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Today's big stories

The US government announced bans on Chinese-owned TikTok and WeChat
Weak inflation could be here to stay, and that might mean your investments are all wrong – Read Now
The expiration of multiple options and futures contracts may have put pressure on stock prices on Friday

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The Last ByteDance

What’s Going On Here?

Chinese giant ByteDance – which just missed the deadline to sell TikTok’s US operations – has been told to boogie: the US announced a ban of the social media app on Friday.

What Does This Mean?

The ban – which also applies to Tencent-owned chat app WeChat – comes in two parts. From next Sunday, Americans won’t be able to download the app, get software updates, or make any in-app transactions. And from November 12th, the app will be outlawed altogether – though TikTok might get back in America’s good graces if it agrees a sale by then.

Speaking of which, Oracle – alongside retail giant Walmart and a handful of private investors – overtook Microsoft last week to become the favorite to take on a stake in TikTok. Nothing can be made official till both the US and Chinese governments sign off, mind you. The US has agreed in principle, while China wants to be sure TikTok-parent ByteDance hangs on to its proprietary algorithms.

Why Should I Care?

For markets: Betting on tomorrow.
When Microsoft and Oracle first entered the fray, investors initially bought into them both. But now that the most likely deal structure will leave Oracle just a part-owner of TikTok, those investors – potentially concerned by a smaller share of profit – initially ditched its shares on Friday. Still, TikTok’s mooted plan to list on the stock market within a year quickly brought them back: the video app’s likely worth at least $50 billion, which could mean a potential windfall for Oracle and its shareholders.

The bigger picture: If it’s good enough for soybeans…
In recent years, the US-China trade war has escalated from agriculture to companies. And investors seem to think this strategy will pay off in at least one way: American social media stocks – Facebook, Twitter and Snap’s – rose on Friday, likely because they’ll benefit from less TikToking.

Behind the headlines: What the US and China are really fighting about.

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2/3 Premium

Your Portfolio Could Be All Wrong

What’s Going On Here?

Some investors are worried about hyperinflation, but James Rossiter – head of global macro strategy at TD Securities – reckons you should be making sure incredibly weak inflation doesn’t undo all your portfolio’s hard work…

Listen to an expert’s low-inflation strategy with Finimize Premium

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3/3

Witch, Please

What’s Going On Here?

A “quadruple witching day” on Friday saw several options and futures contracts expire, and it threw some serious shade at a bunch of big companies’ share prices.

What Does This Mean?

Four times a year, lots of major derivative contracts on US stocks expire all at once. That leaves investors with a decision to make: “roll” the contracts forward by buying those with a later expiry date, or buy and keep the related shares.

But what made Friday’s event notable was last month’s frantic buying of short-term tech stock options. See, a short-term “call” option gives you the right to buy stocks for a pre-agreed higher price at some point in the near future. And when someone buys one of them, the trader who takes the other side of the bet buys those companies’ stocks at their current price so it’s ready to hand them over. That pushes their share prices higher, which in turn drives an increase in option and stock valuations. But if that bubble bursts – like it did earlier this month – the owners of those options will let them expire. And that means the traders will sell the shares they don’t need any more, putting downward pressure on stock markets.

Why Should I Care?

For markets: Ignorance isn’t bliss.
Most institutional investors were aware of Friday’s phenomenon, but retail investors might not have been. And while they haven’t historically had much of an impact on stock markets, the recent popularity of commission-free trading means retail traders now account for 20% of stock trading versus 15% last year. Their trades, then, have had a bigger effect on stock markets than most people could’ve anticipated.

For you personally: What a bummer.
Investors are better off thinking long term, and should ideally only check on their investments to rebalance them. Prices tend to rise over time, after all – and research has shown that the disappointment you feel from seeing your portfolio’s fallen outweighs the kick you get from seeing it rise (tweet this).

Get out of your own way: Classic investing mistakes you need to avoid.

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💬 Quote of the day

“Fight for the things that you care about. But do it in a way that will lead others to join you.”

– Ruth Bader Ginsburg (former US Supreme Court Justice, who died on Friday aged 87)

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🌍 Finimize Community

😎 The rise of the next gen investor

Look out, world: a whole new wave of investors is coming. And we have the managing director of eToro US and the CEO of Money Crashers to tell us how different technologies, communities, and education are making them more switched on than any generation before them.

🔥 Retire & Thrive: 7pm Amsterdam Time / 6pm UK Time, September 21st
😎 Social Innovation and Entrepreneurship: 7pm UK Time / 2pm NYC Time, September 23rd
🙋‍♀️ Women & Money: 5.30pm Perth Time / 10am UK Time, September 23rd
📈 A Tale of Two Recoveries: 6pm UK Time / 1pm NYC Time, September 24th
🐲 Invest Like A Dragon: 11am Ireland / UK Time, September 24th
🤖 The Next Gen Investor: 1pm NYC Time / 6pm UK Time, September 29th
🎉 Find Career Fulfillment: 5pm Dubai Time / 2pm UK Time, September 29th
✈️ Healthy Financial Habits for Expats: 5pm UK Time, October 15th

📚 What we're reading

How green is your software? (Harvard Business Review)
Run, college students, run (Mel)
Please do not touch the tourist trap (National Geographic)

Finimize - 👋 Say goodbye to TikTok

Today's big stories

The Last ByteDance

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Your Portfolio Could Be All Wrong

🤞 How to uncomplicate crypto

Witch, Please

What’s Going On Here?

What Does This Mean?

Why Should I Care?

💻 Invest in digital currencies with Grayscale

😎 The rise of the next gen investor

Older messages

😷 The economy might never recover

😎 Relax, China's got this

🌍 Nvidia versus the world

📈 Investors go back to college

😷 Coronavirus hurts insurers

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