Advertisements

Silicon Valley Investors Are Bonkers For European Startups

Index Ventures partner Danny Rimer always planned to move back to London from Silicon Valley. But when Rimer returned to England a year ago after seven years establishing Index’s U.S. foothold with stakes in companies like Dropbox, Etsy and Slack, he had company: investors from U.S. venture capital firms Benchmark, NEA and Sequoia were also appearing at startup dinners, leading deals and even looking to open offices.

“We’ve always been surprised at how our U.S. peers flew over Europe,” says the Canada-born and Switzerland-raised Rimer, 49, who opened Index’s London office in 2002. As a full-time European resident again, he debuts at No. 3 on the 2019 Midas List Europe, thanks to multi-national investments including Discord, Glossier, Farfetch and Squarespace. Rimer says he watched as investors flocked to pour money into India, China, and Latin American countries, instead. “A very successful Welshman talked about Europe being a museum,” says Rimer, alluding to billionaire investor Michael Moritz, the Sequoia partner and Google and Yahoo investor who moved from Wales to Silicon Valley decades ago. “Now his firm is all over the geo looking.”

More money is flowing into European tech than ever, and it’s increasingly coming from venture capital’s elite U.S. firms. European startups are likely to receive a record $34.3 billion in investments this year, according to investment firm Atomico, with 19% of funding rounds including an American firm, double the portion when Atomico started tracking in 2015. Those American investors will account for about $10 billion, or nearly one-third, of the total amount invested.

American interest in European companies isn’t new: Palo Alto, California-founded Accel opened a London office nearly twenty years ago, and other firms followed suit. But many retreated in subsequent economic down cycles, says Philippe Botteri, No. 6 on Midas List Europe. Botteri, a French citizen, started his venture career at Bessemer Venture Partners in San Francisco and joined Accel in London in 2011. The years leading up to the U.S. firms’ return witnessed a global economic crisis, while access to customers, engineering talent and programs like startup accelerator Y Combinator drove a host of European founders, such as Stripe’s Collison brothers, to relocate to the U.S. Considered a splintered market with regional regulations and languages, Europe faced a fresh hurdle with “Brexit,” when the United Kingdom voted in a 2016 referendum to leave the European Union, a process still ongoing. Its ruling body, the European Union, has made an anchor policy of challenging big tech companies on how they use data.

Blossom Capital founder Ophelia Brown says she was met with incredulity when, as a young investor at Index Ventures between 2012 and 2016, she visited West Coast counterparts and described the opportunity in European tech. “Everyone would push back: Europe was a little travel, a little ecommerce, a little gaming,” she says. “They felt there was nothing of substance.” In 2017, when she set out to raise Blossom’s first fund, many U.S. investors told her the opportunity for new firms seemed greater in the U.S. and China. Just two years later, Brown says she now hears from institutions asking how to get more exposure to Europe’s startup scene.

What’s changed: A mix of high-profile public offerings such as Adyen and Spotify and a maturing ecosystem that’s made it a much easier draw for U.S. firms, facing intense competition at home, to risk millions in Europe. Spotify, the Stockholm-based music streaming service that went public via direct listing in April 2018, and Adyen, the Amsterdam-based payments company that went public two months later, have created nearly $50 billion in combined market value. The IPOs of Criteo in Paris and Farfetch in London have also produced a network of millionaires primed to write “angel investor” personal checks into smaller tech companies. Today there are 99 unicorns, or companies valued at one billion dollars or more, compared to 22 in 2015, according to Atomico’s data.

“The question used to be, can Europe generate a $1 billion outcome, and then you had Spotify and Adyen creating tens of billions of market cap,” says Botteri, who notes that winners are also coming from a broader base of cities in Europe – 12 hubs, not all from London and Tel Aviv. (As on the Midas List Europe, European investors often include Israel’s tech-heavy startup scene.) “Now the question is, can Europe generate a $100 billion company? And my answer is, just give it a few years.”

For startups in far-flung places like Tallinn, Estonia, where Pipedrive was founded in 2010, or Bucharest, where UiPath got its start, the influx of U.S. venture capital counts for more than just money – it means access to former operators who helped scale businesses like Facebook, Google and Slack, introductions to customers in New York or executive hires in San Francisco. And with their stamps of approval comes buzz that can still kickstart a startup’s brand recognition, investors say.

But they also come with a risk: heightened pressure to deliver, board members who may be 5,000 miles away, and potentially overheated valuations that can prove onerous should a founder misstep. Sarah Noeckel, a London-based investor at Dawn Capital and the publisher of women-in-tech newsletter Femstreet, has tracked a number of recent seed-stage deals in which a U.S. investor swooped in with an offer too rich for local alternatives to match, for companies that sometimes haven’t sold anything yet. “I think there’s little validation at this point how it actually plays out for them,” she says.

For the U.S. investors, there’s a clear financial incentive to “swoop in.” On average over the past year, one dollar’s worth of equity in a European startup in a Series A funding round would have cost $1.60 in the U.S. for a comparable share, according to the Atomico report. Investors insist that for the most in-demand companies in Europe, such as London-based travel startup Duffel, which raised $30 million from Index Ventures in October, prices already match Silicon Valley highs.

All the more reason that as U.S. investors hunt in Europe like never before, they’re doing so quietly. Though Lightspeed Venture Partners announced its hiring of a London-based partner, Rytis Vitkauskas, in October, other U.S. firms have been on the ground without advertising it publicly. Leaders from NEA, with $20 billion in assets under management, passed through London in recent weeks on a venture capital tour as the firm plans to invest more heavily in Europe moving forward, sources say. Sequoia partners Matt Miller and Pat Grady, meanwhile, have been spotted around town meeting with potential job candidates. (Sequoia’s never employed a staffer in Europe before.) NEA and Sequoia declined to comment.

“Everyone would push back: Europe was a little travel, a little ecommerce, a little gaming. They felt there was nothing of substance.”

Blossom Capital founder Ophelia Brown

Many more U.S. investors now pass through London; some even stretch the meaning of what it means to visit a city through months-long stays. “I always used to have to travel to the West Coast to see friends that I made from the show,” says Harry Stebbings, who has interviewed hundreds of U.S. venture capitalists on his popular podcast, ‘The Twenty Minute VC.’ “Now, every week I can see three to five VCs in London visiting.” For the past several months, longtime Silicon Valley-based Accel partner Ping Li has lived in London with his family. Asked if he’d moved to the city without any public announcement, Li demurred – “I would argue that I’m spending a lot of time on British Airways,” he says – before insisting he plans to return to California in three to six months. “I don’t think you can actually be a top-tier venture capital firm without being global,” he says. Firms without plans for a permanent presence in London are creating buzz among local investors, too. Kleiner Perkins investors Mamoon Hamid and Ilya Fushman have been active in Europe recently, they confirm. Benchmark, the firm behind Snap and Uber, invested in Amsterdam-founded open-source software maker Elastic, which went public in 2018, and more recently London-based Duffel and design software maker Sketch, based in The Hague. “Europe’s just more in the spotlight now,” partner Chetan Puttagunta says.

Against the backdrop of Brexit, the inbound interest can feel like a surprise. London-based investors, however, appear to be shrugging off concerns and hoping for the best. “In and of itself, it means nothing,” says Index Ventures’ Martin Mignot, a French and British citizen investing in London and No. 7 on the Midas List Europe. “The only real question is around talent, whether it’s going to be more difficult for people to come and work in London, but how difficult that is remains to be seen.” Or as his colleague Rimer quips: “Having spent seven years in the U.S., I don’t exactly think the political climate of the U.S. was necessarily more welcoming.”

