1. What Did Stock Splits Look Like During the Internet Bubble vs. Today?

From Dave Lutz at Jones Trading

2. Get Ready for a Crazy Wave of IPOs. Here Are the Ones to Watch.

BYEric J. Savitz

Sandy Miller, general partner at Institutional Venture Partners, notes that the number of public companies has fallen in half over the last 20 years, as M&A has outstripped new issues. “There’s a real hunger for new names,” he says. 

Coming Attractions:

A few of the tech companies that filed for IPOs this past week.

Company	Latest Fiscal Year Sales	Description
Corsair Gaming	$1.1 billion	Video game accessories
Palantir	743 million	Data analytics
Bentley Systems	608 million	Construction engineering SW
Unity Software	542 million	Video game developer tools
Snowflake	265 million	Cloud data management
Sumo Logic	155 million	Data analytics
Asana	143 million	Work management software
JFrog	105 million	Software release management

Source: company reports

The supply is deep. Venture-backed unicorns—pre-IPO companies with valuations above $1 billion—are piling up like kindling. According to CB Insights, there are 490 unicorns. By contrast, there are just shy of 2,000 companies trading on the Nasdaq or the New York Stock Exchange with valuations above $1 billion. In other words, if all the unicorns magically listed at once, the number of large cap U.S.-listed companies would increase by 25%. Most but not all unicorns are tech businesses, so consider this: Over the past three years, there have been a total of 100 tech IPOs. The current supply of unicorns is equal to 14 years of tech stock debuts.

https://www.barrons.com/articles/the-ipo-market-is-about-to-go-crazy-here-are-the-ipos-to-watch-51598658370?mod=past_editions

 https://www.cbinsights.com/research/best-venture-capital-unicorn-spotters-2/

Unicorn Hunters: These Investors Have Backed The Most Billion-Dollar Companies

3. The Urge to Reverse Merge

SPACs are just getting started

The “blank check” acquisition funds known as special purpose acquisition companies, or SPACs, have raised more than $30 billionso far this year, versus $13 billion in all of last year. Can they keep it up? DealBook spoke with some of the most plugged-in SPAC bankers and lawyers on Wall Street, and they cited three factors driving the boom

1. Valuations are soaring for popular SPAC targets

“The pipeline is heavily weighted to technology and growth companies,” said Niron Stabinsky, who leads SPAC deals at Credit Suisse. He said that he speaks to big venture firms “weekly” about their portfolios. Many have taken notice of recent success stories, like Virgin Galactic’s merger with a SPAC led by the former Facebook executive Chamath Palihapitiya. SPAC offerings will be “incredibly active post Labor Day,” said Paul Tropp, the co-head of Ropes & Gray’s capital markets group. That’s part of a “significant uptick” in listings expected to hit the market before election-related uncertainty sets in: Yesterday, the tech firms Asana, JFrog, Snowflake and Unity all filed to go public.

2. SPACs aren’t just an alternative to traditional I.P.O.s

“SPACs have become a new way of doing an M.&A. deal,” said Jeff Mortara, the head of equity capital markets origination at UBS. A merger with a SPAC allows the target company’s investors to retain a stake while gaining liquidity, and deal negotiations can be done directly, secretly and quickly. SPACs typically have two years from their I.P.O. date to complete a merger.

3. The flood of money to SPACs means better terms for targets

“Everything is negotiable,” the venture capitalist Bill Gurley wrote in a detailed case for SPACs on his blog this weekend. As competition between SPACs intensifies, “sponsors are continuing to negotiate deals that look better for the companies they buy,” he said in the essay, which quickly became the talk of Wall Street and Silicon Valley.

Why? Some SPAC sponsors are open to a smaller “promote” — the stake the sponsor gets essentially free after a merger. (Traditionally, a sponsor takes 20 percent.) SPACs also award warrants to the vehicle’s investors, which give them the right to buy larger stakes in the merged company at a discount; these are becoming less dilutive as sponsors shift their terms to be more favorable to the target company. In the life-sciences industry, where SPACs have “nearly replaced late-stage financing and I.P.O.s,” warrants have come down to zero in some deals, said Christian Nagler, a partner in the capital markets practice at the law firm Kirkland & Ellis.

The standard-bearer of a new approach for SPACs is the $4 billion fund sponsored by Bill Ackman’s Pershing Square, the largest to date. The fund’s warrants are structured in a way that encourages investors to stay invested longer in the merged company, and Pershing will take its “promote” only if the company it buys meets certain performance goals. Sponsors without Mr. Ackman’s reputation may find those terms hard to imitate, but some are adopting similar elements all the same, experts say.

What’s next? Mr. Gurley predicted that SPAC fund-raising this year could be four times higher than the previous record, set in 2019, implying another $20 billion or so to come. The buoyant markets are attracting figures not known for deal making to the space, like the former Congressman Paul Ryan and the baseball executive Billy Beane, which sows doubts among some about the durability of the boom. Just SPAC mergers involving electric car companies and auto technology firms — “deals on wheels,” as one analyst put it to The Times’s Neal E. Boudette and Kate Kelly — are already worth more than $10 billion.

____________________________

Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut, Lauren Hirsch in New York, and Michael J. de la Merced and Jason Karaian in London.

