Finimize - 👀 The Fed could send stocks tumbling

The Fed keeps us on tenterhooks | The feeling is mutual |

Hi Reader, here's what you need to know for August 26th in 3:10 minutes.

💉 If ever there was a time the world needed healthcare innovation, it’s now. So join Goldman Sachs’ Anant Padmanabha for How To Get Your Dose Of Healthcare 2.0 next Wednesday, and find out how modern medicine could give your portfolio the shot in the arm it so sorely needs. Get your free ticket here

Today's big stories

  1. Investors are steeling themselves for the US Federal Reserve’s conference this week
  2. Impact investing is having a moment, but you’ll need to separate fact from fiction if you want to take advantage – Read Now
  3. New analysis showed that mutual funds have had a good first couple of quarters this year

Stage Fright

Stage Fright

What’s Going On Here?

All eyes are turning to the US Federal Reserve (the Fed) ahead of its conference on Friday, so let’s hope it remembers to imagine the audience in their undies.

What Does This Mean?

Most investors are headed into this update expecting the Fed to hint at a slowdown in its bond-buying, before it officially rolls out the “tapering” at the end of 2021 (tweet this). And they probably won’t change their minds as long as the Fed sticks to the script: that, on the one hand, US job growth is looking strong, and, on the other, the fast-spreading Delta variant still poses a risk to economic growth. Then again, Goldman Sachs reckons there’s a 20% chance that the US economy won’t grow as quickly as expected in the next few months. And if the Fed shares that skepticism, it might end up delaying the taper – or even hints of the taper – until next year.

Why Should I Care?

For markets: Investors are trying to jump the gun.
There’s a simple reason investors are so interested in the Fed’s plans: the fewer bonds it buys, the less demand there’ll be for bonds overall (all else equal). That would drive down prices and push up yields, which might encourage investors to ditch riskier stocks – not least “growth” stocks, whose earnings growth becomes less valuable relative to other assets as bond yields climb. So rather than wait for stocks to take a tumble, investors want to spot any early clues and adjust their portfolios ahead of time.

For you personally: History rhymes.
The last taper-driven selloff was in 2013, when US stocks initially fell 5%. But you might’ve been okay if you’d invested in the right stocks: those with high dividend yields, for example, or those with strong balance sheets. Growth stocks fall into the latter bracket, so even if the prospect of a taper is damaging in the near term, they actually stand to bounce back quickly and outperform in the long run.

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2. Analyst Take

The Five Myths Of Impact Investing

What’s Going On Here?

ESG investing has long been a firm favorite among Finimizers.

But rumor has it you’re still treading carefully when it comes to impact investing, which aims to make investors money and have a positive impact on the world.

That’s understandable: there are still a lot of myths around impact funds, including what exactly counts as one and how well they perform relative to the wider market.

It’s understandable, but it could also be a missed opportunity: impact funds have now attracted more than $700 billion worth of capital.

So that’s today’s Insight: how to separate impact fact from impact fiction, and where to look to find the most promising opportunities out there.

Read or listen to the Insight here


Swings and roundabouts

Swings: traditional savings accounts aren’t what they used to be.

Roundabouts: a crypto account with YouHodler is better than it’s ever been.

With YouHodler, you can earn over 12% a year on your crypto. Just deposit your crypto in your wallet, and you’ll get weekly interest payments better than those offered by Binance, BlockFi, and more.

And if you don’t have crypto yet, you can convert it from traditional currencies in a matter of clicks with low fees and real-time execution prices.

You can even use your crypto as collateral for a loan in euros, US dollars, pound sterling, and Swiss franc. Approval should only take a few seconds, and you’ll receive your money instantly.

Plus, open an account before the end of summer, and you could win a round-the-world trip, a hotel subscription, a new laptop, or a unique NFT.

Start Earning

Pool Party

Pool Party

What’s Going On Here?

