#42 Daily Financial News Round Up - Dec 12,2021
How’s crypto-market?
Bitcoin is up by 3.91% in the last 24 hours to the price $50,400. XRP, Terra and Shiba Inu are the top three traded cryptocurrencies in the last 24 hours. The top 3 gainers are Decentraland, Basic Attention Token (BAT) and Celo. The top 3 losers are NKN, BitTorrent, and Paxos Standard.
What news caught my attention?
Companies pay their stock investors in 2 possible ways - a. in the form of dividends or b. by buying back their stock at a premium. Markets interpret stock buybacks very positively as they believe that it signals that management strongly believes in future prospects. In 2020, companies pulled back on their stock buyback programs. This year, things are looking up for stock buybacks as S&P 500 companies spent $234 billion in third-quarter stock repurchases. Buying back shares help boost a company’s valuation, and it is a tool that companies use when they believe that the market is undervaluing the company.
Money inflow into actively-traded ETFs topped $1 trillion for the first time in November 2021. Dubbed fund frenzy, asset managers launched a record number of ETFs this year.
With consumers preferring online shopping over brick and mortar stores, digital payment companies are well-positioned to help the consumer spending surge and track it.
My Takeaways:
Stock buybacks vs dividends - what do investors prefer? and why? - these are some of the questions that have troubled academics for decades. Hopefully, the new emergent trend will help the researchers with new data to test old theories.
A common misconception is that ETFs are passive. However, that is not true. Passive ETFs follow buy-and-hold indexing strategies that track a particular benchmark, while active ETFs use several investment strategies to outperform the benchmark, such as market timing, sector rotation, short selling and buying on margin. Active ETFs saw over $1 trillion of money inflow this year, a historical record.