When Rimer attended the Slush conference, a tech conference of 25,000 in Helsinki in November, he brought along a guest: Dylan Field, the CEO of buzzy San Francisco-based design software maker Figma. If Field were European, Index would be leading him around Silicon Valley; instead, with 80% of Figma’s business outside of the U.S., Rimer wanted Field to experience the energy of Europe’s tech community first-hand. Explains Rimer: “It’s just a reflection of the reality today.”

Get Forbes’ daily top headlines straight to your inbox for news on the world’s most important entrepreneurs and superstars, expert career advice, and success secrets.

Follow me on Twitter or LinkedIn. Check out my website. Send me a secure tip.

I’m an associate editor at Forbes covering venture capital, cloud and enterprise software out of New York. I edit the Midas List, Midas List Europe, Cloud 100 list and 30 Under 30 for VC. I’m a Fortune Magazine and WNYC alum. My tech focus would’ve perplexed my college self, as I studied medieval history and archaeology at Harvard University. Follow me on Twitter at @alexrkonrad and email me at akonrad@forbes.com. Securely share tips at https://www.forbes.com/tips/

Source: Silicon Valley Investors Are Bonkers For European Startups

120K subscribers
A interview with Venture Capitalist and Co-Founder of Andreessen Horowitz, Marc Andreessen In this interview, Marc discusses how Silicon Valley works and why it is so hard to replicate. Marc also talks about what he looks for in investments and gives advice to students. 📚 Marc Andreessen’s favourite books are located at the bottom of the description❗ Like if you enjoyed Subscribe for more:http://bit.ly/InvestorsArchive Follow us on twitter:http://bit.ly/TwitterIA Other great Venture Capitalists videos:⬇ Marc Andreessen: Venture Capital Investment Philosophy:http://bit.ly/MAndreessenVid1 Billionaire Chris Sacca on Investing, Venture Capital and Life:http://bit.ly/CSaccaVid1 Billionaire Peter Thiel on Entrepreneurship, Innovation and Competition: http://bit.ly/PTheilVid1 Video Segments: 0:00 Introduction 1:58 Something you really screwed up? 3:09 How does Silicon Valley work? 6:33 Why has Silicon Valley never been replicated? 10:24 Where does the value of cryptocurrency come from? 12:46 Is it going to disrupt governments? 14:26 What makes a fundable company? 19:23 What do you see in the future? 22:48 Advice to students? 24:52 How do you get rid of fear? Marc Andreessen’s Favourite Books🔥 Life: The Movie:http://bit.ly/LifeTheMovie Confessions of an Economic Hit Man:http://bit.ly/ConfessionsEconomic And the Money Kept Rolling In (and Out) Wall Street:http://bit.ly/MoneyKeptRolling Last Call:http://bit.ly/LastCallMA Startup Rising:http://bit.ly/Startuprising Interview Date: 29th March, 2018 Event: Udacity Original Image Source:http://bit.ly/MAndreessenPic1 Investors Archive has videos of all the Investing/Business/Economic/Finance masters. Learn from their wisdom for free in one place. For more check out the channel. Remember to subscribe, share, comment and like! No advertising.

Advertisements

Measuring The Total Economic Impact Of Unified Endpoint Management

Today, the average IT organization is spending at least 5% of their organization’s annual revenue on IT investments – and the cost of each investment spans far beyond its price tag. Each one needs to be deployed and maintained by IT staff that is grappling with more tools and software products than ever before. Of course, supporting an IT staff comes with its own set of costs and challenges. CIOs, CTOs, and their teams are human resource scarce and spread extremely thin, so the opportunity cost of focusing on one tool versus another has never been greater.

This complexity comes at a time where clearly defined IT strategies that bring about positive impact to the business are non-negotiable. According to IDG’s 2019 State of the CIO report, “62% of CIOs say that the creation of new revenue generating initiatives is among their job responsibilities.” 88% claim to be “more involved in leading digital transformation initiatives compared to their business counterparts.” Net-net, the onus is on IT leaders to streamline efficiencies, reduce total cost of ownership (TCO), and net a return on investment (ROI) for the business.

IT investment decisions driven by real customer data

Forrester has been instrumental in helping business decision-makers overcome their resource, budget, and investment challenges by introducing a Total Economic Impact™ (TEI) methodology. Not only does the TEI take costs and benefits into account, but also the time saved and economic impact of strategic decisions made. Forrester’s TEI assessments are drawn from real client experiences with vendor products and services. The team diligently documents customer outcomes to better understand their positive or negative business impact. Consulting this unique research methodology helps business decision makers justify and future-proof their investments.

Making the transition to unified endpoint management

If your organization is like most, it has a mix of devices that employees use to get work done – whether they’re corporate-liable or supported under a bring your own device (BYOD) program. With 464 custom apps deployed across the average enterprise, procuring a means to manage devices and everything on them (not just apps, but also content and data) has become mission-critical for businesses.

Traditionally, mobile device management (MDM), enterprise mobility management (EMM), and client management tools (CMTs) have been relied upon to get the job done. However, business use cases for devices have become more complex and wide ranging. These shifts are necessitating a tool that makes it possible to manage everything from one place. This is unified endpoint management (UEM).

Commissioned by IBM, Forrester Consulting recently conducted a TEI analysis of IBM Security MaaS360 UEM customers to determine whether they are reducing TCO and netting a quick break-even on their investment. The Forrester team took the time to glean feedback from 19 MaaS360 UEM clients representing financial services, nonprofit, utilities, manufacturing, and professional services industries. These individuals are responsible for managing anywhere from 500 to 100,000 devices for their respective businesses each day.

How UEM from IBM resulted in significant ROI1

Across the 19 clients that were interviewed, Forrester identified the following key benefits. These amount to a three-year 160% ROI and payback in less than 3 months:

  • Endpoint configuration: a 96% reduction in time spend provisioning devices
  • End-user setup: a 47% reduction in time spent getting employees up and running
  • Modern management: $22,960 saved from simplifying their management approach
  • Support ticket remediation: 50% fewer tickets and 55% less time taken to resolve them
  • Security breach remediation: 80% reduction in number of incidents experienced

Of course, these benefits were experienced by a composite organization used to represent the 19 customers surveyed by Forrester. Organizations considering UEM that are actively seeking their own customized TEI assessment can now work with IBMers to do just that. Request your own complementary assessment today to understand whether you can expect a return on your UEM investment, and if so, how quickly you can expect your payback period to arrive.

Request a custom Forrester TEI assessment now

1 The Total Economic Impact™ Of IBM MaaS360 With Watson, a commissioned study conducted by Forrester Consulting, April 2019

John Harrington is a Program Director at IBM Security, overseeing product marketing for data security and unified endpoint management (UEM). In this capacity, he works with product managers, product marketers, and account managers to provide guidance for businesses encountering modern cybersecurity challenges. He’s focused on helping clients learn how to establish digital trust and the various ways Guardium and MaaS360 can help them keep their data and endpoints protected. John is also working towards an MBA graduate degree at Villanova School of Business, and spends his spare time exploring the city of Philadelphia with his wife and their two beagles.

