2 Extremely-Dangerous Shares I Would not Purchase With Free Cash

When you receive a ton of money, or get caught in some money unexpectedly, it might be tempting to spend that money on something you normally wouldn’t – like a high risk investment. After all, if you lose the money, you will be no worse off than before, and if you guess right, the payout could be substantial. But every decision comes with an opportunity cost. Even if you can afford to lose the money, you might be missing out on better opportunities.

And so, even if someone gave me free money to invest, I still wouldn’t like it for risky stocks. waste Okcugen (NASDAQ: OCGN) or TAL training (NYSE: VALLEY). These stocks have already resulted in significant losses for investors this year and are currently simply bad buys.

Image source: Getty Images.

1. Ocugen

Ocugen’s share price rose more than 260% in 2021 as the S&P 500 has only increased by 17%. The surge was fueled by hope that Covaxin, the COVID-19 vaccine candidate that Ocugen is jointly developing with India’s Bharat Biotech, will generate significant revenue for the Health company. The good news is that the results look promising – Ocugen reported in July that Phase 3 results showed Covaxin was over 93% effective in preventing severely symptomatic cases of COVID-19.

But even if Delta variant cases increase, meaning that another vaccine might still be needed in the US, it still may not mean much market share for Ocugen. Under the agreement with Bharat, Ocugen will receive 45% of the profits generated in the US and Canadian markets. In these countries, vaccination rates are among the highest in the world – more than 50% of people have already received at least one dose of a vaccine. And in the US, the company is no longer seeking emergency approval from the Food and Drug Administration (FDA), as the agency has proposed filing a license application for biologics instead. This is a lengthy process that could mean Covaxin will not be available for several months.

Buying a stock based on a trend like COVID-19 can be risky as things change quickly. Although the US economy has reopened in many places, there is a risk of further restrictions as the number of cases increases. It’s hard to predict how long this pandemic will last. And in the midst of this uncertainty, Ocugen investors quickly sold the stock. Its stocks are down more than 40% in the past three months, while the S&P 500 is up more than 4% during that time.

The company had no revenue for the first three months of 2021, and investors who still hold the stock are likely to bet on the success of its vaccine candidate. Ocugen doesn’t have much in the pipeline, and while Covaxin may make some revenue for the company if it gets OK from health officials in Canada or the US (which is by no means a guarantee), it’s just not a great place to invest your money right away. There are better and safer ways so that you last for the long term.

2. TAL training

China-based tutoring company TAL Education seemed like a promising investment at some point, with sales of $ 4.5 billion in 2021, up 37% from last year.

But despite this impressive growth, investing in this business is even riskier than buying Ocugen stock. And that’s because the Chinese government is cracking down on tutoring companies to cut costs for parents. In July, Reuters reported that the country would ban for-profit tuition in “core school subjects”.

While many investors prepared for some restrictions, such sluggish ones came as a shock. TAL Education stocks are now down a staggering 90% in just three months. Brokers have slashed their price targets on the stock to below $ 9 (previously, some expected them to go as high as $ 85).

Presumably, TAL Education will still be able to make a profit in non-core subjects, but even in the best case scenario, the sum will only be a fraction of what it generated before. Analysts out City group say the restrictions for industry leaders could mean a 70% drop in sales for kindergarten through 12th grade (the main focus of TAL Education).

TAL Education appears to have been taken by surprise by these recent developments, so it has canceled the scheduled release of its earnings report for the first quarter, previously slated for August 5th. The stock is an incredibly risky investment right now. and it’s just not worth taking a chance – even with free money.

This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.

Louisiana legislature refers two amendments to 2022 poll regarding investing state cash in shares and digital submitting and remittance of gross sales taxes

Louisiana legislature put two amendments to vote in November 2022 last week.

Louisiana Increase In Maximum Amount In Stocks For Certain SWF Change (2022)

This change would increase the proportion of money in certain sovereign wealth funds that could be invested in stocks (stocks) from 35% to 65%. The increase would relate to the following funds:

  • Educational Quality Trust Fund in Louisiana;
  • Artificial Reef Development Fund;
  • Endowment Fund for Lifetime Licenses;
  • Rockefeller Wildlife Refuge Trust and Protection Fund; and
  • Russell Sage or Marsh Island Refuge Fund.

The change would also remove a provision in the Constitution that restricts the ability of lawmakers to increase the amount of money in the Millennium Trust that can be invested in stocks and instead allows lawmakers to provide for investment under common law.

Legislators passed House Bill 154 on June 2, 36-0 in the Senate and 100-0 in the House of Representatives. In Louisiana, a two-thirds majority is required in every chamber of the Louisiana state legislature to put an amendment to the vote.

Louisiana Creation of the State and Local Streamlined Sales and Use Tax Commission Amendment (2022)

This change would create the state and local streamlined sales and use tax commission. The commission would consist of eight members. The purpose of the Commission would be to streamline the electronic filing and transfer of all sales and use taxes. It would also be responsible for promulgating regulations on all sales and use taxes levied by a state tax authority. The administration of the commission would be funded by sales and use tax revenues. The change would require a two-thirds majority (66.67 percent) of the state legislatures to legislate on the functions and funding of the commission. The commission would replace the Louisiana Distance Sales and Use Tax Commission and the Louisiana Uniform Local Sales Tax Board after one year, with all employees moving to the new commission.