Editors’ Picks

4. Investors Dump ‘Dead Weight’ Cash-Like ETFs at Record Pace

Katherine Greifeld

Investors Dump ‘Dead Weight’ Cash-Like ETFs at Record Pace

(Bloomberg) — Investors are abandoning cash holdings at a record clip as momentum continues to build behind 2020’s risk rally.

Roughly $5.4 billion has exited from the $20 billion iShares Short Treasury Bond exchange-traded fund — the biggest ultra-short duration ETF — over 14 consecutive weeks of outflows. That was the longest streak on record for the product, whose ticker is SHV. Meanwhile, investors have pulled $2.4 billion from the $14 billion SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) over 10 weeks, according to Bloomberg Intelligence data.

Investors accumulated record amounts of cash earlier this year amid concern over the impacts of the coronavirus pandemic on the global economy, with assets in money-market mutual funds soaring to a record $4.8 trillion in late May. Now, that cash is coming off the sidelines as stocks surge and corporate bonds look increasingly appealing. Additionally, the Federal Reserve’s commitment to keep interest rates at near-zero levels for the foreseeable future is further curbing appetite for short-duration Treasury ETFs.

“It’s recognition that ‘ZIRP’ will be around for a long time, combined with a rising risk appetite,” said Kathy Jones, Charles Schwab Corp.’s chief fixed-income strategist, referring to the concept of a zero interest-rate policy. “Short-term Treasury ETFs are looking less attractive than alternatives. Equities are benefiting. We also see interest in foreign equities and high-yield and emerging-market bonds.”

The S&P 500 has surged more than 55% from March’s bottom, notching a fifth straight month of gains in August. The Fed’s credit market backstop has boosted both investment-grade and junk bonds, with the largest high-yield debt ETF climbing nearly 24% since late March. The emerging-market outlook is also considerably brighter amid the dollar’s continued weakness and the Fed’s new average-inflation targeting regime.

The exodus from ultra-short duration ETFs is also likely due to investors trying to eliminate the “cash drag” in their portfolios by reinvesting in higher-yielding assets, according to Dan Suzuki at Richard Bernstein Advisors.

“Because they’re not generating any yield, they are acting as huge dead weight in many people’s portfolios,” said Suzuki, the firm’s deputy chief investment officer. “Investors are probably chasing higher returns, which means moving up the risk spectrum.”

(Updates prices in 5th paragraph.)

For more articles like this, please visit us at bloomberg.com

https://finance.yahoo.com/news/relentless-risk-rally-spurs-record-155206736.html

5. Warren Buffett’s Berkshire Hathaway reveals $6 billion investment in 5 Japanese giants

Theron Mohamed

• Warren Buffett’s Berkshire Hathaway disclosed a $6 billion bet on five of Japan’s biggest trading companies in a press release on Sunday night.
• The billionaire investor’s company revealed that it owns just over 5% of Mitsubishi, Mitsui, Itochu, Marubeni, and Sumitomo.
• “I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” Buffett said in the statement.
• Visit Business Insider’s homepage for more stories.

Warren Buffett marked his 90th birthday on Sunday by revealing a $6 billion investment in five of Japan’s largest trading companies.

The famed investor’s Berkshire Hathaway conglomerate has built passive stakes of just over 5% in each of Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo over the past 12 months, it said in a press release. Its National Indemnity subsidiary made the investments and will officially notify Japanese regulators of the positions when trading begins on Monday.

“I am delighted to have Berkshire Hathaway participate in the future of Japan and the five companies we have chosen for investment,” Buffett said in the press release.

“The five major trading companies have many joint ventures throughout the world and are likely to have more of these partnerships,” he continued. “I hope that in the future there may be opportunities of mutual benefit.”

Shares in Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo all rose between 4% and 10% on Monday.

Buffett’s company highlighted its longstanding positions in Coca-Cola, American Express, and Moody’s in the statement, underscoring its intention to maintain the Japanese investments for the long term. 

Berkshire has the option to boost its stakes as high as 9.9% in any of the five companies. Buffett pledged to seek approval from the relevant board of directors to raise it beyond that point.

Investing in Japanese companies is a departure from the norm for Berkshire, as it has historically favored American businesses such as Apple and Bank of America. However, it has made a few foreign bets on companies such as Brazilian payments group StoneCo.

https://markets.businessinsider.com/news/stocks/warren-buffett-reveals-6-billion-investment-5-japanese-companies-2020-8-1029546397#

6. QQQ vs. EFA (developed Europe) 5 Year Chart….U.S. Tech Sector Now Worth More Than Entire European Stock Market.

QQQ +179% vs. EFA +8%

www.yahoofinance.com

The US tech sector is now worth more than the entire European stock market, Bank of America says

Ben Winck

Henny Ray Abrams/AP Photo

• US tech stocks have overtaken the entire European stock market in market value as investors crowd into mega-caps to ride out the coronavirus pandemic.
• The tech sector is now worth $9.1 trillion, Bank of America said Thursday, while European stocks — including those in the UK and Switzerland — are worth a collective $8.9 trillion.
• The five largest US tech stocks — Apple, Microsoft, Alphabet, Amazon, and Facebook — are worth a collective $7.5 trillion and make up nearly 24% of the S&P 500.
• Amazon has jumped the most in 2020 so far, while Alphabet’s Class A shares have gained the least.
• Visit the Business Insider homepage for more stories.