Source: IBM Security BrandVoice: Measuring The Total Economic Impact Of Unified Endpoint Management

Keeping Up With E-commerce: Last-Mile Delivery Service Deploys ‘Ninjas’ In Online Shopping Boom

Packages are piled higher than people at Ninja Van’s biggest sorting center at a freight facility near Singapore’s Jurong port. Southeast Asia’s big e-commerce operator, Shopee, has just finished its “9/9” online shopping sale and says it got a record 17 million orders in one day. Ninja Van now has the task of delivering most of those orders. “We spend months preparing for how much capacity they require, making sure that we change our processes and have enough drivers,” says Ninja Van’s 32-year-old founder Lai Chang Wen.

Today, Ninja Van delivers on average one million parcels a day around the region, deploying some 20,000 full-time delivery staff, who are dubbed ninjas. Ninja Van’s sales in 2017 rose 9% from a year ago to $13 million and Singaporean Lai was inducted into Forbes 30 Under 30 Asia in 2016.

Ninja Van has so far raised $140 million from a group of investors that includes B Capital and super app Grab. “They’ve really been a leader in last-mile delivery. They are today, we believe, the best service in terms of delivery rates. Everything they’ve achieved using technology is driven to increase customer satisfaction,” says B Capital cofounder Eduardo Saverin, who is a director on the company’s board (and cofounder of Facebook).

Today In: Asia

Lai cofounded Ninja Van in 2014 after a stint as a derivatives trader at Barclays and then setting up Marcella, a custom menswear shop based in Singapore. Monk’s Hill Ventures Managing Partner Lim Kuo-Yi remembers passing on Lai’s pitch to invest in Marcella, but was intrigued by Lai’s proposed solution to the firm’s delivery hurdles.

That proposal is now Ninja Van. Its value proposition is providing a more effective way for Southeast Asia’s small and midsized enterprises to deliver their products as e-commerce in the region explodes. Over 150 million Southeast Asians are now buying and selling online, triple the number from 2015, according a recent report by Bain, Google and Temasek. “What Ninja Van has shown in the last four or five years is the ability to grow the business threefold year-on-year,” says Lim.

Ninja Van is one of a slew of companies offering logistics services for e-commerce deliveries such as Lalamove, GoGoVan and UrbanFox. Competing on cost, speed and reliability isn’t enough, Lai says. Ninja Van also works with SMEs to cut costs and expand their markets. Ninja Van in September introduced a program in Indonesia called Ninja Academy that teaches SME owners about social marketing, inventory management, procurement and sales strategy. “A big part of the question around Ninja Van is how do I evolve my customer base to enable the long tail of commerce,” says Saverin.

Ninja Van entered the logistics scene at an opportune time. Photo: Sean Lee for Forbes Asia

Sean Lee for Forbes Asia

Ninja Van also mines its data to find hidden efficiencies. For example, when multiple merchants are buying the same raw material or product, Ninja Van can then broker a deal to buy in bulk for a lower price on behalf of several customers. The same goes for freight space. “We are the biggest purchaser of air cargo across Indonesia,” says Lai.

With as much as 70% of its transactions still cash on delivery, Ninja Van processes more than a billion dollars in payments a year. While processing those payments, it’s sitting on a massive pool of liquid capital. “There’s opportunity there to extend some level of working capital financing to bridge that gap,” says Lim.

Grab’s investment in Ninja Van is the culmination of an ongoing discussion about collaboration. “We kept finding ways to work together,” says Lai, who first started talking with Grab’s cofounder Anthony Tan four years ago about merging their fleets to improve efficiency.

The two eventually decided that having separate, specialized fleets was more efficient than a combined one, but they have developed a special partnership. Grab customers can access Ninja Van on Grab’s app depending on the kind of delivery. Grab deploys its drivers for on-demand pickups and deliveries, but offers Ninja Van as a discount option for less urgent, next-day courier service to SMEs. Grab has already integrated Ninja Van into its service offering in Indonesia and the Philippines, and plans to do so in Vietnam later this year.

Lai, meanwhile, spends much of his time now in Malaysia and Indonesia, where Ninja Van launched in 2015. “The landscape is very exciting right now, comprised of a lot of small merchants selling on marketable channels,” Lai says. But the real prize, he says, lies beyond Southeast Asia. “There’s a lot more global flow,” he says. Lai won’t name any potential partners, but says the U.S. is “definitely a target.”

Pamela covers entrepreneurs, wealth, blockchain and the crypto economy as a senior reporter across digital and print platforms. Prior to Forbes, she served as on-air foreign correspondent for Thomson Reuters’ broadcast team, during which she reported on global markets, central bank policies, and breaking business news. Before Asia, she was a journalist at NBC Comcast, and started her career at CNBC and Bloomberg as a financial news producer in New York. She is a graduate of Columbia Journalism School and holds an MBA from Thunderbird School of Global Management. Her work has appeared in The New York Times, Washington Post, Yahoo, USA Today, Huffington Post, and Nasdaq. Pamela’s previous incarnation was on the buy side in M&A research and asset management, inspired by Michael Lewis’ book “Liar’s Poker”. Follow me on Twitter at @pamambler

Source: Keeping Up With E-commerce: Last-Mile Delivery Service Deploys ‘Ninjas’ In Online Shopping Boom

220K subscribers
Sick of online shopping deliveries that go MIA or take forever? Ninja Van’s Lai Chang Wen saw how traditional couriers were spoiling the experience – so he jumped in to spoil the market. Even though he had zero experience. Catch the series Game Changers on Monday, 8pm SG/HK. Watch catch-up episodes on Toggle http://bit.ly/2nRyB7Q

Last Week Confirms It. Goodbye, Recession – Hello, Bull Market

 

It is time to get excited, optimistic and bullish. Last week put the final nails in the “Oh, woe is me” recession coffin. RIP.

Last week’s good news supported and confirmed recent anti-negative and pro-positive improvements. Here is the wonderful list:

Earnings reports are driving a shift to the positive

Compare these two headlines from The Wall Street Journal:

  • October 9: “U.S. Earnings Flash a Worrying Signal”
  • November 2: “Earnings Tide Lifts Most Stocks – Investors are getting a more positive picture of American corporations’ health than that painted by analysts in buildup to earnings season”
Today In: Money

The cause? Earnings reports continue to be positive on balance, with most of the September quarter-end earnings reports now in. The 336 S&P 500 companies reporting September results so far (from October 15 through November 1) represent 67% of the 500 companies and 75% of the $27T market capitalization. (Many of the remaining 164 companies will report October or November quarter-end results later.)

While reports of companies beating expectations are widespread, a good way to view investors’ complete evaluation is by examining stock performance. Below is a graph of the one-month returns (including dividend income) for all of the 336 reporting companies. I have broken out the so-called “safe” stocks (REITs and utilities) because they have been beneficiaries of both reduced interest rates and bearish thinking – therefore, expect them to underperform.

Clearly, Wall Street views this earnings report season as favorable. Additionally, the need and desire for “safe” stocks has given way to the pursuit of growth.

The Federal Reserve cuts and quits

Finally! While rates remain abnormally low (meaning there is music to be faced in the future), at least the game of will-they-or-won’t-they looks over for now. That is helpful because businesses, consumers and investors now can make decisions based on a stable rate environment.

GDP growth is just fine

A good example of how negativity can take time to turn positive is the last week’s third quarter GDP growth report. Expectations had been for a seasonally adjusted, real (adjusted for inflation), annualized rate of 1.6%, down from 2% last quarter. Instead, it came in at 1.9%. That is good news, but most reports focused on the “continued slowing” instead of the desirable surprise.