This change was introduced as House Bill 199 (HB 199) on March 26, 2021. On April 21, 2021 the House passed HB 199 by 97 votes to 4 with three absent. The Senate passed the bill unanimously with amendments on May 12, 2021. The House of Representatives rejected the Senate’s changes and a conference committee was convened. Both houses unanimously passed the legislative version of the conference committee on June 3, 2021.

Possible election actions in Louisiana in 2021 and 2022

There are eight other constitutional amendments for the 2022 ballot and three changes for the 2021 ballot that have been passed by a chamber of the Louisiana Legislature. They would appear on the nationwide ballot when passed in the second chamber.

Louisiana Historic Ballot Statistics

From 2000 to 2020, a total of 132 constitutional amendments were voted on nationwide in Louisiana. A total of 96 amendments appeared on the ballot paper in the even years and 36 amendments appeared on the ballot paper in the odd years. The average number of amendments appearing on the nationwide ballot was 10 in even years and 4 in odd years. Voters approved 71.88% (69 out of 96) and rejected 28.13% (27 out of 96) of the changes in even years. Voters approved 69.44% (25 out of 36) and disapproved 30.56% (11 out of 36) of the changes in odd years.

Additional reading:

Learn more

Shares commerce decrease as nation for ‘complete’ lockdown

A man wearing a face mask to protect against Covid-19 walks past two Malaysian flags in the capital, Kuala Lumpur.

Faris Hadziq | SOPA pictures | LightRocket via Getty Images

Stocks in Malaysia fell early Monday as the government announced a nationwide “total lockdown” to contain the rapidly rising daily Covid-19 infections in the country.

The benchmark FTSE Bursa Malaysia KLCI Index fell around 1.5% in the Open before leveling off around 1.1% – an underperformance most of the Asia Pacific markets.

Malaysia has control issues an increase in Covid infections. Last week, the country reported five consecutive days of record spikes in coronavirus cases, bringing cumulative infections to more than 565,500 cases, with 2,729 deaths on Sunday, health ministry data showed.

Prime Minister Muhyiddin Yassin announced on Friday after the market closed that the country would enter into a two-week lockdown from Tuesday.

During the period, individuals are generally only allowed to leave their homes to purchase essential items or to get medical services. For companies, those offering essential services remain open, while certain segments of manufacturing can operate at reduced capacity.

Brian Tan, an economist at Barclays Bank in Singapore, estimated the measures will cost the Malaysian economy between 0.5 and 1 percentage point every two weeks.

Tan wrote in a Monday note that he has cut Malaysia’s growth forecast for 2021 from 6.5% to 5.5% – below the central bank’s projection range of 6% to 7.5%.

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UPDATE 1-European shares rise as central banks pledge simple cash

(For a Reuters live blog about the US, UK and European stock markets, click LIVE / in a news window or type LIVE /.)

* Fed, ECB assurances support sentiment

* M&S hits 1 year high in early trading

* Danone slips on Berenberg downgrade (Adds comments, updates prices)

From Sruthi Shankar

May 26 (Reuters) – European stocks held near all-time highs on Wednesday as a host of central bank policymakers pledged to keep monetary policy loose despite recent signs of rising inflation.

The pan-European STOXX 600 index rose 0.2%, with gains in travel and leisure stocks offsetting bank losses.

Global equity markets were relieved as Federal Reserve officials reiterated a cautious stance on monetary policy after concerns over rising inflation fueled market volatility earlier this month.

Similar comments from European Central Bank policymakers, including the fact that it may be too early to discuss reducing emergency bond purchases, helped stabilize equity markets in the region.

“I think they will endeavor not to make the same mistake as they did last cycle. In 2011 they raised interest rates in front of the Fed as a precaution,” said Max Kettner, multi-asset strategist at HSBC Global Research.

“That was one reason for the slower growth in the eurozone throughout the cycle.” The STOXX 600 hit a record high on Tuesday after rising nearly 12% this year. This was aided by strong gains and optimism about reopening economies as the pace of COVID-19 vaccination accelerated.

“We were very risky at the beginning of 2021 and made our asset allocation a little cyclical just because we missed the next big catalyst on the macro side,” said Kettner.

However, European equities are likely to stay just above current record levels if the initial surge subsides. A Reuters poll of strategists predicted the STOXX 600 would hit 451 points by the end of the year, just 1.3% above Monday’s close of trading.

The story goes on

UK retailer Marks & Spencer rose 4.2% to a year-long high after announcing that it had traded well in the first few weeks of 2021-22 and that profits would rebound after seeing a slump in full-year earnings reported by 88%.

French food company Danone was down 1% after Berenberg downgraded its stock to “sell”, citing the hard-to-fix low-growth nature of most of its categories.