US tech stocks surpassed the entire European stock market in market value after surging through the summer on outsize investor interest, Bank of America said in a note to clients.

The sector has notched several extraordinary superlatives through the coronavirus pandemic. Tech names fueled the US market’s rapid leap out of bearish territory and now host historically high investor crowding. Most recently, the group drove the S&P 500 to a record high, while the US remains deep in an economic slump and economists fear a double-dip recession.

Tech stocks’ market cap totaled $9.1 trillion as of Thursday, Bank of America said. That, for the first time, dwarfed the total value of all European stocks — including those listed in the UK and Switzerland — which stood at $8.9 trillion.

To emphasize the speed at which tech stocks have grown, the bank noted that Europe’s market cap in 2007 was roughly four times the size of the sector.

Much of that value is concentrated in the top five tech giants: Apple, Microsoft, Alphabet, Amazon, and Facebook. Together the companies make up nearly 24% of the S&P 500 and are worth roughly $7.5 trillion. Apple alone is valued at over $2 trillion.

Investors largely shifted capital into tech giants at the start of the pandemic, betting that the mega-caps’ cash piles and insulation from widespread lockdowns would outperform the market. Some strategists have deemed the names overcrowded, and others say they fear that antitrust measures could erode the companies’ success. But that hasn’t stopped the sector from continuing its run-up through the summer.

Of the five giants, Amazon has surged the most through the year. The stock is up roughly 85% in 2020, thriving on a surge of online retail activity as Americans stayed at home.

Alphabet’s Class A shares are up the least year-to-date compared with its mega-cap peers. Still, the shares have gained roughly 22% in 2020 and more than 7% over just the past month.

https://markets.businessinsider.com/news/stocks/us-tech-stocks-worth-more-european-stock-market-apple-microsoft-2020-8-1029545001#

7. Dollar Breaking 200 Day Moving Average

www.stockcharts.com

A weak dollar is impacting an uneven global market recovery

Dion Rabouin, author of Markets

After sinking on Friday, the dollar is teetering near its lowest in more than two years, and threatening to decline even further after Fed chair Jerome Powell confirmed plans to let inflation run hot in the future, likely meaning 0% U.S. interest rates for quite some time.

Why it matters: For the U.S. currency to fall in value, other currencies must rise and that can be especially harmful to export-oriented economies like the eurozone and Japan, whose central banks may be forced to take action in the coming months.

What it means: A strong currency makes a country’s exports more expensive and therefore less attractive, denting a needed source of income, especially as the world tries to recover from the coronavirus pandemic.

• But with the European Central Bank and Bank of Japan both already holding negative interest rates and having significantly expanded their respective quantitative easing programs, weakening their currencies may require extreme measures.

The big picture: The U.S. has done a far worse job handling the coronavirus pandemic than most of Europe and Japan, but that has led to a weaker currency and a much stronger bounce in stock prices. The benchmark S&P 500 has gained 8.6% this year, with the Nasdaq up 30%.

• The currency appreciation is weighing on stock indexes in the eurozone and Japan, which have recovered much more slowly than U.S. equities this year.
• Germany’s DAX is up 5% for the year in dollar terms, but in euros the index remains 1.6% lower than where it began 2020, with similar outcomes for the Italian benchmark FTSE MiB (-10.5% YTD in dollars, -15.6% in euros) and France’s CAC 40 (-11.3% YTD in dollars, -16.3% in euros), per FactSet data.
• Japan’s Nikkei index is flat on the year in dollar terms, but about 3% lower in yen.

Where it stands: The euro has risen to $1.19 and is trading just below the two-year high it touched earlier in August, threatening to break back toward its early 2018 levels around $1.25, while the dollar has fallen to 105.30 yen, eyeing 100 yen per dollar.

• The Swiss franc, Swedish krona and Danish krone all have gained at least 6.5% versus the dollar this year.

Worth noting: Commodities, which are largely priced in dollars, also look poised to further benefit from the greenback’s slide. Gold and silver have had breakout years, each up more than 30% for the year, and other commodities are picking up — copper has risen 12% since July 1, and cocoa is up 23.6%.

https://www.axios.com/weak-dollar-global-recovery-central-bank-policy-f8c9fc0a-5c98-427c-a7c7-6b951773c700.html

8. Update on Restaurant Reservations

In the US, about 75% of the restaurants that took reservations before the pandemic are now taking reservations again, up from zero in April, according to data from OpenTable which provides online reservation services for 60,000 restaurants. Back on July 1, already 65% of the restaurants were taking reservations again, but then new outbreaks spreading across the country, particularly in the South, triggered some retrenching (chart via OpenTable):

The State of the American Restaurant, City by City–by Wolf Richter • Aug 29, 2020 • 108 Comments https://wolfstreet.com/2020/08/29/the-state-of-the-american-restaurants-city-by-city/

9. Follow Up From My Link Yesterday to Most Under 40’s Ever in U.S…..Population in U.S. Median Age is Trending Higher.

Thanks to Joe D at Philly Inquirer for Passing Along.

https://www.statista.com/statistics/241494/median-age-of-the-us-population/

10. Why Misinformation Goes Viral

Psychological factors affect the spread of misinformation during crises.