Think of that report this way. For a quarter that had its problems, growth was still around 2%, in line with the average post-recession growth rate. Looking at a longer time period provides a good perspective for that 1.9% growth rate.

Employment and consumer spending are good

The recession pundits keep expecting these shoes to drop, but they do not. The problem is the factors leading up to reduced employment are absent. Following, so long as consumers are employed, they will spend. Therefore, in spite of that previous sharp drop in consumer confidence, consumer spending has remained strong and consumer confidence has improved.

The Wall Street Journal’s November 2 lead story (print edition) says it best: “Jobs, Consumers Buoy Economy, Defying Slowdown Across Globe.”

The bottom line

Last week offered an outstanding combination of good news that removes recession pessimism and reintroduces growth optimism for 2020. Stock ownership (excluding “safe” stocks) continues to look desirable.

Follow me on Twitter or LinkedIn.

During my 30-year career, I managed and consulted to multi-billion dollar funds. Using the “multi-manager” approach, I worked with leading investment managers. I now manage personal accounts and write about my analysis and decisions. … From my 50-year personal/professional investment experience, I developed the skills I use to find opportunities and avoid risks. Because markets are ever changing, I choose the strategies (safety, income, value and growth) that conditions warrant. … My one regular activity is to seek developments and trends being ignored or misinterpreted by investors. These are the situations that consistently produce higher return opportunities (or higher risk levels). … I am a CFA charterholder with an MBA from Stanford Graduate School of Business and a BS in Finance from San Diego State University. I am a former Washington DC CFA board member and currently serve on the AAUW Investment Advisers Committee and the City of Vista Investment Advisory Committee. … For more, please see my LinkedIn bio at http://www.linkedin.com/in/johntobeycfa

Source: Last Week Confirms It. Goodbye, Recession – Hello, Bull Market

292K subscribers
Traders Jon and Pete Najarian are joined by Sarat Sethi, managing partner at Douglas C. Lane & Associates, and Anastasia Amoroso, global investment strategist at J.P. Morgan Private Bank, to discuss calls on Netflix, Apple and Juniper Networks.

How’s the Consumer Doing? Financial Sector Earnings Next Week Could Help Tell Us

Key Takeaways:

  • Big banks to kick off reporting season the week of October 14
  • Earnings for sector expected to fall slightly, analysts say
  • Brexit, trade, consumer health on topic list for Financial earnings calls

During Q2 earnings season, Financial sector results helped renew investor confidence in the U.S. consumer.

The question heading into Q3 is whether banking executives still see the same kind of strength, and if they think it can continue amid trade wars, Brexit, and signs of weakness in the U.S. economy.

Over the last three months, as the broader stock market rallied to an all-time high, slammed the brakes, and then re-tested earlier peaks, consumer health arguably did much of the heavy lifting. It felt like every time stocks pulled back, they got a second wind from retail sales, housing or some other data or earnings news that showed consumers still out there buying.

Today In: Money

The banks played a huge role in setting the stage by reporting better-than-expected Q2 results that showed signs of strong consumer demand even as some of the banks’ trading divisions took a hit. Next week, six of the biggest banks come back to talk about their Q3 experience and what they expect for Q4. Analysts expect Financial sector earnings to drop slightly in Q3.

That said, most of the major banking names have done an excellent job keeping costs in check as they wrestle with fundamental industry headwinds like falling interest rates and slowing revenue from their trading divisions. This time out, it wouldn’t be surprising to see more of the same, and you can’t rule out a bit more vigor from the trading business thanks to all the volatility we saw in the markets last quarter.

Earnings growth may not be there for Financials this time around, or it could be negligible. At the end of the day, though, Financial companies are still likely to be remarkably profitable considering a yield curve that remains relatively flat and global macroeconomic concerns, according to Briefing.com. This sector knows how to make money, but it might just not make as much as it did a year ago. Earnings will likely show large banking companies still in good financial condition with the U.S. consumer generally in decent shape for now, as the U.S. economy arguably remains the best-kept house on a tough block.

Investors have started to pick up on all this, judging from the S&P 500 Financial sector’s good health over the last month and year to date. The sector is up 3.4% from a month ago to easily lead all sectors over that time period, and up 15% since the start of 2019. The 15% gain is below the SPX’s 17% year-to-date pace, but it’s an improvement after a few years when Financials generally didn’t participate as much in major market rallies.

What to Listen For

No one necessarily planned it, but it’s helpful in a way that banks report early in the earnings season. Few other industries have larger megaphones or the ability to set the tone like the biggest financial institutions can. The other sectors are important, too, but they often see things from their own silos. Combined, the big banks have a view of the entire economy and all the industries, as well as what consumers and investors are doing. Their positive remarks last quarter didn’t really give Financial stocks an immediate lift, but it did apparently help reassure investors who were nervous about everything from trade wars to Brexit.

Going into Q3 earnings, those same issues dog the market, and bank executives have a front-row seat. How do they see trade negotiations playing out? Can consumers hold up if trade negotiations start to go south? How’s the consumer and corporate credit situation? Will weakness in Europe spread its tentacles more into the U.S.? And is there anything bank CEOs think the Fed or Congress can do to fend off all these challenges?

On another subject closer to the banks’ own business outlook, what about the shaky initial public offering (IPO) situation? That’s getting a closer look as a few recent IPOs haven’t performed as well as some market participants had expected. One question is whether other potential IPOs might get cold feet, potentially hurting businesses for some of the major investment banks.

All the big bank calls are important, but JP Morgan Chase (JPM) on Tuesday morning might stand out. Last time, CEO Jamie Dimon said he saw positive momentum with the U.S. consumer, and his words helped ease concerns about the economic outlook. More words like that this time out might be well timed when you consider how nervous many investors seem to be right now. On the other hand, if Dimon doesn’t sound as positive, that’s worth considering, too.

While few analysts see a recession in the works—at least in the short term—bank executives might be asked if they’re starting to see any slowdown in lending, which might be a possible sign of the economy putting on the brakes. Softer manufacturing sector data over the last few months and falling capital investment by businesses could provide subject matter on the big bank earnings calls.

Regionals Vs. Multinationals

While big banks like JPM operate around the world and might be particularly attuned to the effects of trade, regional banks make most of their loans within the U.S., potentially shielding them from overseas turbulence.

Regional banks also might provide a deeper view into what consumers are doing in the housing and credit card markets. With rates still near three-year lows, we’ve seen some data suggest a bump in the housing sector lately, and that’s been backed by solid earnings data out of that industry. If regional banks report more borrowing demand, that would be another sign pointing to potential strength in consumer sentiment. Refinancing apparently got a big lift over the last few months, and now we’ll hear if banks saw any benefit.

One possible source of weakness, especially for some of the regional players, could be in the oil patch. With crude prices and Energy sector earnings both under pressure, there’s been a big drop in the number of rigs drilling for oil in places like Texas over the last few months, according to energy industry data. That could potentially weigh on borrowing demand. Also, the manufacturing sector is looking sluggish, if recent data paint an accurate picture, maybe hurting results from regional banks in the Midwest. It might be interesting to hear if bank executives are worried more about the U.S. manufacturing situation.

Another challenge for the entire sector is the rate picture. The Fed lowered rates twice since banks last reported, and the futures market is penciling in another rate cut as pretty likely for later this month. Lower rates generally squeeze banks’ margins. If rates drop, banks simply can’t make as much money.