The Spire Healthcare Group rose 24.6% after Australian hospital operator Ramsay Health Care announced it was buying a British colleague for £ 1 billion ($ 1.42 billion). (Reporting by Sruthi Shankar in Bengaluru; editing by Arun Koyyur)

Is Spotlight Occasion and Leisure AG’s (VTX:HLEE) Inventory’s Current Efficiency Being Led By Its Enticing Monetary Prospects?

Highlight Event and Entertainment (VTX: HLEE) has had a good run on the stock market. The stock rose a whopping 9.0% last month. Given the company’s impressive performance, we decided to take a closer look at its financial indicators, as a company’s long-term financial health usually determines market results. In this article, we’ve decided to focus on Highlight event and entertainment ROE.

Return on equity, or ROE, is a key measure used to assess how efficiently a company’s management is using the company’s capital. In short, the ROE shows the profit each dollar makes on its shareholder investment.

Check out our latest analysis for Highlight Event and Entertainment

How do you calculate the return on equity?

The ROE can be calculated using the following formula:

Return on Equity = Net Income (from continuing operations) ÷ Equity

Based on the above formula, the ROE for Highlight Event and Entertainment is:

8.8% = CHF 32 million ÷ CHF 358 million (based on the last twelve months up to December 2020).

The “return” is the annual profit. This means that the company made a profit of CHF 0.09 for every equity worth CHF 1.

What does ROE have to do with earnings growth?

So far we have learned that ROE is a measure of a company’s profitability. Depending on how much of those profits the company reinvests or “retains” and how effectively this is done, we can then assess a company’s earnings growth potential. Assuming that everything else stays the same, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that do not necessarily have these characteristics.

A side-by-side comparison of the profit growth of Highlight Event and Entertainment and the ROE of 8.8%

First of all, the ROE from Highlight Event and Entertainment looks acceptable. When compared to the industry, we found that the average ROE for the industry is similar at 8.0%. As a result, this likely laid the foundation for the decent 8.9% growth that Highlight Event and Entertainment has seen over the past five years.

As a next step, we compared the net profit growth of Highlight Event and Entertainment with the industry and happily found that the company’s growth is higher than the average industry growth of 4.0%.

SWX: HLEE Past Earnings Growth May 14, 2021

Earnings growth is an important metric to consider when valuing a stock. It is important for an investor to know if the market has priced in the company’s expected earnings growth (or decline). This then helps them determine whether the stock is placed for a bright or bleak future. A good indicator of expected earnings growth is P / E, which determines the price the market is willing to pay for a stock based on its earnings outlook. You might want to too Check if Highlight Event and Entertainment is trading at a high or low P / E ratioin relation to its branch.

Does Highlight Event and Entertainment use the retained earnings effectively?

Given that Highlight Event and Entertainment does not pay its shareholders a dividend, we conclude that the company has reinvested all profits to grow its business.

Conclusion

Overall, we are of the opinion that Highlight Event and Entertainment performed quite well. We particularly like that the company is reinvesting heavily in its business with high returns. Unsurprisingly, this has resulted in impressive earnings growth. If the company continues to grow earnings the way it has, it could have a positive impact on its share price, as earnings per share affect long-term share prices. Remember that the price of a stock also depends on the perceived risk. Therefore, investors need to be aware of the risks involved before investing in a company. Our risk dashboard would have the 3 risks that we identified for Highlight Event and Entertainment.

Funded
When you choose to trade Highlight Event and Entertainment, you are using the lowest cost * platform ranked # 1 overall by Barron’s. Interactive broker. Trade stocks, options, futures, forex, bonds and funds in 135 markets from a single integrated account.

This article from Simply Wall St is of a general nature. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. We want to provide you with a long-term, focused analysis based on fundamental data. Note that our analysis may not take into account the latest price sensitive company announcements or quality materials. Simply Wall St has no position in the stocks mentioned.
* Interactive brokers have been rated as Lowest Cost Brokers by StockBrokers.com. Annual online review 2020

Do you have any feedback on this article? Concerned about the content? Get in touch directly with us. Alternatively, you can also send an email to the editorial team (at) simplywallst.com.

Why Hovering Shares May Be Unhealthy Information For The Financial system : Planet Cash : NPR

Editor’s note: This is an excerpt from the Planet Money newsletter. You can Login here.

Drew Angerer / Getty Images

Apple stock numbers will be displayed on a monitor on the floor of the New York Stock Exchange (NYSE) at the Opening Bell on August 13, 2019 in New York City.

Drew Angerer / Getty Images

While there have been some ups and downs, the stock market has hit historic highs in recent years. For many, that’s good news: it’s a sign that the economy and their retirement accounts are doing really well. For Jan Eeckhout, however, the booming stock market is a sign that something is deeply wrong with the economy.

Sure, says the economist, he has a retirement account with stocks and he personally benefits from the ongoing bonanza on the stock markets. The rocket ride on the stock market, however, is being driven by the skyrocketing profits of increasingly powerful companies. Their increasingly ridiculous profits, he says, are eating up the incomes of the great mass of workers and damaging the economy as a whole. This term is the central thesis of his forthcoming book, The Profit Paradox: How Thriving Businesses Threaten the Future of Work.

