Now that the summer is drawing to a close, I wanted to take a moment to reflect on some of the important market-related events of 2020.

What a market year it’s been so far. After falling more than 30% in the early spring, markets not only recovered their losses, but they made substantial gains.  By early September, the S&P 500 had increased more than 60% compared to its low in March. One of the big reasons: Giant tech companies have been on a tear. In fact, just a handful of companies, including  Amazon, Apple, Facebook, Google, and Microsoft have driven most of the market momentum.

There are numerous other causes for the market rally, including some fundamental improvements for companies that benefit from people staying and working from home, government stimulus programs, and technical trading factors. But a lot of the uncertainty from the beginning of 2020 still remains today.  Specifically, investors are questioning if the economy will continue to rebound, what will happen with Covid when kids go back to school and people start heading back to work, and who will win the November election. Sometimes concerns over the future can cause the market to become volatile, especially after a very dramatic move in one direction. 

Invest for the long term

So here’s our message for you today.  Consider your long game, and continue investing regularly. Market volatility and market turbulence like we’re seeing today is normal. Markets go up, they go down, and they sometimes go sideways, it’s impossible to predict where the market will go in the short term.  

Here’s what we recommend. First, turn on Auto-Stash. Consistent investing—regularly buying quality companies and funds you believe in—and playing the long game is much better than trying to time the market. Don’t focus on the daily ups and downs. Remember, investing is about time in the market, not timing the market. Think of every trading day, regardless of whether markets are up or down, as an opportunity to add small amounts to your positions. 

Also remember, all investing involves risk, and while you can make money, you can also lose money that you put in the market. 

How Auto-Stash can help

When markets go down, you should stay the course. Specifically, we think it’s best for you to keep investing in a diversified portfolio and turn on Auto-Stash.  It can be your best friend right now. I want you to look back at this time in a few years knowing you picked up investments during all the market cycles. A diversified portfolio can include bonds and stocks that are global.  Stash now offers a new tool called portfolio diversification analysis¹ that can help you stay on track, offering your current portfolio a score and suggestions about how to stay properly diversified. 

Then, simply consider investing small amounts–even $1–on a regular basis.  We make this easy with Auto-Stash. Now, more than ever, it’s time to set it and let Auto-Stash work it’s magic.

If you had invested $10 per week in the market, using Auto-Stash’s Set Schedule feature from the end of 2007 through the first week in March 2020*, you could have more than doubled your investment to have nearly $14,000 in your portfolio. That includes all the market dips, including the most recent Covid-19 pandemic.

Turning on or updating your Auto-Stash is the easiest way to add small amounts of money to your investments on a regular basis. This way, you’ll avoid the emotional aspect of investing and won’t get fooled into trying to time the market.

Remember the Stash Way

Then follow the Stash Way, which includes regular investing, proper diversification, and taking a long-term view. By taking a long-term view and consistently investing small amounts, you can allow your money to work for you.

It’s the best guidance we can give for investing in up markets and down markets. Just a few words more about each of these ideas:

• Invest regularly: Even if you take small amounts and invest them every week or every month, that can add up through the power of something called compounding. Remember the Stash investing minimum is less than one dollar.
• Invest for the long term: Over the years, market gains have outpaced standard savings rates in bank accounts. Looking ahead, experts expect markets to return about 5%. With the power of compounding and regular investing, you have the ability to build wealth for the financial future you want.
• Diversify: Diversification means you’re not putting all of your eggs in one basket, so you can better weather the stock market’s ups and downs. That means you won’t put all of your money in too few stocks, bonds, or funds. 

Stash is your financial partner, and we are here for you—to help you meet your most important financial needs and goals during these challenging times. We have some exciting new features in the pipeline and cannot wait to show you really soon!

Thanks for being a Stasher!

The post Markets Rise, Markets Fall appeared first on Stash Learn.

The drop in oil prices by 24% to about $35 a barrel was the single biggest one-day drop in oil prices since the beginning of the Gulf War in 1991. The drop in oil prices also triggered a steep sell-off in markets. The Dow Jones Industrial Average fell more than 2,000 points, and the S&P 500 fell 7%, reportedly the biggest decline since the financial crisis of 2008. 

