood businesses instead of reflexively ordering items online from Amazon, Walmart, Etsy or eBay.
They might be reminded how local mom-and-pop stores, and bigger retailers like Bloomingdales and Macy’s, are part of what makes a city dynamic, diverse and interesting. These businesses also employ our neighbors.
A delivery surcharge will also undoubtedly encourage consumers, and the Amazons of the world, to more regularly consolidate multiple items into a single package for delivery… That’s one truck trip down your block by FedEx or UPS instead of three. Now multiply that by millions.”
My initial thoughts? It’s something that sounds good in theory, but will prove to be detrimental for low-income New Yorkers who are already struggling financially.
But I want to know what YOU think – do you agree with Carroll’s proposal to add on an additional surcharge to online deliveries? Why or why not? Reply to this newsletter and let us know your thoughts on this matter!