Electric vehicle stocks: the competition is heating up

It is no secret that the electric vehicle (EV) industry has been booming in recent years. With climate change and sustainability becoming more of a focus, sales of EVs have soared. In 2020, global EV sales rose by 43%¹ to 3.2 million, despite the fact that overall car sales declined by 16% due to the coronavirus pandemic. 

For investors, there could be a long-term opportunity here. Realistically, the electric vehicle industry is still in its infancy. According to the International Energy Agency (IEA), by 2030, there could be up to 230 million² electric vehicles on our roads, up from around 10 million at the end of last year. Meanwhile, according to Allied Market Research, the global EV market is set to be worth around $800 billion by 2027, up from $160 billion in 2019³. This industry growth is likely to generate many lucrative investment opportunities in the years ahead. 

Choosing the best electric vehicle stocks to buy for the long term is not an easy process, however. In this industry, competition levels are intense. Out of the world’s top 20 vehicle manufacturers — which together accounted for around 90% of new car registrations in 2020 — 18 have recently announced plans to rapidly scale up production of electric vehicles⁴. In other words, right now, the entire auto industry is undergoing a shift toward electric vehicles. So, gaining broad exposure to the industry through a thematic product could be a sensible approach to investing. 

Tesla is leading the electric vehicle race

Today, Tesla is the clear leader in the electric vehicle space. Last year, it delivered 499,950 EVs in total, a 36% increase on the number of vehicles it delivered in 2019 and far more than any of its rivals. 

Tesla — which is led by visionary Elon Musk — has a number of things going for it. Firstly, it has a first-mover advantage. A pioneer in the EV space, it was one of the first companies to produce electric vehicles at scale. As a result, it currently has a large market share.

Secondly, its battery technology is best-in-class. Last year, analysts at UBS compared batteries from seven major EV manufacturers and Tesla came out on top by most measures⁵. 

Thirdly, Tesla has a dominant position in China, which is the world’s largest EV market. In 2020, Tesla delivered around 150,000 cars⁶ in China (representing about 20% of its total sales⁷) and its ‘Model 3’ was the best-selling EV in the country⁸. With electric vehicle sales in China set to reach six million units by 2025⁹, Tesla looks well placed for long-term growth. 

The best-selling electric vehicles globally in 2020

Source:https://www.statista.com/statistics/960121/sales-of-all-electric-vehicles-worldwide-by-model/

Competition is heating up

However, a number of major auto manufacturers are now taking on Tesla. 

One such company is Volkswagen, which is taking the electric vehicle race very seriously. Recently, the German company told investors that by 2030, it expects 70% of its cars sold in Europe to be fully electric. To achieve this, it is planning to open six ‘gigafactories’ in Europe by the end of the decade. These will help it ramp up battery production. It also advised that it is targeting an EV market share of over 50% in China and the US by the end of the decade. 

Last year, Volkswagen delivered 231,600 EVs (and 9.3 million cars in total). So, it is still currently miles behind Tesla. However, the company appears to be closing the gap rapidly. “We are stepping up the pace. In the coming years, we will change Volkswagen as never before,” said Volkswagen CEO Ralf Brandstätter at the company’s strategy update in March 2021.

Other traditional auto manufacturers in Europe are also ramping up their EV production. Volvo, for example, has said that it is committed to becoming a leader in the ‘premium’ electric car market and plans to become a fully electric car company by 2030. Volvo launched its first fully electric car, the ‘XC40 Recharge’ last year. In the years ahead, it plans to roll out several additional electric models. 

Meanwhile, Daimler — which owns Mercedes-Benz — recently unveiled the electric version of its flagship Mercedes-Benz ‘S-Class’ luxury sedan, the ‘EQS’. The EQS is the first in a family of Mercedes-Benz cars built on a dedicated EV platform from the ground up. It will go on sale in August this year in Europe and the US, and in early 2022 in China. Analysts at Deutsche Bank have called the EQS — which has a range of 770 kilometres and a display screen that covers almost the entire dashboard — “Mercedes’ Tesla fighter” and said that the car “will likely set the benchmark in terms of technical features, as well as design and quality” in the industry. 

Porsche — which is owned by Volkswagen AG — is another European company worth a mention here. It recently launched its ‘Taycan’ electric sedan and this model is proving to be very popular. Indeed, in the first quarter of 2021, Porsche delivered 9,072 Taycan vehicles, just 61 less than the number of ‘911s’ it delivered. 

US manufacturers are getting serious about sustainability

In the US, it’s a similar story with traditional auto manufacturers racing to ramp up their EV production in order to capture market share. 

General Motors (GM), for example, recently announced that between now and 2025, it will spend nearly $30 billion on electric (and autonomous) car development, while launching 30 electric car models globally. GM is moving directly to battery electric vehicles (BEVs), bypassing hybrid vehicles completely. By 2035, the company — which recently revamped its logo to reflect the drive towards an all-electric future¹⁰ — will only sell EVs¹¹. “We want to lead in this space. We don’t just want to participate, we want to lead,” said Doug Parks, GM Executive Vice President of Global Product Development in late 2020. 

Ford, meanwhile, announced in February that every car it sells in Europe will be “zero-emission capable” (i.e., at least plug-in hybrid) by 2026 and pure electric by 2030. Ford recently launched its ‘Mustang Mach-E,’ and this has proven to be popular so far. In the first quarter of 2021, it was the fourth best-selling EV in the US, stealing market share from Tesla¹². 

Tesla has competition in China

In China, the competition is also intense. The largest player here in the EV space is SAIC Motor, which has partnerships with Volkswagen and General Motors. Its budget electric vehicle, the ‘Hong Guang Mini EV,’ is outselling Tesla’s more upmarket cars in the country. In January, sales of this model — which has been marketed as ‘the people’s communing tool’ — were around double Tesla’s sales in China¹³. SAIC has advised that it plans to have nearly 100 ‘new energy’ models with its partners by 2025. New energy vehicles include battery electric vehicles as well as plug-in hybrid and hydrogen fuel cell vehicles. 

Then, of course, there’s NIO, which is sometimes called the ‘Tesla of China.’ NIO — which describes itself as ‘the next generation car company’ — develops premium smart electric cars that feature advanced technologies such as artificial intelligence. Like Tesla, it is seen as a trendy brand. In 2020, NIO delivered a total of 43,728 EVs, an increase of 113% year-on-year. Analysts at Mizuho expect the company to roughly double that this year¹⁴, despite the global semiconductor shortage. 

Other EV players in China include XPengLi Auto, and Warren Buffett-backed BYD Company

Electric vehicle start-ups

Finally, it is worth mentioning that a number of smaller, niche players are shortly about to enter the market. 

One example is Fisker. Its flagship model, the ‘Ocean,’ was designed by Danish automotive designer Henrik Fisker, who also designed Aston Martin’s ‘DB9.’ Fisker plans to start production next year. 

