Ain’t No Pirate
The stock market was up again, and it was the Dow that recovered and led the indices — more on that in the “Overall Market” section.
Beyond the overall market, the space tourism industry is one of the hottest investments so far in 2020. Also, it’s good to note that not every dip is a buying opportunity — more on that in the “What’s Up?” and “What’s Down?” sections.
Oh, can you guess why one of our users told us that he “ain’t no pirate?” — more on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
- U.S. markets: All three indices agreed on the direction and finished Wednesday in the green. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: For one more day, the above $10,000 mark was the new norm for Bitcoin’s price.
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The Dow Recovers.
All three indices finished Wednesday in the green. Interestingly, the Dow that had a flat day on Tuesday led the pack on Wednesday with approximately one percent gain.
Despite the worries about the economic impact of coronavirus and the warnings provided by the World Health Organization, good earnings in some of the largest stocks in the Dow index, such as UnitedHealth (Ticker: UNH), drove the market. Some say that the health care stocks’ movement is the direct result of who people believe will end up winning the Presidential election, and that’s why some of the political news on Wednesday drove healthcare stocks during the day.
Space Travel Is Better than Tesla
So, what happened?
Shares of Virgin Galactic (Ticker: SPCE) were up more than 5% on Thursday. Maybe more impressive is the company’s year-to-date return. Virgin Galactic’s stock price has gained approximately 90% since the start of 2020. Compare that to Tesla (Ticker: TSLA) that has been the talk of the town for the last few weeks, and SPCE has even outperformed Tesla’s 85% year-to-date gain. As we all know, Virgin Galactic hasn’t still started operating its space tourism service. Therefore, the price is just a reflection of how excited investors are about the future of the space industry.
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Not every dip is a buying opportunity.
So, what happened?
Shares of Plantronics (Ticker: PLT) have gone down more than 45% since the beginning of 2020. The company designs and manufactures phone headsets for call centers, mobile devices, gaming, and other similar applications. Those are products everyone uses, and the demand for headsets is not supposed to be going down. However, the stock is one of the worst-performing stocks of the year, so far. Earlier in the year, the company announced the abrupt resignation of its CEO. Such unexpected leadership changes never sit well with investors, and the stock is being punished for it.
Also, it’s good to notice that the company is not profitable yet, and has quite a lot of debt. Therefore, the sustainability of it is more than a 3% dividend yield is questionable. That also never sits well with investors. This may not be the classic “buy the dip” situation.
I ain’t no pirate…
So what happened?
The other I told a client of mine, if you’d like a safe investment opportunity that protects the value of your money against inflation, look nowhere than Treasuries.
He looked at me with a blank expression and said, “I ain’t no pirate.”
Get it? Treasure … Pirate … He was joking, of course. He knew I was referring to the bonds offered by the United States government, also known as Treasuries. His Joke, however, made us wonder about the most common questions investors may have about investing in Treasuries. How to invest in them, what to expect, what the options are, and so on.
Ten things you’d need to know about Treasuries:
- Treasuries are a form of bond.
- Like all bonds, Treasuries are a way to lend someone money.
- Specifically, Treasuries are the money individual people or institutions loan to the government of the United States.
- Because the borrower of Treasuries is the government of the U.S., they are considered to be the safest form of bond.
- Investors can invest in Treasures that are newly issued (new-issue) by the government directly from a unique website set by the government.
- All main brokerages also allow investors to invest in Treasuries. However they mostly have a minimum of $1000 to start.
- When you invest in Treasuries, you need to pick a maturity date that can vary from 90 days to a few decades.
- If you need your money back sooner than its initial maturity date, you can sell them to other investors. Treasuries are known to be highly liquid.
- The interest you would receive on your Treasuries is tax-free in at local and the state level. You would only need to pay Federal tax on that interest income.
- Treasuries aren’t callable, meaning that after 2009, the government decided not to call Treasuries sooner than their maturity date.
If you are saving money for buying a house, or if you are simply not comfortable with taking stock market risks, Treasuries are good options to pick to feel safe and sleep well at night. After all, you ain’t no pirate. Are you?