Category Archives: Business

You Can Get the Same Bank Account as a Professional Investor. Here’s How.

Shortly after giving blood a week ago, I availed myself of the blood center’s free cookies and magazines. I flipped to an article about banking in poor, mostly black areas of the rural south:

…the national banks discourage poorer—and less profitable—clients through minimum-balance requirements and fees. And in many small towns around the Delta, good luck even finding a big traditional lender. From 2012 to 2017, low-income rural communities lost 14% of their bank branches, according to a Federal Reserve study.

This struck me as very sad, since I don’t deal with any of those problems. Ever.

What if you could get an account with a bank that’s entirely online, meaning you don’t need to worry if you live in a rural area? And what if that bank had accounts with no minimum balance and even free checks to boot?

Well, that’s the kind of account I have. And as I read that article, I thought about several friends who’ve had struggles with their banks and asked me the same question: what bank do you use?

I’ve used Ally Bank for about four years, and I do love it so! Here are some of the benefits:

  • No minimum balance
  • Free checks
  • Reimbursement of ATM fees up to $10/month, which is usually plenty for me
  • Tons of fee free ATM’s, including at every Walgreens and CVS
  • Every service is online, no branch to go to, wait in line, and catch COVID at
  • Wait time of 1-2 minutes at most to get a human on the phone, 24/7/365
  • Some of the highest interest rates for savings accounts in the nation, probably because they don’t have to pay for branches and tellers

A friend of mine recently had his bank account frozen due to fraud protection. Naturally, it conveniently happened on a Saturday afternoon, after the branches and phone lines were closed! With Ally’s 24/7 support, this would never have been an issue.

In fact, in four years, I’ve never had one problem with my Ally account.

As a professional investor, deciding where to put money is my entire job. So, I put a good bit of thought into this decision, and it’s worked out well for me.

I’d love to see people of more modest means, people in remote rural areas, and disadvantaged minorities get the same good service as a very fortunate urban white guy like myself. So that’s why I wrote this post!

I have no affiliation with them and won’t get a dime if you sign up. But if you do decide to, the link is here.

Have a great weekend everyone!

For more on saving money and financial issues, check out these posts:

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Photo: Me and some random person’s car. 🙂

28% Of Americans Bought Meme Stocks in January

I came across a shocking fact this morning: 28% of Americans bought a meme stock like GameStop or AMC in January:

Over a quarter of American adults say they bought GameStop (GME) or another viral stock in January, according to a new survey from Yahoo Finance and The Harris Poll.

All in, 28% of Americans say they bought one of these viral stocks, the Yahoo Finance-Harris Poll found.

AMC was the most popular, closely followed by GameStop and then Blackberry:

In relative terms, 35% of people who bought one of these stocks bought AMC, 33% bought GameStop, and 23% bought BlackBerry.

And they went beyond just buying the stock, getting into sophisticated and potentially risky strategies like options and buying on margin:

Meanwhile, 29% used conditional trading like a limit order, 22% bought call options, and 15% bought with margin — borrowing money to get in.

The people using these sophisticated techniques were largely novice traders:

The survey found that 43% of the people who said they had a brokerage account had signed up within the past month, an enormous uptick that matches Google trends results that showed that more people were googling “how to buy stocks” than ever before.

More here.

I see real risk if novice investors buy heavily touted stocks with debt. They could lose a great deal. And the more they lose, the bigger the push for regulations to stop such speculation will be.

For more on the Wallstreetbets phenomenon, check out these posts:

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Photo: “Retail GameStop” by ccPixs.com is licensed under CC BY 2.0

Bitcoin Anonymity Could Become A Thing of the Past If This Regulation Passes

In the waning days of the Trump administration, the government proposed regulations that would ban anonymity for holders of cryptocurrencies:

Users whose wallets now are only identified with codes would have their true identities recorded with the financial institutions they zealously avoided.