Another example is Lucid Motors. It describes its flagship model, the ‘Lucid Air,’ as ‘the quickest, longest-range, fastest-charging luxury electric car in the world.’ This model is expected to be available in 2022. 

Rivian is also worth mentioning here. It is developing a range of slick all-electric adventure vehicles. The company has said that Its R1T model is set to be delivered to customers in the US in June 2021. 

All of these companies are looking to take on Tesla with their premium electric vehicles. 

A better way to invest in electric vehicle stocks

Given the high level of competition in the EV space, those interested in investing in electric vehicle stocks may want to take a diversified approach. Instead of backing just one or two companies, consider spreading capital over a range of EV stocks. This approach will help minimise stock-specific risk and potentially improve your chances of capitalising on the growth of the industry.

One of the easiest and most cost-effective ways to get broad exposure to the EV industry is to invest in eToro’s car-focused CopyPortfolios. One portfolio to consider is the Driverless strategy, which offers access to many major players in the EV space, including Tesla, Volkswagen, General Motors, BMW, Volvo, and NIO, despite the fact it is designed to provide exposure to companies operating in the autonomous vehicle space.

Another option is the ChinaCar portfolio, which provides exposure to Chinese automotive manufacturers. Holdings in this portfolio include NIO, BYD, and XPeng.

A third option to consider is eToro’s ‘Auto Industry’ CopyPortfolio. This portfolio, which is still in development, but set to be launched in the near future, will include a number of EV manufacturers, since this is the future of the industry. 

Through these CopyPortfolios, investors can position their portfolios to capitalise on the long-term growth of the electric vehicle industry, while minimising stock-specific risk. 

Source list:

  1. https://www.theguardian.com/environment/2021/jan/19/global-sales-of-electric-cars-accelerate-fast-in-2020-despite-covid-pandemic
  2.  https://www.iea.org/reports/global-ev-outlook-2021
  3.  https://www.alliedmarketresearch.com/electric-vehicle-market
  4.  https://www.just-auto.com/news/global-electric-car-sales-up-41-in-2020-iea_id201603.aspx
  5. https://www.businessinsider.com/teslas-batteries-best-cheapest-industry-ahead-competition-ubs-teardown-2020-10?r=US&IR=T
  6.  https://fortune.com/2021/01/28/tesla-2020-profit-china-sales/ 
  7.  https://www.cnbc.com/2021/02/09/teslas-china-sales-more-than-doubled-in-2020.html
  8. https://www.cnbc.com/2021/04/22/chinese-electric-car-makers-target-europe-as-competition-heats-up.html
  9. https://www.spglobal.com/platts/en/market-insights/latest-news/metals/121720-chinas-ev-sales-to-reach-more-than-13-mil-units-in-2020-caam
  10. https://www.dezeen.com/2021/01/11/general-motors-logo-redesign-2021/
  11. https://www.nytimes.com/2021/01/28/business/gm-zero-emission-vehicles.html
  12. https://fordauthority.com/2021/04/ford-mustang-mach-e-was-the-fourth-best-selling-ev-in-the-u-s-in-q1/
  13.  https://www.bbc.co.uk/news/business-56178802
  14. https://finance.yahoo.com/news/nio-despite-chip-shortage-deliveries-163737076.html
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Resurgence tourism an opportunity for investors

In view of rising vaccination rates in Europe and the upcoming summer holiday period, the tourism sector offers opportunities for private investors. “The recovery in tourism is being driven by domestic travel in the countries where vaccination coverage is high,” said Ben Laidler, Global Markets Strategist at the eToro trading platform.

“For domestic tourism, we see a recovery with an increase in local flights, hotel bookings and car rentals, among others. Intercontinental travel and cruises are expected to recover the slowest as worldwide vaccination coverage is still low (10%). The recovery in Europe is expected to be larger in percentage terms, but will take longer than in the US because Europe receives more international tourists and therefore saw a larger decline in 2020 (-52% compared to a 41% decline in the US),” said Ben Laidler.

According to the World Travel & Tourism Council, the tourism sector, worth USD 9 trillion, represents 10.4% of global GDP. This share decreased by -52.5% in 2020. The figure below shows the size of the tourism sector as a percentage of GDP in 2019, for the 20 largest economies.

“Southern European countries had a double effect because these countries rely more heavily on tourism. Although this was the cause of the above-average decline in GDP in southern European countries last year, it may also contribute to an accelerated recovery in the future,” explains Ben Laidler.

According to Ben Laidler, market leader Booking.com, among others, is well-positioned to benefit from the tourism upturn: “With a plus of 4.5%, the stock has lagged behind the average recovery in stock markets (+10%) in the first five months of 2021. Although the number of room reservations by domestic tourists at Booking.com is back to 2019 levels, the total number of reservations is still 43% lower compared to 2019.”

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How higher inflation relates to diversification

The importance of diversifying your portfolio cannot be emphasised enough. Diversification is a risk management strategy in which you invest in a variety of different financial assets, and which, in the event of significant market volatility, may reduce your chances of incurring major losses. The importance of diversification can be illustrated in the high inflation period happening before our very eyes. 

Commodities market is going crazy

There are significant developments in the market this year which are not receiving their due attention. It is not because their importance and implications are not understood, rather, that they are being overshadowed by other events. All attention had been focused on the surge of cryptocurrencies — from Bitcoin to Dogecoin — until late May, and then on their subsequent plummet. However, the commodities market has soared in 2021, and if not for cryptocurrencies, this would be a central focus of the markets. 

In the chart below, you can see the surge in futures contracts since the middle of 2020. The price surge in these contracts causes consumer goods to rise in price, resulting in inflation. 

Past performance is not an indication of future results.

Semiconductor scarcity generates inflation

The semiconductor industry is another field generating inflation.

Currently, there is a chip shortage in the world which may have significant ramifications for the global economy. For example, although semiconductors make up only 0.3% of the US GDP, the products that use them make up 12%. Chips are indeed the brain of every electronic device.

The chip shortage began at the outset of the pandemic when automakers were purchasing less chips, believing that lockdowns would reduce auto sales. Simultaneously, consumer purchases of products using chips surged. Auto sales picked up faster than expected, creating a situation where both industries were competing for chips from semiconductor manufacturers, while production of the chips remained steady. 

This intense competition for chips has caused prices to rise across the board, or in other words, inflation, and estimates are that the chip shortage will not be resolved any time soon. 

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Inflation erodes the real profit of tech companies

Over the past year, the US Federal Government has spent more than $5 trillion dollars on Covid-19 relief legislation. These relief packages are in addition to the regular Federal government budget, and are increasing the federal debt significantly. While the Fed can continue to print money nonstop, the effects are being felt in the bond market.

But high inflation actually hurts tech companies. The reason is because the valuation of high growth entities such as tech companies is based on a forecast of a percentage of increase in cash flow per year. However, high inflation erodes the real profits over the long term. Even more, the uncertainty of interest rates make it more difficult to value the company at present.