Fresh analysis out this week showed that mutual funds had a strong start to 2021, as pooled investments became the closest investors were getting to a vacation.

What Does This Mean?

Mutual funds collect money from lots of small investors, and most of them then “actively” invest that cash – i.e. pick and choose where to invest, rather than passively track a market. And it turns out they performed well in the first two quarters of the year, according to Goldman Sachs’ analysis of almost 600 funds with $3 trillion of cash between them.

The funds that did best began the year by betting on cheap-looking “value” stocks and smaller companies, and added more big, reliable companies – think Amazon and Apple – in the second quarter. But they’ve all been doing well: 43% of mutual funds focused on large stocks, for example, were up by more than the “benchmark” indexes they’re charged with outperforming – and they outstripped the long-term average of 33% too.

Why Should I Care?

For markets: A big win for ESG.
Investors have been putting a lot of money into mutual funds focusing on environmental, social, and governance (ESG) factors – $314 billion worth, to be precise. That huge influx has helped double the amount of money those ESG-focused funds have been holding in the last year, bringing the global total to around $1.6 trillion. The US is lagging behind, mind you: only 3% of the money in American funds is in ESG-focused funds, compared to 9% internationally.

For you personally: Some ideas to pinch. 
Take a closer look at which stocks are most and least popular with mutual funds, and you might get a few ideas about where you should and shouldn’t put your own money. They’re confident in the payments space, backing companies like Visa, Mastercard, and Square. But they’re not so keen on pharma and biotech companies, like Johnson & Johnson, Pfizer, and Amgen.

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💬 Quote of the day

“Find people who will make you better.”

– Michelle Obama (an American attorney and author)
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The gift that keeps on giving

Real estate has been a savvy investment for generations, and the market is still going strong.

The only thing that’s changed is your access to the crème de la crème of real estate investing.

Crowdstreet has opened the door to institutional-quality commercial real estate deals. Lots of doors, actually: grocery stores, data warehouses, cancer treatment centers, you name it.

In fact, Crowdstreet has funded over 500 real estate projects across the US since its inception in 2014. That’s about $21 billion worth of investment, and $241 million worth of returns.*

You might consider seizing the opportunity to profit from the commercial real estate market.

Crowdstreet’s already eyeing up the next 500 deals: get it on the action today.

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*Past performance is no guarantee of future results.

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🎯 On Our Radar

  1. The when, where, and “wait what?” of the Paralympics. Everything you need to know.
  2. The next Amazon? Ecommerce isn’t done growing, and this company could reap the rewards.*
  3. What to do with post-breakup bitcoin? Buy a house, of course.
  4. X-rays can now detect race. And, just like us, AI can be biased.
  5. As if things couldn’t get worse. It’s basically illegal to be homeless in LA now.

When you support our sponsors, you support us. Thanks for that.

🌎 Finimize Live

📺 The revolution will not be televised

But it will play out every time you tap your card, phone, or vaccine chip across a reader to pay for things. Yep, we’re talking about the digital payments revolution, and Village Capital’s Dustin Shay will be too at How To Profit From Open Banking.

🙌 How To Create A Diversified Portfolio: 1pm UK time, August 26th
🚀 How To Profit From Open Banking: 5pm UK time, August 27th
💰 How To Value Any Company: 6pm UK time, August 31st
💉 How To Get Your Dose Of Healthcare 2.0: 5pm UK time, September 1st
🤔 The Pros And Cons Of Alternative Investments: 5pm UK time, September 6th
📚 How To Navigate Investing In A Meme Stonk World: 2pm UK time, September 8th
💥 How To Master The Crypto Ecosystem: 5pm UK time, September 14th
🔒 Navigating The World Of Bitcoin Security: 6pm UK time, September 21st
♻️ How To Turn Your Portfolio Green : 6pm UK time, September 23rd
🤠 How To Win Big With Fractional Shares: 5pm UK time, September 28th

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