Bored Investors Enjoy “Easy” Wins
Bored Investors Enjoy “Easy” Wins
The S&P 500 has climbed almost 40% from the depths of its coronavirus-fueled lows. As outlined in a recent Wall Street Journal article, many individual investors have benefited during the rebound. Bored during quarantine, some stimulus recipients put their checks into the stock market to play what one person in the article called “a gambling game.” TD Ameritrade, a discount broker, reported a 250% increase in the number of new accounts, which has led to an average of 3.5 million daily trades so far in June, an almost unbelievable 4x increase year-over-year. These new investors have not been buying blue chip stocks, either. Instead, they have been executing increasingly risky trades, including buying shares in companies that have announced the need to file for bankruptcy. The rental car company, Hertz, is one such example. The environment appears very similar to the late-90’s tech boom when day traders bid up the price of any company that attached “.com” to its name. We consider the indiscriminate buying behavior very reckless. Often, early investment success leads to overconfidence. Overconfidence can spell doom for any investor because it typically brings with it a penchant for riskier trades coupled with a lack of proper diversification. This behavior increases the odds that one bad trade sinks an entire portfolio. At First Fiduciary, we stick to our disciplined investment process, focusing on valuation and including a thorough review of overall portfolio construction. No matter how confident we are in an investment, we limit our clients’ exposures to any one company or industry. With our careful approach to portfolio diversification, our clients benefit from long-term exposure to the stock market and meet their financial goals without taking on imprudent levels of risk.
Articles We Enjoyed:
Land Grab Universities
High Country News traces the history of the land-grant university system. In the second half of the 19th century, the US government gave land expropriated from indigenous people to a number of renowned state universities. The universities typically sold the land to fund their development. The massive wealth transfer helped build many of American’s great institutions of higher learning while creating a modern ethical dilemma of how to correct past wrongs.
Learning to Fight the Next Pandemic
While the current pandemic is likely far from over, Bill Gates writes in The Economist how the world can be better prepared for the next one. He outlines three scientific advancements that give him hope for the future: 1) better processes in manufacturing new vaccines, 2) improved diagnostic measures to identify novel viruses, and 3) breakthroughs in antiviral drugs.
China and India's Border Skirmishes
In 1988, when China and India came to a compromise on their shared border, the two countries’ economies were of similar size. Today, however, China’s economy is over five times larger than India’s. The economic disparity alters the balance of power between the two countries, worrying some defense experts.
Bug Bounties
HackerOne employs some of the best and brightest minds in the world to hack into the world’s biggest companies. However, this is not a criminal enterprise. In fact, companies like Google pay HackerOne to infiltrate its cybersecurity systems. HackerOne provides a valuable service, highlighting security flaws that can be fixed before more sinister players can exploit them.
Raphael, the Architect
500 years after Raphael’s death of viral pneumonia at the age of 37, coronavirus forced museums around the world to cancel anniversary celebrations. While most remember him for his paintings, this New Criterion article discusses Raphael’s prematurely ended career as an architect.
Economics of Chess
With most professional and college sports leagues shut down, chess has experienced a surge in viewership. The economist Tyler Cowen details the economics of online chess.
Pizza Arbitrage
Here’s a light-hearted take on the food delivery industry. The article includes an anecdote about one of the very few companies to make money from food delivery.
A Notable Read:
The Three Body Problem
by Liu Cixin
This is the first novel in Chinese writer Liu Cixin’s Remembrance of Earth’s Past trilogy, and it is unlike anything I’ve ever read. The story, set primarily in China, centers on a world in which humans are no longer able to make technological advancements. The lack of progress inevitably leads to fighting (both political and physical) among various groups of academics and world leaders alike, causing discord as an even stronger enemy advances. I’m anxious to see where the trilogy goes next. – AG
Recipes We Like:
Restaurants are slowly re-opening around the country, so we hope to bring you a new restaurant recommendation soon. In the meantime, please enjoy another of our favorite recipes.
Chickpea Craze
2 TBS olive oil
1 can garbanzo beans, drained and rinsed
2 TBS curry powder
Dash of red pepper flakes
Dash of black pepper
Dash of salt
2 cups kale, washed, drained and chopped
1 cup cooked quinoa
Juice of 1 lime
1 basket of cherry tomatoes, each cut in half
The quinoa can be cooked a day ahead and refrigerated. Have all ingredients ready to cook.
Add oil to a large frying pan and heat over medium high. Add garbanzo beans, curry powder, red & black peppers, and salt and stir. Add kale and cooked quinoa and stir again. When kale is bright green and slightly wilted, add lime juice and stir. Add tomatoes and stir just until distributed. Serve immediately.
Source: Howe Fun Lye-Starks, The Stir-Fry Project
This vegan dinner is a family favorite that is protein-packed, nutritious, quick and easy to prepare. – MA
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