FINSUM + Magnifi: Wells Fargo Says Stage is Set for Gold
April 1, 2021
Wells Fargo’s head of real asset strategy John LaForge says gold could hit $2,200 an ounce this year. This
is all because of the news that gold supplies are deficient rather than excessive. LaForge pointed out
that it was supply deficiencies that sent gold on the rally from $250 to $1900 in the decade from 2001-
2011. LaForge said this could be gold's new “bull super-cycle”. Additionally, Wells Fargo sees traditional factors like easy money and a weak dollar as a positive outlook as well.
FINSUM + Magnifi: Chinese Tech Stocks Slip is an Opportunity
April 1, 2021
Chinese technology and financial regulation have been on the rise. And big tech companies such as
Tencent, Baidu, iQiyi, and Vipshop have seen their stock prices fall. Additionally, the forced liquidation of
key investment firm Archegos Capital Management hit these companies hard. However, KraneShares
CIO Brendan Ahern says this just sets the KraneShares CSI China Internet ETF back YTD, and that ultimately they are still bullish on the medium and long-run outlook for this sector. ETF Trend’s CEO
David Lydon, says this is a buying opportunity and these are key innovators in global technology.
FINSUM + Magnifi: Biden’s Planned Tax Hike Will Hit Clients Where it Hurts
April 1, 2021
One of Biden’s most important campaign promises was that he would not raise taxes on the middle
class, or more specifically those earning less than $400,000. However, there is a new Democratic
proposal circulating that would affect a wide range of Americans. The aim of the tax proposal
appears to be funding the new infrastructure bill by targeting “stepped up basis” in inheritance taxes as
a way to raise tax revenue. Right now, when inherited assets get transferred, their basis resets to
whatever the market value is at the time of inheritance. In this way, heirs only pay capital gains on the
increase in value that occurs while they hold the asset. Biden and his administration want to change
the rules in order to keep the basis in place from when the original buyer purchased the asset. This
change would not only affect the wealthy in a big way, but also the middle class, as the basis for many
assets would suddenly be very low, meaning large taxes would be due no matter the size of the estate
being transferred. A good example might be an inherited condo from a parent that was bought 30 years
ago and has appreciated from $100,000 at purchase to $600,000 now. Under the current system, a
middle class earner who inherited and decided to immediately sell the condo would pay almost no
taxes. However, under the new proposal, almost $100,000 in taxes would be due because basis would
be applied to the original purchase price.
Cryptocurrency
More and more, cryptocurrencies are becoming a medium of exchange. But they’re not your average dollar.
Cryptocurrency—or digital currencies that are based on blockchain technology—is a thing of the present, and the future. With Bitcoin prices soaring and more cryptocurrencies coming online, this new, digital financial instrument is drumming up more interest than ever.
Investors these days are wondering if it’s too late to invest in Bitcoin. And, if so, what are the other options available to investors who want to buy cryptocurrency?
Big banks are also trying to figure out how to modernize and innovate for the purposes of meeting customer interest in cryptocurrency. This has some banks creating their own currency exchange networks. Silvergate Capital’s Silvergate Bank, for example, offers the Silvergate Exchange Network (SEN), a digital payments network that facilitates 24/7 transfers of cryptocurrency.
Others, like J.P. Morgan Chase, are launching their own digital coins. Still others are providing services to manage the new currency. In early 2021, the Bank of New York Mellon, the nation’s oldest bank, announced that it would begin financing bitcoin and other digital currencies. It is the first traditional bank to offer services for digital assets.
Since they were first introduced, cryptocurrencies have developed into an alternative high-risk asset for affluent investors. As a financial innovation, they appeal to customers because they allow for real-time value movement, improving transaction speed and removing limitations on business hours.
Here’s what investors should know about the Bitcoin Cash and how is it different from Bitcoin.
What Is Cryptocurrency?
In order to describe Bitcoin Cash, it’s important to understand its predecessor, Bitcoin.
Unlike paper bills (fiat), cryptocurrency is strictly digital. Instead of a centralized bank monitoring currency purchases and exchanges, cryptocurrency “uses encryption techniques to control the creation of monetary units and to verify the transfer of funds.” Each transaction is recorded on a global public ledger recorded via blockchain technology.
Bitcoin was first described by an anonymous person(s) who went by the name Satoshi Nakamoto in 2008. Bitcoin was later released publicly in 2009. Although blockchain was first thought of as far back as 1991, it was really only first implemented as a currency model in 2009, the birth of Bitcoin.
Bitcoin is fundamentally different from other commodities. These days, it is typically used as an investment and exchange platform. (While it can be used to complete certain types of online purchases, these tend to be more complicated than paying with dollars.)
Bitcoin also allows for anonymity, as no central entity verifies buyers and sellers. Rather, the blockchain allows the ledger to be peer-to-peer, with no one entity maintaining ownership or control over the ledger.
A signature feature of Bitcoin transactions is that they have low fees and lots of flexibility. Think no more waiting two business days for a transaction to clear.
And, in the case of Bitcoin, there is a fixed amount of 21 million available. That nulls the issue of inflation that other currencies are subject to.
But, that fixed number, an increase in demand, and a flux in transaction fees is in part is what led to Bitcoin Cash…
In the years following Bitcoin’s launch, the cryptocurrency evolved from a fringe boutiquey interest to a more mainstream purchase and investment. As Bitcoin began to capture more and more interest from the general public, the blockchain technology that was pivotal to the use of the currency faced major challenges, resulting in increasing fees and less reliable transactions.
Out of that problem, Bitcoin Cash was born. Created on August 1, 2017, Bitcoin Cash was designed to help solve these scalability issues. In the world of blockchain it is considered a “hard fork,” or basically a new coin.