The 10-year Treasury yield has fallen from last autumn’s high above 3.2% to recent levels just above 1.5% amid fears of economic sluggishness and widespread predictions of central bank rate cuts. The long trade standoff between China and the U.S. has also contributed to lower yields as many investors pile into defensive investments like U.S. Treasuries, cautious about the growth outlook.

Another thing on many investors’ minds is the current structure of the yield curve. The 10-year and two-year yields inverted for a stretch in Q3, typically an indication that investors believe that growth will be weak. That curve isn’t inverted now, but it remains historically narrow. Still, some analysts say the current low five-year and two-year yields might mean healthy corporate credit, maybe a good sign for banks.

Q3 Financial Sector Earnings

Analysts making their Q3 projections for the Financial sector expect a slowdown in earnings growth from Q2. Forecasting firm FactSet pegs Financial sector earnings to fall 1.8%, which is worse than its previous estimate in late September for a 0.9% drop. By comparison, Financial earnings grew 5.2% in Q2, way better than FactSet’s June 30 estimate for 0.6% growth.

Revenue for the Financial sector is expected to fall 1.6% in Q3, down from 2.6% growth in Q2, FactSet said.

While estimates are for falling earnings and revenue, the Financial sector did surprise last quarter with results that exceeded the average analyst estimate. You can’t rule out a repeat, but last time consumer strength might have taken some analysts by surprise. Now, consumer strength in Q3 seems like a given, with the mystery being whether it can last into Q4.

Upcoming Earnings Dates:

  • Citigroup (C) – Tuesday, October 15
  • JPMorgan Chase & Co. (JPM) – Tuesday, October 15
  • Wells Fargo (WFC) – Tuesday, Oct. 15, (B)
  • Goldman Sachs (GS) – Tuesday, October 15
  • Bank of America (BAC) – Wednesday, October 16
  • Morgan Stanley (MS) – Thursday, October 17

TD Ameritrade® commentary for educational purposes only. Member SIPC.

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66.

Source: How’s the Consumer Doing? Financial Sector Earnings Next Week Could Help Tell Us

21.3K subscribers
JP Morgan Chase: https://www.zacks.com/stock/quote/JPM… PNC Bank: https://www.zacks.com/stock/quote/PNC… US Bank: https://www.zacks.com/stock/quote/USB… Banks are usually at the front of earnings season and help to set the tone for the rest of the market. However, with a terrible interest rate outlook, can the space still post good profits and give us a positive lead-off for this earnings season? Follow us on StockTwits: http://stocktwits.com/ZacksResearch Follow us on Twitter: https://twitter.com/ZacksResearch Like us on Facebook: https://www.facebook.com/ZacksInvestm…

Peloton IPO Disappoints, But Fintech Lender Oportun Gains 8% In Nasdaq Debut

Oportun Financial, a fintech company that offers low-cost loans to those it calls “credit invisible,” raised $94 million in its IPO on Thursday. The company, which offered 23% of its outstanding shares to the public, debuted on the Nasdaq under the ticker OPRT.

The trading day’s most anticipated IPO, fitness startup Peloton, ended in disappointment after the stock closed 11% lower than its IPO price, but Oportun closed its first day of trading with an 8% gain and showed no signs of slowing down in the hours immediately following the market’s close.

Oportun sold 6.25 million shares (a quarter of which were from insiders) priced at $15, on the lower end of its target range of $15 to $17.  Shares jumped to $16.43, or nearly 10%, initially, but as of 2:00 p.m. EST were trading closer to $16. Shares had climbed back $16.17 by 4:00 p.m. EST.

Today In: Money

Oportun’s focus is the 100 million American borrowers with no credit or limited credit history, as well as those it says have been “mis-scored” by traditional methods that do not accurately reflect creditworthiness. The company brought in nearly $500 million in revenue last year, up from $360 million in 2017.

Oportun was founded in 2005 to serve the underbanked Hispanic community and once operated as Progreso Financiero. It has since broadened its mission and disbursed more than $7.3 billion in loans ranging from $300 to $9,000 to more than 1.5 million customers, about half of whom did not have a FICO score when they were awarded their first loan.

The San Carlos, California-based company uses traditional credit bureau scores as well as alternative data, like a borrower’s mobile phone and utility payment history, to assess creditworthiness, much in the same way that startups like Tala, which provides micro loans to the unbanked, and Kabbage, which provides small business loans, do.

Fintech IPOs have been few and far between in recent months, despite a public market newly saturated with tech giants like Slack, CrowdStrike, Uber, and Peloton. Only three fintech unicorns went public last year, according to CB Insights, and just one in the United States: online home improvement lender GreenSky, which raised $800 million in its May 2018 IPO. Its shares have fallen more than 70% since its offering.

According to a PitchBook analysis, none of the top ten most valuable fintech companies, including Stripe, Coinbase, Robinhood, and TransferWise, all of which are at least ten times Oportun’s size, are close to a public offering.

“Our decision to go public was driven in large part by our desire to get the capital we need to continue the pursuit of our mission,” Oportun CEO Raul Vazquez said. He says the company is planning to strengthen its presence in the 12 states in which it operates, expand to new markets on the East Coast, and launch a credit card product in the first quarter of 2020. Prior to its IPO, Oportun had raised $266 million from the likes of Fidelity Management and Institutional Venture Partners.

Oportun’s offering is expected to close on September 30. Barclays, J.P. Morgan Securities, and Jefferies were the lead underwriters.

Follow me on Twitter. Check out some of my other work here. Send me a secure tip.

I’m an assistant editor on Forbes’ Money team, covering markets, fintech, and blockchain. I recently completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance and the Foreign Corrupt Practices Act.

Source: Peloton IPO Disappoints, But Fintech Lender Oportun Gains 8% In Nasdaq Debut

The Wall Street Journal created this video as part of their Financial Inclusion Challenge. Oportun was a finalist for using technology to help low-income workers build credit.

What Is The Average Retirement Savings in 2019?

It costs over $1 million to retire at age 65. Are you expecting to be a millionaire in your mid-60s?

If you’re like the average American, the answer is absolutely not.

The Emptiness of the Average American Retirement Account

The first thing to know is that the average American has nothing saved for retirement, or so little it won’t help. By far the most common retirement account has nothing in it.

Download Now: To be a profitable investor you first need to know the rules. Get Jim Cramer’s 25 Rules for Investing Special Report

Sources differ, but the story remains the same. According to a 2018 study by Northwestern Mutual, 21% of Americans have no retirement savings and an additional 10% have less than $5,000 in savings. A third of Baby Boomers currently in, or approaching, retirement age have between nothing and $25,000 set aside.

The Economic Policy Institute (EPI) paints an even bleaker picture. Their data from 2013 reports that “nearly half of families have no retirement account savings at all.” For most age groups, the group found, “median account balances in 2013 were less than half their pre-recession peak and lower than at the start of the new millennium.”

The EPI further found these numbers even worse for millennials. Nearly six in 10 have no retirement savings whatsoever.

But financial experts advise that the average 65 year old have between $1 million and $1.5 million set aside for retirement.

What Is the Average Retirement Account?

For workers who have some savings, the amounts differ (appropriately) by generation. The older you are, the more you will have set aside. However there are two ways to present this data, and we’ll use both.

