Morning Download from Invincible Money
Personal finance + economics + markets
Good morning investors! Yesterday proved to be a great day. Most sectors were green and even the crypto industry got a boost due to positive news related to BTC ETFs. Plus, Nvidia hit an all-time high.
Today we cover:
A good day for stocks 👍
Why the crypto industry is celebrating 🎊
All about dollar cost averaging 💵
🔈 Audio version: Apple Podcasts | Spotify
📊 Economy and News
Regulators force regional banks to raise debt levels
It seems regulators are not very high on the banking sector and foresee some more failures. They have now unveiled plans to force regional banks to issue debt and bolster their so-called living wills.
According to a notice issued jointly by the Treasury Department, Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, these new requirements are for US banks with $100 billion or more in assets.
Under these new regulations, lenders will have to maintain long-term debt levels equal to 3.5% of average total assets or 6% of risk weighted assets, whichever is higher.
“While many regional banks have some outstanding long-term debt, the new proposal will likely require issuance of new debt,” said FDIC Chairman Martin Gruenberg. “
Quick hits:
Meta claims to have disrupted a massive disinformation campaign linked to Chinese law enforcement.
NIO misses earnings, falls 5% during trading.
These 10 drugs are subject to Medicare price negotiations.
📈 Stocks
S&P 500 4,497.63 (1.45%)
DJIA 34,852.67 (0.85%)
NASDAQ 15,376.55 (2.15%)
VIX 14.55 (-3.51%)
* Prices as of Aug 30th, 12:20 AM UTC
A good day for stocks
August appears to be closing on a positive note as the market closed higher on Tuesday. Much higher!
Who won? Almost all major indexes gained with the tech sector proving to be the biggest winner.
Source: CNBC
There were no major triggers except weak job openings data fueling hopes of a rate-hike pause. This sent most growth stocks higher with big names like Tesla and Nvidia doing very impressive numbers.
Drug making, Catalent, gained on settlement with Elliott to explore review and Best Buy reported impressive earnings.
On the plus side, there were no big losers yesterday.
Something interesting
If you’re a Tesla bull, here’s something interesting.
Simplify just filed for a TSLA Revolution ETF which will hold Tesla stock and Tesla derivatives actively shifting exposure to stock bt 25% and 200% depending on momentum.. so kinda like an actively mgd Tesla stock ETF trying to outperform Tesla.
— Eric Balchunas (@EricBalchunas)
Aug 29, 2023
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🔐 Crypto
Bitcoin $27,854.80 (6.72%)
Ethereum $1,739.34 (5.29%)
Total market cap $1.11T (5.73%)
* Prices as of Aug 30th, 12:20 AM UTC
Bitcoin Spot ETF in the U.S. finally?
The District of Columbia Court of Appeals has ruled in favor of Bitcoin ETFs.
The court sided with Grayscale against the Securities and Exchange Commission (SEC) concluding that the SEC wrongly rejected an application from crypto asset manager Grayscale Investments to list an ETF that tracks the price of Bitcoin.
Not happy with the SEC’s decision, Grayscale initiated a lawsuit against the SEC in June 2022. The company wanted to pursue an ETF backed by Bitcoin instead of Bitcoin derivatives. The decision was motivated by the SEC’s approval of ProShares’ futures-based bitcoin ETF.
Up Only: The news has brought some life back into the crypto industry that has been dull for a while.
🏋🏽♂️ Crypto pumped!
All major cryptos, including Bitcoin and Ether, jumped on the news and Coinbase, which is listed as the custodian partner in multiple spot bitcoin ETF applications, went up over 14%. Another company, Marathon Digital, a bitcoin mining company, was up 29% on the ETF news.
Now what? It’s believed that now the SEC will approve more companies as big names like Fidelity and BlackRock are also interested in creating Bitcoin ETFs.
BREAKING: Twitter now has a crypto license?
BREAKING: X, formerly known as Twitter, has obtained a license required for crypto payments and trading in the US, per CryptoTimes.
— unusual_whales (@unusual_whales)
Aug 29, 2023
💵 Personal Finance
What is dollar cost averaging?
Some of us get scared of technical terms and financial jargon. Words like dollar cost averaging and correlation coefficient can leave us confused. With this newsletter, our purpose to help you be a better investor and continue to educate you.
Hence, we’ll now regularly introduce you to terms that you will come across when learning about investing, personal finance, and money. Our focus today is on ‘dollar cost averaging’, a technique that can help you save and make money.
Source: USBank
Dollar cost averaging
Dollar cost averaging can be defined as a technique used to ”manage price risk when buying assets such as stocks, ETFs, and mutual funds.”
It involves buying over time at regular intervals, thus decreasing "the risk of paying too much before market prices drop." In other words, instead of purchasing a high number of shares or any other assets at a single price point, you buy in smaller amounts at regular intervals.
How does it work?
An interesting thing about prices is that they don’t always in one direction. They move in both directions and as an investor, when following the dollar cost averaging technique, your aim should be to buy without looking at the prices.
You decide how much you want to spend on an asset then you purchase it in intervals to bring your average cost down.
Here’s an example:
You can use this technique in a variety of situations, including retirement planning and 401(k) plans.
A 401(k) plan, for example, gives employees the power to determine how much they wish to contribute and to what. Then, investments can be made automatically every pay period. Based on the changing market, a specific number of securities get added to the employee’s retirement accounts.
What are its benefits?
Here are some of the main benefits of this investment technique:
Helps bring the average cost down.
Encourages regular investments, which helps build wealth.
It helps ensure that you are ready whenever the time is right.
It takes emotions out of the deal and reduces the risk of emotional buying.
With automation, you do not have to worry about ‘buying’.
For more information, watch this great video about dollar cost averaging and if it’s a better option than lump-sum buying or timing the market.
💰 Be a Better Investor
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.”
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👩🏽⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.