Different financial assets are competing with each other for investors’ money. As interest rates go up, investing in bonds can be suddenly more attractive than investing in stocks. This is because the way to reduce inflation over the long term is by raising interest rates. Bonds which work on interest rates, therefore, may become a more attractive investment at some point.

Your capital is at risk.

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Financial companies prosper during inflation periods

Portfolio diversification is something that cannot be stressed enough. Diversification may reduce investors’ risk exposure by ensuring that investments are spread out over various asset classes. A rising rate of inflation offers investors opportunities to hedge their investments by investing in financial assets that prosper during periods of inflation. For example, banks provide loans and collect interest on those loans. Inflation causes higher interest rates, and, thus, banks generate higher profits from their loans. However, rising inflation underscores one of the most important lessons of investing, which is to diversify your portfolio.

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A quiet week on Wall Street

Last Week’s Top Five Market Winners

Nasdaq Stock Market (NASDAQ)

The past week included significant gains for Urban One Inc. (UONE), Adamis Pharmaceuticals Corp. (ADMP), 9F Inc. (JFU), Workhorse Group Inc. (WKHS) and Canaan Inc. (CAN).

  • Urban One Inc. (UONE) shares soared amid investor anticipation of Juneteenth, which celebrates the emancipation of slaves in the US, since the minority-owned multimedia company saw a run-up last year. 
  • Adamis Pharmaceuticals Corp. (ADMP) shares jumped following a report by the National Institutes of Health (NIH) that the biotech company’s experimental drug TEMPOL could be promising as an oral treatment for COVID-19.
  • 9F Inc. (JFU) shares soared in response to a date set for shareholders to discuss changing the Chinese financial services company’s name to ‘Ether Securities, Inc.’ which would formalise its focus on brokering stocks.
  • Workhorse Group Inc. (WKHS) shares popped when the electric vehicle (EV) specialist joined a group of meme stocks favoured by Reddit users looking to pump share prices.
  • Canaan Inc. (CAN) shares were up as Bitcoin prices stabilising coincided with the mining hardware maker posting solid first-quarter results. 

NASDAQ TOP-PERFORMING STOCKS

STOCKWEEKLY CHANGECURRENT TRADING PRICESECTOR
Urban One Inc. (UONE)5.71 (+77.69%)13.06Services
Adamis Pharmaceuticals Corp. (ADMP) 0.3116 (+45.26%)1.00Consumer goods
9F Inc. (JFU)0.57 (+41.61%)1.94Financial
Workhorse Group Inc. (WKHS)3.68 (+39.27%)13.05Consumer goods
Canaan Inc. (CAN)2.57 (+30.60%)10.97Technology

New York Stock Exchange (NYSE)

Strong results were recorded on the New York Stock Exchange for AMC Entertainment Holdings Inc. (AMC), BlackBerry Limited (BB), Asensus Surgical Inc. (ASXC), Callon Petroleum Co. (CPE) and Cloudera Inc. (CLDR).

  • Shares of AMC Entertainment Holdings Inc. (AMC) skyrocketed after the movie theatre chain launched its new AMC Investor Connect program, which rewards shareholders with special perks.
  • BlackBerry Limited (BB) shares surged due to renewed interest in so-called “meme stocks” in which the mobility technology company was swept up.
  • Asensus Surgical Inc. (ASXC) shares soared while the medical device company’s 2021 Annual Meeting of Stockholders took place this week.
  • Callon Petroleum Co. (CPE) shares were up, along with other energy stocks, following a rally in oil prices thanks to an optimistic update from OPEC.
  • Cloudera Inc. (CLDR) shares spiked after the data software company announced a deal to be purchased by private equity firms Clayton, Dubilier & Rice and KKR.

NYSE TOP-PERFORMING STOCKS

STOCKWEEKLY CHANGECURRENT TRADING PRICESECTOR
AMC Entertainment Holdings Inc. (AMC)21.79 (+83.42%)47.91Consumer Goods
BlackBerry Limited (BB)3.79 (+37.64%)13.86Technology
Asensus Surgical Inc. (ASXC)0.65 (+27.78%)2.99Consumer Goods
Callon Petroleum Co. (CPE)9.29 (+24.15%)47.76Consumer Goods
Cloudera Inc. (CLDR)2.98 (+23.17%)15.84Technology

Last Week’s Top Five Market Losers

Nasdaq Stock Market (NASDAQ)

The last seven days were less than ideal for Globalstar (GSAT), MannKind Corp. (MNKD), iRhythm Technologies Inc. (IRTC), Veracyte Inc. (VCYT) and FireEye (FEYE).

  • Globalstar (GSAT) shares tanked this week with no recent news about the mobile satellite services provider that might have caused this volatility.
  • MannKind Corp. (MNKD) shares dropped following a report on the global dry powder inhaler device market, in which the biopharmaceutical company and its competition were analysed.
  • iRhythm Technologies Inc. (IRTC) shares sank after the cardiac care company announced that President and CEO Michael Coyle would be stepping down.
  • Veracyte Inc. (VCYT) shares dipped after the genomic diagnostics company closed a deal to acquire HalioDx. 
  • FireEye (FEYE) shares declined after the cybersecurity company announced major changes to its business, including plans to buy back $500 million in stock.

NASDAQ WORST-PERFORMING STOCKS

STOCKWEEKLY CHANGECURRENT TRADING PRICESECTOR
Globalstar (GSAT)-0.43 (-26.88%) 1.17Technology
MannKind Corp. (MNKD)-0.81 (-18.33%)3.61Consumer Goods
iRhythm Technologies Inc. (IRTC)-13.37 (-17.72%) 62.09Consumer Goods
Veracyte Inc. (VCYT)-6.11 (-15.65%)32.94Consumer Goods
FireEye (FEYE)-3.45 (-15.42%)18.92Technology

New York Stock Exchange (NYSE) 

On the New York Stock Exchange, TAL Education Group ADR (TAL), GSX Techedu Inc. (GOTU), Resolute Forest Products Inc. (RFP), Inspire Medical Systems Inc. (INSP) and ZIM Shipping Services Ltd. (ZIM) stocks all experienced negative movement over the past week.

NYSE WORST-PERFORMING STOCKS

STOCKWEEKLY CHANGECURRENT TRADING PRICESECTOR
TAL Education Group ADR (TAL)-9.97 (-24.94%)30.00Consumer Goods
GSX Techedu Inc. (GOTU)-4.30 (-23.19%)14.24Technology
Resolute Forest Products Inc. (RFP)-2.60 (-15.41%)14.27Consumer Goods
Inspire Medical Systems Inc. (INSP)-29.37 (-15.12%)164.93Consumer Goods
ZIM Shipping Services Ltd. (ZIM)-6.41 (-13.81%)39.99Industrial Goods

Highlights and Lowlights

Major US indexes posted modest gains for the second week in a row. The SPX500 and the DJ30 rose 0.6% and 0.7% respectively, bringing them just shy of record highs set four weeks ago. The NSDQ100 added a very modest 0.5% gain.

