What we’re reading (8/7)
“Cathie Wood, Meme-Stock Champion Who Bet Big On Tesla And Bitcoin, Stands Her Ground” (Wall Street Journal). “Fans of fund manager Cathie Wood have built websites that track her every investment move. They sell T-shirts with her picture in the style of the Barack Obama “Hope” poster and with the ticker symbol of her flagship exchange-traded fund, ARK Innovation. On social media, they call her ‘Mamma Cathie,’ ‘Aunt Cathie’ and, in South Korea, ‘Money Tree.’ Behind the adoration is her unchecked enthusiasm for a certain kind of speculative investment: companies that generate little or no profit but have what she says is the potential to change the world through ‘disruptive innovation.’”
“This Is The Job Market We’ve Been Waiting For” (New York Times). “America is getting back to work. That’s the simplest, clearest analysis of the labor market that emerges from nearly every line of the July employment numbers released Friday morning. It is a welcome sign that, as of the middle of last month, the economy is healing rapidly — and that the previous couple of months reflected healthier results than previously estimated.”
“It May Look Like A Bubble, But The US Isn't Heading For Another Housing Crisis” (CNN Business). “Home prices have surged during the pandemic, leaving many to believe we're either in a housing bubble or heading toward one. The good news, however, is that the United States is not about to repeat the 2005-07 housing boom and bust, which led to the Great Recession. Basic supply and demand factors — not speculation, predatory lending and/or bad underwriting — are driving home prices. Moreover, a series of mortgage-market safeguards should prevent a hard landing when home prices recede.”
“What Is Direct Indexing?” (Morningstar). “Two things that have made direct indexing a more viable option for more investors in recent years are the rise of commission-free trading, and fractional share stock investing, which allows investors to purchase fractional shares in a certain dollar amount. It works like this: Amazon.com is currently trading at around $3,300 per share, so if we invest $1,000 we would own 0.3 shares of Amazon. Because stock prices vary so widely, having the ability to invest fractionally makes it much easier to match the index’s proportions.”
“Why Biden Will (Probably) Keep This Republican on His Team” (New York Times). “Some have speculated or reported that Mr. Biden will select a more progressive successor. But Mr. Powell, a former investment banker and a Republican, brings to the job unmatched experience, disarming political savvy and a record of positive, transformative change at the Fed. It will be hard for Mr. Biden to look past those attributes.”
