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Today's big stories

Stock markets might calm down sooner than most investors think
Goldman Sachs reckons it’s found the secret ingredient to boosting a company’s share price – Read Now
BMW’s third-quarter results were below expectations, and it’s cautious about its future

1/3

False Start

What’s Going On Here?

According to a prominent hedge fund manager this week, investors who are hoping to profit from massive post-US election uncertainty have completely jumped the gun.

What Does This Mean?

Whenever there’s uncertainty in financial markets – in anticipation of, say, a contested election – skittish investors tend to buy and sell assets more quickly than usual, causing their values to rise and fall more dramatically.

That's volatility, and over the last few weeks, investors have been betting it’ll be high for the foreseeable future. That much was clear when the Volatility Index (VIX) – a key measure showing how fearful investors are about US stock prices – hit 35 on Tuesday, versus a long-run average of 20. But one hedge fund that specializes in volatility-based investments says those investors are wrong: it reckons that as people adjust to – checks notes – the new normal, volatility will actually fall (tweet this).

Why Should I Care?

For markets: Bandwagon-jumping.
That opinion isn’t especially unique: some traders are starting to bet on falling volatility too, according to investment bank BNP Paribas. Just look at the bets they've been making via options: the number of so-called “puts” that stand to profit from falling volatility have now outstripped the number of “calls”, which profit from rising volatility. Even a major investment manager has started selling off a certain investment whose value typically rises as markets get more turbulent.

Zooming in: Back to the futures.
The pros use futures contracts to bet where the VIX will be at a predefined point, but brokers – knowing losses can mount quickly on assets like those – don’t always let retail investors invest in them. It might be simpler and safer to buy into an exchange-traded fund (ETF) that tracks VIX futures instead. Just be aware that when those contracts expire, the ETF will reinvest in new, typically more expensive ones – and you’ll probably lose money even if the VIX itself has stayed put.

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2/3 Premium

Powerful Women Bring Powerful Returns

What’s Going On Here?

For years, researchers have been trying to prove whether or not companies that hire and promote more women see a boost in their share prices.

And according to Goldman strategist Sharon Bell, they do.

See, she’s noticed that companies with more women on the board have seen their share prices outperform their less-balanced rivals by 2.5% a year, on average.

And that might even be giving European companies – which are doing far better at promoting gender diversity than other parts of the world – an edge.

Sharon digs into the stats, the success stories, and the challenges ahead: you can catch up on our interview with Sharon here.

🍹 Sit back and let AJ Bell do the work

The AJ Bell funds make investing simple.

They’re a one-stop shop for effortless investing – a collection of funds for you to choose from, managed by AJ Bell’s team of investment specialists. So no matter what kind of investor you are or what you’re investing for, they’ll have a fund for you.

AJ Bell Youinvest’s services are low-cost and easy to use, and they must be good: AJ Bell has just been named a Which? “Recommended Investment Platform”.

Find out more here, and get started today.

Get Started

Disclaimer: Remember that the value of investments can change, and you could lose money as well as make it. AJ Bell Youinvest doesn’t offer advice.

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3/3

Lockdown Lockout

What’s Going On Here?

BMW reported worse-than expected third-quarter results on Wednesday – and things mightn’t improve if drivers keep getting locked into their homes and out of their cars.

What Does This Mean?

First the good news: BMW’s car sales jumped by 31% to record highs in China this quarter, helping its autos business deliver profit in line with expectations. Now for the bad: the company’s global car sales are still down 12.5% for the first nine months of the year, and it warned that new waves of lockdown across Europe could derail future demand too.

BMW’s betting big on electric and hybrid vehicles to help it out of the slump: it’s put nearly $5 billion into research and development this year, even as it slashed costs elsewhere to deal with the pandemic-induced drop in demand. The carmaker will have five electric models on the market by the end of 2021, and has big plans to deliver almost five million electric cars over the next decade.

Why Should I Care?

For markets: Overtaken.
BMW’s bleak news follows a string of pretty upbeat quarterly updates from rival carmakers: Daimler, Ferrari, Tesla, Volkswagen, and Fiat Chrysler all reported better-than-expected earnings. That was partly thanks to recovering demand from places like China and the US, as well as the higher subsidies countries are using to incentivize carmakers to go electric.

Zooming out: Send in the heavies.
BMW might’ve done well out of Chinese consumers, but new economic data suggests the country’s recovery isn’t as strong as it looks. Chinese manufacturers have had a lot of trouble collecting the money they’re owed this year, with downturn-hit clients putting off paying till they absolutely have to. In fact, it’s taken them a record-breaking 54 days on average to get paid in the first three quarters of 2020, compared to 45 days last year. So more orders or not, those businesses might need to start cutting back on production to save cash.

Take action: Why BMW might still be a good opportunity.

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💬 Quote of the day

“If there is no struggle, there is no progress.”

– Frederick Douglass (an American social reformer, abolitionist, writer, and statesman)

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💪 Put your investments to work

Income: it’s what we work for and it’s what a lot of investors invest for. But with returns on bonds so low, it’s time for a rethink. Next week, we’ll talk you through some of the best investment income opportunites out there, and how you can earn yourself a little extra green from them.

🤑 Income Enhancing Tactics: 11am Vancouver Time, November 10th
🤰 Financial Planning Through Life Stages: 6pm UK Time, November 10th
📈 Creating A Diversified Portfolio: 2.30pm UK Time, November 11th
🌏 Fintech for Ethical Investing: 6pm Dubai Time, November 16th
🙋‍♀️ Women & Investing: 2pm UK Time, November 18th

📚 What we're reading

That weird dream you had does mean something (New Scientist)
Absence makes the heart grow fonder (Buzzfeed)
The overwhelming racism of COVID coverage (Indica)

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Finimize - ⚠️ Don’t celebrate just yet

Today's big stories

False Start

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Powerful Women Bring Powerful Returns

🍹 Sit back and let AJ Bell do the work

Lockdown Lockout

What’s Going On Here?

What Does This Mean?

Why Should I Care?

💪 Put your investments to work

Older messages

🇺🇸 Your Election Day guide

👻 Big Tech goes boo(m)

🔧 Boeing's falling apart

🚀 Microsoft takes off

🙋‍♀️🙋‍♂️ Let's get to know you

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