The Threecap
Three things to recap this past week.
A Healthy Correction or a Warning Sign?
After surpassing pre-pandemic record highs, the market pulled back heavily on Thursday with the S&P down 3.6%, the NASDAQ down 5%, and the Dow Jones down 2.8%. Tech was hit especially hard, after its disproportionately large increase compared to overall market gains. Instead of a swift recovery on Friday, stocks ended in the red. With the markets closed on Monday in observance of Labor Day, it remains to be seen if the selling will continue starting next Tuesday.
Some fear that the market’s tumble is indicative of future pain. Economic numbers continue to indicate light at the end of the tunnel, but the unemployment rate at 8.4% is more than double what it was before the COVID-19 pandemic. The market may have peaked on Wednesday, and could be adjusting to current economic conditions. Conversely, the selling may have simply been profit-taking.
Encouraging COVID-19 Data
The overall case count per day and death rate continues to decrease in the United States, but California, Texas, and Florida continue to lead in both case counts and new cases each day.
According to Governor Andrew Cuomo, New York’s “positive Covid-19 infection rate [has stayed] below 1% for 30 straight days.” New York, and New York City, in particular, was hit especially hard by the pandemic. Their recent data suggest the pandemic is manageable.
The race for a successful vaccine continues. Russia has claimed their vaccine leads to an immune response, but health officials worldwide remain skeptical. U.S. vaccine trials will receive phase three results in the next few weeks.
Looking to the Future
While the world has gained optimism regarding the COVID-19 pandemic, Federal Reserve Chairman Jerome Powell has indicated some sobering realities regarding the U.S. economy in the future. Powell says the economy will need stimulus - meaning low-interest rates and increased spending - for the near future. The economy’s next few years may look similar to those after the 2008 Financial Crisis. The “V-shaped recovery” appears to have come to fruition in financial markets, but not economic numbers.
Recent Articles
Intro To Automated Money Management
Over the past decade, technology and automation have disrupted many industries, from automotive to manufacturing. Recently, it has made its presence known in the wealth management industry, with the rise of automated money management. Our writer, Ryan Hsu, introduces the concept of automated money management (AMM), an industry on the cutting edge of financial planning and the future.
A Beginner’s Guide To Value Investing: EV/EBITDA Ratio
One of the most famous ratios used by value investors is the EV/EBITDA ratio, or the Enterprise Value to Earnings Before Interest, Tax, Depreciation, and Amortization ratio. Value investors use it to evaluate a company. The EV/EBITDA ratio is used with or instead of the P/E ratio. Our writer, Rishi Ganupa, breaks down this ratio into two parts: Enterprise Value and EBITDA.
Recent Podcast
In this episode, Rohan Gupta and Alex Patel speak with Heidi Roizen of Threshold Ventures about the dot-com bubble. They delve into topics like the irrational exuberance, evangelism, the history of innovation, entrepreneurship, and much more!
Finance Tip
“Investing is an activity of forecasting the yield over the life of the asset; speculation is the activity of forecasting the psychology of the market.” - John Maynard Keynes
Team Member Showcase
Matthew Lim
Writer & Co-Head of Marketing
Education: Amador Valley High
Daily Routine: Wake up at 6:30 for some cardio; start school at 8:30 and end school at 12; grind on college apps and homework while occasionally play fall guys with my friends on Discord, and lift weights at 10, and go to sleep at 11:30.
Why you started StreetFins: As a prospective business and finance major, I wanted to expand my knowledge of finance so, I joined my school’s investment club. There, I met and worked with Rohan, Rajan, and Sean, where I learned about this initiative. The core mission to solve financial illiteracy in America inspired me to join and wanted to learn a variety of finance topics from writing for StreetFins.
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