Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.
Stock Market Commentary for 11/30/2020:
– By Raymond Kanyo
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Top Investment Story #1: Black Friday: Bust For Stores, Boom for E-commerce
What is Happening?
According to Sensormatic Solutions and Adobe Analytics, Black Friday in-person shopping fell 52.1% this year, while online spending surged 21.6%- hitting a new record. Even with a decrease in foot-traffic, the National Retail Federation predicts holiday sales will increase 3.6% to $755 billion, including a 20% growth from online shopping. Let’s look at the winners and losers!
Why does this Matter?
This Black Friday was a continuation of an emerging trend since Covid-19 restrictions hit in March. Cautious consumers are shopping online, or gravitating toward big-box retailers that offer everything from groceries to clothing in one stop.
The Winners: Amazon, Etsy, Walmart, Target.
The Losers: Department and apparel stores such as Macy’s, Kohl’s, T.J. Maxx, J.C. Penney.
The Takeaway:
It seems that consumers have changed their purchasing behavior. This holiday season, Americans are predicted to spend $755 billion, and only $202 billion will come from online sources. It appears that e-commerce still has massive room to grow for years to come.
– Written by Raymond Kanyo
– Published in MarketBites Daily Newsletter
Top Investment Story #2: High-Risk ETFs See Largest Demand Since 2008
What is Happening?
Investors are aggressively chasing higher returns, as levered exchange-traded-funds (ETFs) see the largest inflow of investment since 2008. Inflows are on pace to break the ’08 record of $16.7B.
Why does this Matter?
Any sort of investment behavior that imitates 2008 raises eyebrows for investors. Levered ETF demand does not mean there is an impending financial crisis. However, we should look into these investment vehicles to understand why they’re in such high demand.
Levered ETFs were originally meant to be single-day, or short term investments. In recent years, and especially since March and April lows, they have become long term holdings for many investors. Levered ETFs can mirror indices such as the S&P 500 or the Dow Jones Industrial Index. The difference is, they will reflect multiplied gains or losses of these indices. Long term investors are chasing a significantly higher upside, while exposing themselves to a potentially crippling downside.
While the nearly $14B put into ETFs in April and March have experienced massive returns, there is the capacity for black swan events to wipe out those gains in as quickly as one day. When oil prices cratered in 2018, triple leveraged oil ETFs crumbled and some became insolvent. Bull investors lost everything.
The Takeaway:
The allure of larger returns does not come without assuming proportionate downside risk. There is a reason that Invesco and other large ETF providers are fighting to have these leveraged vehicles ditch the “ETF” label in their names. They carry risks that standard exchange-traded-funds do not. Without proper due diligence, many retail investors can get badly burned.
– Written By Jack Dunne
– Published in MarketBites Daily Newsletter
Meet the Authors
Raymond grew up in Budapest, Hungary, where he played tennis for the Hungarian Junior Davis Cup team. At the age of 16, he received the Davis United World College Scholarship, which was established by legendary investor Shelby Cullom Davis, allowing him to attend the Taft Boarding School in Watertown, CT. After Taft, Raymond received a Presidential Scholarship to the Robins School of Business at the University of Richmond, where he studied Quantitative Economics and Finance. Raymond is a CFA Level III Candidate. Prior to joining Taylor Hoffman, Raymond worked at various financial institutions in the insurance, asset management, and financial consulting space. Outside of the office, Raymond enjoys playing tennis at ACAC and Westwood Country Club.
Jack graduated from the Robins School of Business at the University of Richmond with concentrations in Marketing and Finance in 2019. Prior to joining Taylor Hoffman, he worked in high-growth B2B SaaS marketing; assisting Fortune 100 firms to improve their web performance experience. A Long Island New York native, Jack’s hobbies include passionately supporting the Mets and Islanders, and he enjoys skiing whenever he can.
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-Ben Franklin