Welcome to our #129 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we spotlight our interview with Rebecca Chesworth who is the Senior Equities Strategist at State Street Global Advisors.
We talk about the uncertain market, the outlook for the rest of 2022 and for 2023 and what actions European investors are taking.
We highlight Rebecca’s response (in this newletter) to our question about how you should be thinking about investing at this time?
Listen to the full interview here.
And you can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
And we are taking a 2 week break-so see you in early September! In the meantime, you can tweet me @janicka or drop me an email: jana@jointhepurse.com.
Until then,
Jana
An uncertain market: how should you be thinking about investing at this time?
Rebecca Chesworth, Senior Equities Strategist at State Street Global Advisors was interviewed on The Purse Podcast-we share an extract.
We interviewed Rebecca Chesworth, who is a lead strategist on sectors and ESG for SPDR ETFs at State Street Global Advisors on The Purse Podcast.
We talk about what is happening in the market today, how to think about a difficult or bear market, the outlook for the rest of 2022 and for 2023, what actions are European investors taking and how should you be thinking about investing at this time?
Here is a short extract from the interview (we have edited down the response for ease of reading only):
Question: If you're a relatively new or nervous investor -how should you be thinking about investing at this time?
Rebecca’s answer:
So they're thinking about inflation. They're thinking about how that cost of living crisis happens.
I think ESG is still important and we will still see investors buying ESG funds, but that has taken somewhat of a backseat for the last couple of months. Now we are seeing investors taking action buying defensive.
This is buying the healthcare sector, which would include pharmaceutical companies, the food producers, brewing companies, for example, food retailers. These are some of the high street names that we'd know well.
Gold has been bought in the form of funds and the area of the market I work in, which is ETFs (exchange traded funds).
ETFs have been benefiting in this environment because it is a relatively low cost instrument. It’s easy to trade a lot of these type of assets. Whether you are buying a sector or you are buying gold, or you are buying a fund that has dividends in it, investors have been buying through ETFs.
One figure I read this morning was that $500bn dollars (year to date) has gone into ETFs. Even though the market has been all over the place, we know that investors are still buying.
Another way of playing this market is not just to look at stocks or sectors, but themes ie things that could be interesting in the future, like clean energy or artificial intelligence- they are the ones that I quite often get questioned about as well.
And take the chance to learn. There's always the chance to learn. And make sure you know what you are buying.
The worst thing you could do, on a market like we have seen in the last week or two, would be to run in. The reason why that's a bad idea is you're not going to know what you're buying or why you're buying it.
You want to pause and take a deep breath. And ask: what do I want to buy? How am I going to do it?
If I'm going to buy a fund, which is what I'd say most entry level investors are doing so they might be buying a mutual fund or an ETF, what country do I want to be invested in? Or what sector do I want to be an energy or financials?
What style do I want to be: in growth companies or in value companies? And then they may want to think about do I want to be active or passive?
Passive would mean that I'm just going to buy a fund, which completely matches the index. I want to buy the FTSE 100, because I know it will go up at the same rate as the top 100 companies in the UK.
An active fund, by comparison, would be trying to find a fund manager that would then try to beat that. There is nothing wrong with that. And a lot of people make a good living from that, but you have to know that that's why you are doing it. And then you have to know that their ability to beat the market will continue and that you are not paying too much for an active fund.
And remember to check what fees you are paying and then you have to think about risk.
If you were new to investing and relatively young, then the old age adage goes that you would have more equities because these are more risky, but could give you more return in the long term.
If you were closer to retirement, you might go into something safer, like corporate or government bonds…
Listen to the full interview on The Purse Podcast with Rebecca Chesworth.
News in Brief
Financial news
S&P 500 snaps 4-week-long rally, dropped 1.2% this week on persistent inflationary pressures (especially in Europe), ongoing corporate margin headwinds, a tepid growth outlook in China, and complacent investor psychology.
Bank of America (BoA) Fund Manager Survey shows biggest tail risk is inflation staying high, while the catalyst for a Fed pivot is seen as US PCE inflation below 4%.
Inflation outlook hasn’t improved since ECB raised rates by 50bps in July, Exec Board member Isabel Schnabel said, suggesting that another 50bps hike may be coming next month.
Europe is lurching into an energy crisis: German and French electricity prices keep climbing, hit fresh records.
UK inflation hits 10.1%, driven by soaring food and fuel prices. ONS July figure is only fourth time in 70 years that inflation has breached 10%. And a 13% inflation peak looks optimistic.
UK consumer confidence weaker than during major recessions. Monthly look finds deepening pessimism about personal finances and prospects for the economy.
‘Big Short’ investor Michael Burry dumps stock portfolio after market crash warnings to just 1: private-prison operator Geo Group. Scion sold off its long positions on 11 comps during Q2, incl bullish bets on Alphabet, Meta, Bristol-Meyers Squibb & Nexsta.
Crypto: bitcoin, ethereum, DeFi & NFTs
The total crypto market cap fell almost as low as $1trn. $210 million of bitcoin long positions were liquidated on Friday as the crypto markets fell sharply.
Sudden crypto market drop ends bitcoin to below $22,000; a more than three-week low, after a sudden sell-off. (See the current BTC price).
Bitcoin sees its steepest decline in a month as hopes fade for a less hawkish Fed that suggested a dovish pivot remained unlikely to happen soon.
Ether fell from $1,808 to $1,728 at the same time before staging a muted rebound. It had slipped again and ETH is trading at around $1,610+ (See the current ETH price).
Coinbase and other crypto exchanges are pausing Ethereum and ERC-20 withdrawals and deposits during the merge.
Dogecoin and Shiba Inu have made huge gains: Dogecoin is up about 16% this month while copy-cat shiba inu has gained 24%. For scale, bitcoin has only broken even; ether has popped 9%.
The Purse Podcast
We cover the following in our conversation:
The economy and global markets
How to think about a difficult or a bear market?
The outlook for 2022 & 2023
European investors
And more..
Please enjoy! Listen on Apple Podcasts and Spotify+
Coffee Break? Read This
We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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