The decrease in oil prices comes as the global economy is reckoning with the coronavirus pandemic, which has added uncertainty to markets around the world. 

What happened?

Oil prices, like all things,  are dictated by supply and demand. When supply falls, prices rise, and vice versa. 

As the world economy has slowed because of coronavirus, the Organization of the Petroleum Exporting Countries (OPEC), a group of the world’s biggest oil producers that includes Saudi Arabia, has wanted to offset the decline in demand by cutting oil production. When OPEC members cut production, that typically increases the price of oil by limiting supply. When it increases production, that typically causes prices to fall. 

However, Russia, which isn’t a member of OPEC but has had a working pact with the group since 2017, decided not to go along with the group. In response, Saudi Arabia, the biggest oil producer in the world, announced it would increase production and cut prices between $4 and $7 a barrel. The move, according to some reports, could allow Saudi Arabia to take market share away from Russia. 

And when prices fall by a large amount, it can slow down production of oil and gas. Higher oil prices, generally, make it more cost-effective for oil companies to extract and process oil.

On the plus side, however, lower oil prices mean cheaper gas for consumers. Gas could fall below $2 a gallon, according to some estimates.

More about OPEC

OPEC members, comprising Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates, and Venezuela, among others, control about 80% of the world’s oil reserves, according to the organization. It was founded in 1960 to set production levels among member countries. 

Follow the Stash Way

We’ve boiled down our investing philosophy into three basic steps that we call the Stash Way. It involves investing for the long-term, investing regularly, and diversification. 

You can find out more about that here.

The post What’s Going on With Oil Prices? appeared first on Stash Learn.

Hey Stashers!

I always like to reach out to you during times of market volatility. And this week started off with a wild ride. Major indices from the S&P 500 to the Dow and Nasdaq reacted to the news that a novel coronavirus, dubbed Covid-19, appears to be spreading more quickly than people had expected. As an investor, it is important to understand how to invest right through market events and think long term.

Coronaviruses are among the most widespread on the planet, related to the common cold and the flu. Covid-19 results in a pneumonia-like illness that, sadly, can be life-threatening.

And while it’s understandable that people are concerned, it’s important not to overreact. Just to keep things in perspective, millions more people catch the flu each year than have contracted the new coronavirus. 

And we’ve been here before. In 2003 there was Severe Acute Respiratory Syndrome (SARS), and a few years later something called Middle East Respiratory Syndrome (MERS), and then Swine Flu–all of which are coronaviruses. Just a few years ago people panicked about the Ebola virus.

So why are markets reacting to a virus? Covid-19 has interrupted global supply chains stretching from China to the U.S., as tens of millions of people stay home due to a regional quarantine. That, in turn, has caused factories to shut down because of worker shortages. 

Already, some prominent companies, including iPhone and iPad maker Apple, have said the virus will cut into their expected earnings for the year.  Car manufacturer Tesla also temporarily closed its factory in China. Meanwhile, coffee chain Starbucks and Scandinavian furniture design store Ikea both temporarily closed more than half of their Chinese stores. (You can read more about that here.)

And this week, it appears as if the virus is spreading to more countries including South Korea, Italy, Iran, and—yes—the U.S.

Market volatility is normal

Okay, so now that you know what’s going on, here’s what you can do. Take a breath and zoom out. Markets can go up just as easily as they can go down. The most important thing I want to say is that volatility is a normal part of investing. Don’t get caught up in short-term market news. Over time, staying in the market and long-term investing is the way to go. 

What I recommend is setting your sights on long-term investing, and making regular investments regardless of whether markets are moving up or down. We built Stash so you can add small amounts of money on a regular basis, and for long-term investing. 

I’ve been investing for decades, and here’s what I know. 

When the market moves sharply down, it’s understandable for people to get spooked. It can be tough to see the value of your portfolio go down. That’s especially the case if you’re investing for the first time during one of these periods. I was once a novice investor too.

But I lived through a bear market in the early 2000s, right after the dot-com bust  and in 2008, I lived through another big market correction. Despite the hard times, I focused on a long-term investment plan and maintained my focus. 

No matter what the market does, continue to buy small amounts of your investments on a regular basis.

Turn on Auto-Stash

Auto-Stash, Auto-Stash, Auto-Stash—I’ve said it before, and I’ll keep on saying it.

