Hi Newsletterest, here's what you need to know for June 29th in 3:07 minutes.

☕️ Finimized over an espresso at Gaia Art & Café in Copacabana, Brazil (23°C/73°F ☀️)

Today's big stories

The CEO of investment bank Goldman Sachs thinks US stocks are too expensive
After a crazy few months, our analysts look at what the second half of 2020 holds for markets – Read Now
Major European mall owner Intu collapsed under the weight of its debts

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Hot Potato

What’s Going On Here?

The CEO of investment bank Goldman Sachs warned last week that US stocks are getting too hot to handle as high prices remain unsupported by companies’ actual earning potential.

What Does This Mean?

When assessing how pricey a public company is, analysts like to compare its share price to its earnings per share: annual profit divided by the total number of shares outstanding. When the resulting “price-to-earnings (P/E) ratio” is low relative to competitors, it suggests a company’s stock is cheap – and when it’s high, the shares look more expensive.

Record-low interest rates and unlimited central bank support have pushed investors in search of returns head first into stock markets, with hot competition pushing up prices. And with company profit predictions now drastically lower thanks to the pandemic, US stocks’ P/E ratios have risen rapidly. Assuming the 190 worried investors surveyed by Bank of America this month are a representative sample, it’s likely that portfolios will soon be rebalancing away from US stocks.

Why Should I Care?

For markets: World: hold on.
US stocks’ almost 40% rise from March lows sent their “valuation premium” – how much higher the average P/E ratio is compared to other markets – up to four times earlier this month, compared to the historical range of between zero and two. But the ‘Murican premium has already started closing almost as quickly as it opened up. Given US stocks have remained pretty popular, that primarily reflects investors’ purchases of more stocks elsewhere: Germany, South Korea, Brazil, and South Africa have recently caught investors’ eyes, to name but a few.

For you personally: Keep calm and carry on diversifying.
Valuations oscillate over the years, and what’s expensive in 2020 might be seen as a bargain by 2021. That’s why for most individual investors chasing individual groups of stocks might be more trouble than it’s worth. After all, a globally diverse portfolio should benefit from rising markets all over the world.

Go for gold, man: How to build a portfolio that’ll perform well in all environments.

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2/3 Premium

Hourglass Figures

What’s Going On Here?

Unbelievably, the year is already halfway done. After a stock market tumble of unprecedented speed followed by an equally aggressive rebound, it takes serious guts to make predictions about what will come next. That’s why our analysts have looked into what European investment bank Nordea thinks is in store…

Get the full story with Finimize Premium

Going Under

What’s Going On Here?

Another quarter of widespread rent refusals plunged European real estate investment giant Intu into bankruptcy on Friday.

What Does This Mean?

Back in March, Intu – which owns numerous UK shopping landmarks – only received 30% of the quarterly rent it was owed as retail tenants suffered from shuttered stores. And last week it managed to get just 14% of the rent it was due for next quarter (tweet this). That put Intu in a tough spot: it owed money itself to banks and bondholders and was unable to agree a revised payment plan. Entering “administration” hands control of the company to its lenders, who may now seek to recover some cash by way of a restructuring.

Retail landlords may have further struggles in store. Swedish fashion giant H&M reported its first quarterly loss in more than a decade on Friday; like rival Inditex, it could soon start reducing its physical footprint. Microsoft, meanwhile, announced on Friday that it was closing all its stores.

Why Should I Care?

The bigger picture: Intu darkness.
Intu’s shares had already lost 95% of their value this year, and they fell another 50% on Friday before trading was suspended. With as much as 60% of British retail space reportedly owned by the public – albeit largely indirectly through pension investment pots – the professionals stewarding people’s money might see Intu’s collapse as a sign that they need to focus on industries less at risk of failing to pay out the all-important dividends retirees rely upon for income.

Zooming out: Amazon stands to gain again.
Everyone’s favorite internet giant agreed last week to buy autonomous vehicle startup Zoox for $1.2 billion, perhaps planning to integrate Zoox’s technology into its expanding delivery network. In the not-so-distant future autonomous delivery may put even more pressure on malls: even cheaper transport of products to peoples’ homes makes them even less likely to bother shopping in person.

If only Intu had read this: Four things you need to know before investing in real estate.

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💬 Quote of the day

“Knowing yourself is the beginning of all wisdom.”

– Aristotle (a Greek philosopher and polymath during the Classical period)

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⚡️ Lightning Insight

🔮 Investing tips from a seasoned pro

With markets so crazy in 2020, we asked Madelaine Jones of Oaktree Capital how professionals approach investing in volatile times. Madelaine’s been with Oaktree, the investment management firm founded by Howard Marks, since 2003 and manages a huge portfolio of high-yield bonds.

In times when many are questioning the valuation of stock markets, Madelaine explains how she invests in high-yield bonds – and whether Finimizers could find money-making opportunities in this less-understood part of the market.

Step into The Boardroom to hear how you can approach investing in the world of company bonds.

👋 See you soon

Ask our analysts your burning investing questions on Tuesday, discuss entrepreneurship in startup paradise Estonia, and talk money with the Australian women of Finimize.

🌍 Global: Finimize Live AMA – 1.30pm UK Time, June 30th
🇬🇧 UK: Estonia’s Startup Ecosystem – 5pm UK Time, July 1st
🇦🇺 Australia: Women & Money – 5.30pm Perth Time, July 22nd (this is an in-person event)

📚 What we're reading

How to sit right and sit tight (Ted)
Energy can be extracted from a black hole (Science Alert)
Meet Brazil’s best classic writer (Electric Literature)

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Finimize - 😟 Goldman sees stock drop

Today's big stories

Hot Potato

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Hourglass Figures

Going Under

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🔮 Investing tips from a seasoned pro

👋 See you soon

Older messages

😵 RIP Wirecard

🌱 Green shoots of a global recovery

🕚 JPMorgan: stocks’ party will stop

🆘 Missing: 2 billion dollars

🤕 Hertz to be a retail investor

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