H. Colleen Sinclair Ph.D.

Unpacking Social Relations

In the continued war on misinformation, LinkedIn and Facebook just removed millions of posts containing misinformation about the coronavirus.  And it is believed that is but a fraction of the posts.  When John Oliver tackled the flood of misinformation surrounding the COVID-19 pandemic, he mentioned the “proportionality bias” — that big events beg big explanations — to explain why misinformation, particularly conspiracy theories, have had a heyday with the current crisis.  However, the science suggests that it is more than just the proportionality effect at play making this crisis exceptionally fertile grounds for seeds of misinformation.

Negativity Bias. For starters, our evolutionary heritage leads us generally to pay more attention to negative information than to positive information.  This negativity bias was important to the survival of our species, as attending to the tiger prowling the encampment was more imperative than celebrating the latest birth.  We see this reflected in our news which disproportionately features headlines about the latest travesty while feel-good stories are relegated to the back pages.  And recent research has shown that this attention to negative news is evident at the physiological (and neurological) level across samples in 17 different countries.

Ultimately, this means that if something bad is happening, it’s got our attention.  A once-a-century pandemic killing hundreds of thousands certainly qualifies.  Thus, already, we are on the outlook for information.  Further, evidence suggests that negative information is viewed as more credible than positive information.  So not only are we paying attention but we are also primed to believe it.

Social Risk Amplification. This negativity bias gets a boost when information is shared.  In a recent interview, it was said that the spread of misinformation is like a “screwed up game of telephone.” In fact, using these “diffusion chain experiments” is a common choice in experimental studies examining the transmission of information.  In a 2015 study researchers had strings of 10 participants pass along information about the risks and benefits of a controversial drug (i.e., triclosan).  Overall, all messages became shorter and increasingly inaccurate.  However, by the end of the “diffusion chain” information about the benefits had been relatively lost whereas information about the risks continued to spread.  Further, individual biases about risks led to the amplification of risks down the chain.  A follow-up 2020 study showed that this amplification effect is even stronger when people are feeling stressed and unfortunately, new research shows that Americans are even more stressed about the coronavirus than other nations.

American Stress Levels Compared

Source: Reginald D. Williams II et al., Do Americans Face Greater Mental Health and Economic Consequences from COVID-19? Comparing the U.S. with Other High-Income Countries (Commonwealth Fund, August 2020).

Dread Risks. As if that weren’t enough to provide a megaphone for misinformation during stressful times, social risk amplification is even more likely when people are experiencing what are called dread risks, i.e., life-altering, disastrous, random, events that present a threat to mortality.  In a 2018 study, researchers using an 8-person diffusion chain experiment paradigm randomly assigned groups to transmit low- or high-dread risk messages. As the message passed from person to person the high-dread chains became more and more negative in their transmission of the message relative to the low-dread chains, and those messages became more and more distorted. We saw a real-life example of this with the transmission of information about the Ebola outbreak in 2015 via Twitter and Facebook where the diffusion chains are no longer just 8 or 10 people long but spread across millions of users each with their own megaphones of various wattage.

Frustration with the Scientific Method. To further complicate matters, the current pandemic features a novel coronavirus.  Meaning there wasn’t a wealth of accurate information from science at the outset of the outbreak because how could there be? It was new. Scientists are racing to find answers. Science, however, is constrained by the scientific method which is much slower than the pace at which fearful stressed citizens want information. It takes considerable time, customarily, to build a scientific consensus. Thus, in this race for information, science often lags behind misinformation because the Twitter user recommending alcohol to combat COVID-19 is not similarly constrained.

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This scientific method can further be frustrating to individuals when the process of replication and peer review kicks in and leads to the modification or retraction of findings. These updates are more likely to occur when there is a race for answers and thus usually meticulous methods are viewed as less important than expediency. When recommendations are altered based on new evidence, this is a sign that science is working.  However, when sources who are supposed to “have the facts” change course, it can result in a tainted truth effect damaging trust in those sources.  Meanwhile, our Facebook friends are not held to the same standard.

Fear and Shallow Processing. Consequently, the wrong information, if repeated and said with certainty, can be more persuasive than the latest science, especially when we don’t take the time to process messages (e.g., read beyond the headline). Shallow processing is even more likely on the internet, where information flies by at the speed of a scroll and among people who are afraid such that they are looking for any type of action to protect themselves.  

Due to this perfect storm of contributing factors we are seeing the spread of misinformation take on pandemic proportions (now available in 25 languages). Scientists often feel like they are combating two viruses. As citizens wishing to avoid infection, we need to practice good information hygiene in addition to good personal hygiene—starting with recognizing some of the signs that something you encounter might be misinformation, just as you would be on high alert when you hear someone cough or sneeze. Further, engage in basic fact-checking. Be the investigator, find the source of the information, and weigh the evidence supporting their claims. If you don’t have the time to do the investigation, do not share. You could save a life by stopping the spread of misinformation.

https://www.psychologytoday.com/us/blog/unpacking-social-relations/202008/why-misinformation-goes-viral?collection=1148634

Disclosure

Lansing Street Advisors is a registered investment adviser with the State of Pennsylvania..
To the extent that content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such security as information is provided for educational purposes only. Articles should not be considered investment advice and the information contain within should not be relied upon in assessing whether or not to invest in any securities or asset classes mentioned. Articles have been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Securities discussed may not be suitable for all investors. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results.
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Material for market review represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
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1. 1995-2016 Hedge Fund Managers Kept 64% of Profits.

