#340
What Next?
Published:
Jun 13, 2020
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In a matter of three months since the health crisis and resulting market pendulum, we have witnessed four complete and rapid market cycles in the S&P 500 - cycles that usually take a decade to play out.
The first cycle was the rush to consumer staple stocks: canned soup, toothpaste, and toilet paper businesses, all of which outperformed the market.
The second cycle showed signs of confidence with investors backing tech stocks with stable growth and strong balance sheets. This was followed by the third wave to financial stocks - an indication that people were betting on a decent economic recovery.
In the last week, we’ve seen the fourth phase come and go in a blink – with a mad dash of exuberance from retail investors into bankrupt companies like Hertz and illiquid small-cap stocks.
What the next phase will be is anyone’s guess. The advent of one-click trading apps has given a new generation of investors a platform to enter the market for the first time and a zero cost. While Twitter and Reddit discussion boards push the mantra of “stocks only go up” Wile E. Coyote knows only too well that gravity catches up with you in the end.
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What's Next?
Hundreds of thousands of tiny buyers swarm to insolvency stocks - +70%: The minimum single-day stock appreciation seen Monday, June 8 for a half-dozen companies in or nearing bankruptcy. That included JCPenney (up 200%), Hertz Rent-a-Car (up 70%), Whiting Petroleum (up 200%), and Chesapeake Energy (up 440%). Read more
‘Bored’ millennial day traders boost airline ETF’s assets 2,930% - The number of users holding JETS on retail trading platform Robinhood surged to nearly 30,000 this week even after Berkshire Hathaway completely exited its positions in airlines due to COVID-19. Read more
The stocks-only-go-up strategy falls into a $2t ditch - “Stocks only go up” was the philosophy, and however tongue-in-cheek the intent, it got a jarring refutation Thursday as the S&P 500 plunged 6% and almost $2t was erased from equities. Selling was worst in areas of the market embraced by armies of retail investors that have swarmed to equities in the last month, including airlines, energy producers, and banks. Read more
Industry News
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Weekend currency trading beckons in age of nonstop news - The days of having to wait until Monday morning to react to news that broke during the weekend may be numbered for some investors. LMAX Group plans an “institutional grade” venue that will help some traders react to weekend tweets from President Trump! Read more
Banks say they’re gaining against fintech start-ups during pandemic - Traditional financial institutions are claiming the coronavirus pandemic is weakening the upstarts that have been challenging them since the last financial crisis with the CEO of Morgan Stanley citing Robinhood's outages as one example. Read more
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Lemonade files to go public - The New York digital renters and homeowners insurance startup has filed with the SEC to raise $100m in an IPO on the NYSE. The company reported annualized revenue of $100m in Q1. Read more
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Private Equity investing now allowed in 401(k) retirement funds - Employees seeking to enhance their 401(k) retirement savings in the U.S. can now invest in private equity firms via professionally managed funds, the Trump administration said. Read more
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Select Financings
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H4 - London based digital documentation startup raised $27m in venture funding from JPMorgan, Goldman Sachs, Barclays, and Linklaters. Read more
iBanFirst - France based international payments and FX platform raised €21m in Series C funding from Elaia and Bpifrance’s Large Venture fund. Read more
M1 Finance - Chicago based digital investment platform raised $33m in Series B funding led by Left Lane Capital. Read more
NS8 - Las Vegas based startup focused on online fraud detection and prevention for SMBs raised $123m in Series A funding co-led by Lightspeed and AXA Venture Partners (AVP). Read more
Pando - California based platform for organizing future earnings for people in high volatility careers raised $8m in Series A funding led by Core Innovation Capital. Read more
Planck - New York based data analytics platform for insurance providers raised $16m in Series B funding led by Team8 Capital. Read more
Propzy - Vietnam based consumer real estate platform raised $25m in Series A financing led by Gaw Capital and SoftBank Ventures Asia. Read more
Silverfin - Belgium based accounting software startup raised $30m in Series B funding led by Hg. Read more
Squire Technologies - New York based barbershop management and point of sale system software platform raised $34m in Series B funding led by CRV. Read more
Sun Exchange - South Africa based crypto-driven solar power platform raised $3m in Series A financing led by the Africa Renewable Power Fund. Read more
Tabby - Dubai, UAE based consumer financing startup raised $7m in Seed funding led by Raed Ventures. Read more
TaxProper - Chicago based property tax automation platform raised $2m in Seed funding led by Khosla Ventures. Read more
Trustly - Sweden based platform enabling merchants to better handle online transactions raised an undisclosed amount of funding led by BlackRock. Read more
Wahed Invest - New York based sharia-compliant investment platform raised $25m in venture funding led by Saudi Aramco Entrepreneurship Ventures. Read more
Ziina - Dubai, UAE based P2P payments app raised $850k in pre-seed funding led by Class 5 Global. Read more
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