Putting your investment plan on auto-pilot is an easy way to add small amounts of money on a regular basis into your portfolio. This way, you can avoid the emotional aspect of investing and won’t get fooled into trying to time the market, which means trying to make guesses about which way the market is heading. 

The key to long-term investing is to build wealth over time.

That means some weeks you’ll be buying shares when they’re high, other weeks when they’re low, and over time, the highs and the lows can balance themselves out. 

Here’s why Auto-Stash can be a great tool. By putting small amounts of money into your investments on a regular basis, you can feel good about ignoring market volatility and focus on investing for the long term. Even just a few dollars a week can make a difference.

Auto-Stash is an incredibly powerful tool, and an essential part of the Stash Way.

Remember the Stash Way

Investing can be confusing, and maybe even scary, when markets become volatile.

That’s why we’ve boiled down our investing philosophy into three basic principles that we hope can guide you as you make your first investing decisions. We call our approach the Stash Way. Here are its three pillars:

• Invest for the long-term. (Don’t time the market.)
• Invest regularly. (Turn on Auto-Stash.)
• Diversify. (Don’t just buy stocks.)

When in doubt, follow the Stash Way, which you can learn more about here.

Work hard, and then make your money work hard for you. By taking a long-term view and consistently investing small amounts of money, you can build wealth over time, and put yourself on a path toward a more secure financial future.

Stash is your financial partner, and we’ll get through this together!

The post Stash’s CEO: Now’s The Time to Think Long Term appeared first on Stash Learn.

And the expiration of these lockups has caused some fluctuation in their stock prices, according to news reports.

If you’re confused by what a lockup period is, and what it has to do with a public company’s stock, read on and we’ll explain.

What’s an IPO again?

IPO is shorthand for something called an initial public offering. An IPO is the first time a company sells its shares to the public through a stock exchange such as the Nasdaq or the New York Stock Exchange (NYSE).

When a company wants to open new stores, build or acquire a factory, or expand in some other way, it may need additional resources to pay for it. Company executives may use an IPO to raise capital, or money, to grow a business.

Often a company does not yet have enough internally generated funds to finance such projects. Going public is one way to raise a relatively large sum of money in a relatively short period of time.

It’s important to know that following an IPO, a new stock can be subject to significant increases or decreases in market price. That’s known as volatility. Stock volatility can be particularly high in the first few months following an IPO and as a result, so can the potential for short-term losses.

What’s a lockup period?

Often, fluctuations in stock prices occur following an IPO, due to the expiration of a lockup period. A  lockup period is when company insiders, such as employees granted stock options or executives who own shares, sign an agreement that prohibits them from selling shares for a specified period of time. (For both Uber and Beyond Meat, the lockup period was 180 days following their respective IPOs.)

When lockup periods expire, insiders or other early investors may want to sell their stock in order to make a profit from their shares. Remember that previously, the company was private and there was no public market for their shares.

When these insiders start to sell their shares, sometimes that can cause a company’s stock price to fall. That’s because more shares become available for investors to buy. And an increase in the number of shares for sale can cause prices to fall. (It’s one of the basic laws of economics, called the law of supply and demand. Essentially, if there’s more of something, such as stock, and demand remains constant, prices fall.)

Find out more

You can find out more about the lockup period and other information about Beyond Meat, Uber, or any other company that has had an IPO by looking at the prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

Remember the Stash Way—invest for the long-term, invest regularly, and don’t put all of your eggs in one basket.

The post How Lockup Periods Can Affect Stock Prices appeared first on Stash Learn.

In less than a decade, it had received billions of dollars from investors, expanding from a single office building in Manhattan to a network of shared working spaces across the globe.

But soon after it filed its S-1 paperwork with the Securities and Exchange Commission (SEC) in August 2019, things began to unravel.

The paperwork showed WeWork had hundreds of millions of dollars of debt, which reportedly caused investors to question the company’s $47 billion valuation, and whether the company’s business model was working. It also brought up questions about the leadership of Adam Neumann, WeWork’s chief executive, and co-founder.

Sometimes things don’t always work out as planned. And an IPO can just as easily be unsuccessful as successful.