Opinion: Hedge fund fees — whether or not you make money — are truly shocking

Mark Hulbert

Hedge funds keep two-thirds of profits; investors get the rest

The professors analyzed a comprehensive hedge fund database containing nearly 6,000 funds over the 22 years from 1995 through 2016. Over that period these hedge funds collectively produced total gross profits of $316.8 billion. Of this total, fund managers kept $202 billion ($88.7 billion in management fees and $113.3 billion in performance incentive fees). The remainder—$113.3 billion, or 35.8% of total gross profits — went to investors. (See the chart below.)

The source of this skewed profit sharing is the asymmetry of hedge funds’ performance incentive fees. While the hedge fund industry receives a portion of investors’ gains, it does not to the same extent share in their losses.

It’s easy to overlook this asymmetry because it becomes evident only when focusing on the industry as a whole. At the individual fund level, incentive fees are only levied on performance that exceeds prior performance — exceeds previous high-water marks, in other words.

To illustrate how this performance incentive fee arrangement looks in practice, imagine the following two otherwise identical scenarios (setting aside management fees):

•        You invest in a single hedge fund that in the first year gains 20%, gives up all that gain in the second year (a loss of 16.67%), and then gains 30% in the third year. You’d pay a performance incentive of 4% in the first year (20% of the 20% gain), nothing in the second year, and only 2% in the third year (2% of the amount by which that year’s gain exceeds that fund’s previous high-water mark). Glossing over several details, your total performance incentive fee for all three years would be 6% of assets under management.

•        In the second scenario, imagine that you instead invest in three separate hedge funds with the same gains: The first gains 20%, the second loses 16.67%, and the third gains 30%. Because the losing hedge fund’s losses can’t be used to offset the other two funds’ gains, you will pay a performance incentive fee of 10% — four percentage points higher.

An extreme example of this occurred in 2008, during the Great Financial Crisis. Cumulatively that year, the professors report, the hedge funds in their database lost $147.1 billion before fees. Yet investors in those funds collectively paid $4.4 billion in performance incentive fees.

https://www.marketwatch.com/story/hedge-fund-fees-whether-or-not-you-make-money-are-truly-shocking-2020-08-21

2. Call Options Betting on Higher Market Hit 1999 Levels

1. Sector Changes in the Dow….Tech Down Healthcare Up.

Bespoke notes The biggest shifts in sector weights with the Dow Changes will be in Health Care and Industrials (to the upside) and Technology and Energy (to the downside) – Roughly $31.5 billion of assets are benchmarked to the Dow, with $28.2 billion of passively managed funds linked. (The figures are $11.2 trillion and $4.6 trillion for the S&P 500.)

From Dave Lutz at Jones Trading.

2. Airlines vs. Gold Hitting Historical Lows.

Which Asset Is Most Sensitive to Vaccines?

The biggest underperformers under the pandemic — airlines — will likely come back with a bang should vaccines be cleared for broad use and virus counts decrease. At the same time, some of this year’s biggest gainers would slump, especially gold. Gold tumbled and value stocks gained after Russia’s vaccine news, imagine how much stronger the moves would be if an inoculation received full approval from a western nation or two. – BBG

From Chris Preston River and Mercantile

3. The Other 94%…Just 6% of S&P at 52 Week Highs

Posted August 20, 2020 by Michael Batnick

Yesterday, the S&P 500 made a new all-time high. However, of the 500 members in the index, just 6% were concurrently making 52-week highs.

This is a remarkable data point, but it doesn’t necessarily tell the whole story. What if the other 94% were just 2% from a 52-week high? They’re not, but if they were, this data point would obscure that fact.

This data point also doesn’t reveal that the median stock is 63% above its 52 week low. Most stocks might not be near a 52-week high, but they’re also very from their 52-week lows.

So how exactly are stocks doing? On an absolute basis, the median S&P 500 stock is down 3.1% year-to-date, while 56% of them are above their 200-day moving average. Hardly terrible, but not great either.

On a relative basis, it’s pretty gnarly out there. 64% of the S&P 500 is under performing the index in 2020. The median level of underperformance -22%. The 64% is actually in line with historical numbers, but the magnitude (-22%) sounds high. I don’t have that data, but would love to see it if anybody does.

The only thing you really need to know to determine how a stock has performed in 2020 is by looking at its market cap. Granted, there might be a little double counting going on because I’m measuring from today, not from Jan 1, but I’m nearly certain that the numbers wouldn’t change much at all.

It’s normal to worry about the market when fewer and fewer stocks are leading the charge, but this is not a new worry, we’ve been talking about this for years

I know this is the type of thing that doesn’t matter until it matters, but we should also consider an alternate outcome. What if a handful of the other 94% of stocks catch up? I’m not predicting that, but it’s an outcome that we have to at least be open minded to.

It’s always important to look beyond individual data points, because facts don’t always tell the whole story.

 https://theirrelevantinvestor.com/2020/08/20/the-other-94/

4. Global companies raise most funds for the month of August in a decade

Scott Murdoch, Patturaja Murugaboopathy

(Reuters) – Companies raised the most funds in global equity and debt markets for the month of August in a decade as homebound bankers spend their summer fixing deals off the back of trillions of dollars of stimulus worldwide to fight the coronavirus pandemic.

