What exactly are we to do in this levitating market? Buy more? Pull back? Do nothing?
I get why most folks are uneasy these days—they’re seeing the stock market, and particularly tech stocks, heading into the stratosphere, while the economy that supports them is a mess. Stocks can’t hang in midair forever, the thinking goes. Eventually they’ll plunge to earth.
A (Pleasant) Surprise in a Lousy Year
Don’t buy this argument. Because in the weird market we’re in, stocks can not only hover but actually rip higher and hand us growing dividends, too. Let me show you what I mean, starting with the economy.
Sure, GDP cratered 34.3% in the lockdown-riddled second quarter, but it rebounded 38% in the third quarter to get back to near its pre-crisis level. Still, our economy is still behind, so shouldn’t stocks be behind as well?
Remember that stocks are forward looking—they’re not priced based on present earnings but future earnings growth. And since the first half of 2020 saw some shocking earnings declines due to the lockdown, the strong implication here is that the first half of 2021 will see tremendous earnings growth just because the comparables are so low, never mind the effect that three (and possibly more) vaccines in the coming months will have on consumer spending.
From Travel to E-Commerce—and Back Again?
What’s more, consumer spending has reshuffled, giving more support to both the S&P 500 and the tech sector than most investors believe.
Pelosi: ‘We Have Time’ For Stimulus, $908 Billion Framework ‘Just A Start’ And Government Will Not Shut Down
When you dive into the third-quarter data, you see that earnings declines are mostly concentrated where you’d expect them: in the travel and leisure sectors. But it’s important to remember that travel-spending declines are destined to be short-lived. When vaccines are out and people can travel again, pent-up demand will spur earnings in the sector.
Now, if we saw a massive growth in travel-related stocks before those higher earnings were released, you could say this sector has gotten out of hand. But in reality, that’s not the case.
The airline-industry-focused US Global Jets ETF (JETS)
, which holds major carriers like Delta Air Lines (DAL
), Southwest Airlines
(LUV) and JetBlue Airways
(JBLU), remains behind the broader market. This shows that investors are waiting for clearer evidence of the big earnings boost a return to travel will provide. But this doesn’t mean it’s time to run out and buy JETS—or load up on any travel-related stocks, because any profit gains in that sector will likely be tempered.
In theory, it makes sense that you’d see a shift of discretionary spending from e-commerce to travel as soon as people aren’t stuck in the house anymore. But this implies that a big driver of the e-commerce shift has been vacation money that people simply redirected to online purchases. But there’s more to this story.
More Than Travel Goes Online
E-commerce data shows a steady shift in spending from offline to online until COVID-19, when that trend accelerated. People who had bought little to nothing online were now buying groceries through the web. The Internet had become a place to buy essentials, not just discretionary goods.
The pace of this spending growth is essential to understanding how durable this trend is. Since the 32% jump in online spending began at the start of the shutdown, and with that spending staying high throughout the third quarter, we can see that the increase wasn’t driven by discretionary spending (or it would have shown up later), and it wasn’t driven solely by one-time panic buying of essentials (or it wouldn’t have lasted into the third quarter).
In other words, Americans’ pivot to e-commerce will likely continue, which justifies the tech sector’s big gains for 2020 (since those companies are largely connected to online shopping) while also justifying the S&P 500’s lower but still-strong returns (since the companies producing many of the products consumers are buying are benefiting from the shift to e-commerce).
The bottom line? Now is not the time to worry about a bubble, in either tech or the market as a whole, even if the big deals in stocks we saw earlier this year are over.
Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report “Indestructible Income: 5 Bargain Funds with Safe 8.8% Dividends.”
LeddarTech Announces Significant Growth in Customer Engagements, Partnerships, and Investment in 2020 – Financial Post
QUEBEC CITY, Jan. 27, 2021 (GLOBE NEWSWIRE) — LeddarTech®, a global leader in Level 1-5 ADAS and AD sensing technology, announces notable and significant growth in 2020.