There is a powerful force lurking behind Corporate America’s rising earnings and stock prices. Eeckhout argues that violence is one of the main reasons the typical American worker’s wages have fallen; why the share of employed persons has decreased significantly; why the share of employees in national income has decreased; and why startup growth has slowed over the past few decades. That force, he says, is the amazing growth in market power since 1980.

The amazing rise in market power

Market power – also known as monopoly power – is the ability of companies to generate high profits by valuing their products and services more than it costs to actually manufacture and provide them. It costs Apple less than $ 500 to make a high-end iPhone, but it charges consumers more than double that amount. Apple’s ability to do this is a sign that the company has great market power.

Investors love market power. Warren Buffett, for example, famous advises that people invest in companies that will benefit a lot. Companies with market power are money-makers, protected by machine guns and bazookas, and keep potential competitors at bay.

Market power often comes from real innovation, efficient business models, and creating things that consumers like. but it also has costs for society. These costs are outlined in classical monopoly theory. Without competition, companies can raise their prices to maximize profits. As the prices of products rise, many consumers cannot afford them, and so the monopoly company reduces what it produces and sells. And that means they need less manpower.

If this were just one company, it wouldn’t be such a big deal to the wider economy. But Eeckhout documents a staggering increase in market power in all industries since 1980. We’re not just talking about the usual suspects; Amazon, Google, Facebook and so on. We talk about everything from cat food manufacturers to Seller of caskets. More than half of all dry cat food in the United States is sold by one company. Almost 90 percent of mayonnaise in the US is sold by two companies. Airlines, social media, pacemakers, pharmaceuticals, energy, cars, home improvement – there are so many industries that are increasingly dominated by just a few companies.

The International Monetary Fund rang alarm bells in 2019 about the problem of growing market power (read) our newsletter about that). They examined nearly a million companies, focusing on one measure of market power: markups, which is the ratio of the price of products a company sells to the cost of production. The IMF found that premiums in advanced countries increased 8 percent between 2000 and 2015.

in the his own studyEeckhout and his colleagues, published in a top peer-reviewed journal, note that publicly traded companies’ premiums have tripled since 1980 and that dominant companies are much more profitable than they used to be. In 1980, the average profit rate of a listed company was only one to two percent of sales. Now they have profit percentages between seven and eight percent of sales. It’s a mind-boggling increase.

Eeckhout says he has nothing against profits per se. However, the excessive profits of so many companies come at the expense of the livelihood of ordinary workers. In the world of ubiquitous market power, workers don’t just have to pay higher prices for goods and services. They, says Eeckhout, also find it more difficult to get well-paid jobs. This is because higher prices for things mean lower demand for those things, which also means lower demand for workers who make or provide those things.

“Market power is so widespread today, from technology to textiles, that it lowers production and labor demand,” he writes. “Instead of creating jobs, market power means that profitability lowers wages and destroys work. That is the profit paradox.”

Why has market power increased?

Eeckhout blames two big factors for the rise in market power. The first is the government’s lax enforcement of competition. This includes the ability for companies to partner with and devour their competitors, as well as an overly generous patent system that grants lengthy monopoly rights on the sale of all types of devices and pills. Most of the lobbying in Washington is largely about protecting and expanding market power.

However, according to Eeckhout, the main story is about rapid technological change that is creating markets where all winners are represented and making it difficult for Davids to challenge the goalkeepers. Over the past four decades we have made tremendous advances in technology in computing, transportation, and communications. This has fueled the rise of global supply chains, big box retailers, search algorithms, and “network effects” platforms that add more value to companies like Google, Amazon, and Facebook the more people use them. Smaller businesses are now struggling to amass the brand’s resources, expertise, and reputation to overcome the formidable barriers to entry it takes to compete with the big ones.

What should we do about it?

The simple answer is that the government is liquidating companies. However, Eeckhout emphasizes that many companies are still dominant because, due to their technologically advanced and well-run business, they often offer greater efficiency and better products. Sure, you can dissolve Google, but its search algorithm, which is the main source of income, actually works better the more people use it. A liquidation of the company could put consumers in a worse position.

Some companies have to be wound up, says Eeckhout. Others just need to be better regulated, however. One idea: a “reverse patent” system where companies like Google only have a limited amount of time to keep the data they collect private. The data is then freely available to competitors.

Another idea: a new federal competition agency modeled on the Federal Reserve. The main job of the Fed is to prevent inflation, and according to Eeckhout, the cost of market power is much higher than the cost of inflation ever before. Like the Fed, this new agency would be well staffed and with expanded powers that it can exercise independently of Congress and the President. Their main task would be to regulate monopolies and limit market power.

Eeckhout admits that dealing seriously with this issue will not make stock traders happy. Limiting market power and increasing competition would reduce corporate profits. This, in turn, would mean that companies would have lower share prices. Returning to the levels of competition we saw in the early 1980s, he writes, “Be prepared for a Dow Jones below 10,000 instead of 30,000.”

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What Occurs to Shares and Cryptocurrencies When the Fed Stops Raining Cash?

