Thriving with Interest!

What happened to get ETH a major leg up over the past 48 hours? Ethereum Improvement Protocols (EP) went live. What this means is that this  new fork will help the network become more efficient in terms of gas fees and, probably most importantly, it is starting to burn those fees (basically sending them to ETH addresses that are not accessible by anyone - which will reduce supply). What are the effects? Bitcoin has always had the edge in that people it has the 21 million cap. Ethereum didn't. With this new fork, Ethereum will possibly similarly be capped (or at a minimum it won't grow as much). The network is now burning new ether. As of 6pm Pacific Coast Time on 6 August, 7,300 ETH have been burned: you can monitor it here  https://ultrasound.money/ The price of ETH has risen close to $1,200 in the last 3 days from a low of close to $1700 to close to $2,900 on Friday evening. From a technical perspective this has led to a breakout which now means that it is likely to reach $3...

A recent headline from the WSJ: Let's be clear here, we needed to do a lot to shore up the economy during the pandemic caused recession of 2020. Virtually any job loss was not of one's own doing, but rather to this crisis. Therefore printing and handing out trillions of dollars was necessary.  This has worked miracles in terms of getting the economy back on track. Despite a slightly less than expected Q2 GDP numbers, we have had the fastest rebound ever and are back to pre pandemic levels and trajectory: We also have an economy with more job openings than applicants, real estate/stocks/other investment markets at or near all time highs.  Savings rates are sky high too.    Yet the Biden administration is looking to extend the eviction moratorium. This should not be a go to move. There comes a point where too much debt and printing of free money will not do anyone any good.  Firstly, $47 billion have already been allocated to help renters/landlords. Unfortunately ...

It sometimes doesn't matter how long one has spent looking at the stock market, there are some obvious things that can happen that are not spotted by even veteran investors... Firstly, for those of you that have missed it, Robinhood shares started trading last week at a price of $38. For the first few days, the IPO was a bust... Here we are a week later and the price has doubled in that time. For those that are fans of graphs: The cause of the bounce this week? WallStreetBets talking up the stock Options trading began on HOOD Overhang from "weak" hands had been taken out in the first few days of trading. So where does that leave us now? A stock that is worth almost as much as ICE, the owner of the NY Stock Exchange A stock that doubled in the space of 2 trading sessions and up 85% from it's IPO price The second most actively traded share on the US markets and most active stock on the retail platforms operated by the big brokerage firms. What to do now. Well from a med...

I read an excellent blog called 1729 from Balaji Srinivasan. I would strongly suggest that you do the same. Check out 1729.com . As an aside, many of you might be wondering what is special about 1729? No, it doesn't refer to some historical event that happened that year. Rather,  1729, the Hardy-Ramanujan Number, is the smallest number which can be expressed as the sum of two different cubes in two different ways.  1729 is the sum of the cubes of 10 and 9 - cube of 10 is 1000 and cube of 9 is 729; adding the two numbers results in 1729.  1729 is also the sum of the cubes of 12 and 1- cube of 12 is 1728 and cube of 1 is 1; adding the two results in 1729. Ok, enough of the math lesson, back to today's topic, remittances and how they are revolutionizing the uptake in crypto. Today, there was a great blogpost on 1729 and it was entitled: Here is the actual link to the story: https://1729.com/crypto-remittances The key takeaways are as follows: Every day, millions of foreign w...

Here is a headline from today's WSJ: For those of us that have worked in the investment banking industry, the name Goldman Sachs often conjures up very strong feeling, both positive and negative. Haters will hate, but what is clear is that they are a gold standard of investment banking and that anyone who has the opportunity to work there (Goldman's interview process is notoriously time consuming and difficult), should hop on it for the simple reason that you will eventually be able to parlay that into something great a few years down the road if/when the time is right to make a move.  On the one hand, this is not a surprise. Goldman announced Q2 profits of $5.49 billion (on revenues of $15.39 billion - this is a good gig if you can get it). This is coupled with very positive outlook statements given the visibility of deal flow, backlogs. Note that trading revenues are more volatile and less predictable. For this reason, raising salaries is not an issue for investment banks. On...