Companies have raised $65.5 billion through initial public offerings (IPOs) and high-yield bond issuances globally so far in August, the highest for that month in at least 10 years, according to Refinitiv data. They raised $98.6 billion in July and $126.5 billion in June, which was the highest in 20 years.

Graphic: Monthly global IPO proceeds here

https://www.reuters.com/article/us-markets-global-fundraising/global-companies-raise-most-funds-for-the-month-of-august-in-a-decade-idUSKBN25K15H

Found at Crossing Wall Street blog http://www.crossingwallstreet.com/

5. The Growth Rate of U.S. Debt Outpacing WWII

We Have Crossed the Line Debt Hawks Warned Us About for Decades—

The debt of the United States now exceeds the size of its gross domestic product. That was considered a doomsday scenario that would wreck the economy. So far, that hasn’t happened

“At this stage, I think, nobody is very worried about debt,” said Olivier Blanchard, a senior fellow at the Peterson Institute for International Economics and a former chief economist for the International Monetary Fund. “It’s clear that we can probably go where we are going, which is debt ratios above 100 percent in many countries. And that’s not the end of the world.”

That nonchalant attitude toward what were once thought to be major breaking points reflects an evolution in the way investors, economists and central bankers think about government debt.

At the end of last year, the United States was about $17 trillion in debt — roughly 80 percent of the gross domestic product. In January, government analysts predicted that debt would approach 100 percent of the G.D.P. around 2030. But by the end of June, the debt stood at $20.53 trillion, or roughly 106 percent of G.D.P., which shrank amid widespread stay-at-home orders. (These numbers don’t count trillions more the government owes itself in bonds held by the Social Security and Medicare trust funds.)

That more than 25 percentage-point surge would represent the largest annual leap in American indebtedness since Alexander Hamilton founded the nation’s credit in the 1790s, outpacing even the debt growth at the peak of World War II, according to data from the Congressional Budget Office.

https://www.nytimes.com/2020/08/21/business/economy/national-debt-coronavirus-stimulus.html?auth=login-email&login=email

6. Tech vs. Dividend Growers 15 Year Chart

So it’s no surprise that the tech-heavy S&P 500 has been outperforming the S&P 500 Dividend Aristocrats for many years. But if you look back 15 years, the story changes:

Over 15 years, the S&P 500 Dividend Aristocrats Index has beaten the performance of the full S&P 500 Index.

 FACTSET

These ‘Dividend Aristocrat’ stocks have been raising their dividends for decades, and there have been no dividend cuts during the pandemic By Philip van Doorn

https://www.marketwatch.com/story/these-dividend-aristocrat-stocks-have-been-raising-their-dividends-for-decades-and-there-have-been-no-dividend-cuts-during-the-pandemic-2020-08-25?mod=newsviewer_click

7. Disney Leads Old Media Giants in Making Money From Streaming

Christopher Palmeri

Disney Leads Old Media Giants in Making Money From Streaming

(Bloomberg) — Online video is becoming a serious business for some of America’s oldest and largest media companies, with Walt Disney Co. leading the pack.

Disney will generate an estimated $11.2 billion in direct-to-consumer revenue this year, according to a report released Monday by Macquarie Research. That would account for 19% of its total sales — a level rivals in traditional media haven’t matched.

Macquarie credits Disney+, which quickly snapped up more than 60 million subscribers, and Hulu, a business that the company gained majority control of last year.

Fox Corp. and Comcast Corp. are the new-media laggards in the old-media group. Fox sold the bulk of its entertainment assets to Disney last year, and Comcast is just getting started in streaming: Its ad-supported Peacock service debuted nationally last month.

The big surprise, however, may be Lions Gate Entertainment Corp., which will get 18% of revenue from streaming this year, according to Macquarie. Lions Gate said recently that it had over 11 million online customers for its Starz service globally.

Analysts expect Netflix Inc. to generate almost $25 billion in revenue this year, virtually all of it from streaming.

For more articles like this, please visit us at bloomberg.com

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 https://finance.yahoo.com/news/disney-leads-old-media-giants-191812649.html

8.  50% of U.S. Households Have Less Than $1000 Saved.

 

CHART OF THE DAY: Households Were Not Prepared For An Income Shock Keith McCullough @keithmcculloughhttps://app.hedgeye.com/insights/88256-chart-of-the-day-households-were-not-prepared-for-an-income-shock?type=macro%2Cmarket-insights

9. Betting on Return to Workplace

Erica Pandey, author of @Work

Illustration: Annelise Capossela/Axios

As the pandemic has persisted, Silicon Valley tech giants have extended their telework timelines — and some have even said that employees can stay home forever. But now those same firms are simultaneously betting on the future of the office.

Why it matters: Remote work has been successful at many firms, but the vast majority still have strong office cultures. The pandemic won’t drastically alter that.

• “COVID changed a lot of minds,” says Julie Whelan, of the commercial real estate firm CBRE. “That said, there are billions of square feet leased across the United States, and that’s not disappearing overnight.”

What’s happening: Office leasing activity in the second quarter of 2020 was down 44% year-over-year, CBRE reports. But it appears to be bouncing back, led by the tech titans.