The monthly employment report showed continued, albeit moderate, improvement in job growth and the unemployment rate, with the last two monthly gains being smaller than those for March 2021.

What’s in Store for the Week?

With the earnings season behind us and a relatively quiet calendar for next week, investors will likely focus on the pace at which the US economy continues to recover, as well as look for signs that the Fed may begin tightening its monetary policies.

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Crypto market drifts sideways on announcement at Bitcoin Miami 2021

Will Bitcoin become legal tender in El Salvador?

Bitcoin has drifted sideways this week; caught between waves of volatility as bad news from China and tweets from Elon Musk rock the market back and forth.

Prices approached $40K on Friday, before Musk tweeted a broken heart emoji with the Bitcoin logo, triggering a 7% drop. Fears over his influence on the market were then calmed as he changed his profile picture to a laser-eyed Bitcoin anime figure, but the recovery was blocked by news that Chinese social media platform Weibo had suspended crypto influencer accounts.

In the end, Bitcoin finished the week flat, while Ethereum fared slightly better with 3% gains. Dogecoin ran ahead adding 16%, matched by IOTA which has released an update of the network’s ‘Tangle’ protocol.

This Week’s Highlights

  • El Salvador to make Bitcoin legal tender
  • China purges crypto social media

El Salvador to make Bitcoin legal tender

In what could be a giant leap forward for Bitcoin, El Salvador President Nayib Bukele has said he plans to introduce legislation that will make the country the first to adopt the cryptoasset as legal tender.

Bukele announced his intentions at the Bitcoin 2021 conference in Miami, claiming the measure will make it easier for Salvadorans living overseas to send money home. He also said that he has assembled a team of Bitcoin experts to help build a new financial ecosystem around the cryptoasset.

Despite the potentially monumental news, it didn’t move the market. This suggests traders could be waiting for further details to assess the impact.

China purges crypto influencers

After being battered and bruised by Elon’s tweets, Bitcoin’s attempted recovery was blocked by signs of a further crackdown on crypto in China.

Prices of all major cryptocurrencies fell on Saturday as it emerged that China’s Twitter equivalent Weibo had blocked several influencers and media outlets in a cleansing of crypto industry accounts.

With concerns about China weighing heavily on the market after the recent ban, the social media purge has only confirmed the government’s intentions — dealing another damaging blow to crypto market sentiment.

The week ahead

As prices of the major cryptocurrencies have now drifted sideways since the drop of mid-May, expectations are growing for a breakout that will signal the future trend.

Such a move could be catalysed this week by the bill to make Bitcoin legal tender in El Salvador. This piece of legislation is expected to pass in the next few days, but could attract criticism from the global community.

Elsewhere, global markets will be waiting with bated breath for US inflation data. Set to be released on Thursday, this could indicate how permanent rising prices are likely to be, and trigger volatility across crypto and stock markets.

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Protecting your portfolio during periods of rising inflation

Inflation is a topic that has dominated the financial news lately. With the world now reopening after the coronavirus pandemic, and cashed-up consumers unleashing pent-up demand, inflation is beginning to rise. In the US, inflation jumped 4.2% in April — the largest increase since September 2008. Investors are worried that higher inflation will force the world’s central banks to raise interest rates. 

Inflation, a measure of price increases within an economy, and higher interest rates, can hurt an investment portfolio. Just look at what has happened to high-growth stocks since mid-February. The sharp pullback in this area of the market is almost entirely due to inflation concerns. This is because when interest rates rise, the present value of projected future earnings are worth less.

So, what can investors do to protect their portfolios from inflation? What are the assets that are likely to perform well during periods of rising inflation? 

Oil: a key driver of inflation 

Oil is one asset that can potentially provide protection against inflation. Oil and inflation are closely linked because the commodity is a key driver of inflation. Oil is the lifeblood of the global economy. It powers vehicles and planes, heats homes and buildings, produces electricity, and is used to make plastics, chemical products, and synthetic materials. When economic conditions are strong — as they are likely to be this year — demand for oil tends to rise, pushing its price up. This, in turn, pushes inflation up. 

In 2021, the price of oil has climbed as coronavirus vaccines have been rolled out and economic activity has begun to pick up. In May, the price of WTI Light Crude Oil rose to $66 a barrel amid expectations of a surge in demand for the commodity later this year. 

Oil prices may increase even more. According to the International Energy Agency (IEA), oil consumption is set to increase significantly in the second half of the year as the economy picks up speed. A report earlier this month stated:  “As vaccination rates rise and mobility restrictions ease, global oil demand is set to soar from 93.1 million barrels per day in 1Q21 to 99.6 million barrels per day by year-end.” The IEA added that due to supply constraints from OPEC members, the ‘bloated’ oil inventories that built up during the pandemic have now returned to more normal levels.

When it comes to adding oil to your investment portfolio, there are a number of possible approaches.

  1. Open a direct position on the price of the oil itself through a Contract For Difference (CFD). A CFD is a financial instrument that allows you to capitalise on the price movements of an asset without actually owning it (i.e., a barrel of oil).
  2. Invest in oil-producing companies. Some examples include Exxon-MobilRoyal Dutch Shell, and Chevron. Oil stocks tend to rise parallel to oil price increases, since higher oil prices translate to higher profits. With this approach, however, there is always some ‘stock-specific’ risk. One way of reducing this risk is to invest in an oil stock-focused exchange-traded fund (ETF) such as the SPDR S&P Oil & Gas Exploration & Production ETF. This ETF tracks the performance of US companies operating in the oil and gas exploration and production industries.
  3. Invest in eToro’s OilWorldWide CopyPortfolio. This is a fully allocated portfolio containing exposure to stocks of leading global companies involved in oil mining, exploration, and production and oil-related products, as well as oil stock-focused ETFs and oil futures. Similar to an ETF, it minimises stock-specific risk since capital is spread out over a wide range of companies. In addition, it also offers broader diversification through the combination of equities and direct asset exposure. 

Gold: a hedge against inflation 

Gold is another commodity which can be hedged against inflation. When prices are rising and the value of money is being eroded, investors tend to gravitate to ‘hard assets,’ such as gold, for protection. Gold is considered to have intrinsic value due to its finite supply. Unlike currencies, such as the US dollar and the euro, its supply cannot suddenly be increased significantly by central banks. So, it is often one of the better performing assets when investors are concerned about rising inflation. 

After a period of weakness early in 2021, the price of gold has started to rise in recent months, breaking above a key resistance point of $1,800/oz. Concerns regarding inflation appear to be a key driver of the price increase. 

It is worth noting that some experts have suggested that today’s macro environment closely resembles that of the 1970s — a decade when gold saw phenomenal price gains. During that time period, oil prices were rising, central banks were printing money, and there were high inflation expectations. 

As with oil, there are a number of ways investors can obtain portfolio exposure to gold.