Over the course of the month I wrote the following posts that said it was a decent time to get into some BTC and to buy the S&P (and European markets).  For reference here are the posts: S&P 500: https://thrivingwithinterest.blogspot.com/2021/06/s-500-target-is-5250-in-our-sights-this.html BITCOIN: https://thrivingwithinterest.blogspot.com/2021/07/woah-thats-quite-move-in-bond-market.html EUROSTOXX50 https://thrivingwithinterest.blogspot.com/2021/05/where-to-invest-now-europe-of-course.html As the month of July comes to end, it would be nice time to update those predictions. Here goes... Bitcoin is bumping up against resistance: If anything, you could get out of some BTC and roll that into ETH as the ratio is near a medium term bottom here: And the S&P 500 is still looking like it will continue to motor ahead (despite today's little wobble it had a good July and overcame a 7% drop in AMZN shares too): The EuroStoxx is having a hard time here, but if it breaks above this...

It's ok, and even cathartic, to cry... Scott Galloway (I wholeheartedly agree) Let me first take a step back... At the end of May I wrote a blogpost listing 5 of my favorite podcasts for those of you looking to increase your financial literacy. Here is the link: https://thrivingwithinterest.blogspot.com/2021/05/top-5-podcasts-to-increase-your.html I would like to add another podcast as a must listen. Even though it's not a purely financial one, you will certainly learn a lot about finance, marketing and business in general from the great Scott Galloway, professor at NYU Stern School of Business and host (or co-host with Kara Swisher) of a couple of great podcasts. The one I want to focus on here (and add  to the list above), is the Prof G Pod with Scott Galloway: In today's podcast he had a fascinating interview with Jonathan Haidt, also of the NYU Stern School, but what I would like to highlight is the last segment of his show (basically the final 5 minutes) which he entit...

A big IPO is due to come to market on Thursday, that of Robinhood (stock code HOOD). Good luck... A few people have asked me what to do with it and I have one simple answer, steer clear. Here is the deal, they are actually living up to their name and handing out shares to users of the app. That's pretty cool. Until it isn't... (because I think the stock will go down from here) Firstly, the $38/share price implies a valuation of over $30 billion. A year ago the company was valued at $12 billion. Yes the company has done well over the past year+ but that's a big rise for a company that may be past it's prime. For one the world is slowly returning to normal and the days of daytraders dominating markets (and using Robinhood) may be behind us.  Here is a snapshot of it's revenue (and expense) growth: Nice chart... That being said, bears like me could point to the fact that it appears likely that growth has peaked and they will have a hard time signing up new customers at...

It's a shame that nobody seems to be watching these Tokyo 2020 Olympics. I know it's hard with so many people having cut the cord and needing to find the appropriate place to stream the various events. Just a few days into the Olympics there have already been so many great stories. A 13 year old Japanese girl took home the gold in skateboarding ( 頑張って). On the other hand of the spectrum,  Oksana Chusovitina, a  46-year-old   gymnast from Uzbekistan, competed in her eighth Olympic Games this week. But the story so far (or story 1.b. after Naomi Osaka lighting up the Olympic flame) has to be the decision overnight by Simone Biles. At the Tokyo 2020 Olympics the great Simone Biles withdrew from the gymnastics team finals after her first rotation. Initially it might have appeared that her decision was brought on by a physical injury. The ultimate decision didn't have much do with with anything physical, but rather entirely mental. Team USA was already trailing the Russian Oly...

Over the past day or two there has been quite a rally in BTC price, primarily brought about by the chitchat that Amazon would most likely be looking to accept Bitcoin payments by the end of the year. As such it has certainly bounced back off a nice support level in the low $30,000 range. Amazon has an ad for a "digital currency and blockchain product lead” and it has sparked rampant speculation over what the tech giant might have planned. The new position will be part of the team responsible for how Amazon’s customers pay on its platforms. That being said, Amazon has come out to clarify things a bit. This morning a spokesperson from Amazon said:  "Notwithstanding our interest in the space, the speculation that has ensued around our specific plans for cryptocurrencies is not true,  We remain focused on exploring what this could look like for customers shopping on Amazon." Which has led to a slight pullback in the price of Bitcoin.  In addition, there has been speculation ...

What a difference a few days make. On Monday US equities markets had their biggest one day fall of the year, and by the close of business on Friday, we had just reached all time highs on the 3 major indices. A picture tells 1,000 words, so here goes: On Monday and Tuesday the financial pundits kept on highlighting reasons why this pullback occurred, Covid 19 cases being one of the key points, but potential interest rate hikes, questions regarding earnings, and broader economic slow downs were other reasons. Funnily enough on Wednesday I was fortunate enough to meet up with a high school classmate and her teenaged children. They were asking me about day trading as many of their friends were into that sort of thing. I told them that I would steer clear of it and that it was always better to take medium to long term views on markets and you will stand a better chance of making it work out. Low and behold, I wish we met up today because I would have been able to pop up the chart of the wee...

