It’s been 72 hours since Election Night and we STILL do not have any further resolution as to the final results. Either presidential candidate could win the election, and it’s entirely possible the results will be heavily contested by both sides for several weeks to come.
Yet for some inexplicable reason, the stock market continues to go up and up. A +500 point increase in the Dow Jones should definitely be a warning sign for investors who were watching the markets yesterday:
- Dow Jones: +1.95%
- S&P 500: +1.95%
- NASDAQ: +2.6%
- Netflix, Apple, Microsoft: Greater than +3%
Not only are all three major indices up by at least 7% this week, but this could be their largest weekly gains since April. And we’re also seeing a minimum of +1% gains among the S&P 500 and Dow Jones for four consecutive days (which hasn’t happened since 1982).
The only factor explaining this rally is the expectation of a divided US government. Which means regardless of which candidate wins, they will not be able to make significant changes to government policies. From this, it is clear that taxes and regulations over the major tech firms will likely remain the same.
However… all of this is contingent on a clear and definitive winner of the 2020 Presidential election. No political coups, no contesting the results, and no uncertainty around the results of the election.
Because should that happen, and we fail to achieve a peaceful transition of power, the stock market is going to get extremely volatile. And unless it gets resolved quickly, we’ll see stocks dropping like hotcakes. Erasing all of this week’s positive gains will be the least of our worries.
Whether you’re a short-term trader or a long-term investor, all I can advise you to do is either stick to your current strategy or stay away until the election is 100% resolved. If your decisions are easily influenced by politics, now is not the time to be taking bold risks.
What do YOU think will happen to the stock market next week? Will we continue to see an ongoing rally, or could a big drop finally happen? Reply to this newsletter and share your predictions with us!
Apparently, You Should NOT Be Day Trading Right Now…
Despite my recommendations made in the introduction of today’s newsletter, some people are insistent that day trading in the current climate is a recipe for financial loss and disaster.
This is the opinion of NerdWallet writer Liz Weston, who is more in favor of long-term investing with exchange-traded funds and mutual funds.
Here are her arguments against day trading:
- Only 1% of day traders are able to generate returns that beat those of a low-cost index fund
- Stocks do not always go up, and some of the downturns can be too much to bear for short-term traders (see: the 90% loss in market value during the 2007-2009 recession)
- Sometimes, stocks can go all the way to zero and never go up again
So what does he recommend instead? Diversification, in her own words is “buying stocks in many, many companies, including companies of different sizes, in different industries and in different countries” via mutual funds and ETFs.
In her mind, trading less means you will save money on the commissions involved and the associated costs with each trade. After all, every trade potentially exposes you to losing money. Plus, holding onto your investments for less a year will lead to your profits being taxed as income (unless held in an IRA or any other tax-deferred account).
What do YOU think about this stance on day trading? Does Liz have a point, or are there upsides of day trading she hasn’t considered? Reply to this newsletter and share your opinion with us!
Another $3 Billion EASILY Put in Jeff Bezos’ Pocket!
It must be ridiculously easy to be a multi-billionaire: Anytime you need an extra infusion of cash, just sell a couple million of shares and it ends up right in your pocket!
Jeff Bezos did just that, giving him a cool $3 billion in his pocket. In 2020 alone, this would mark the third time he has sold shares ($4 billion in February, $3.1 billion in August). To date, he’s made over $10 billion from doing nothing else than selling shares.
Here are the exact details of his latest maneuver:
- As part of a predetermined 10b5-1 plan to sell Amazon, he sold 1 million shares of Amazon when shares were trading between $2,950 and $3,075 per individual share.
- This sell-off represents 1.8% of his total share in Amazon, reducing it to a total of 10.6%
- Thus, Jeff Bezos still has a $170+ billion stake in the company consisting of over 53 million shares
But why make so many sell-offs in the current year? Analysts have a few reasons in mind…
On top of launching a $10 billion “Earth Fund” to do his part in fighting climate change, he also has a rocket company startup called Blue Origin that he wants to fund. Not to mention that his $38 billion divorce settlement from last year has not been fully paid off yet.
We don’t know for sure. But it’s interesting to see how starting up the world’s largest e-commerce company can pay off very handsomely…
How Are Multi-Millionaires Playing the 2020 Presidential Election?
As the average retail investor struggles to figure out how they’re going to play the 2020 Presidential Election, the wealthy multi-millionaires already have a gain plan figured out.
Specifically, I’m talking about the little-known 800+ member organization known as Tiger 21 (from their website):
“…an exclusive peer membership organization of high-net-worth entrepreneurs, investors, and executives.
Harnessing the power and intellect of over $80 billion in personal assets that spans of the spectrum of industry, our Members leverage Tiger 21’s deep well of experience and expertise.”
So what assets are they looking into right now? It seems as if they have a few key assets in mind, betting on a Democratic administration:
- Bitcoin and gold miners: Both instruments are going to be an “insurance policy” against the uncertainty of the fixed-income world.
- Silver: Generally, when gold goes up, so does silver. So this is yet another hedge the Tiger 21 members are investing into.
- Real estate and estate planning: Combined with the current sales in real estate, Tiger 21 members are getting ready for new opportunities to arise in cities such as NYC. But they’ll also have to worry about a potential President Biden’s plan to lower the amount of money that can be passed on to their heirs without paying taxes.
Very interesting stuff! Perhaps we start doing the same…
Skyworks Solutions Will Benefit from the Rise in 5G Smartphones
Apple announcing their iPhone 12 having 5G capabilities is just the very beginning of the 5G explosion set to take place worldwide.
But in order for smartphones to capitalize on this brand-new technology, they’ll need a supplier for wireless connectivity chips. And based on the fiscal results for Q4 2020 coming out from tech firm Skyworks Solutions, they might be the ones to take the role of the industry leader:
- Revenue: $957 million (+30% from Q3 2020, +16% year-over-year)
- Adjusted earnings per share: $1.85 (+22% year-over-year, projected was $1.51)
- Net income: $814.8 million (-4.5% year-over-year)
China-based Huawei may have been their second-largest customer, but the fate of the 2020 Presidential Election could change that. No worries – companies such as Alphabet and Apple are going to become their next best customers.
So it’s no surprise why Skyworks is expecting revenues of anywhere between $1.04 billion and $1.07 billion in Q1 2021 alone. And once they dominate the smartphone market, they’ll be looking into other avenues where their technology can be used: 5G infrastructure, connectivity within cars, and the list goes on…
Bentley Decides to Join the Electric Car Race
If you love driving a Bentley but hate having to consume oil and gas, you’ll be pleased to know they’re joining the booming rise in electric cars. (And if you don’t… well, it’s time to get with the program.)
But they’re planning to go one step further: By 2026, they plan to have all of their cars being 100% electricity-powered or plug-in hybrids. And when 2030 arrives, every single vehicle will be powered entirely by electricity.
Their first plug-in hybrid models, which are currently unnamed, will be released in late 2021. And should everything go their way, 2025 will see the release of their first full-electric vehicle. CEO Adrian Hallmark is all-in on the future of electricity-powered luxury cars, citing the company’s transition towards clean energy:
“Within a decade, Bentley will transform from a 100-year-old luxury car company to a new, sustainable, wholly ethical role model for luxury… and we want Bentley to be completely carbon neutral by 2030.”
I just hope they can take care of their core business first before making this move, as they had to lay off 1,000 people this summer…