  1. Gain direct exposure to the price of gold through a long CFD position. If gold rises in price, the value of the CFD position will increase too. 
  2. Invest through a gold-focused ETF, such as the SPDR Gold and the iShares Gold Trust.
  3. Invest in gold mining stocks. Gold miners tend to perform well when the price of gold is rising due to the fact that their profits are higher. However, like oil stocks, this approach introduces stock-specific risk, although that can be mitigated with a gold stock-focused ETF such as the VanEck Vectors Gold Miners ETF
  4. Investors may also consider eToro’s GoldWorldWide CopyPortfolio. This is a fully allocated portfolio that provides exposure to a range of gold mining companies as well as gold ETFs.

Bank stocks 

A third asset class to consider for protection against inflation and higher interest rates is bank stocks. Higher interest rates are generally positive for banks. That is because banks typically generate a large proportion of their income from the spread between borrowing rates and lending rates. Higher interest rates create the potential for larger spreads and higher profits. 

In 2021, bank stocks outperformed the broader market (we highlighted the opportunity in bank stocks late last year). Many bank stocks, such as JP Morgan ChaseWells Fargo, and Lloyds Banking Group are up more than 25% year to date (YTD). With the global economy picking up speed, however, there could be more upside in the cards. Investors looking for exposure to bank stocks may want to consider eToro’s TheBigBanks CopyPortfolio. This portfolio provides exposure to the 25 largest banks in the world, which means that it is less risky than owning individual bank stocks.

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You should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience and knowledge before you decide to trade. Under no circumstances shall ADR Investors or eToro have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever. Trading with ADR Investors via eToro by following and/or copying or replicating the trades of other traders involves a high level of risk, even when following and/or copying or replicating the top-performing traders. Such risks includes the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Past performance of an eToro Community Member is not a reliable indicator of their future performance. Content on eToro’s social trading platform is generated by members of its community and does not contain advice or recommendations by or on behalf of eToro | Copyright © adrinvestors.com | an eToro partner.

Past performance is not an indication of future results.
General Risk Disclosure | Terms & Conditions

Basics of technical analysis

Since becoming a popular investor on eToro, Andy Cleaver has been trying to help his copiers learn more about both trading and investing. When it comes to learning a new skill, many people have the tendency to dive straight in at the deep end and sometimes forget that they need to learn how to swim first. This is especially true when learning to trade! 

Learning to trade takes a long time and a lot of discipline; a strong foundation of the basics is essential. This blog post was written to help you get started with the absolute basics of technical analysis.

Introduction to candlesticks

When learning about technical analysis, you must first understand what a candle on a chart represents. When talking about candles, we are not referring to the type that many of you have in your homes. 

I am sure we have all noticed the red and green candles on a chart before, but what do they actually show us? Simply put, the candles tell us how the price of an asset has moved over a given period of time. If a candle is green, this means that the price of the stock has closed higher than it opened at the start of the specified time range. If the candle is red, this means the price has closed lower than when it opened during the specific time range. 

Timeframes

As a trader, it is important to analyse price movement on multiple timeframes. When opening the chart of any asset you are able to select from a number of different timeframes. These range from yearly, where one candle represents the price action of an entire year, all the way down to one minute.  

You may have read about someone being bullish or bearish on a certain asset. To be bullish means that you believe the price of an asset will increase, to be bearish means you believe an asset’s price will decrease. When beginning to understand how to decipher those fantastic-looking candlestick charts, the longer period timeframes are useful for understanding whether a particular asset is currently in a bullish or bearish trend (also known as market structure).

What do candlesticks tell us?

The opening and closing prices are shown on a chart by looking at what is called the candle body. On a green candle, the price at the bottom is where price started at the beginning of the timeframe – this is referred to as the “open”, and the price at the top is where price finished – referred to as the “close”. The exact opposite is true when looking at red candles. 

Above and below each red or green candle body you will see the wicks. The wicks tell us the highest and lowest prices seen during the specified timeframes, also known as “the range”. 

For example, if you were looking at the one-hour timeframe, an asset could have opened at $10 and closed at $20. However, during that hour the price may have risen to $25 or dropped to $5. The wicks provide us with that information and are useful in identifying levels of support and resistance (which I will explain). 

Introduction to support & resistance levels

As a new trader, it can be difficult to know what to focus on when using the tools of technical analysis. You will see people talking about all the various indicators out there such as RSI, MACD, and EMAs, alongside the fancier sounding Elliot Waves, Ichimoku Clouds, Stochastics, and Bollinger Bands. This inevitably leads to a new trader’s chart having so many lines and indicators on it that it looks like a Jackson Pollock painting.

Support and resistance levels

Support and resistance levels are a technical analysis tool which can provide investors with an indication as to when an asset should be rising or falling in price. 

For example, if you see a stock rising in price, you may begin to wonder how much longer will it continue rising? Is now a good time to invest? The same question could be asked about a stock falling in price. How much longer will the decline continue? The truth is that nobody can give a definitive answer. 

Nonetheless, support and resistance levels are price zones based on the previous performance of the stock, where should the stock rise and reach that zone we would then expect that stock to reverse course since it has hit a resistance zone. Same is true for a stock where the price is dropping. When a drops to a certain zone or area, and hits a support level, we would now expect the stock to reverse course.

Sometimes, the stock continues to rise beyond the resistance level. When that happens, the previous resistance level becomes a support level and a new level of resistance is created. If a stock drops below a support level, a new support level will also be established, and the previous support level will now become a resistance level. 

Strength of support and resistance levels

Support and resistance levels that form on the higher timeframes such as the weekly, daily, or 4-hour charts, tend to be good at identifying potential areas for a reversal or continuation of a trend. There are many ways we can add confluence to a support and resistance level and its likelihood of holding, regardless of in which timeframe it is found.  

Imagine an elephant standing on a very thick sheet of ice that can comfortably support its weight. The ice holds the elephant up and acts as a support. Now imagine that the elephant invites its friends to join him on the ice one by one. With each additional elephant that steps on the ice, it is increasingly likely to result in the ice shattering. The same is true of support levels. The more times a stock price drops to, and touches, a support level, the more likely it is to break and lead to further decline in share price.

The same is true of resistance levels. The more times a stock price touches a resistance level, the more likely the price will eventually break through and lead to further increase of the stock price (although the elephant analogy does not work here, so you need to think of another one…).

Real chart examples

Before finishing this blog post, I want to share a couple of real chart examples to illustrate the concepts visually. Sometimes a picture makes concepts a lot easier to understand!

Bitcoin example (daily chart)

For the first example, I used the Bitcoin daily chart that shows some nice support and resistance level flips. Back around the start of 2021, Bitcoin reached a new high around the $42,400 level and eventually broke through this resistance level at the first time of asking. Over the course of the next several weeks, Bitcoin continued climbing to around $58,000. However, it then experienced a correction of approximately 30%, coming back to retest the previous daily resistance level at the previous high around $42,400.

As you can see from the chart below, this ultimately led to Bitcoin setting its most recent all-time high, at that moment, around the $61,500 level. Based on a very simplistic view of Bitcoin continuing to be in a bull market, and the basic concept of support and resistance, Bitcoin’s next move could very well be breaking through the latest high at $61,500 and eventually coming down to retest that level and turn it into support. 