• Amazon is adding 900,000 square feet of office space in New York City, Phoenix, Dallas, Detroit, San Diego and Denver. And Facebook is expanding its New York footprint with 730,000 additional square feet in midtown Manhattan.
• Amazon is also in the middle of building two large complexes to complement its Seattle headquarters. Its Hyderabad, India, building is 1.8 million square feet, and its Arlington, Virginia, campus — HQ2 — could be as big as 8 million square feet.

The tech giants’ bets on the importance of the office appear to be shared by other big firms.

• Per a CBRE survey of 126 companies, half of which are Fortune 500 firms, 70% are confident in setting long-term real estate strategies even amid the pandemic.
• 79% say the importance of the physical office will decrease slightly or remain the same when the coronavirus crisis is over.
• And teleworkers across the country say they’ve developed an appreciation for the workplaces they once griped about.

But, but, but: While the pandemic won’t kill offices, its effects on where and how we work will linger.

• Look for many companies to pursue a hybrid of work-from-home and work-from-office. 61% of CBRE’s respondents say employees will be able to work remotely at least part of the time in the post-pandemic world.
• That means those firms won’t need as much space, and many will downsize.

The bottom line: “We’re changing why we need an office: It’s the social interaction,” Whelan says. “That doesn’t need to happen five days a week. But it still needs to happen.”

• As Jerry Seinfeld writes in his defense of New York City, “Energy, attitude and personality cannot be ‘remoted’ through even the best fiber optic lines.”

https://www.axios.com/workplace-office-telework-remote-coronavirus-41785f8e-c4f0-482e-b76d-55e4ae1615f2.html

 10. Ten Things You Do That Make You Less Likable

Too many people succumb to the mistaken belief that being likable comes from natural traits that belong only to a lucky few. Dr. Travis Bradberry shows you how being likable is under your control.

BY TRAVIS BRADBERRY, AUTHOR, EMOTIONAL INTELLIGENCE 2.0@TALENTSMARTEQ

Getty Images

Too many people succumb to the mistaken belief that being likable comes from natural, unteachable traits that belong only to a lucky few–the good looking, the fiercely social, and the incredibly talented. It’s easy to fall prey to this misconception. In reality, being likable is under your control, and it’s a matter of emotional intelligence (EQ).

In a study conducted at UCLA, subjects rated over 500 descriptions of people based on their perceived significance to likability. The top-rated descriptors had nothing to do with being gregarious, intelligent, or attractive (innate characteristics). Instead, the top descriptors were sincerity, transparency, and capable of understanding (another person).

These adjectives, and others like them, describe people who are skilled in the social side of emotional intelligence. TalentSmart research data from more than a million people shows that people who possess these skills aren’t just highly likable; they outperform those who don’t by a large margin.

Likability is so powerful that it can completely alter your performance. A University of Massachusetts study found that managers were willing to accept an auditor’s argument with no supporting evidence if he or she was likable, and Jack Zenger found that just one in 2,000 unlikable leaders are considered effective.

I did some digging to uncover the key behaviors that hold people back when it comes to likability. Make certain these behaviors don’t catch you by surprise.

1. Humble-bragging. We all know those people who like to brag about themselves behind the mask of self-deprecation. For example, the gal who makes fun of herself for being a nerd when she really wants to draw attention to the fact that she’s smart, or the guy who makes fun of himself for having a strict diet when he really wants you to know how healthy and fit he is. While many people think that self-deprecation masks their bragging, everyone sees right through it. This makes the bragging all the more frustrating, because it isn’t just bragging; it’s also an attempt to deceive.

2. Being too serious. People gravitate toward those who are passionate. That said, it’s easy for passionate people to come across as too serious or uninterested, because they tend to get absorbed in their work. Likable people balance their passion for their work with their ability to have fun. At work they are serious, yet friendly. They still get things done because they are socially effective in short amounts of time and they capitalize on valuable social moments. They focus on having meaningful interactions with their co-workers, remembering what people said to them yesterday or last week, which shows people that they are just as important to them as their work is.

3. Not asking enough questions. The biggest mistake people make in conversation is being so focused on what they’re going to say next or how what the other person is saying is going to affect them that they fail to hear what’s being said. The words come through loud and clear, but the meaning is lost. A simple way to avoid this is to ask a lot of questions. People like to know you’re listening, and something as simple as a clarification question shows that not only are you listening, but you also care about what they’re saying. You’ll be surprised how much respect and appreciation you gain just by asking questions.

4. Emotional hijackings. My company provides 360° feedback assessments, and we come across far too many instances of people throwing things, screaming, making people cry, and other telltale signs of an emotional hijacking. An emotional hijacking demonstrates low emotional intelligence. As soon as you show that level of instability, people will question whether or not you’re trustworthy and capable of keeping it together when it counts.

Exploding at anyone, regardless of how much they might “deserve it,” turns a huge amount of negative attention your way. You’ll be labeled as unstable, unapproachable, and intimidating. Controlling your emotions keeps you in the driver’s seat. When you’re able to control your emotions around someone who wrongs you, they end up looking bad instead of you.

5. Whipping out your phone. Nothing turns someone off to you like a mid-conversation text message or even a quick glance at your phone. When you commit to a conversation, focus all of your energy on the conversation. You’ll find that conversations are more enjoyable and effective when you immerse yourself in them.