To veterans of financial bubbles, there is plenty familiar about the present. Stock valuations are their richest since the dot-com bubble in 2000. Home prices are back to their pre-financial crisis peak. Risky companies can borrow at the lowest rates on record. Individual investors are pouring money into green energy and cryptocurrency.

This boom has some legitimate explanations, from the advances in digital commerce to fiscally greased growth that will likely be the strongest since 1983.

But there is one driver above all: the Federal Reserve. Easy monetary policy has regularly fueled financial booms, and it is exceptionally easy now. The Fed has kept interest rates near zero for the past year and signaled rates won’t change for at least two more years. It is buying hundreds of billions of dollars of bonds. As a result, the 10-year Treasury bond yield is well below inflation—that is, real yields are deeply negative —for only the second time in 40 years.

There are good reasons why rates are so low. The Fed acted in response to a pandemic that at its most intense threatened even more damage than the 2007-09 financial crisis. Yet in great part thanks to the Fed and Congress, which has passed some $5 trillion in fiscal stimulus, this recovery looks much healthier than the last. That could undermine the reasons for such low rates, threatening the underpinnings of market valuations.

“Equity markets at a minimum are priced to perfection on the assumption rates will be low for a long time,” said Harvard University economist

Jeremy Stein,

who served as a Fed governor alongside now-chairman

Jerome Powell.

“And certainly you get the sense the Fed is trying really hard to say, ‘Everything is fine, we’re in no rush to raise rates.’ But while I don’t think we’re headed for sustained high inflation it’s completely possible we’ll have several quarters of hot readings on inflation.”

Since stocks’ valuations are only justified if interest rates stay extremely low, how do they reprice if the Fed has to tighten monetary policy to combat inflation and bond yields rise one to 1.5 percentage points, he asked. “You could get a serious correction in asset prices.”

‘A bit frothy’

The Fed has been here before. In the late 1990s its willingness to cut rates in response to the Asian financial crisis and the near collapse of the hedge fund Long-Term Capital Management was seen by some as an implicit market backstop, inflating the ensuing dot-com bubble. Its low-rate policy in the wake of that collapsed bubble was then blamed for driving up housing prices. Both times Fed officials defended their policy, arguing that to raise rates (or not cut them) simply to prevent bubbles would compromise their main goals of low unemployment and inflation, and do more harm than letting the bubble deflate on its own.

As for this year, in a report this week the central bank warned asset “valuations are generally high” and “vulnerable to significant declines should investor risk appetite fall, progress on containing the virus disappoint, or the recovery stall.” On April 28 Mr. Powell acknowledged markets look “a bit frothy” and the Fed might be one of the reasons: “I won’t say it has nothing to do with monetary policy, but it has a tremendous amount to do with vaccination and reopening of the economy.” But he gave no hint the Fed was about to dial back its stimulus: “The economy is a long way from our goals.” A Labor Department report Friday showing that far fewer jobs were created in April than Wall Street expected underlined that.

The Fed’s choices are heavily influenced by the financial crisis. While the Fed cut rates to near zero and bought bonds then as well, it was battling powerful headwinds as households, banks, and governments sought to pay down debts. That held back spending and pushed inflation below the Fed’s 2% target. Deeper-seated forces such as aging populations also held down growth and interest rates, a combination some dubbed “secular stagnation.”

Share Your Thoughts

Do you think we’re in the middle of a bubble? If so, what will cause it to burst? Join the conversation below.

The pandemic shutdown a year ago triggered a hit to economic output that was initially worse than the financial crisis. But after two months, economic activity began to recover as restrictions eased and businesses adapted to social distancing. The Fed initiated new lending programs and Congress passed the $2.2 trillion Cares Act. Vaccines arrived sooner than expected. The U.S. economy is likely to hit its pre-pandemic size in the current quarter, two years faster than after the financial crisis.

And yet even as the outlook has improved, the fiscal and monetary taps remain wide open. Democrats first proposed an additional $3 trillion in stimulus last May when output was expected to fall 6% last year. It actually fell less than half that, but Democrats, after winning both the White House and Congress, pressed ahead with the same size stimulus.

The Fed began buying bonds in March, 2020 to counter chaotic conditions in markets. In late summer, with markets functioning normally, it extended the program while tilting the rationale toward keeping bond yields low.

At the same time it unveiled a new framework: After years of inflation running below 2%, it would aim to push inflation not just back to 2% but higher, so that over time average and expected inflation would both stabilize at 2%. To that end, it promised not to raise rates until full employment had been restored and inflation was 2% and headed higher. Officials predicted that would not happen before 2024 and have since stuck to that guidance despite a significantly improving outlook.

Running of the bulls

This injection of unprecedented monetary and fiscal stimulus into an economy already rebounding thanks to vaccinations is why Wall Street strategists are their most bullish on stocks since before the last financial crisis, according to a survey by

Bank of America Corp.

While profit forecasts have risen briskly, stocks have risen more. The S&P 500 stock index now trades at about 22 times the coming year’s profits, according to FactSet, a level only exceeded at the peak of the dot-com boom in 2000.

