Dinosaur Crossing
By Mon, Nov 2, 2020
Hey Scoopers,
The stock market finished October in the red. Considering what’s going on in the world, that was not a surprise. — More on that in the “Overall Market” section.
Beyond the overall market, shares of an industry disruptor were up despite the market’s red arrows. At the same time, the disappointing earnings of an old disruptor may have been the cause of the overall market’s red arrows on Friday. — More on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, ARK invest is making fun of the financial services industry’s dinosaurs. — More on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: All three indices wrapped the week just like how they started it; deeply in the red. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin’s price didn’t follow the stock market prices, and ended the week near $14,000 per coin.
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No Surprise
The market wrapped Friday, and the month of October, in the red. The election jitters, the rise of the number of COVID-19 cases, and new rounds of lock-downs globally have reduced investors’ appetite to take risk and hold their equity investments. Even if nothing else was going on in the world, the election was enough to create uncertainties. Overall, the market drop shouldn’t have been a surprise to anyone.
Disrupting An Age-Old Industry
So what happened?
Shares of Lemonade Inc (Ticker: LMND) were up by more than 7% on Friday. The company is a recent IPO in the digital insurance space and has been a darling of stock market traders. The stock more than doubled since its IPO. Despite no signs of earnings or even expected widen losses in the quarter, investors are adamant to buy up the stock. Disrupting age-old industries such as the insurance industry could be a massive opportunity investors can’t say no to.
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Bound To Follow
So what happened?
Shares of Apple (Ticker: AAPL) were down by more than 5% on Friday. The company announced its latest quarterly earnings report, and the results disappointed investors. Both product sales and earnings per share were down year-over-year, and even the growth in the services revenue didn’t manage to encourage investors.
It’s no wonder why the overall stock market indices dropped as much as they did. Being the largest publicly-traded company in the U.S. means every movement Apple’s stock makes, the market is bound to follow.
Making Fun of Financial Services’ Dinosaurs
So what happened?
Recently, many individual investors have become fans of an active ETF company named ARK Invest. It is a company admired by investors for its appetite for risk, transparency in investments, and bold bet on technology. As the size of ARK’s assets under management grows, so does its boldness. Last week, ARK released an advertisement making fun of passive investors and index followers.
The ad was funny and made us laugh. It also reminded us of the old advertisement by Informix, making fun of Oracle back in 1997. Informix put up a billboard advertisement near Oracle’s headquarters in Northern California, warning people of the nearby dinosaur.
We don’t know how long ARK can keep up its winning streak in the market, but passive investing is the most sacred concept in the financial services industry. Making fun of it is not too different from Informix calling Oracle a dinosaur. The question is whether passive investing is headed to a dinosaur status?!
If you have any questions, or suggestions let us know by emailing us at members@tradestocks.com. We look forward to hearing from you.
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