Workers With Savings

Following are the mean and median retirement accounts for people who have one. That is to say, this data only shows what a representative account looks like without factoring in figures for accounts that don’t exist. This data comes per the Federal Reserve’s Survey of Consumer Finances. (Numbers rounded to the nearest hundred.)

• Under age 35:

Average retirement account: $32,500

Median retirement account: $12,300

• Age 35 – 44:

Average retirement account: $100,000

Median retirement account: $37,000

• Age 45 – 55:

Average retirement account: $215,800

Median retirement account: $82,600

• Age 55 – 64:

Average retirement account: $374,000

Median retirement account: $120,000

• Age 65 – 74:

Average retirement account: $358,000

Median retirement account: $126,000

For households older than 65 years, retirement accounts begin to decline as these individuals leave the workforce and begin spending their savings.

Including Workers Without Savings

When accounting for people who have no retirement savings the picture looks considerably worse. Following are the median retirement accounts when including the figures for people with no retirement savings. The following do not include mean retirement accounts, as this would be statistically less informative than median data.

• Age 32 – 37: $480

• Age 38 – 43: $4,200

• Age 44 – 49: $6,200

• Age 50 – 55: $8,000

• Age 56 – 61: $17,000

How Much Should You Have Saved For Retirement?

So that’s how much people have saved for retirement, or more often don’t. Now for the more useful question: How much should you have saved for retirement?

The truth is that there’s no hard and fast rule. It varies widely by your age, standard of living and (perhaps most importantly) location. Someone who rents an apartment in San Francisco needs a whole heck of a lot more set aside than a homeowner in the Upper Peninsula of Michigan.

The rule of thumb is to estimate by income. Decide the income you want to live on once you retire, then picture your life as a series of benchmarks set by age. At each age you want a multiple of this retirement income saved up. Your goal is to have 10 to 11 times your desired income in savings by retirement.

• By age 30: between half and the desired income in savings

• By age 35: between the desired amount and double the desired income in savings

• By age 40: between double and triple the desired income in savings

• By age 45: between triple and quadruple the desired income in savings

• By age 50: between five times and six times desired income in savings

• By age 55: between six times and seven times desired income in savings

• By age 60: between seven times and nine times desired income in savings

• By age 65: between eight times and 11 times desired income in savings

So, if you earn $50,000 per year, by age 40 you will want to have between $100,000 and $150,000 in retirement savings set aside. The formula grows later in life for two reasons. First, as your savings accumulate they will grow faster. Second, as you approach retirement it is often wise to accelerate your savings plan.

What You Should Do Next for Your Retirement Savings

Retirement is approaching a crisis. In the coming decades millions of Americans will get too old to continue working without the means to stop. Millennials, crippled by debt from graduation, will turn this crisis into a catastrophe in about 40 years. And Social Security, designed to prevent exactly this problem, covers less than half of an average retiree’s costs of living.

It’s beyond the scope of this article to discuss exactly how this happened, but if you’re one of the many people who have fallen behind on retirement savings, don’t panic. There’s plenty you can do. But… it might not necessarily be easy.

The key is to think about retirement savings like a debt. This is money you owe to yourself and it charges reverse interest. Every day you go without adding money to your retirement account is a day you lose investment income. That’s money that you’ll need someday and won’t have.

Next, take stock of where you are. How much will you want to live on in retirement and how much do you have saved today? Use our chart above. That will tell you how far behind you are compared to where you need to be. Are you a 40 year old with $25,000 in savings who will want to live on $50,000 per year in retirement? Then you’ve got $75,000 you need to make up for.

Now, begin catching up. Chip away at that debt every week and every month. Pay into your 401k and IRA the same way you would whittle down a credit card. By thinking about it this way, as a specific goal, you can take away some of the fear of saving for retirement and turn it into an achievable (if large) amount. It’s not just some big, black hole you can never fill. It’s a number, and numbers can go down.

It won’t necessarily be fun. You might have to cut back on luxuries or take on some extra work, but even if you start late in life you can catch up on your retirement.

Now’s the right time to start.

By:

Source: What Is The Average Retirement Savings in 2019?

Dimensional Vice President Marlena Lee, PhD, explains how her research on replacement rates can help you prepare for a better retirement outcome. See more here: https://us.dimensional.com/perspectiv…

Ever Thought Of A 100-Year Green Bond? French Railway Firm Is Pitching The World’s First

It seems green bonds, sometimes referred to as climate bonds, are becoming ever so popular by the day with issuance tipped to reach record levels in 2019. However a French railway firm has notched industry trend setting way up the charts by launching the world’s first 100-year green bond.

Societe Nationale des Chemins de Fer Réseau (SNCF Réseau), France’s state-owned railway network management firm, which has already raised €2.8 billion ($3.10 billion) in green bonds in 2019 alone, confirmed Friday (August 23) that it has launched its 100-year product.

The near €100 million in book value raised would be used to finance green projects meeting its eligibility criteria for improvement, maintenance and “energy optimization” of railways. Some of the funds would also be allocated to sustainability components of new route and track extensions, the company said.

In total, SNCF Réseau has so far raised €5.4 billion in green bonds, nearly doubling the figure this year. Following the latest investment round in its green bond program, the French company now ranks seventh in the global green bond issuance market.

Green bonds are typically asset-linked and backed by the issuer’s balance sheet, earmarked to be used for climate and environmental projects. According to rating agency Moody’s, issuers brought $66.6 billion of green bonds to market globally the second quarter of 2019, propelling first-half issuance to a record $117 billion up 47% on an annualized basis compared to the first six months of 2018, and compared against the 11% year-over-year growth for the same six month periods of 2017 and 2018.

However, there has been criticism over the criteria for green bonds. On paper such bonds allow firms to raise finance for low carbon and climate-friendly projects thereby offering a promising solution to those looking to go green via climate initiatives.

But there have been instances of companies using the proceeds of green bond issuance to pay of other debts. Some issuers offer green bonds targeting specific projects, but often fail to outline a clear, long-term strategic environmental goal.

For its part, SNCF Réseau’s 100-year bond and previous issuance drives strictly comply with the European Commission’s green bond standard. The French railway network operator now takes over the title of the world’s longest maturing green bond from Energias de Portugal (EDP) and Energie Baden-Wuerttemberg (EnBW) whose bond had a maturity of 60 years.

Follow me on Twitter. Check out my website.

I am a UK-based oil & gas sector analyst and business news editor/writer with over 20 years of experience in the financial and trade press. I have worked on all major media platforms – print, newswire, web and broadcast. At various points in my career, I have been an OPEC, Bank of England and UK Office for National Statistics correspondent. Over the years, I have provided wide-ranging oil & gas sector commentary, including pricing, supply scenarios, E&P infrastructure, corporations’ financials and exploration data. I am a lively commentator on ‘crude’ matters for publications and broadcasting outlets including CNBC Europe, BBC Radio, Asian and Middle Eastern networks, via my own website, Forbes and various other publications. My oil market commentary has a partial supply-side bias based on a belief that the risk premium is often given gratuitous, somewhat convenient, prominence by cheeky souls who handle quite a few paper barrels but have probably never been to a tanker terminal or the receiving end of a pipeline. Yet having done both, I pragmatically accept paper barrels [or should we say ‘e-barrels’] are not going anywhere, anytime soon!

Source: Ever Thought Of A 100-Year Green Bond? French Railway Firm Is Pitching The World’s First

10 years ago, the World Bank Treasury issued the first green bond then laid out the first blueprint for sustainable fixed income investing, transforming development finance and sparking a sustainability revolution in the capital markets. Learn about the revolution.