Despite the pandemic, LeddarTech, a pioneer in automotive sensing technology, boosted growth in investment, units sold, ecosystem partnerships, strategic customer engagements, and acquisitions in 2020. In November of 2020, LeddarTech was recognized by Tracxn in a category of only six Canadian corporations as a Unicorn, defined by Tracxn as one with a valuation exceeding the billion, and even the multi-billion-dollar mark in some cases, representing the elite of the Canada Tech start-up sector.
Major 2020 Achievements:
- Reached over $350 million of investments from industry leaders.
- Contracted six Tier-1 and OEM customers to develop LiDAR measurement software, sensor fusion, and perception technology to enable ADAS and autonomous driving applications with a lifetime value over US$1.5 billion, supporting a growing opportunity funnel well over US$4.0 billion.
- Signed strategic partnership agreements with three global automotive Tier-1/2 customers for LiDAR platform development.
- Delivered over 9,000 low-cost solid-state LiDAR sensors to customers, a double-digit increase over 2019.
- Announced volume production of the award-winning Leddar™ Pixell with manufacturing partner Faurecia-Clarion Malaysia.
- Announced the addition of four major global technology companies as collaborative partners for joint delivery of LiDAR solutions to the market within the Leddar™Ecosystem, including STMicroelectronics, Flex, dSPACE, and Ningbo Sunny Optical. LeddarTech expects to report further additions to the Leddar Ecosystem H1 of 2021.
collaboration with Renesas to accelerate autonomous driving and ADAS development. This platform combines LeddarTech’s industry-leading raw data sensor fusion stack and LiDAR technology with Renesas’ newly launched R-Car V3U, a best-in-class ASIL D system-on-chip (SoC) for ADAS and AD systems.
- Accelerated automotive sensing solutions through two acquisitions:
- Phantom Intelligence: This acquisition advanced LeddarTech’s strategy to aggregate and consolidate automotive sensing technologies, enabling the company to offer comprehensive solutions to our customers at lower cost.
- VayaVision: This acquisition added a vital building block by combining sensor fusion and perception technology with LeddarTech’s proven LeddarEngine™ platform. The LeddarEngine platform built on an open software architecture combined with LeddarVision™ enables LeddarTech to address customers’ need for sensing solutions that are hardware agnostic, scalable, and adaptable to any vehicle and sensor configuration.
The acquisitions of VayaVision and Phantom Intelligence, combined with over a decade of expertise in groundbreaking L1-5 ADAS and AD sensing technologies, demonstrate LeddarTech’s commitment to continuous innovation and service to our Tier 1-2, OEM, and autonomous mobility customers.
LeddarTech also expanded operations in Israel and augmented the existing engineering team with world-class AI and machine learning engineers.
“2020 was the most challenging year in recent history, but meeting challenges is in LeddarTech’s DNA,” stated Mr. Charles Boulanger, CEO of LeddarTech. “We are very proud of the advances we have made as an organization and the faith that our customers and strategic partners have placed in us,” concluded Mr. Boulanger.
“Our partners and customers recognize that they can rely upon LeddarTech’s ingrained expertise in sensing solutions that have been achieved through over 10 years of pioneering experience,” said Mr. Frantz Saintellemy, President and COO.
LeddarTech is a leader in environmental sensing platforms for autonomous vehicles and advanced driver assistance systems. Founded in 2007, LeddarTech has evolved to become a comprehensive end-to-end environmental sensing company by enabling customers to solve critical sensing and perception challenges across the entire value chain of the automotive and mobility market segments. With its LeddarVision™ sensor-fusion and perception platform and its cost-effective, scalable, and versatile LiDAR development solution for automotive-grade solid-state LiDARs based on the LeddarEngine™, LeddarTech enables Tier 1-2 automotive system integrators to develop full-stack sensing solutions for autonomy level 1 to 5. These solutions are actively deployed in autonomous shuttle, truck, bus, delivery vehicle, smart city/factory, and robotaxi applications. The company is responsible for several innovations in cutting-edge automotive and mobility remote-sensing applications, with over 95 patented technologies (granted or pending) enhancing ADAS and autonomous driving capabilities.
Daniel Aitken, Vice-President, Global Marketing, Communications, and Product Management, LeddarTech Inc.