If you’re confused by what happened with WeWork, we’ll break it down for you.

Why are IPOs important, and why do they sometimes fail?

• IPOs can be one of the major events in a private company’s life. They usually occur following a rapid period of rapid growth, after a company has taken in money from investors, called venture capitalists. This money helps companies increase their size, and hopefully become profitable. But investors eventually expect a return on their investment.
• Two ways that can happen is if the company goes public, or is acquired by another business. Both scenarios allow investors to sell their shares, hopefully for more money than they paid for them.
• But IPOs require companies to reveal information about their operations to the Securities and Exchange Commission, in a document called an S-1, or prospectus. This is a public document, which anyone can view. It opens up the company to public scrutiny, and if a company has any financial problems, it will come to light. In WeWork’s case, the massive amount of its losses—reportedly more than $200,000 every hour—immediately became apparent.
• Investors can lose confidence in the company and its prospects in the public markets. Investors reportedly had concerns about Neumann, specifically around his controversial leadership style.  Neumann reportedly cashed out  $700 million worth of shares via sales and loans prior to the IPO, which was not a good sign for the company. Typically, the CEO will wait until after the IPO to sell shares, at what’s expected to be a much higher price.

More details about WeWork

• Founded in 2010 by Neumann and Miguel McKelvey, the company grew to 12,500 employees, and claims to manage 16 million square feet of office space with 500,000 members around the world, according to its prospectus.
• It received $13 billion of financing from investors. One of its largest investors is the Japanese tech firm Softbank, which owned 30% of the company.
• Neumann was known for a freewheeling leadership style, which some employees said led to an allegedly “frat boy” atmosphere. Neumann reportedly voiced a desire to be “president of the world,” the world’s first trillionaire, and he wanted to put WeWorks on Mars, among other things.
• The company’s valuation dropped to $8 billion from a massive $47 billion, in early October, and it was on the verge of bankruptcy.
• It received a $10 billion rescue package from Softbank, its top investor, while announcing the layoffs of thousands of its workers.
• Neumann received a $1.7 billion payout package, in exchange for leaving the company and giving up his ties and titles there.

Other unsuccessful IPOs this year

While WeWork’s scenario is extreme, because it ultimately cancelled its IPO and had to be bailed out from the brink of bankruptcy, it has followed other unsuccessful high-profile IPOs this year, such as Uber, Lyft, and Peloton.

The lack of success of ultra-hyped IPOs has led experts to speculate that private valuations of many companies seeking IPOs today are maybe too high.

Follow the Stash Way

All investing involves risk, and it’s possible for your investments to lose value. Stash recommends following the Stash Way, which includes investing for the long-term, investing regularly, and diversification.

The post The Rise and Fall of WeWork appeared first on Stash Learn.

• Following European Union (EU) parliamentary approval, the UK officially left the EU on Friday, January 31, 2020. There will be an 11-month transition period, during which the UK will adhere to previous EU trading rules and regulations as the new relationship gets ironed out, according to reports.
• On Thursday, December 12, Boris Johnshon’s conservative party won the majority of votes in a general election. Johnson’s victory is likely to pave the way for the U.K.’s departure from the European Union.

Brexit has hit the rocks again.

Over the weekend, British members of parliament rejected Prime Minister Boris Johnson’s plan to remove the United Kingdom (UK) from the European Union by the end of October, and they have asked for an extension to attempt a solution.

Brexit has consumed the UK for nearly three years, as the country and its governing representatives have been unable to agree on exact terms for its departure from the single European market, which could mean a big shakeup for one of the world’s largest economies, and possibly markets around the world.

If you’re confused about what Brexit is, or why it matters, read on.

What’s the European Union?

The European Union (EU) is a group of 28 countries that function as a single trading bloc. Ratified in 1993, the union has its roots following the calamity of World War II.

Its purpose is to foster economic and political partnership. The hope?  Countries that trade together will be less likely to declare war on each other.

The EU functions as a single market, which means goods (like refrigerators and eggs) can be shipped without paying tariffs and duties. Citizens of the individual countries and visitors to the region are allowed to move around all the countries as though it was one gigantic country.

Think about the border between Oklahoma and Texas—the highway patrol may change, but there are no customs or border security and people can move from Norman to Austin whenever they want.