Other asset markets are similarly stretched. Investors are willing to buy the bonds of junk-rated companies at the lowest yields since at least 1995, and the narrowest spread above safe Treasurys since 2007, according to Bloomberg Barclays data. Residential and commercial property prices, adjusted for inflation, are around the peak reached in 2006.

Stock and property valuations are more justifiable today than in 2000 or in 2006 because the returns on riskless Treasury bonds are so much lower. In that sense, the Fed’s policies are working precisely as intended: improving both the economic outlook, which is good for profits, housing demand, and corporate creditworthiness; and the appetite for risk.

Nonetheless, low rates are no longer sufficient to justify some asset valuations. Instead, bulls invoke alternative metrics.

Bank of America recently noted companies with relatively low carbon emissions and higher water efficiency earn higher valuations. These valuations aren’t the result of superior cash flow or profit prospects, but a tidal wave of funds invested according to environmental, social and governance, or ESG, criteria.

Conventional valuation is also useless for cryptocurrencies which earn no interest, rent or dividends. Instead, advocates claim digital currencies will displace the fiat currencies issued by central banks as a transaction medium and store of value. “Crypto has the potential to be as revolutionary and widely adopted as the internet,” claims the prospectus of the initial public offering of crypto exchange

Coinbase Global Inc.,

in language reminiscent of internet-related IPOs more than two decades earlier. Cryptocurrencies as of April 29 were worth more than $2 trillion, according to CoinDesk, an information service, roughly equivalent to all U.S. dollars in circulation.

Financial innovation is also at work, as it has been in past financial booms. Portfolio insurance, a strategy designed to hedge against market losses, amplified selling during the 1987 stock market crash. In the 1990s, internet stockbrokers fueled tech stocks and in the 2000s, subprime mortgage derivatives helped finance housing. The equivalent today are zero commission brokers such as Robinhood Markets Inc., fractional ownership and social media, all of which have empowered individual investors.

Such investors increasingly influence the overall market’s direction, according to a recent report by the Bank for International Settlements, a consortium of the world’s central banks. It found, for example, that since 2017 trading volume in exchange-traded funds that track the S&P 500, a favorite of institutional investors, has flattened while the volume in its component stocks, which individual investors prefer, has climbed. Individuals, it noted, are more likely to buy a company’s shares for reasons unrelated to its underlying business—because, for example, its name is similar to another stock that is on the rise.

While such speculation is often blamed on the Fed, drawing a direct line is difficult. Not so with fiscal stimulus. Jim Bianco, the head of financial research firm Bianco Research, said flows into exchange-traded funds and mutual funds jumped in March as the Treasury distributed $1,400 stimulus checks. “The first thing you do with your check is deposit it in your account and in 2021 that’s your brokerage account,” said Mr. Bianco.

Facing the future

It’s impossible to predict how, or even whether, this all ends. It doesn’t have to: High-priced stocks could eventually earn the profits necessary to justify today’s valuations, especially with the economy’s current head of steam. In he meantime, more extreme pockets of speculation may collapse under their own weight as profits disappoint or competition emerges.

Bitcoin once threatened to displace the dollar; now numerous competitors purport to do the same.

Tesla Inc.

was once about the only stock you could buy to bet on electric vehicles; now there is China’s NIO Inc.,

Nikola Corp.

, and

Fisker Inc.,

not to mention established manufacturers such as Volkswagen AG and

General Motors Co.

that are rolling out ever more electric models.

But for assets across the board to fall would likely involve some sort of macroeconomic event, such as a recession, financial crisis, or inflation.

The Fed report this past week said the virus remains the biggest threat to the economy and thus the financial system. April’s jobs disappointment was a reminder of how unsettled the economic outlook remains. Still, with the virus in retreat, a recession seems unlikely now. A financial crisis linked to some hidden fragility can’t be ruled out. Still, banks have so much capital and mortgage underwriting is so tight that something similar to the 2007-09 financial crisis, which began with defaulting mortgages, seems remote. If junk bonds, cryptocoins or tech stocks are bought primarily with borrowed money, a plunge in their values could precipitate a wave of forced selling, bankruptcies and potentially a crisis. But that doesn’t seem to have happened. The recent collapse of Archegos Capital Management from reversals on derivatives-based stock investments inflicted losses on its lenders. But it didn’t threaten their survival or trigger contagion to similarly situated firms.

“Where’s the second Archegos?” said Mr. Bianco. “There hasn’t been one yet.”

That leaves inflation. Fear of inflation is widespread now with shortages of semiconductors, lumber, and workers all putting upward pressure on prices and costs. Most forecasters, and the Fed, think those pressures will ease once the economy has reopened and normal spending patterns resume. Nonetheless, the difference between yields on regular and inflation-indexed bond yields suggest investors are expecting inflation in coming years to average about 2.5%. That is hardly a repeat of the 1970s, and compatible with the Fed’s new goal of average 2% inflation over the long term. Nonetheless, it would be a clear break from the sub-2% range of the last decade.