This chart also perfectly illustrates that support and resistance levels should be viewed as zones, rather than pinpoint accurate levels.

Ethereum example (daily chart)

This example illustrates a concept discussed earlier in the blog in relation to the strength of a support or resistance level. In the chart below, from early 2021, you can see that Ethereum has spent a long period of time hovering around the $1,700 level.

You can see in the cart that this is an important level for Ethereum; it has acted as both support and resistance many times on the daily chart. On the most recent test of the level as support, you can see that it was tested around eight times before eventually seeing Ethereum drop below $1,700 again.  

Summary

Hopefully, some of you have found this blog useful. Learning to trade profitably takes both time and discipline, but acquiring a solid foundation in technical analysis will give you a great starting point. I am always happy to talk about technical analysis, share my opinion, or answer any questions you may have, so please feel free to reach out to me on eToro!

Andy Cleaver is a Popular Investor on eToro. He prefers a low-risk portfolio and strives to beat the major indices over the course of each year. When Andy invests in long-term holdings, he looks for companies who will continue to provide value in the future.

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You should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience and knowledge before you decide to trade. Under no circumstances shall ADR Investors or eToro have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever. Trading with ADR Investors via eToro by following and/or copying or replicating the trades of other traders involves a high level of risk, even when following and/or copying or replicating the top-performing traders. Such risks includes the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Past performance of an eToro Community Member is not a reliable indicator of their future performance. Content on eToro’s social trading platform is generated by members of its community and does not contain advice or recommendations by or on behalf of eToro | Copyright © adrinvestors.com | an eToro partner.

Past performance is not an indication of future results.
General Risk Disclosure | Terms & Conditions

US markets back on track: Weekly Stock Market Update

Last Week’s Top Five Market Winners

Nasdaq Stock Market (NASDAQ)

The past week included significant gains for Tellurian Inc. (TELL), Beyond Meat Inc. (BYND), Sundial Group Inc. (SNDL), Nikola Corp. (NKLA) and EHang Holdings Ltd. (EH).

  • Tellurian Inc. (TELL) shares skyrocketed after the liquified natural gas exporter signed a new long-term contract with Gunvor Singapore.
  • Beyond Meat Inc. (BYND) shares soared following bullish analysts’ remarks and Internet chat room hype surrounding the plant-based meat substitute producer.
  • Sundial Group Inc. (SNDL) shares led a rally for several cannabis stocks following news that HEXO had struck a $766 million deal with marijuana producer Redecan.
  • Nikola Corp. (NKLA) shares popped following analyst coverage of the electric vehicle start-up.
  • EHang Holdings Ltd. (EH) shares were up after the Chinese aerospace company unveiled its first autonomous aerial vehicle (AAV) for inner city operations. 

NASDAQ TOP-PERFORMING STOCKS

STOCKWEEKLY CHANGECURRENT TRADING PRICESECTOR
Tellurian Inc. (TELL)1.74 (+66.41%)4.36Consumer goods
Beyond Meat Inc. (BYND)38.83 (+36.43%)145.42Services
Sundial Group Inc. (SNDL)0.215 (+28.48%)0.97Consumer goods
Nikola Corp. (NKLA)2.98 (+24.87%)14.96Consumer goods
EHang Holdings Ltd. (EH)5.27 (+24.24%)27.01Industrial Goods

New York Stock Exchange (NYSE)

Strong results were recorded on the New York Stock Exchange for AMC Entertainment Holdings Inc. (AMC), Virgin Galactic Holdings Inc. (SPCE), Owens & Minor Inc. (OMI), Aurora Cannabis Inc. (ACB) and GameStop Corp. (GME).

  • Shares of AMC Entertainment Holdings Inc. (AMC) jumped, as consumers were getting ready to return to movie theatres, drawing heavy interest from investors for the movie theatre chain.
  • Virgin Galactic Holdings Inc. (SPCE) shares surged after founder Sir Richard Branson tweeted a video from last week’s VSS Unity flight. 
  • Owens & Minor Inc. (OMI) shares soared following optimistic updates delivered by the medical device maker during its Investor Day presentations.
  • Aurora Cannabis Inc. (ACB) shares were up, as were several other cannabis stocks, following news that HEXO had struck a $766 million deal with marijuana producer Redecan. In addition, Aurora moved its stock listing from NYSE to the NASDAQ this week.
  • GameStop Corp. (GME) shares spiked, along with other “meme stocks,” as investor interest in another short squeeze was raised.

NYSE TOP-PERFORMING STOCKS

STOCKWEEKLY CHANGECURRENT TRADING PRICESECTOR
AMC Entertainment Holdings Inc. (AMC)14.04 (+116.23%)26.12Consumer Goods
Virgin Galactic Holdings Inc. (SPCE)10.16 (+48.22%)31.23Consumer Goods
Owens & Minor Inc. (OMI)12.92 (+40.64%)44.71Services
Aurora Cannabis Inc. (ACB)2.04 (+26.91%)9.62Healthcare
GameStop Corp. (GME)45.21 (+25.57%)222.00Services

Last Week’s Top Five Market Losers

Nasdaq Stock Market (NASDAQ)

The last seven days were less than ideal for IAC/InterActiveCorp (IAC), Castor Maritime Inc. (CTRM), Newegg Commerce Inc. (NEGG), PUBMATIC INC-CLASS A (PUBM) and Adamis Pharmaceuticals Corp. (ADMP).

  • IAC/InterActiveCorp (IAC) shares plunged after the interactive media conglomerate’s spin-off Vimeo hit the market, essentially splitting IAC’s value, although shareholders will now hold both stocks.
  • Castor Maritime Inc. (CTRM) shares crashed after the Baltic Dry Index (BDI), which tracks the rates that shipping companies can charge for hauling dry bulk goods, dipped.
  • Shares of online electronic goods retailer Newegg Commerce Inc. (NEGG) sank, shortly after last week’s successful market launch.
  • PUBMATIC INC-CLASS A (PUBM) shares dipped heavily, causing eight brokerage firms to give the programmatic advertising company an Overweight rating. 
  • Adamis Pharmaceuticals Corp. (ADMP) stock declined on news that the biopharma company’s naloxone injection product had its New Drug Application (NDA) resubmitted to the US Food and Drug Administration (FDA).

NASDAQ WORST-PERFORMING STOCKS

STOCKWEEKLY CHANGECURRENT TRADING PRICESECTOR
IAC/InterActiveCorp (IAC)-89.78 (-36.02%) 159.47Services
Castor Maritime Inc. (CTRM)-1.197 (-28.18%)3.05Industrial Goods
Newegg Commerce Inc. (NEGG)-3.49 (-25.78%) 10.05Consumer Goods
PUBMATIC INC-CLASS A (PUBM)-5.03 (-14.54%)29.57Technology
Adamis Pharmaceuticals Corp. (ADMP)-0.115 (-14.28%)0.6884Consumer Goods

New York Stock Exchange (NYSE) 

On the New York Stock Exchange, GSX Techedu Inc. (GOTU), Nordstrom Inc.(JWN), CVR Energy (CVI.N), Anaplan Inc. (PLAN) and Cabot Oil & Gas Corp. (COG) stocks all experienced negative movement over the past week.