The EU has its own parliament in Brussels and puts its stamp on rules that affect the nations under its umbrella. These rules can affect prices on trade, environmental policy, and how people can travel from country to country.

Many countries in the EU have abandoned their currency and adopted the euro. Great Britain chose not to and continues to use the pound sterling.

What’s Brexit?

The movement to leave the EU is known as Brexit, short for “British Exit.”

On June 23, 2016, the people of the United Kingdom voted on a referendum. The question? To stay in or leave the EU. The decision? The results surprised the world (and many people in the UK). Experts predicted that the UK would overwhelmingly vote to stay in the EU. But the experts were wrong.

The UK voted to leave the EU by a tiny margin.

The reasons why are complicated. What many people saw in Great Britain as a positive, such as ease of travel and citizenship from country to country, others saw as a negative, including increased immigration, globalization, and loss of native culture.

And not everyone in Great Britain likes taking orders from Brussels. Many who voted to leave the EU have said they think that U.K. decisions should be left to the U.K. and that it should have control over its own borders, and its own economy.

Brexiteers also point to costs: Britain pays 13 billion pounds annually to belong to the bloc, for which it also gets about 4 billion pounds in spending.

Politicians have struggled for years to make the Brexit deal a reality. Theresa May, the prime minister prior to Johnson, was unable to convince parliament to vote for a deal she had painstakingly worked out with the EU. She stepped down as prime minister in May 2019.

Johnson has also struggled, going as far as shutting down parliament so he could complete Brexit without further legislative debate by the October 31 deadline.

One of the most complicated sticking points relates to the border with the Republic of Ireland, which will remain in the EU, while Northern Ireland will depart in Brexit. Questions linger over whether Northern Ireland will continue to be subject to EU trading rules, and where to put a customs border.

As an FYI: The UK includes England, Wales, and Scotland, as well as Northern Ireland. The Republic of Ireland, on the same land mass as Northern Ireland, is an independent country.  Tensions between the UK and Ireland have run high for centuries.

Brexit, the UK economy, and world markets

With a GDP of nearly $3 trillion, as of 2018, the U.K.’s economy is currently the fifth-largest in the world. It’s also connected to many others in the region and around the globe.

London, for example, is one of the biggest financial centers in the world, and it is often seen as an entryway to markets in the rest of Europe. That status may change after Brexit, according to some experts.

Britain’s trading border with the EU is currently wide open, and approximately 50% of its exports go to the EU. Following Brexit, its trading businesses would suddenly be subject to tariffs and other trade impediments.

Similarly, its trading partners in the EU would also be subject to new tariffs and other potential financial burdens with a separated UK.

You may have heard the term no-deal Brexit. That’s the possibility that the UK could leave without any deal with the EU in place. Some economists and other market watchers say this could cause huge financial problems, including a recession in the UK, and problems for markets around the world.

Follow the Stash Way

Markets can be volatile, and sometimes what happens in other parts of the globe can affect what goes on in our own economy. That’s why Stash recommends following the Stash Way, which includes investing for the long term, regular investing, and diversification.

You can learn more about the Stash Way here.

The post What You Need to Know About Brexit appeared first on Stash Learn.

Last week, McDonald’s announced it will sell Beyond Meat patties as a “PLT” sandwich in 28 locations in Canada.

The Golden Arches is the latest food chain hoping to tap a new consumer frenzy for plant-based products that look, and in some cases “bleed,” like real meat.

In August, Burger King announced it will start selling Impossible Whoppers, from Beyond Meat competitor Impossible Burger. A slew of other fast-food chains have already begun offering plant-based burgers, including Carl’s Junior, Bareburger, and White Castle. Even IKEA, the Scandinavian-inspired design store, is planning to offer an “Impossible Meatballs,” as an alternative to its famous in-store Swedish meatballs made from meat.

While the products these chains are serving are produced primarily by competitors Impossible Meat and Beyond Burger, many other food manufacturers are developing their own alternative meat products.

Here’s a quick look at the growing alternative meat market.

What are alternative meat burgers, anyway?