Tel.: + 1-418-653-9000 ext. 232
Leddar, LeddarTech, LeddarEngine, LeddarVision, LeddarSP, LeddarCore, VAYADrive, VayaVision, and related logos are trademarks or registered trademarks of LeddarTech Inc. and its subsidiaries. All other brands, product names, and marks are or may be trademarks or registered trademarks used to identify products or services of their respective owners.
Ark Investment Management's Top 10 Takeover – CMC Markets
The ARK Innovation ETF [ARKK] recently pushed Catherine Wood’s Ark Investment Management into the top 10 issuers of exchange-traded funds (ETFs) worldwide, following a rapid increase in the share price of its largest holding, Tesla Inc [TSLA]. The investment firm, which runs six other ETFs besides ARKK (with a new, space-focused fund on the way), dislodged WisdomTree [WETF] in the top 10 list.
The Innovation ETF is comprised of companies in the “disruptive innovation” space, encompassing fields such as genomics, industrials, next-gen internet and fintech. Ark’s other funds specialise in specific sectors.
In the 12 months to Friday 22 January, the flagship fund’s price had grown 175.7% from $54.09, with most growth occurring in the last six months. On 22 July 2020, the fund closed at $81.23, a 53.3% increase above its price six months prior, and closed 22 January another 79.8% higher at $146.08. In the opening weeks of 2021, the fund has gained 13.75% (as of 26 January’s close).
The price rise of the ARK Innovation ETF over the past 12 months
In displacing WisdomTree, Ark Investment Management went from a relatively minor investment firm with less than $3.5bn in assets to managing $41.5bn in ETF products. The Ark Innovation ETF makes up the bulk of Ark’s assets, worth $21.4bn at the time of Bloomberg’s 11 January report, which also states the ETF received cash inflows of almost $10bn in 2020
As of 26 January, the fund’s largest holding is Tesla, accounting for 9.76% of the fund. Tesla has driven much of the fund’s recent increase in value, with the electric vehicle company’s stock rising 21.01% year-to-date, and more than doubling in the last three months (as of 26 January’s close). Tesla closed at a record-breaking $883.09 on 26 January, having reached an intraday all-time high of $900.40. Even if the stock starts to settle, this represents a massive 691.30% increase from this time a year ago, when Tesla’s stock traded at just over $110.
Tesla’s holding in the ARK Innovation ETF as of 26 January
Tesla is not the only stock that has driven the ARKK’s recent performance, however. Roku [ROKU] is the fund’s next largest holding at 7.21% of the fund and currently trades at $403.40, having gained 219.63% over the last year (as of 26 January’s close). Gains of 26.9% in 2021 so far suggest Roku is currently growing faster than Tesla. A strong earnings report revealing the streaming hardware service’s 14 million new users in 2020 saw Laura Martin, analyst with Needham, upgrade her price target to $400, a milestone the stock passed within days.
WisdomTree’s (relative) decline appears to be due, at least in part, to its focus on slower-growth assets. Its largest fund, the WisdomTree US Quality Dividend Growth Fund [DGRW], grew just over 10% in 2020 — underperforming the S&P 500 over the period. DGRW tracks “dividend quality growth companies” screened for “return on equity, return on assets and expected earnings growth”. It is perhaps unsurprising that the fund underperformed the markets in a year defined by upheaval, disruption and speculation, then.
Bullish opinions abound regarding ARKK’s key stocks. David R Baker, a writer for Bloomberg, reports that electric vehicles could cost the same as internal combustion engine-powered cars within five years and cheapen from there. Wood, Ark’s founder and CIO, explained in a recent note that the company expects electric vehicle sales to increase twentyfold in that time. Given increasing demand for sustainable vehicles in China, Dan Ives, analyst at Wedbush Securities, recently raised his price target for Tesla to $950, predicting the stock could reach $1,250 in a bull-case scenario.
Roku has a compelling case for continued growth as advertising looks set to increase by between 12% and 15% in 2021. Advertising generates Roku an 80% profit margin and, given the encouraging user numbers announced recently, the company already holds more appeal for advertisers in 2021 than it did in 2020.