This proposed regulation has now been passed on to the Biden administration. There’s no timeline for a decision, but removing anonymity from crypto transactions could hammer the price:

If adopted, the regulations could cause a sharp fall in the prices of virtual currencies like Bitcoin, said Matthew Maley, chief market strategist for Miller Tabak & Co., adding that he thinks Bitcoin’s price will continue to rise in the long term.

There are some major companies like Fidelity and Coinbase pushing to retain anonymity, and I think their political influence may stop such regulations. But on the other hand, the possibility for anonymity to facilitate drug deals and terrorism could push the government in the opposite direction.

For more on the latest in cryptocurrencies, check out these posts:

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Photo: “Bitcoin, bitcoin coin, physical bitcoin, bitcoin photo” by antanacoins is licensed under CC BY-SA 2.0

Palantir Options Are Bullish, But This Company Is Still a Dog

We are seeing strong options activity on Palantir Technologies, Inc., which is a darling of the Reddit crowd:

On CNBC’s “Options Action,” Mike Khouw said about 610,000 contracts traded in Palantir Technologies Inc on Wednesday and calls outpaced puts by about three to one. The most active calls were the 26 strike calls that expire at the end of this week.

See the full video here.

Regardless of what the options market is saying, my view on Palantir is that it’s a terrible, money losing company. It has lost money every single year of its 18 years in business, and its current burn rate is $100,000,000 a month. Other major tech companies like Amazon and Google made it to profitability much sooner, so I’m not inclined to give Palantir a break. This is one you want to avoid.

For more on Wallstreetbets, check out these posts:

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Photo: “PandoMonthly – April 2012 – Sarah Lacy Interviews Peter Thiel” by thekenyeung is licensed under CC BY-NC-ND 2.0

Wallstreetbets’ Next Stop: Asia

Stock mania has gripped the US throughout the year. And now it’s spreading to Asia, where trading volumes are rising far faster than even in the US:

The value of stock trades matched on exchanges, in what is known as electronic order-book trading, gives a sense of the trend. Such trading on the Shanghai and Hong Kong exchanges more than doubled in January from a year earlier, to $1.37 trillion and $517 billion respectively, World Federation of Exchanges data shows. In South Korea, it more than tripled to $709 billion.

For comparison, similar trading for Nasdaq Inc. in the U.S. stood at $2.2 trillion, up 54% from a year earlier, while for Germany’s Deutsche Boerse AG and the London Stock Exchange Group PLC the equivalent figures were $178 billion and $148 billion.

I would expect to see higher volatility in some Asian stocks given this trend. This would mirror the increase in volatility in the US this year that we saw during big run-ups in meme stocks in late January and late February, as seen in the VIX index:

For more on Wallstreetbets, check out these posts:

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Europe Is Falling Behind the US, and It’s Going to Get Worse

A huge untold story of the world today is how far Europe has fallen behind the US economically in recent decades:

Here are the 2019 numbers (in 2019 dollars, again World Bank) US: $65,297. UK $42,330. That’s 35% less than the US. Or, the US is 54% better off than the UK.. France: $40,494. Italy: $33,228 That’s 50% less than US. Or the US is 96% better off than Italy. China: $20,261.

And it’s been getting steadily worse. France got almost to the US level in 1980. And then slowly slipped behind. The UK seems to be doing ok, but in fact has lost 5 percentage points since the early 2000s peak. And Italy… Once noticeably better off than the UK, and contending with France, Italy’s GDP per capita is now lower than it was in 2000.

More here.

So why is this happening? Regulation and lack of investment in IT in the services sector are chief suspects.

I definitely noticed this difference when I went to Paris for the first time in the fall of 2019. I was expecting a gleaming city, but I was surprised at the poverty I saw. There were panhandlers at the airport, which I’ve never seen in the US, and a lot of crumbling buildings and down-and-out people. It was rather sad. However, I enjoyed my time there a great deal, and would recommend their delicious food and superb art highly.

With the vaccine rollout in Europe going far more slowly than in the US, I think they will fall much further behind, and quickly. Other parts of the world will be wide open while they’re still locked down.

