Today's big stories

Chinese stocks’ eight-day rally came to an abrupt halt
Goldman Sachs has recommended 20 stocks that stand to benefit as Europe transitions to a greener future – Read Now
Some investors think oil’s price will get back to $150 per barrel

1/3

Damp Squib

What’s Going On Here?

The Chinese government threw cold water on the stock market’s eight-day hot streak on Friday, after two of its own investment funds announced plans to sell, sell, sell.

What Does This Mean?

It’s good practice to lock in your profits from successful investments when you rebalance your portfolio. But if you happen to be an investment fund backed by the Chinese government – known for buying and selling on its say-so – then that “good practice” can have unintended consequences.

Chinese stocks added about $1 trillion in value last week after the government encouraged investors to buy the country’s shares. But at the same time as some analysts were cautioning that stocks had risen too far, too fast, the government – keen to avoid a boom-and-bust cycle – published an article warning against a “crazy” bull market on Friday. And for individual investors who had piled in based on earlier advice, the rapid selloff that followed could’ve hurt…

Why Should I Care?

For you personally: Every day’s a school day.
Short-term investors might’ve felt the impact more than most, given that they rely on quick and continuous rises. For them – and for you – this whole brouhaha highlights just how important it is to do your homework before buying or selling, rather than doing what someone else tells you to. For long-term investors, though, Friday’s selloff will probably just be a blip in the context of typically upward-trending markets. That might be why long-term investors – who take the time to understand company fundamentals before buying a stock – tend to do best (tweet this).

The bigger picture: Run for cover.
International funds followed local investors’ lead and sold Chinese shares overall for the first time this month on Friday. But their reasons might’ve been different: they may be anticipating more trouble ahead for the country’s companies after the US sanctioned four Chinese government officials on Thursday, and wanted to limit their investments’ exposure to any fallout.

Spot opportunity: Three ways to tell if China’s a worthwhile investment.

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2/3 Premium

Guess Which?

What’s Going On Here?

Investment banks Morgan Stanley and Goldman Sachs have laid out how to pick companies that are set to benefit from a greener future – including a few recommendations of their own.

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3/3

Barrelthumping

What’s Going On Here?

The price of oil got knocked down to a record low earlier this year, but some investors reckon the slippery elixir’s price is about to get right back up again.

What Does This Mean?

Oil prices have bounced back a bit from April’s lows, partly thanks to the pick-up in Chinese demand post coronavirus. But seeing as COVID-19 may have changed travel and consumption patterns for the long term, Negative Nancys don’t think global demand will ever return to pre-pandemic levels. Couple that with the decisions from some of the world’s biggest oil companies to slash spending and shift toward greener energies, and cheap oil might be here to stay.

Over time, the commodity should hit a price that’ll allow oil companies to turn a profit – somewhere around $50, which Goldman Sachs estimates is the breakeven price. But some Positive Pollys have gone a step further: they reckon the right investor behavior and renewed oil demand could send the price of a barrel to $150 by 2025.

Why Should I Care?

For markets: More doom and gloom, please.
The most optimistic of oil analysts depend on the most pessimistic of banks and investment managers. If the latter refuse to invest in or lend to energy companies that want to double down on oil wells, demand for the obsidian earth-juice could exceed supply and push prices up. Optimists might also be hoping investors have got ahead of themselves: the futures market suggests oil’s price will stay below $60 for the next decade, but that’s a lot less likely if the world’s transition away from fossil fuels takes longer than expected.

The bigger picture: You wanna piece of me?
It’s not just commodity investors who care about oil. In the US alone, oil companies represent about 3% of the entire stock market, and investors can buy into different parts of the industry – upstream, where oil’s produced, or downstream, where it’s sold – to profit as oil prices both rise and fall.

Take action: How to profit from oil, wherever it goes next.

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💬 Quote of the day

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– Elbert Hubbard (an American writer, artist, and philosopher)

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Finimize - 📉 China tanks stock market

Today's big stories

Damp Squib

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Guess Which?

🍰 Start with a Schwab Stock Slice™

Please read a few important disclosures.

Barrelthumping

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🎯 Start small, aim big

Please read a few important disclosures.

😭 In case you missed it

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