Slightly higher inflation would result in the Fed setting short-term interest rates also slightly higher, which need not hurt stock valuations. More worrisome: Long-term bond yields, which are critical to stock values, might rise significantly more. Since the late 1990s, bond and stock prices have tended to move in opposite directions. That is because when inflation isn’t a concern, economic shocks tend to drive both bond yields (which move in the opposite direction to prices) and stock prices down. Bonds thus act as an insurance policy against losses on stocks, for which investors are willing to accept lower yields. If inflation becomes a problem again, then bonds lose that insurance value and their yields will rise. In recent months that stock-bond correlation, in place for most of the last few decades, began to disappear, said

Brian Sack,

a former Fed economist who is now with hedge fund D.E. Shaw & Co. LP. He attributes that, in part, to inflation concerns.

The many years since inflation dominated the financial landscape have led investors to price assets as if inflation never will have that sway again. They may be right. But if the unprecedented combination of monetary and fiscal stimulus succeeds in jolting the economy out of the last decade’s pattern, that complacency could prove quite costly.

Write to Greg Ip at greg.ip@wsj.com

Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Most Lively Shares In the present day? four Leisure Shares To Contemplate

May 7, 2021 6 min read

This story originally appeared on Stock market

Like it or not, Entertainment stocks are still some of the most active stocks on the stock market today. After all, entertainment is a central part of our entire life. This would be especially the case if we have been in a global health crisis for more than a year. Entertainment allows most consumers to forget their worries for a moment, which benefits both organizations and investors. Fortunately for investors, there is a wide variety of entertainment stocks on the market Stock market right now.

On one hand, you have digital entertainment companies that thrived during the pandemic. In that group there are video streaming companies like Roku (NASDAQ: ROKU) that continue to entertain the crowds at home. On the other hand, traditional forms of personal entertainment continue to gain momentum as pandemic conditions improve too. For starters, we could look at Cruise ships like carnival (NYSE: CCL) and Royal Caribbean (NYSE: RCL). The duo would prepare to return cruise tours this coming summer. Not to mention entertainment stocks like AMC Entertainment (NYSE: AMC) and GameStop (NYSE: GME) are considered the hottest Meme stocks now. Obviously, there is no shortage of investor hype in this industry, to say the least. Could be one of these Top entertainment stocks Is it therefore worth investing in the stock market?

Best entertainment stocks in May

DraftKings Inc.

DraftKings is a digital sports entertainment and games company. The offer includes daily imagination, regulated gaming and digital media. It is the only vertically integrated sports betting provider based in the United States. Essentially, the company is a multi-channel sports betting and gaming technology provider that offers sports and gaming entertainment for over 50 operators in 17 countries. The DKNG share is currently trading at $ 49.49 as of 1:40 p.m. (CET) and has more than doubled in the past year. The company released its financials for the first quarter today, much to the delight of investors.

Source: TD Ameritrade TOS

First, the company had sales of $ 312 million, an impressive 253% year-over-year increase. The monthly individual payers for the B2C segment increased by 114% compared to the previous year. In the first quarter, an average of 1.5 million paying customers were employed with DraftKings per month. The increase reflects the strong retention and acquisition of players at Daily Fantasy Sports, Online Sports Betting and iGaming. Given the company’s great start in 2021, it has raised its fiscal 2021 revenue forecast to between $ 1.05 billion and $ 1.15 billion. This would correspond to a sales growth of 79% compared to the previous year. Given this exciting news, will you consider buying DKNG shares?

[Read More] Buy cheap stocks? 4 Cloud Computing Stocks To Know

Skillz Inc.

Skillz is an entertainment company that provides game developers with monetization services through mobile esports platforms. The company’s main activity is developing and supporting an online hosted technology platform. This would allow independent game developers to host tournaments and offer competitive gaming activities to end users. Given that mobile gaming has grown in prominence in recent years, could Skillz be on the up too? Earlier this week, ARK Invest continued to add Skillz shares to its actively managed exchange-traded fund.

Source: TD Ameritrade TOS

On Tuesday, the company reported record first-quarter revenue and also raised its guidance for 2021. Skillz posted revenue of $ 84 million, up 92% year over year. It is impressive that the paying monthly active users have grown by 81% compared to the previous year. It also ended the quarter with $ 613 million in cash and had no debt. Skillz also noted that it had increased its Android footprint and that Android users’ sales were growing twice as fast as iOS. For its financial outlook, the company is increasing its 2021 revenue forecast to $ 375 million, up 63% year over year. With that in mind, are you considering buying SKLZ shares?

Continue reading

Penn National Gaming Inc.

Next on that list is Penn, a casino and race track operator. The company owns and operates 41 gaming and racing properties in 19 states and operates video game terminals with a focus on slot machine entertainment. It also offers live sports betting at its Colorado and Iowa homes, among other things. The company’s strategy has evolved from owner of gaming and racing real estate to omnichannel provider of retail and online games, live racing and sports betting entertainment. PENN stock is currently trading at $ 86.09 as of 1:40 p.m. (CET) and is up over 350% over the past year.