  • GSX Techedu Inc. (GOTU) shares tanked after the Chinese tutoring company reported first-quarter earnings, with mixed results as compared to analyst expectations.
  • Nordstrom Inc.(JWN) shares dipped after its financials did not meet investors’ expectations for the fashion retailer to make a strong recovery.
  • CVR Energy (CVI.N) shares tumbled after the petroleum refiner set the final ratio for the Stock Distribution portion of its previously announced special dividend.
  • Anaplan Inc. (PLAN) shares slid as the software-as-a-service (SaaS) company posted an earnings miss and announced that its CFO was stepping down. 
  • Cabot Oil & Gas Corp. (COG) shares dropped following a merger deal with Cimarex Energy.

NYSE WORST-PERFORMING STOCKS

STOCKWEEKLY CHANGECURRENT TRADING PRICESECTOR
GSX Techedu Inc. (GOTU)-3.12 (-14.40%)18.54Technology
Nordstrom Inc.(JWN)-4.27 (-11.29%)33.54Services
CVR Energy (CVI.N)-2.62 (-11.23%)20.72Basic Materials
Anaplan Inc. (PLAN)-5.38 (-9.46%)51.51Services
Cabot Oil & Gas Corp. (COG)-1.41 (-7.92%)16.40Basic Materials

Highlights and Lowlights

The major US indexes posted modest gains in a quiet week of trading, with the SPX500 and the DJ30 both rising moderately (1% and 1.2%,respectively). The NSDQ100 was back on track for the second week in a row, adding 2.1%. 

A weak jobs report for April showed that the US economy had failed to generate as many new jobs as economists had expected, and reflected an unemployment rate which had risen from 6.0% to 6.1%. However, a report on the price index for personal consumption reflected a surge in consumer demand as pandemic restrictions were being lifted. 

What’s in Store for the Week?

Ambarella will report earnings this week, as will Hewlett Packard and Crowdstrike Holdings.

A monthly jobs report for May, due out on Friday, will give further clues to the state of the US labour market recovery as COVID restrictions continue to be rolled back.

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You should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience and knowledge before you decide to trade. Under no circumstances shall ADR Investors or eToro have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever. Trading with ADR Investors via eToro by following and/or copying or replicating the trades of other traders involves a high level of risk, even when following and/or copying or replicating the top-performing traders. Such risks includes the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Past performance of an eToro Community Member is not a reliable indicator of their future performance. Content on eToro’s social trading platform is generated by members of its community and does not contain advice or recommendations by or on behalf of eToro | Copyright © adrinvestors.com | an eToro partner.

Past performance is not an indication of future results.
General Risk Disclosure | Terms & Conditions

Crypto market finds footing on institutional support

Bitcoin falls another 10% as DeFi coins show resilience

Bitcoin is searching for firm footing around $35K after another week of volatility has washed over the market.

The leading cryptoasset hit lows above $33K on Sunday before bouncing, with bullish momentum supported by some of the loudest voices in institutional investing. Ray Dalio admitted to owning Bitcoin at Consensus last week, saying he’d prefer holding it over bonds in the event of inflation. Meanwhile, famed investor Stanley Druckenmiller said that he thinks “Bitcoin has won the store of value game.”


Although the entire market has shrunk in the latest sell-off, DeFi coins represent a growing slice of the pie. Chainlink and Uniswap have shown resilience by staying relatively flat over the last week, and smart contract platform EOS has risen 3%.

This Week’s Highlights

  • Ray Dalio prefers Bitcoin to bonds
  • Apple job ad sparks adoption speculation
  • eToro lists DeFi tokens

Ray Dalio prefers Bitcoin to bonds

Speaking at the Consensus conference last week, hedge fund legend Ray Dalio said that the U.S. dollar is on the verge of devaluation, and the gold-like properties of Bitcoin make it increasingly attractive as a store of value.

“Personally, I’d rather have Bitcoin than a bond” in an inflationary scenario, said Dalio, who admitted to owning an undisclosed amount of the cryptoasset.

Joining Dalio in voicing support for Bitcoin was billionaire businessman Carl Icahn, who said in an interview with Bloomberg that he is contemplating a $1.5 billion investment in crypto.

Apple job ad sparks adoption speculation

Rumors are flying that Apple could be adopting crypto, after the world’s biggest tech firm posted a job for a business development manager with experience working on alternative payment systems such as crypto.

The backing of such a big brand would be a mega endorsement for the crypto market, and could potentially bring millions of new users into the ecosystem through Apple Pay.

In another possible scenario, Apple could be following the lead of Samsung and creating a digital wallet for users to securely hold crypto on their iPhone.

eToro lists DeFi tokens

As DeFi continues to gain traction and shows resilience in the recent sell-off, eToro is listing four new ERC-20 tokens from top projects.

Aave (AAVE), Compound (COMP), Yearn.Finance (YFI) and Decentraland (MANA) are now available on eToro, making a total of 23 cryptoassets for investors to diversify their portfolios.

The week ahead

Unless Bitcoin makes a rapid recovery, the month of May will close with around 36% losses — marking the worst monthly performance since September 2011. Such a deep drop needs time to heal, and traders will now be looking for a period of consolidation to see if Bitcoin can hold above the local bottom at $30K.

Later in the week, the Bitcoin 2021 Conference in Miami is likely to boost awareness and could help support prices by driving more mainstream adoption.

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You should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience and knowledge before you decide to trade. Under no circumstances shall ADR Investors or eToro have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever. Trading with ADR Investors via eToro by following and/or copying or replicating the trades of other traders involves a high level of risk, even when following and/or copying or replicating the top-performing traders. Such risks includes the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Past performance of an eToro Community Member is not a reliable indicator of their future performance. Content on eToro’s social trading platform is generated by members of its community and does not contain advice or recommendations by or on behalf of eToro | Copyright © adrinvestors.com | an eToro partner.

Past performance is not an indication of future results.
General Risk Disclosure | Terms & Conditions

Get to know an Elite Popular Investor: Gasper Sopi

Gasper Sopi has more than eight years of trading experience. An Elite Popular Investor on eToro, he has more than 1,700 copiers and almost 10,000 followers. He has important advice for those contemplating copying a Popular Investor: Make sure your investment goals align with the Popular Investor and stick with him for at least a year. Gasper’s diverse background can be an inspiration for anyone new to investing. It is an example that you need not be an investor from birth to be successful in the field. We spoke with Gasper about his background, his investment strategy and his favourite trades over the past year.

Tell us a little bit about yourself!