“…expecting the same type of performance we saw in 2020 moving forward is unrealistic” – Nathan Geraci, president of The ETF Store
However, the analyst community collectively doubts that ARKK can continue to grow, especially given forecasts suggesting that Tesla is overpriced (Dan Ives’ prediction aside). Median and low 12-month targets of $512.50 and $40 from CNN Money’s 34-analyst panel would see the stock losing 42% and 95.5%, respectively over the coming year. CNN Money’s polled analysts similarly expect Roku to lose money over the period, with the median target of $300 representing a fall of 25.6% from 26 January’s closing price.
With Ark displacing WisdomTree in the top 10 ETF issuers worldwide, thanks to the former’s focus on growth stocks in the turbulent conditions of 2020, a recovery from the coronavirus pandemic and return to “normal” conditions could spell bad news for the company. Nathan Geraci, president of The ETF Store, told Bloomberg that “expecting the same type of performance we saw in 2020 moving forward is unrealistic”.
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
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Clarity Capital, Israel's Premier Investment Management Firm, Launches Israeli Backup Investment Accounts for American and Canadian Citizens – PRNewswire
NEW YORK, Jan. 26, 2021 /PRNewswire/ — To meet the growing demand for Israeli backup bank accounts, Clarity Capital launched Israeli Backup Investment Accounts (IBIA) for American and Canadian citizens. These accounts are intended to help individuals and families set aside money to deal with risks such as a need or desire to leave the United States or Canada.
In fact, a survey conducted by the Anti-Defamation League (ADL) recently revealed that 63 percent of American Jews feel their communities are less safe than they were a decade ago.
To provide these citizens with peace of mind, knowing their money is safe and adhering to international tax reporting standards and more, Clarity Capital is providing the United States and Canadian citizens with an opportunity to hold a securities account in Israel.
“It’s unfortunate, but we’ve seen an increase in calls from Jewish Americans who are interested in opening a bank account in Israel for security purposes,” said Amir Leybovitch, Chief Executive Officer of Clarity Capital. “Through IBIA, and as an ISA and SEC-registered firm, we are able to provide our clients with the opportunity to safely open a backup account as part of their wealth risk management strategy.”
Since 2006, Clarity Capital, a global investment firm with offices in Tel Aviv and New York has been providing wealth and investment management services to institutional and individual investors worldwide including high-net-worth individuals, families, endowments, foundations, and institutions.
When a client opens an IBIA facilitated by Clarity Capital, they will have access to a myriad of benefits, including:
- The option to open private, corporate, and trust accounts
- Removal of double taxation due to the Taxation Treaty
- Monthly reports about the health of the account
- Remote set-up of accounts
- Choice of active- or passive-managed accounts
- Minimal fees associated with passive accounts (in addition to reduced bank fees)
All these benefits and more are meant to provide American and Canadian citizens with the opportunity to protect their funds and their families by opening an account in Israel in the event of an emergency.
Contact the team at Clarity Capital to help you reach your financial objectives.
About Clarity Capital
Clarity Capital is a global investment management firm with offices in Tel Aviv and New York, providing wealth and investment management services to institutional and individual investors worldwide, including high-net-worth individuals, families, endowments, foundations, and institutions, since 2006. Clarity offers a wide range of services and products which include Private Wealth Management, Family Office Services, Hedge Fund, and Private Debt opportunities, Socially Responsible Investing, and Institutional Fund Distribution. Our team is led by financial professionals with decades of worldwide experience in protecting and growing clients’ assets. Clarity Capital is registered with the U.S. Securities and Exchange Commission (SEC), the Israel Securities Authority (ISA), the Canadian Autorité des Marchés Financiers of Québec (AMF), and the Canadian Ontario Securities Commission (OSC).
Website – www.claritycap.com
Clarity Capital North America Headquarters 712 Fifth Avenue, New York, NY 10019, United States, 34th Floor [email protected]; +1 646 448 5200
Investment inquiries – [email protected]
Partnership inquiries – [email protected]
Press and media inquiries – [email protected]
SOURCE Clarity Capital
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