5 Things Wealthy People Invest Their Money Into

I never had access to money during my childhood, or even as I grew into a teenager and young adult. Both of my parents lived paycheck-to-paycheck and struggled with debt, so that’s really all I knew.

As a result, I was never really exposed to the investing world, nor did I learn to think of entrepreneurship as a viable career option. My parents were busy trying to keep the lights on and food on the table — the thought of having extra money to invest and build wealth would have been completely foreign to them.

Eventually though, I got my first introduction to the concepts behind investing and building wealth. I majored in finance in college, learned about mutual funds and ETFs, and found out how the stock market really works.

As I began my career as a financial advisor and transitioned to entrepreneurship, I was always looking for ways to increase my base of knowledge. I read books like Rich Dad, Poor Dad and Crush It: Why NOW is the Time to Cash In On Your Passion by Gary Vaynerchuk. However, books like these didn’t teach me how to invest my money. Instead, they taught me how to invest in myself and my personal growth.

5 “Non-Investment” Investments Rich People Learn to Make

The thing is, these are areas where rich people really do invest time and time again. That’s because they know something most people don’t — they know that growing wealth is about more than throwing money into the stock market, becoming an entrepreneur, or taking big risks to fund a promising startup.

Building wealth is just as much about becoming the best version of yourself, staying in constant learning mode, and building a network of like-minded people who can help you reach your goals.

Want to know exactly what I’m talking about? Here are some of the most common non-financial investments rich people love to make:

Accelerated Learning

Most rich people read a lot of books written by people who inspire them in some way or have unique experience to share. I’ve always been a big reader too, diving into books like The 4-Hour Workweek by Tim Ferriss and The Millionaire Messenger by Brendon Burchard.

Reading is such a smart and inexpensive way to fill some of your free time and increase your knowledge, which is something the wealthy already know. If reading a few hours per week could help you stay mentally sharp while you learn new things, why wouldn’t you make that decision over and over?

But there are other ways to accelerate learning that don’t involve reading or books. You can also take online courses in topics that relate to your career. As an example, I’ve personally taken courses on YouTube marketing, productivity, search engine optimization, and affiliate marketing.

Going to conferences to learn new skills from others in your field is also a smart move rich people make. FinCon is a conference for financial bloggers I attend each year that I can attribute making millions of dollars from — mostly from meeting brands, learning new skills, and networking with my peers.

Personal Coaching

Personal coaching is another smart investment rich people make when they know they need some help reaching their potential. Morgan Ranstrom, who is a financial planner in Minneapolis, Minnesota, told me he wholeheartedly suggests a high-quality coaching program for anyone who needs help taking that next step in their business.

Ranstrom has worked with various life and business coaches that have helped him understand his values and clarify his goals, become a published author, and maximize his impact as a professional and business owner.

“For individuals looking to break through to the next level of success, I highly recommend investing in a coach,” he says.

Personally, I can say that coaching changed my life. I signed up for a program called Strategic Coach after being in business for five years, and this program helped me triple my revenue over the next three years.

The thing that scares most people off about coaching is that it’s not free; in fact, some coaching programs cost thousands of dollars. But wealthy people know the investment can be well worth it, which is why they’re more than willing to dive in.

Mentorship

Mentorship can also be huge, particularly as you are learning the ropes in your field. One of the best mentors I had was the first financial advisor that hired me. He was a million-dollar producer and had almost a decade of experience under his belt. I immediately gained access to his knowledge since his office was just next door and, believe me, I learned as much as I could.

Todd Herman, author of The Alter Ego Effect, shares in his book how he mentored under the top mindset coach in his industry when he couldn’t really afford it. He lived in a Motel 6 for almost a month to make the program fit in his budget though. Why? Because he knew this investment was crucial for his career. And, guess what? He was right.

Over the last year, I’ve participated in mentoring with Dr. Josh Axe, an entrepreneur who has built a $100 million health and wellness company. Just seeing how he runs his business and his personal life have been instrumental to my own personal growth.

The bottom line: Seek out people who are where you want to be, ask them to mentor you or sign up for their mentorship programs , and you can absolutely accomplish your goals faster.

Mastermind Groups

It’s frequently said that Dave Ramsey was in a mastermind group called the Young Eagles when he first started his business. Entrepreneurs such as Aaron Walker and Dan Miller were also in the group, and they leaned on another for advice and mentorship to get where they are today. Ramit Sethi, bestselling author of I Will Teach You to Be Rich, is in a mastermind group with Derek Halpern from Social Triggers.com and other successful entrepreneurs.

I also lead a mastermind group for men. Believe it or not, one of our members has been able to increase his recurring annual revenue over $300,000 because of advice he has received.

These are just a few examples of masterminds that have worked but trust me when I say most of the wealthy elite participate in some sort of mastermind group or club.

Mastermind groups are insanely helpful because they let you bounce business ideas off other entrepreneurs who may think differently than you but still have your best interests at heart. And sometimes, it’s a small piece of advice or a single statement that can make all the difference in your own business goals — and your life.

Building Relationships

When it comes to the top tiers of the business world, there’s one saying that’s almost always true:

“It’s not always what you know, but who you know.”

According to Alex Whitehouse of Whitehouse Wealth Management, successful people forge relationships that catapult their careers.

“The right connections can help land better jobs, accelerate promotions, or start lucrative businesses,” he says.

But it’s not about cheesy networking events. To get the most value, focus on meeting people at professional conferences, mastermind groups, and high-quality membership communities, says Whitehouse.

This is a strategy most successful people know — meet other people who you admire and build a relationship that is beneficial for everyone.

But, there’s a catch — and this is important. When you meet someone new who could potentially help you in your business, you can’t just come out of the gate asking for favors. I personally believe in the VBA method — or “Value Before the Ask.” This means making sure you provide value before asking a favor from anyone.

In other words, make sure you’re doing your share of the work to make the relationship a win for everyone. If you try to build relationships with other entrepreneurs just so you can ride their coattails, you’ll be kicked to the curb before you know it.

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here.

 

I am a certified financial planner, author, blogger, and Iraqi combat veteran. I’m best known for my blogs GoodFinancialCents.com and LifeInsurancebyJeff.com and my book, Soldier of Finance: Take Charge of Your Money and Invest in Your Future. I escaped a path of financial destruction by being a college drop out and having over $20,000 of credit card debt to eventually become a self-made millionaire. My mission is help GenX’ers achieve financial freedom through strong money habits and unleashing their entrepreneurial spirit. My work has been featured in The Wall Street Journal, USA Today, Reuters and Fox Business.