6. Name-dropping. It’s great to know important and interesting people, but using every conversation as an opportunity to name drop is pretentious and silly. Just like humble-bragging, people see right through it. Instead of making you look interesting, it makes people feel as though you’re insecure and overly concerned with having them like you. It also cheapens what you have to offer. When you connect everything you know with who you know (instead of what you know or what you think), conversations lose their color.

People are averse to those who are desperate for attention. Simply being friendly and considerate is all you need to win people over. When you speak in a friendly, confident, and concise manner, people are much more attentive and persuadable than if you try to show them that you’re important. People catch on to your attitude quickly and are more attracted to the right attitude than who you know.

7. Gossiping. People make themselves look terrible when they get carried away with gossiping. Wallowing in talk of other people’s misdeeds or misfortunes may end up hurting their feelings if the gossip ever finds its way to them, but gossiping is guaranteed to make you look negative and spiteful every time.

8. Having a closed mind. If you want to be likable, you must be open-minded, which makes you approachable and interesting to others. No one wants to have a conversation with someone who has already formed an opinion and is unwilling to listen. Having an open mind is crucial in the workplace, where approachability means access to new ideas and help. To eliminate preconceived notions and judgment, you need to see the world through other people’s eyes. This doesn’t require that you believe what they believe or condone their behavior; it simply means that you quit passing judgment long enough to truly understand what makes them tick.

9. Sharing too much, too early. While getting to know people requires a healthy amount of sharing, sharing too much about yourself right off the bat comes across wrong. Be careful to avoid sharing personal problems and confessions too quickly. Likable people let the other person guide them as to when it’s the right time for them to open up. Over-sharing comes across as self-obsessed and insensitive to the balance of the conversation. Think of it this way: If you’re getting into the nitty-gritty of your life without learning about the other person first, you’re sending the message that you see them as nothing more than a sounding board for your problems.

10. Sharing too much on social media. Studies have shown that people who over-share on social media do so because they crave acceptance, but the Pew Research Center has revealed that this over-sharing works against them by making people dislike them. Sharing on social media can be an important mode of expression, but it needs to be done thoughtfully and with some self-control. Letting everyone know what you ate for breakfast, lunch, and dinner, along with how many times you walked your dog today, will do much more harm than good when it comes to likability.

Bringing It All Together

When you build your awareness of how your actions are received by other people, you pave the way to becoming more likable.

What other things make people less likable? Please share your thoughts in the comments section, as I learn just as much from you as you do from me.

https://www.inc.com/travis-bradberry/10-things-you-do-that-make-you-less-likeable.html?cid=sf01003&sr_share=facebook

Shopify Founder: These Are the 2 Books That Made Me Into a Billionaire

Tobias Lütke credits these two books with transforming him from an awkward programmer into a successful leader. 

BY JESSICA STILLMAN, CONTRIBUTOR, INC.COM@ENTRYLEVELREBEL

Tobias Lutke, CEO and co-founder of Shopify. Getty Images

Some billionaire business success stories got where they are on personal charm, salesmanship, and communication chops. Others were quiet, reserved “nerds” who just managed to build a product so awesome it took off like a rocket ship, forcing them to figure out the people side of business on the fly.

Shopify co-founder Tobias Lütke is solidly in the second camp. A programmer by trade, Lütke had no intention of having anything to do with the business side of Shopify, the Canadian startup he co-founded and which has since become an e-commerce juggernaut. But then, as he explained on Tim Ferriss’s podcast, circumstance intervened and he found himself needing to grow into a leader capable of scaling his startup, and fast.

He decided to source some reading that would arm him with the skills he needed. As he shares with Ferriss (hat tip to this excellent post by Alan Trapulionis), that process of soliciting recommendations ended up yielding two titles. Lütke credits them with teaching him the skills to build a billion-dollar business (as well as a multibillion-dollar net worth).

1. Influence by Robert Cialdini

“Influence was just the most mind-bending book you can imagine, because it essentially taught you all the ways humans are flawed and influenceable, and how, yes, computers are predictable, but once you make things for people you need to go into storytelling,” says Lütke.

“Which was news to me, frankly. I spent my teens with computers. Not with people,” he adds to laughs from Ferriss.

An international bestseller when it was first published in 1984, Influence remains a foundational work on the science of persuasion, so Lütke is far from the only brilliant-but-awkward young striver Cialdini has helped. If you’re looking for a quick summary of the book’s basic ideas, Trapulionis’s post has a useful rundown.

2. High Output Management by Andrew Grove

“One of the best books ever,” raves Lütke of this second classic by the former CEO of Intel, describing High Output Management as “a how-to manual that deconstructs the world of business into first principles. It’s like, here’s what matters. Here’s how to think about it.” By laying out building a business like an engineering exercise, Grove’s book made the whole challenge far less daunting, Lütke claims.

He’s not the only nerdy young entrepreneur riding a startup rocket ship to benefit from the legendary title. Mark Zuckerberg also claims the “book played a big role in shaping my management style.”

If you, too, are intimidated by the less technical aspects of building a business, it might be worth picking up these books. Who knows? They might even help you create a billion-dollar company too.

AUG 24, 2020

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

https://www.inc.com/jessica-stillman/shopify-tobias-lutke-andrew-grove.html?cid=sf01003

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