They’re different from the veggie burgers made from beans and tofu and other widely available vegetable products, which have been around for a long time and are aimed at vegetarians. The current generation of products are meant to mimic the taste and texture of meat. And they are created with meat-eaters in mind. Impossible Burger’s patties famously “bleed,” thanks to a yeast protein called heme.

Attracting new consumers

Fast food companies aren’t just interested in providing healthier alternatives to meat for their customers. Many of the traditional burger chains have experienced declining sales growth as they’ve fought to keep their traditional customer base, mostly by slashing prices.

By offering alternative meat products, they may have an opportunity to attract a new customer base willing to pay more for an alternative burger.

About the meat substitute market

Beyond Meat and Impossible Foods are part of a small but growing number of meat substitute companies, competing increasingly with big meat manufacturers who are producing their own alternative products. For example:

• Tyson Foods recently launched a plant-based meat alternative called Raised and Rooted. It also invested in a plant-based seafood alternative called New Wave.
• Kellogg Co. has launched a line of vegan products called Incogmeato. It also produces veggie burgers and other meat-free options through its Morningstar Farm division.
• In 2017, Nestle purchased vegan burger company Sweet Earth, which produces the Awesome Burger.
• Hormel Foods is exploring vegan pizza toppings that mimic meat.
• Jensen Meat Co. acquired alternative turkey, chicken, and breakfast patty maker Before the Butcher in June, 2019.

Additionally, Europe has a growing alternative meat market of its own, with a company called Moving Mountains, called the Impossible Burger of Europe. Moving Mountains recently formed a partnership to sell its burgers at Hard Rock Cafes in Europe.

Sales of plant-based meat alternatives increased 22% to $1.5 billion in 2018, according to reports. And in the next ten years, the plant-based food market is expected to grow to $140 billion.

But it’s still a fraction of the worldwide market for meat products, valued at $1.4 trillion.

According to a recent Gallup poll, 5% of Americans identify as vegetarians, and 3% are vegans. But nearly 40% say the want to eat more plant-based foods, according to consumer research company Nielsen.

Many consumers, vegan or otherwise, are also interested in environmentally-friendly food options, out of concern about the meat industry’s impact on the environment and its contribution to global warming.

The post Let the Burger Wars Begin! appeared first on Stash Learn.

There’s no need to consult a crystal ball. Auto-Invest is one way to hold steady during market storms.

What’s Auto-Invest all about?

Auto-Invest is a great tool, no matter your risk level.

It lets you invest consistently over time, regardless of the temporary ups and downs of the market. You won’t have to worry about picking the right time to invest.

If your risk level is Aggressive, you can consider Auto-Invest to your holdings of single stocks and/or equity ETFs.

If you’re more Moderate or Conservative (or just nervous about ongoing stock market losses and already have a lot of stocks in your portfolio), you can lower your risk by simply adding more of your risk-appropriate Mix to your portfolio, and by investing in bonds.

The power of diversification

One of the reasons investment experts recommend putting money into both stocks and bonds is that they don’t always correlate with each other. In other words, when stocks go down, bond prices can often go up (and vice-versa).

You can’t time the market

With Auto-Invest you don’t need to worry about timing the market. It allows you to invest on a schedule, letting you purchase your investments at a higher price (when markets are up), and some at a bargain (when markets are down).

That way, the average price is likely to be somewhere in the middle.

Making small deposits to your diversified portfolio on a regular basis is one of the keys to smart investing. This strategy can help you manage the highs and lows of the market to your best advantage.

History can be a lesson

A lot has happened since 2000. We’ve seen the stock market collapse twice, once during the bursting of the dot-com bubble, and more recently during the Great Recession. But staying the course—by which we mean buying and holding a diversified mix of stocks, bonds, and funds—has proven to be the way to go as markets have always recovered.

Note: From 2000 through the end of 2017, stocks returned 6.26% on average per year.

Stay calm and keep Stashing

Don’t think about the daily, weekly, or even monthly volatility.

We have a saying at Stash. It’s all about “time in the market, not trying to time the market.”  Stay strong. Stay the course. Stay diversified with bonds. Keep learning every day.

We’re in this with you.

The post Auto-Invest: Stay on Track, Even When Markets Go Wild appeared first on Stash Learn.

Stock market indexes around the world dropped on Monday, August 5, 2019  as China retaliated by canceling orders for U.S. products, and by devaluing its currency.