Many countries around the world are seeing a renewed increase in Covid cases. Some of the more astute politicians and health officials have even come to the conclusion that we will not be able to totally eradicate Covid but will have to learn how to live with it (see statements from UK Health Secretary Sajid Javid and Singapore's  Covid 19  Multi-Ministry Task Force). To some extent we have had that here in the US for quite some time with the country basically reopened since May/June depending on the state and I wrote about this in May:  https://thrivingwithinterest.blogspot.com/2021/05/how-quickly-do-we-get-back-to-post.html ) With vaccinations becoming more and more widely available in most western countries (even in Japan they are doing much better), and with the US now willing to step up and take a leading role in helping the rest of the world by shipping excess doses to countries in need, we will slowly get to a situation where people who want to get the vaccine will...

For those of you that follow the Bitcoin price closely, you probably know why the price popped up today. One word: Elon Musk. Bitcoin price has fallen by over 50% from its all time highs reached in April. It has had a hard time finding it's footing, although it is a very important support level here. 24 hours ago it seemed like it was on the verge of breaking down and soon find itself on a further downward trajectory that would lead it to the low $20,000s (blue line above). The reasons for the fall are well documented: Elon Musk tweets, China mining crackdown, Binance issues, Ransomware, possible increased regulatory scrutiny, and technical breakdown. Today's pop in Bitcoin, Ethereum and other crypto's is all down to an interview given by Elon Musk at the B Word Conference. Here is a recap of some of his statements: “One thing you do need to watch out for with crypto, especially bitcoin, using proof of work, using energy that’s a bit too much and not necessarily good for th...

I just read this article on the IFLS website from July 15th about how the world population will decline at some point after 2064 (this might still come too late to do anything about Climate Change). This would be the first time this happens in the absence of a global famine, pandemic (hold that thought...), war, etc... but rather because of the lowered fertility rates. Here is the full article for your perusal ( https://www.iflscience.com/health-and-medicine/for-the-first-time-in-centuries-the-worlds-population-will-decline-in-next-few-decades/ ): Make no mistake about it, there are great benefits to learning a second (or third/fourth/etc... language). I am in the process of spending time learning Japanese in order to complement my panoply of foreign languages. So I am all for this endeavor. One can make a very valid argument that learning programming languages is equally (if not more) valuable. So go for it.  From an economic perspective the greatest bang for your buck is learning...

Robert Reich, a noted public figure who was former Labor Secretary under Clinton, is a frequent commentator on various media outlets, and currently professor at UC Berkeley, highlighted the following story: Normally I am a bit skeptical with many of Mr Reich's views on policy and the role of government rules/regulations and capitalism in the various ills that plague the US, but on this one I couldn't agree more. This is his take on the situation: " Friends, stock buybacks don’t create more or better jobs. They don’t build a company. They don’t grow the American economy. Stock buybacks serve one purpose: enriching shareholders and executives. Kroger made billions thanks to the hard work of its frontline employees, and instead of rewarding them, it's rewarding the executives who got to safely work from home. Remember: Stock buybacks were illegal until the Reagan administration legalized them in 1982 — around the same time most Americans' wages started to become stagn...

  WSJ story July 16 There was a WSJ story today that highlighted how difficult it is to buy a new or used car with sales prices often exceeding sticker prices. This is consistent with other big purchase items such as housing, furniture, etc...Chip shortages, low inventories, and consumers flush with cash are 3 of the key reasons for the sharp price rises in the car market. This leads me to the following stock price recommendation. There are two names that come to mind: Carvana (CVNA)  and CarMax (CMX). Carvana is going gangbusters, with sales almost doubling YoY and up 10x over the past 4 years. However at $50+ bil market cap, it is currently over 5x Price to Sales. I am a sucker for a growth company, and this one certainly fits the bill, however with the stock up from $30 in the depths of the Covid selloff in March 2020 to over $300 today, that is a bit rich. Therefore let's take a look at the leader in the in industry, CarMax. They are currently trading below 1x sales and wi...