Personal Finance

Robinhood To Trade On Nasdaq Targeting $32B Valuation

By now it’s clear to all that Robinhood will take from the rich … what happens after that remains unclear, but retail investors will now have a chance to decide on their own as the disruptive zero-fee trading app prepares to go public.

Robinhood, the most popular trading app, especially among novice and young traders, said it will trade on the Nasdaq under the symbol HOOD.

With an initial offering price ranging between $38 and $42 per share, Robinhood is expected to reach up to a $32 billion valuation, which would make it worth more than two-thirds of companies on the S&P 500.

According to its amended prospectus, the company plans to sell 52.4 million shares in the IPO, with founders Vladimir Tenev and Baiju Bhatt selling another 2.6 million shares in the deal. After the IPO closes, they will still own 7.9% each.

Robinhood has been targeting an IPO since at least last year, but it’s been a bumpy road pot-holed with regulatory inquiries, including a hearing convened by the House Financial Services Committee.

Robinhood was last valued at $11.7 billion in its private fundraising round in September. In February, the company announced that it had raised a further $3.4 billion in a funding round… Read more.

Canada’s Pile Of Household Savings Is Mostly Held By The Rich, And Won’t Be Spent

Canadians have an epic pile of savings accumulating, but it’s not as big as most economists think. Oxford Economics‘ Tony Stillo took a deep dive into the household savings rate this week. The firm found the gross numbers exaggerate the total that can actually be used. Further, wealthier households represent more than half of the savings accumulation. In the end, only 13% of the epic pile is forecast to actually be used in the near future. Talk about a letdown.

Canadian Household Accumulated $184 Billion
Canadian households accumulated a big pile of savings since the pandemic started. The firm estimates $184 billion in gross excess savings from Q1 2020 to Q1 2021. The second quarter of this year should add even more, due to the third-wave lockdowns. It may sound like a lot, and you may have heard the “revenge spending” narrative. However, it may not be so impressive.

Only $100 Billion Of Those Savings Are Liquid
First off, the liquid excess savings are much smaller than the gross excess savings. Only $100 billion are actually liquid, by the firm’s estimate. Their analysis shows households used $22 billion in capital to reduce their debt. Another $62 billion has already gone to housing and equities.

Wealthier Households Represent More Than Half Of The Savings
Wealthier households represent most of the savings, which means less will be spent. Stillo’s team estimates over half of the savings are from the top two income quintiles. It’s a big detail since wealthier households have a lower marginal propensity to consume. In plain English, the households with savings already have few buying restraints. Additional cash only provides a minimal influence to increase consumption…read more.

Iceland Finds ‘Major Success’ Moving To Shorter Workweek

As many people contemplate a future in which they don’t need to commute to offices, the idea of working less altogether also has its appeal.

Now, research out of Iceland has found that working fewer hours for the same pay led to improved well-being among workers, with no loss in productivity. In fact, in some places, workers were more productive after cutting back their hours.

Granted, Iceland is tiny. Its entire workforce amounts to about 200,000 people. But 86% of Iceland’s working population has moved to shorter hours or has the right to negotiate such a schedule, according to a report by the Association for Democracy and Sustainability and the think tank Autonomy. This follows two successful trials, involving 2,500 workers, that the report called “a major success.”

The trials were conducted from 2015 to 2019. Workers went from a 40-hour weekly schedule to 35- or 36-hour weekly schedules without a reduction in pay. The trials were launched after agitation from labor unions and grassroots organizations that pointed to Iceland’s low rankings among its Nordic neighbors when it comes to work-life balance.

Workers across a variety of public- and private-sector jobs participated in the trials. They included people working in day cares, assisted living facilities, hospitals, museums, police stations and Reykjavik government offices…read more.

The Year Of The Retail Investor Keeps Getting Bigger

Retail investors will have their say on the stock market this year, and the recent GameStop and AMC Entertainment stock squeezes were only the beginning.

According to JPMorgan’s global markets strategist, Nikolaos Panigirtzoglou, retail investors have invested nearly $500 billion into equity funds this year…Click for full article.

How to retire a millionaire

 

Retiring a millionaire isn’t as farfetched as it may seem. With a bit of saving, investing, and a proper plan, you can be well on your way to hitting $1 million — or more — by the time you reach retirement age.

In fact, the number of retirement millionaires have reached record levels, according to data from Fidelity Investments, the nation’s largest provider of 401(k) savings plans. Retirement savers with a 401(k) balance of $1 million or more increased to 365,000 during the first quarter of 2021, while the number of those with an IRA with a balance of $1 million or more jumped up to 307,600.

Here’s how you can retire a millionaire:

Saving is the key to reaching almost any financial goal, especially if you want to retire with a million-dollar portfolio. But the trick isn’t necessarily how much you save, but when you start.
“One of the huge keys to success here is to take advantage of your biggest asset: time,” said Tony Molina, CPA and senior product specialist at Wealthfront.
Most experts recommend contributing at least 10% to 15% of your income to your retirement fund. But if you’re not able to contribute that much, don’t let that discourage you. Saving any amount can put you significantly ahead in reaching your retirement goals, thanks to compound interest.

Where Shortages Show up: The WTF Plunge in Retail Inventories

How messed up the economy has become, fueled by government moolah and Fed manna, when nothing and no one was ready for it

When the government spends trillions of borrowed dollars to boost demand from all sides, and when the Fed prints trillions of dollars to monetize the borrowing binge by the government and also to inflate asset prices so that asset holders feel richer and start spending these gains (the Fed’s doctrine of the Wealth Effect), well, then you’re going to get some demand, a lot of demand, suddenly, particularly for goods. And this sudden demand has been ricocheting through the economy for over a year.

And supply? Duh. Maybe they thought supply would suddenly materialize. But supply chains are long and complex, and then there were all kinds of additional issues, ranging from container shortages, spiking ocean-freight container rates, the blockage of the Suez Canal, a capacity shortage among container carriers and freight companies, a ferocious winter storm that hit the Texas petrochemical industry and semiconductor plants that then created further snarls in supply chains, while a fire at a chip plant in Japan wreaked further havoc with the semiconductor shortage for automakers.

Among commodities, sudden demand from homebuilders and remodelers for things like lumber caused all kinds of distortions and supply issues. And retailers ran out of products across a wide spectrum, from bicycles to hot tubs and importantly – since they weigh so heavily in retail sales – new and used vehicles.

“Turns out it’s a heck of a lot easier to create demand than it is to bring supply up to snuff,” Jerome Powell mused at the press conference. And now the economy has the biggest mess in decades to deal with.

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