On the bright side, this could provide a great opportunity for the UK to catch up, since it has outpaced the US, China and almost every other country worldwide on vaccines. Their speed and innovative policies, like delaying second doses of vaccines, have impressed me a great deal.

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Photo: Image by Nocturnales is licensed under CC BY-NC 2.0

Congress Is Investigating Wallstreetbets Over GameStop, But the Law’s On Their Side

Congress is investigating whether traders on Reddit’s Wallstreetbets colluded to drive up the price of GameStop, possibily illegally. But two major legal precedents are on the side of Wallstreetbets:

In the DRW case, the CFTC argued the defendants’ orders for a swap contract were “inherently manipulative” because the defendants “understood and intended that their bids would affect the settlement price” of that contract. As the court summarized, the CFTC’s position was that the defendants “had intent to affect the prices, and because they had intent to affect the prices, that means [the prices] were illegitimate, which means that the prices were artificial.” The court rejected that logic as “circular,” concluding the government’s “theory, which taken to its logical conclusion would effectively bar market participants with open positions from ever making additional bids to pursue future transactions, finds no basis in law.”

More here.

The way I view this is people saying “You should buy GME!” on an online message board are exercising their free speech. Period.

For more on the Wallstreetbets phenomenon, check out these posts:

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Photo: “GameStop” by JeepersMedia is licensed under CC BY 2.0

Short Sellers Lost Almost $1 Billion on Rocket Companies Yesterday

As Rocket Companies jumped over 70% yesterday, short sellers are feeling the pain:

A surge in the shares of U.S. mortgage provider Rocket Companies on Tuesday is estimated to have inflicted losses of $813 million on short-sellers, data from financial analytics firm Ortex showed.

More here.

Given that this is one of the most shorted stocks in the market and yet has big profits, I could see short sellers losing even more on this one. How long until they give up and frantically cover their bets to avoid the fate of Melvin Capital?

For more on Rocket Companies and Wallstreetbets, check out these posts:

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Photo: “Key West, Feb 2012 – 08” by Ed Yourdon is licensed under CC BY-NC-SA 2.0

How Bitcoin Could Reach $400,000

I came across an interesting stat today: the estimated value of all the gold in the world is $7.5 trillion. Gold and bitcoin are often compared as stores of value with a limited supply. What if bitcoin became as widely accepted and highly valued as gold?

At the current market cap of $949 billion, bitcoin would have to multiply in value eight fold in order to equal the value of all gold reserves. Bitcoin’s price is already heady at over $50,000, up from under $9,000 a year ago. But this stat makes me think it may have more room to run. If it reached parity with gold, one bitcoin would be worth $400,000.

Bitcoin is much easier to store and exchange than gold. On the other hand, gold has a much longer track record as a store of value and also has some industrial uses.

I prefer cash flowing stocks, bonds and real estate to either one, but for someone like me who is used to dismissing cryptocurrencies, this information did give me pause.

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Photo: “Bitcoin, bitcoin coin, physical bitcoin, bitcoin photo” by antanacoins is licensed under CC BY-SA 2.0

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too! 

Bitcoin Is Worth More Than Double All US Gold Reserves

When it comes to storing value, what could be more iconic than Fort Knox, where the US keeps a large portion of its gold reserves? It’s heavily guarded and contains gold worth over $290 billion.

But that along with all other US reserves, at $456 billion, are worth less than half of the value of all bitcoin, at $948 billion.

The value of all bitcoin worldwide still pales in comparison to the value of gold, however. Were they to reach parity, bitcoin’s value would have to multiply many times.

(I arrived at the value of all US gold reserves by taking the reserve amount here and multiplying it by the price per metric ton here.)

For more on cryptocurrencies and financial markets, check out these posts:

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Photo: “Bitcoin, bitcoin coin, physical bitcoin, bitcoin photo” by antanacoins is licensed under CC BY-SA 2.0