Ever since I was a child, I was always curious about the world, and so I loved reading illustrated encyclopedias, watching the news and political debates – you know, all the stuff that nerdy kids do. This passion for learning seems to be a core part of my nature and so I tend to read about a variety of things – from technology & design to psychology & philosophy, from political & economic theories to finance and futurism. 

Professionally, I’m an award winning UX/UI designer with a Bachelor’s degree in IT and a Master’s degree in Cognitive Systems & Interactive media. I’ve also published poetry, played in concerts, dabbled in science, exhibited artwork in contemporary art galleries, lectured on UX design, lectured at tech conferences and mentored at startup events. In 2016, I stepped away from my CEO position in a software development company I co-founded in order to focus on my investment activities, travel and philanthropy. Nowadays, the majority of my energy and focus goes to actively managing the portfolio on eToro. I also serve as a board member in an NGO dealing with social development, and I’m an active member of a Korean Zen School where I study and practise meditation. 

Tell us about your financial background

I began developing a deeper interest in finance in late 2010, when I quit my fancy and well-paid Art Director job to start my own design shop that eventually grew to a full-service software development consultancy. I started investing in the stock market soon after and this led me to enroll in various finance-related courses. I’ve earned course certificates in “Capital Markets” and “Company Valuations” organised by the Zagreb Stock Exchange and a course certificate in “Understanding Financial Reports” organised by a leading financial education institution in Croatia. Learning about finance and investing is one of my biggest passions in life, and I feel grateful for all the learning opportunities that eToro so readily offers to its investment community.

What is your strategy and have you changed it recently to adapt to the volatile markets? 

My overarching strategy is based on the time-tested wisdom of fundamental investing and I try to keep it as consistent as possible in all circumstances. I’m here for the long haul and am willing to hold on my key convictions, with a healthy dose of adjustments, even through the rough waters of volatility. I am bullish on growing disruptive companies that create products and services that people love, are well capitalised, have a competitive advantage in a growing market, are led by ethical management who’s in it for a bigger cause, and do it in a way that is aligned with the interests of the planet as a whole. 

As for the recent volatility in the markets, I’ve responded to it by increasing the exposure in beaten-down blue chips that stand to gain from the economic restart, such as Berkshire Hathaway, Volkswagen, various banks and financial institutions, healthcare providers as well as a basket of hotels, airlines, cinemas and transportation. This has softened the volatility and protected the downside during the tech sell-off (ended March with +1.5% while many struggled) while at the same time capturing the upside of the growth components.

Where do you do your research?

I prefer to read research reports from various strategic consultancies like McKinsey, BCG and many others, as well as a select number of people and services on Twitter. When it comes to deep diving into the financial details of a certain company, I would use a number of online services such as SimplyWallSt, Koyfin, FinViz, Wallmine & Finbox, and I’d usually check the current sentiments on the eToro feed, StockTwits and Twitter. Occasionally, I skim through the coverage on TipRanks and SeekingAlpha to get a feel for what the consensus might be, but I try to stay as little exposed to other people’s opinions as I possibly can.

How has eToro changed the way you trade?

eToro taught me to be slightly more risk-averse than I would usually be if I were managing just my own money. I’m personally comfortable with having a more concentrated portfolio, but on eToro I try to de-risk my positions through a broader diversification.

Because I am in almost daily contact with my copiers, either on the feed or on my Discord server, I’ve been developing an increased appreciation for the whole eToro community and all the individual investors. It feels that we’re all working to better our lives together, and it’s often touching when my copiers share their individual stories as well as their gratitude for their gains. 

Which assets or industries do you have your eye on now?

At any given time, approximately 90% of my money is invested, with about 10% of cash that I set aside for an unexpected momentum trade or taking advantage of sudden market irrationalities. Of the money I invest, about 95% is in equities and the other 5% is in Crypto. 

As for the industries I like, the key issue for me is how well I can understand them. I try to stay in my own circle of knowledge which is tech, innovation, finance & payments, consumer brands, leisure & entertainment, particularly gaming. I think the COVID-19 pandemic has caused some major shifts in the way humans do work, socialise, learn, shop and care about their wellbeing, so I expect that companies who are able to adapt to these changes in these 5 areas are positioned to perform really well.

What was your favourite trade over the past 12 months?

This is a tough question. As you know, the last 12 months have been incredibly rewarding for many investors, and I am no exception. Between Tesla, Nio, Ethereum and GameStop, all of which have given me more than 10x a piece in 2020, I’d have to pick GME. The success of GME was, at least in part, a result of people coming together to indicate that the tides are shifting and that the little guy can no longer be ignored. Additionally, because GameStop’s success was partially a result of a retail investor uprising rather than driven by company fundamentals, I didn’t want to take credit for this trade, so I donated all my GME gains to a dozen charities across the world.

Do you invest in any asset classes outside of stocks, commodities and crypto?

Does investing in oneself count as an asset class? I generally try to keep things as simple and focused as possible. We live in incredibly fast-changing times and it becomes almost impossible to stay on top of all the investment opportunities that are available nowadays, so I mostly stay with equities and crypto-related investments. I occasionally invest in startups through crowdfunding sites and have been looking into tokenised property but haven’t done any investments there yet. I’m waiting for someone to come up with a way to tokenise human potential, that would definitely be an interesting asset class.

What is your long-term trading goal?

My long-term trading goal would hardly be regarded as trading. I prefer to look at it as investing. I’m a huge fan of the power of compounding and am committed to helping generate consistent, above-average returns for both my copiers and myself. I invest for growth and capital appreciation and personally, as a zen practitioner, I lead a very unassuming and frugal life. I’m interested to see how far I can accumulate my capital and then eventually, 10 years from now, use it to support and empower initiatives and causes that I’m passionate about, such as education, entrepreneurship, investing and mindfulness. 

Any message to copiers or potential copiers?

When you invest in a PI, you are not investing in one stock that you can just exchange for another. Rather, you are investing in a portfolio that has been strategically designed to meet a certain objective – so it’s very important that your own objective aligns with the objective of the portfolio you are copying. Take some time before deciding on a Popular Investor to copy, but once you reach a decision, then you need to stick with them for at least a year, otherwise things might not work out. 

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You should seek advice from an independent and suitably licensed financial advisor and ensure that you have the risk appetite, relevant experience and knowledge before you decide to trade. Under no circumstances shall ADR Investors or eToro have any liability to any person or entity for (a) any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs or (b) any direct, indirect, special, consequential or incidental damages whatsoever. Trading with ADR Investors via eToro by following and/or copying or replicating the trades of other traders involves a high level of risk, even when following and/or copying or replicating the top-performing traders. Such risks includes the risk that you may be following/copying the trading decisions of possibly inexperienced/unprofessional traders, or traders whose ultimate purpose or intention, or financial status may differ from yours. Past performance of an eToro Community Member is not a reliable indicator of their future performance. Content on eToro’s social trading platform is generated by members of its community and does not contain advice or recommendations by or on behalf of eToro | Copyright © adrinvestors.com | an eToro partner.

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