Source: 5 Things Wealthy People Invest Their Money Into

Warren Buffett is the godfather of modern-day investing. For nearly 50 years, Buffett has run Berkshire Hathaway, which owns over 60 companies, like Geico and Dairy Queen, plus minority stakes in Apple, Coca-Cola, and many others. His $82.5 billion fortune makes him the third richest person in the world. And he’s vowed to give nearly all of it away. The Oracle of Omaha is here to talk about what shaped his investment strategy and how to master today’s market. I’m Andy Serwer. Welcome to a special edition of “Influencers” from Omaha, Nebraska. It’s my pleasure to welcome Berkshire Hathaway CEO Warren Buffett. Warren, welcome. WARREN BUFFETT: Thanks for coming. ANDY SERWER: So let’s start off and talk about the economy a little bit. And obviously, we’ve been on a good long run here. WARREN BUFFETT: A very long run. ANDY SERWER: And does that surprise you? And what would be the signs that you would look for to see that things were winding down? WARREN BUFFETT: Well, I look at a lot of figures just in connection with our businesses. I like to get numbers. So I’m getting reports in weekly in some businesses, but that doesn’t tell me what the economy’s going to six months from now or three months from now. It tells me what’s going on now with our businesses. And it really doesn’t make any difference in what I do today in terms of buying stocks or buying businesses what those numbers tell me. They’re interesting, but they’re not guides to me. For more of Warren Buffett’s interview with Andy Serwer

click; https://finance.yahoo.com/news/influe…

Hashtag: #YFBuffett Bitly: yhoo.it/Berkshire Connect with Yahoo Finance: Get the latest news: https://yhoo.it/2fGu5Bb

Find Yahoo Finance on Facebook: http://bit.ly/2A9u5Zq

Follow Yahoo Finance on Twitter: http://bit.ly/2LMgloP

Follow Yahoo Finance on Instagram: http://bit.ly/2LOpNYz

More Selloff Strategies: Cramer’s ‘Mad Money’ Recap

When investors encounter tough days in the stock market, they need a game plan for how to respond, Jim Cramer told his Mad Money viewers Friday. That means knowing what type of selloff you’re dealing with and how best to navigate it. Fortunately, history can be your guide in identifying those inevitable moments of weakness and keep you from panicking.

Stocks finished down Friday, as Donald Trump’s recent threat to levy 10% tariffs on an additional $300 billion of Chinese imports overshadowed the latest U.S. jobs data.

The Dow Jones Industrial Average, which hit a session low of 334 points, finished down 98 points, or 0.37%, to 26,485. The S&P 500, which saw its worst week of the year, fell 0.73% and the Nasdaq dropped 1.32%. The Dow had its second worst week of the year as it fell 2.6%.

Cramer told his viewers that the U.S. stock markets have only seen two truly horrendous selloffs since he began trading in 1979. Those were the Black Monday crash in October 1987 and the rolling crash of the financial crisis from 2007 through 2009. But while both of these declines saw huge losses, they were in fact very different.

Many investors don’t remember Black Monday, where the Dow Jones Industrial Average lost 22% in a single day. Even fewer remember that the market lost 10% during the week prior, and continued its losses on the Tuesday after. While it wasn’t known at the time, this crash was mechanical in nature, caused by a futures market that overwhelmed the ability to process the flood of transactions. In the confusion, buyers stepped aside and prices plunged.

The carnage wasn’t stemmed until the Federal Reserve stepped in with promises of extra liquidity. But in the end, the economy was strong. There was nothing wrong with the underlying companies, the market just stopped working. That’s why it only took 16 months to recover to their pre-crash levels.

Investors witnessed similar mechanical meltdowns in the so-called “flash crash” of 2010 and its twin in 2015. On May 6, 2010 at precisely 2:32 p.m. Eastern, the futures markets again overwhelmed the markets, only this time machines were doing most of the trading. The crash lasted for a total of 36 minutes, during which time the Dow plunged 1,000 points from near the 10,000 level.

In August of 2015, another flash crash occurred at the open, with the Dow again falling 1,000 points in the blink of an eye. In the confusion, traders couldn’t tell which prices were real and which ones were pure fantasy. Only those with strong stomachs risked trading at the heart of the decline, but those traders were rewarded handsomely.

In all of these cases, Cramer said, the machinery of the markets was broken. Even the circuit breakers put in place after 1987 were not able to stem the declines and in fact, did very little to even slow them down. But for those investors who were able to recognize what was actually happening, these declines were a once- (well, twice-) in-a-lifetime gift.

Cramer and the AAP team are making three more trades as they reposition on this week’s selloff, including Burlington Stores, (BURLGet Report) and Home Depot (HDGet Report) . Find out what they’re telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.

The Great Recession

The Great Recession was a totally different animal. The market began falling in October 2007, but didn’t bottom until March 2009, almost two years later. Afterwards, it took until March of 2013, four years later, for the markets to get back to even. Cramer said this kind of decline is the most dangerous, but fortunately, it’s truly a once-in-a-lifetime event, only occurring every 80 years or so.

The Great Recession was caused by the Fed raising interest rates 17 times in lock step, trying to cool an already cooling economy. The recession could have been avoided had the Fed done their homework and actually talked to CEOs, as Cramer did at the time.

Cramer recalled talking to the CEOs of banks, all of whom told him that defaults on mortgages were on the rise in a fashion none of them had seen before. Cramer’s famous “They know nothing” rant on CNBC stemmed from those conversations, as the Fed did nothing until the first banks began to collapse. The market fell 40% before finally finding its footing.

How can investors identify this type of devastating decline? Cramer said investors can ask whether the economy is on a solid footing. Is business declining? Is employment falling? Are interest rates still rising even as cracks are appearing? If big companies are unable to pay their bills, the problem could be a lot deeper than you think.

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Today’s Market

Today’s market is not like 2007, however, Cramer said. Business is stronger, our banking system is stronger and there’s still time for the Fed to take their foot off the brakes and wait for more data before proceeding.

So you’ve just spotted a mechanical breakdown in the market, what should you buy? Cramer said he’s always been a fan of accidental high-yielders, companies whose dividend yield is spiking because their share prices are falling with the broader averages.

He said that these stocks are always among the first to rebound, as their dividends help protect them. He advised always buying in wide scales as the market declines. That way, if the rebound is swift, you’ll still make a little money, but if it’s a larger, multiday sell off, you’ll make even more.

Cramer reminded viewers that when the Fed is cutting interest rates, almost every market dip is a buying opportunity. But when it’s raising rates, things get tricky. Not every rate hike causes a crash, however, only ones that push rates high enough to break the economy.

During these times, it’s important to remember that stocks aren’t the only investment class out there. You can also invest in gold, bonds or real estate to stay diversified.

It’s Not Just the Fed

The Fed isn’t the only reason why the market declines, and Cramer ended the show with a list of the other common culprits.

The first sell-off culprit are margin calls. Too often, money managers borrow more money than they can afford and when their bets turn south, they are forced to sell positions to raise money. We saw this happen in early 2018 when traders were betting against market volatility by shorting the VIX. When volatility returned, these traders lost a fortune and the whole market suffered.

There are also international reasons for the market to sell off, including crises in Greece, Cyprus, Turkey and Mexico, among others. Cramer said in these cases, it’s important to ask whether your portfolio will actually be impacted by these events. Usually, the answer is no.

Then there’s the IPO market. Stocks play by the laws of supply and demand after all, so when tons of new IPOs are hitting the markets, money managers often have to sell something in order to buy them. Declines can also stem form multiple earnings shortfalls as well as, yes, political rhetoric coming from Washington.

Cramer said many of these declines happen over multiple days. The key is to watch if the selling ends by 2:45 p.m. Eastern. If so, it may be safe to buy. But if not, there will likely be more selling the following day and it will pay to be patient.

By:

Search Jim Cramer’s “Mad Money” trading recommendations using our exclusive “Mad Money” Stock Screener.

To watch replays of Cramer’s video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer’s free Booyah! newsletter with all of his latest articles and videos please click here.

Source: More Selloff Strategies: Cramer’s ‘Mad Money’ Recap

 

%d bloggers like this:
Skip to toolbar