There are only 21 million units of Bitcoin Cash available in total, similar to Bitcoin. A major difference, however, is that Bitcoin Cash has larger blocks (between 8 MB and 32 MB), which allows space for more transactions per block. These larger blocks also make the system faster and more reliable.
Why Invest in Cryptocurrency?
The cryptocurrency market has yet to mature, but when it does, you might be happy that you decided to stuff your digital wallet with Bitcoin Cash in the early days.
Even now, to do so, you’ll have to dish out big bucks. As of March 16, 2021, 1 unit of Bitcoin Cash had the cash equivalency of about $523.
But, that’s much more affordable than the original Bitcoin. As of late February 2021, one Bitcoin was selling for $47,032.52. As of January 30, 2021, there were only 2,385,193 bitcoins remaining available for mining.
Bitcoin Cash, on the other hand, entered the market at $900 and has since reached an all-time high of $3,785.82. While the price of Bitcoin Cash in late February 2021 was about $515.93, predictions put Bitcoin Cash at higher than that, reaching $738.03 by December 2021.
Bitcoin Cash is faster and cheaper, at about $0.20 per transaction. (Bitcoin transactions cost about $25 per transaction, but fees have reached as high as $60.)
While Bitcoin Cash isn’t valued nearly as high as Bitcoin, Bitcoin Cash is still one of the top ten cryptocurrencies in the world.
The cryptocurrency world is still relatively new, but in many ways, Bitcoin has set the standard for these currencies. It is anticipated that in the long-term, Bitcoin Cash has the ability to take on some of Bitcoin’s market share, eventually becoming the most dominant cryptocurrency.
Unlock a World of Investing with a Magnifi Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
The information and data are as of the March 30, 2021 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
FINSUM + Magnifi: Why Financial Stocks Will Rally Big
March 2021
Eyes and ears have been on the Fed as the bond market still is unsure of the future of inflation, but it
was a different Fed announcement that had the market moving on Thursday. The Fed announced that
pending stress tests, the restrictions put on dividends and share buybacks will be lifted this summer. The
measures were put on banks to ensure financial security through the crisis. If banks fail to meet the capital requirements imposed by the Fed, then the restrictions will continue. Banking stocks ticked up
on the news as S&P Bank ETF KBE rose 2.8% on the announcement.
FINSUM + Magnifi: Agriculture Changing the ESG Landscape
March 2021
Farming, often considered one of the original green industries, has fallen out of sync with
environmental, social, and governance (ESG) practices because of the increased use of chemicals and
GMOs. However, the industry is seeing a turnaround with new policies and technology. The Biden
administration is looking to incentivize companies for green initiatives like carbon replenishment of the
soil as agriculture contributed to 9.9% of greenhouse gasses in 2018. Companies like Royal DSM,
Novozymes, and Bayer AG are working on enzymes to increase plant growth, feed additions to minimize
greenhouse gases from animal byproducts, and satellites to improve soil administration. Sustainable
agriculture is gearing up to compete with traditional mainstays.
FINSUM + Magnifi: Amp Up Your Portfolio with Robotic Stocks
March 2021
For years robotics was pigeonholed into major US manufacturing duties but new technology and
artificial intelligence are turning that around. Robots look to assist a much larger capacity with these
technology improvements, such as personal assistance, autonomous vehicles, biomedical assistance,
and delivery. Robotics was expected to have a CAGR of 25% from 2020 to 2025 so the growth is promising. Companies like Intuitive Surgical (ISRG), iRobot Corp (IRBT), and Rockwell Automation (ROK),
offer promising future growth prospects and value buys like ABB offer P/E ratios that are attractive
compared to the S&P 500.
FINSUM + Magnifi: ESG Grows and Branches into New Territory
March 2021
The pandemic has shifted the paradigm for many investors as they look to environmental, social, and governance (ESG) to make up a larger share of their portfolio. ESG will shape the future of investing but there is a new way to invest in green companies with a new twist. Sustainably linked bonds (SLB) allow firms to receive money for green energy initiatives but rather they will pay a penalty if they don’t meet expectations. Marilyn Ceci head of ESG development at JP Morgan expects SLB to hit $120-150 billion despite issuance since inception being only around $20 billion. SLB isn’t a threat to ESG as the industry is expected to grow from $270 billion last year to over $400 billion this year, but rather a compliment to the growing industry. ESG's ability to withstand the full business cycle is a testament to its future.
FINSUM + Magnifi: This Fintech Just Saw its Shares Surge Like GameStop
March 2021
Fintech company Upstart experienced a rally reminiscent of the Reddit-fueled GameStop frenzy weeks back as its stock jumped 171% over the last three trading days. However, fundamentals and not internet boards were the catalyst here. Upstart uses AI and machine learning techniques to underwrite consumer loans and passes this information off to banks that can better place borrowers. The company saw revenue growth due to a spiking 124,000 loan originations last quarter prompting the surge in stock price.
Read more
FINSUM + Magnifi: Real Estate Set for Pandemic Bounceback
(March 2021)
Real estate investment trusts are poised for a rally as the economy begins to open. Many specific sub-industries like retail shopping malls and college dorms are ready for the biggest swings. It's not just these sub-sectoral swings either, in general REIT yields are up 3.5% outpacing the 1.5% of the S&P 500. Spirit Realty Capital, National Retail Properties, Macerich, Weingarten Realty, American Campus Communities, and Brixmor Property Group are all S&P mid-caps that have higher than average yields that could perform even better in 2021. These companies mainly comprise retail stores, shopping malls, gyms, college housing, and grocery stores. All industries will no doubt further benefit from the reopening.
Read more