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Today's big stories

  1. Oil prices hit a seven-year high
  2. You’ll need to create your own baskets of stocks if you want to profit from some of the most exciting market themes out there – Read Now
  3. US companies have spent record amounts buying back their own shares this year

No-Can-Do Attitude

No-Can-Do Attitude

What’s Going On Here?

Oil’s price hit a seven-year high over the weekend, but the world’s biggest producers don’t seem in a hurry to do much about it…

What Does This Mean?

There’s a serious shortage of coal and natural gas right about now, and countries’ stockpiles of the fuels are running low too. That’s sent prices soaring, which has forced companies to switch to a more affordable alternative: oil. Trouble is, that demand is now pushing up its price too, with a barrel of the slippery elixir hitting $80 a barrel for the first time since 2014.

There is a plan to keep its price down, it’s true: OPEC+ – the group of major oil-producing countries – intends to increase supply by 400,000 barrels a day. But economists aren’t sure that’ll be enough, and investors were hopeful the group might agree to boost supply by even more when it met last week. Not quite: OPEC+ announced that it’s sticking to the plan.

Why Should I Care?

For markets: The Bank of England admits defeat.
Oil is essential to pretty much everything from transport to manufacturing, so a pricier barrel makes goods across the board a little more expensive too. Cue the Bank of England, which warned over the weekend that it’ll probably be raising interest rates much sooner than expected. That’ll make it more expensive for companies and households to borrow, which should put the kibosh on spending and slow down price rises.

The bigger picture: The price isn’t right.
Those price rises are hitting everyday consumers too, especially now that governments are rolling back their pandemic support packages. That might partly be why Goldman Sachs is suddenly less confident about the US recovery: the investment bank cut its economic growth forecast for 2021 from 5.7% to 5.6% over the weekend, and its 2022 forecast from 4.4% to 4%.

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Analyst Take

How Not To Get Caught Out By Thematic Investing

How Not To Get Caught Out By Thematic Investing
Photo of Stéphane Renevier

Stéphane Renevier, Analyst

What’s Going On Here?

Genomics, artificial intelligence, space exploration…

Let’s face it, investing in a theme is much more exciting than buying your garden variety utility company.

But it’s also not especially profitable: most of these thematic funds underperform the market in the long term, and end up closing after only a few years.

Still, there are also a few things you can do to better take advantage of your favorite theme’s potential.

Hint: you might want to create your own basket of thematic stocks.

So that’s today’s Insight: why thematic funds underperform the market, and how you can actually profit from investing thematically.

Read or listen to the Insight here

Vanity Fair

Vanity Fair

What’s Going On Here?

US companies are all me, me, me these days: data out on Monday showed they’ve spent record amounts buying back their own shares this year.

What Does This Mean?

Cast your mind back to early last year: sourdough starters were our new best friends, a walk round the block was a big night out, and companies were holding their breath and tightening their belts. This year, though, they’ve been all about splashing out: US firms spent a record $870 billion in the first nine months of this year buying back their own shares. That’s 6% more than 2018’s previous record, and three times more than over the same period last year (tweet this).

Why Should I Care?

For markets: Don’t be fooled.
Buybacks are a good thing for investors, reducing the number of shares on the market and pushing their price up. But they’re also a bit of a red flag. See, companies often use their spare funds to grow their businesses or buy out competitors. So the fact that so many have opted for buybacks – especially at a time when shares are so expensive – suggests they can’t find any investments that’ll benefit their long-term growth. That could lead to lower profits further down the line.

For you personally: Buy the dip?
Investors sent US stocks down 5% from their September highs last week – the most in almost a year – as they started to worry that the post-pandemic recovery had passed its peak. But JPMorgan and Goldman Sachs are more optimistic: both investment banks just argued that inflation – which they think is the biggest obstacle to the recovery – is only temporary, and that now could be the perfect time to buy in while the going’s cheaper.

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💬 Quote of the day

“I don’t dream at night, I dream all day. I dream for a living.”

– Steven Spielberg (an American film director, producer, and screenwriter)
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SPONSORED BY MUDREX

ETFs, but for crypto

It’s common knowledge that investing in a basket of stocks is a smarter bet than individual ones.

So that begs the question: why can’t you do the same with cryptocurrencies?

With Mudrex, you can: you’ll be able to invest in baskets of tokens handpicked by experts and centered around a single theme – known as Coin Sets.

So say you want to invest in the biggest cryptocurrencies out there, or in a handful of the industry’s up-and-comers, or in the top smart contract platforms. There’s a Coin Set for that.

And since Mudrex automatically handles all the rebalancing for you, you’ll always be invested in the best crypto your theme has to offer.

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🌎 Finimize Live

🌞 How do you want to retire?

Take your pick: spending your days on the golf course, writing that book you always put off, or relocating to a waterfront house in the Florida Keys. Whatever your retirement style, you need to make sure you’ve got the money to fund it. That’s why you should join Hargreaves Lansdown’s Tom McPhail for Age Wealthily, Not Gracefully on Wednesday, and learn how to set yourself up for your golden years.

💪 How To Make Money From Online Businesses: 1pm UK time, October 12th
👵 Age Wealthily, Not Gracefully: 5pm UK time, October 13th
🤔 The Pros And Cons Of Alternative Investments: 5pm UK time, October 18th
👍 How To Trade In Good And Bad Times: 5pm UK time, October 19th
👀 How To Spot A Market Dud: 6pm UK time, October 20th
⚡️ What’s Next For EV Batteries?: 11am UK time, October 21st
🤓 A Smarter Way To Profit In The Short Term: 5pm UK time, October 21st
🇰🇷 Are Korean Stocks The Next Big Thing?: 1pm UK time, October 22nd
🤖 How to Assess Winning DeFi Projects: 6pm UK time, October 28th
🚀 Finimize & Ledger Crypto Summit 2021: December 2nd-3rd

🎯 On Our Radar

  1. The real fake news. One photographer’s quest to fake it for good.
  2. Allowances might be sexier than you think. They’ve saved a marriage or two.
  3. Got that “tall Zoom energy”. Meeting coworkers in real life comes with surprises.
  4. Need an organ transplant? You might have to get a Covid vaccine first.
  5. The moralities of stuffing your face. Or, why Americans die on donuts.
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