Today's big stories

Bank of America’s latest survey showed most investors think the stock market’s overvalued
Investors ought to be suspicious of the surprisingly great US economic data out recently – Read Now
Software giant Oracle reported a disappointing quarterly update

1/3

Roll up! Roll up!

What’s Going On Here?

According to Bank of America’s (BoA’s) latest investor survey, too much money has been thrown at stocks, and they’ve actually – whisper it – become a bit of a rip-off.

What Does This Mean?

BoA surveys professional investors every month to see what they’re up to. And in June, the bank duly asked 190 investment managers – who collectively look after $560 billion worth of assets – how they’re feeling about the markets. Almost 80% of those surveyed – the biggest proportion ever – said they reckon the stock market’s currently “overvalued”. In other words, the investors think share prices are too high given expectations for company earnings.

Over half the investors also said they think the current stock market rally – which has seen global stock markets rise over 30% from their March lows – is a “bear market rally”. That’s where stocks rise in the short-term before collapsing back into bear market territory and plumbing new lows.

Why Should I Care?

For markets: Cutting shapes.
It was just this week that Morgan Stanley backed a “V-shaped” economic recovery, but less than 20% of surveyed investors agree. Almost two-thirds reckon any recovery will be more gradual, suggesting a U or W shape (tweet this). And that’s reflected in their stock choices over the last month: they reduced their holdings of tech and pharma stocks (some of which have benefited from the pandemic), and added “early cyclical” sectors like materials and energy.

For you personally: Honorable pension.
The investors said they’d put more money into markets over the last month, reducing the amount of cash they had by 5% – the biggest monthly drop in over a decade. Among those who spent the most were pension funds, which consistently have to pay retirees at the expense of their cash pile. They can’t necessarily afford to miss out on a rising stock market if they want to keep payments flowing, no matter how risky the market might be.

Take action: How to plan your long-term financial future.

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2/3 Premium

Big Whoop

What’s Going On Here?

The record rise in US retail sales last month is among the country’s most surprising data ever, but the road to full recovery’s far from over yet.

Get the full story with Finimize Premium

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3/3

Cold Reading

What’s Going On Here?

Oracle probably saw this one coming: after laying out a foreboding quarterly update for investors, the world’s second-biggest software company’s stock initially fell 5% on Wednesday.

What Does This Mean?

Seeing as Oracle’s last quarter ended in May, its results showed the full coronavirus-stained picture. The company fell victim to delayed payments as businesses tried to save themselves money, maybe because they thought Oracle – with its $37 billion bank balance – didn’t need it as much as they did. Throw in nervous customers that might’ve paid for Oracle’s services in better circumstances, and it’s little surprise the company’s revenue and profit came in lower than expected.

And given we’re stuck with those circumstances for a while, Oracle isn’t forecasting its sales will grow at all this quarter versus the same time last year. That’s a far cry from the growth software giants like Amazon’s AWS and Microsoft are expected to turn in – even if it is what Oracle’s investors predicted.

Why Should I Care?

The bigger picture: Zoom this, Zoom that.
With so many people forced to work from home, cloud-based software companies like Zoom have benefited from an increase in demand. But not everyone's a Zoom: “enterprise software” – which includes Oracle’s specialties of employee management, databases, and resource planning – is expected to take a hit as companies reprioritize their spending. Near term, then, Oracle’s opportunity lies in converting its big software customers into cloud-based software customers, just like Adobe and Salesforce have done.

Zooming out: Fool me once...
Next month, we’ll start to hear how most companies have done in the second quarter. Analysts are setting expectations low: they think major US companies’ earnings will be 44% lower than the same time last year. But even that could be generous. Only 48 of those companies have given second-quarter earnings guidance, and almost four times as many have washed their hands of their own previous forecasts. That suggests investors could be in for some big surprises…

Get invested: Profit from the tech companies that are benefiting from this pandemic.

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💬 Quote of the day

“Painting is poetry that is seen rather than felt, and poetry is painting that is felt rather than seen.”

– Leonardo da Vinci (an Italian polymath of the Renaissance)

Tweet this

🤔 Q&A · RE: Cool, Calm, Collected

“How does a company’s stock being listed on two exchanges affect its price?”

– Kian Leong, in Malaysia

“It’s hard to be certain, but probably not by much since both sets of shares give their owners the same rights to the company. Still, there might be investors who were previously unable to invest in the company (given its listing location) who can now invest – and who might potentially buy when others are selling, propping the share price up when it may otherwise have fallen. On the other hand, any new investors probably won’t be that different to existing shareholders, meaning a disappointing update that triggers mass-selling will likely happen to both sets of shares. The other likely price effect is down to currencies: if a company is, say, listed in the UK and the US, the prices of both sets of shares will fluctuate to maintain the prevailing exchange rate between the pound and the dollar.”

🙋 Ask a question

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🌎 Finimize Community

🚨 New events alert

Just when our backs were turned, some new events snuck up on us. We’re not sure where they came from (probably our Community team) or why they’re here (probably to help you become better investors), but we’re rolling with it.

🇭🇺 Hungary: What’s Next For The Energy Market? – 6.00pm CET, June 23rd
🇺🇸 USA: Making Sense of Sustainable Investing – 10am PT, June 25th
🌍 Global: Finimize Live AMA – 1.30pm UK Time, June 30th

📚 What we're reading

Why yes, you can train your dog to get you a beer (Mel)
AI leaves no wrinkle undefined (Science Alert)
We had such high hopes, Bose (Gizmodo)

Finimize - 📈 Stocks are a rip-off, say investors

Today's big stories

Roll up! Roll up!

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Big Whoop

🙌 You’re in safe hands

Cold Reading

What’s Going On Here?

What Does This Mean?

Why Should I Care?

😄 Change your mood in a sniff

🚨 New events alert

Older messages

🇯🇵 Japan’s IPO frenzy

😎 Morgan Stanley: ignore the recession

😭 Uber goes hungry

💪 Activism really works

📈 Tech stocks break records

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