Top Entertainment Stocks To See (PENN Stock)Source: TD Ameritrade TOS

On Thursday, the company released its first quarter financials and essentially started the year with record results. Specifically, the company had sales of $ 1.27 billion, an increase of 14% over the previous year. Net income for the quarter was $ 90.9 million. The company was also included in the S&P 500 in March, underscoring the investment community’s confidence in digital transformation and its position as the largest regional gaming operator in the US Portfolio?

[Read More] Buy best stocks now? 4 Focus on Consumer Discretionary

Netflix Inc.

At the top of our list is Netflix, a content platform and production company headquartered in Los Gatos, California. It is one of the world’s leading entertainment services with 208 million paid memberships in over 190 countries. The company’s portfolio includes a wide variety of TV series, documentaries, and feature films in a variety of genres and languages. NFLX stock currently trades at $ 502.23 as of 1:41 p.m. ET.

Buy entertainment stocks (NFLX stock)Source: TD Ameritrade TOS

Despite its current lead in the streaming industry, Netflix isn’t resting on its laurels just yet. According to reports, the company plans to create a platform called “N-Plus”. Netflix describes N-Plus as a “future online area” where subscribers can learn more about their Netflix preferences. By and large, this would help streamline the content recommended by users while improving customer loyalty. If that wasn’t enough, users could also create and share playlists made up of their favorite shows. Would you consider NFLX stock to be one of the best entertainment stocks to buy as Netflix continues to strengthen its massive streaming portfolio?

2 Sizzling Leisure Shares to Purchase Now

Shares of Planet 13 Holdings ((CNSX: PLTH)((OTC: PLNH.F) and Mudrick Capital Acquisition Corporation ((NASDAQ: MUDS) have been in tears since February. Your returns of 25% and 40% are very impressive given the fact S&P 500 The benchmark only rose by 8.6% over the same period.

What is behind the luxury cannabis operator and the (imminent) rallies of the legendary trading card company? Well, the strength of their brands alone is enough to take their inventory to new levels.

Image source: Getty Images

1. Planet 13 Holdings

Planet 13 could be the most unique cannabis company in the country. Instead of rushing to open a large number of pharmacies or building wholesale partnerships, the company is dedicated to marijuana superstores. The Las Vegas flagship store is just minutes from the Vegas Strip and is open until 3 a.m. on weekends. The house also has a cafe, restaurant and interactive experiences like LED floors.

Almost $ 70.5 million in 2019 Planet 13 revenue came from its Vegas business and accounted for about 10% of all cannabis sold in Nevada. Due to a one-time decrease in traffic related to COVID-19, sales increased by only 10.8% compared to 2019. Towards the end of the pandemic, party-goers are returning en masse to Sin City.

The catalog of vapes, edibles, flowers, extracts, pre-rolls, tinctures, and themes is extremely popular with tourists from nearby resorts and casinos. Planet 13 also plans to open a second supermarket in Santa Ana, California in early July. It is conveniently located just a 20 minute drive from Disneyland. The company plans to implement home delivery as a core feature. In addition to the two locations mentioned, the company already operates a neighborhood pharmacy in Nevada.

Investors expect a sharp spike in the company’s sales this year as its stock trades for 8.7 times the futures deal. Before the pandemic, the company grew sales an impressive 200% per year, so expectations seem pretty reasonable. Additionally, insiders own nearly half of the company, which shows management’s high level of confidence in Planet 13’s long-term prospects. That is definitely lucrative Cannabis supply check out now.

2. Topps (Mudrick Capital Acquisition Corporation)

The Special Purpose Acquisition Company (SPAC) Mudrick Capital plans to take over the trading card and confectionery company Topps by the end of the year. For over 70 years the company has worked with the MLB to collect trading cards for baseball.

Don’t be put off by what appears to be a niche market. There is a whole market of loyal fans happy to pay for memorabilia. Currently, limited edition cards for rookie players can fetch between $ 1.0 million and $ 5.2 million apiece at auctions.

In addition, the company expanded into the blockchain industry by putting baseball cards for sale non-fungible tokens (NFTs). It is planned to sell 1.38 million virtual cards by the end of April. rare cards come with animated backgrounds or holographic effects. The technology assures buyers that they will receive authentic versions of the cards during the auction or resale.

The company also works with other well-known brands such as Formula 1 and Star Wars to release collectibles. It also has its collection of interactive card game apps and gift cards. Last year, e-commerce sales soared to $ 92 million from less than $ 5 million in 2015. This side of the business has a highly scalable model that the company uses to sell its cherished cards to other countries may be popular in which baseball operates, such as Japan. Outside the sports and entertainment segment, around a third of sales come from the sale of sweets. Its brands like Ring Pop are consistently in the top 4 in the country.

The company’s revenue increased 23% year over year to $ 567 million last year. It expects further momentum with an estimated annual sales increase of 22% this year. That’s very cheap considering Enterprise value (EV) is only twice its sales. All of these factors make Topps’ SPAC a top growth stock for investors. Portfolios.

This article reflects the opinion of the author who may disagree with the “official” referral position of a Motley Fool Premium Consulting Service. We are colorful! Questioning an investment thesis – including one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.