What’s happening with the trade war with China?

• Trade talks between China and the U.S. broke down, over an alleged agreement that China would purchase more products from the U.S.
• The Trump administration threatened a new round of tariffs, in addition to the $250 billion it has already placed on Chinese imports.
• In response, China has called for a halt to purchases of American agricultural products.
• China is also allowing the value of its currency, called the yuan, to fall. It’s a little complicated, we know, but bear with us. China pegs its currency to the dollar. Very generally, that means every yuan exchanged equals a fixed amount of dollars that fluctuates with the value of the dollar. By letting its currency devalue, or fall below its current value, China makes its own goods and services cheaper in export markets.
• Last week, the Federal Reserve also cut a key interest rate in the U.S., in an attempt to keep the U.S. economy from slowing down.

What’s a trade war again?

A trade war is when countries start waging an economic battle with each other using tariffs. One country will put tariffs on another’s goods, and the other will retaliate in kind.

A tariff, sometimes called a duty, is a tax imposed by one nation on another’s imports. (In some cases, tariffs can be “levied”–or placed–on exports.) The tariff is generally calculated as a percentage of the import’s total value, including freight and insurance charges.

Governments tend to impose tariffs on another’s goods to make their own products more competitive and affordable, and to generate revenues.

Until recently, the U.S. has generally refrained from increasing tariffs and entering into trade wars with other countries.

The trade war with China could decrease global growth by $1.2 trillion, according to recent reports. The U.S. and China are the world’s first and second-largest economies.

Remember the Stash Way

Investing can be scary and confusing, especially when markets are volatile.

That’s why we’ve boiled down our investing philosophy into three basic principles that we hope can guide you as you make your first investing decisions. We call our approach the Stash Way. Here are its three pillars:

• Invest for the long-term
• Invest regularly
• Diversify

You can learn more about the Stash Way here.

The post The U.S.-China Trade War Explained appeared first on Stash Learn.

But just a few years ago, the company’s sales were falling as food safety issues hurt Chipotle, and as customers sought Tex-Mex alternatives. Now the burrito chain has reportedly engineered a turnaround, with sales and the company’s value rising.

Here’s a quick look at Chipotle then and now.

Chipotle today

CMG Q2 Earnings

• In the second quarter of 2019, sales increased 13.2% to $1.4 billion compared to the same quarter in 2018, according to Chipotle’s earnings report.
• Chipotle’s profit in the second quarter nearly doubled to $91 million, compared to the second quarter of 2018.
• The burrito chain said its same-store sales for the second quarter of 2019 increased 10% compared to the second quarter of 2018, according to its most recent earnings report. Same-store sales refer to a comparison of stores open at 12 months or longer.
• New chief executive Brian Niccol, formerly the CEO of Taco Bell, has aggressively pursued digital sales, according to reports. That includes a partnership with DoorDash, the app-based food delivery service, which features free delivery. Chipotle reported a nearly 100% increase in digital sales in the quarter, accounting for 18% of total revenue in the quarter.
• At $17, digital sales are reportedly about 42% higher than an average in-store sale of $12.
• The average check price increased 3.5%, according to reports, driven by price increases on menus.
• The rising costs of food and beverage items, primarily avocado and dairy products, cut into profits during the most recent second quarter, according to reports.

Some Chipotle history

• Chipotle was founded in 1993 by Steve Ells, at a single location in Denver, Colorado.
• It quickly became one of the fastest-growing fast-casual food businesses in the country, with the help of McDonald’s, which became a 90% owner until 2005, when it sold its stake back to the company.
• Between 2014 and 2015, the company grew very quickly, reportedly adding hundreds of new stores, and hiring thousands of new workers.
• More than 500 people across the country became sick from e. Coli and other pathogens that contaminated food in various Chipotle restaurants in 2015.
• In 2016, at the height of the concern about food safety issues, sales plunged 44% in the company’s first quarter. Earnings problems haunted the company through 2017.
• As part of its recovery plan, however, Chipotle overhauled its food processing and production, according to reports, including centralizing more of its food preparation, and conducting early tests for pathogens in the fresh produce destined for its stores.
• By mid-2018, Niccol had engineered a recovery for Chipotle, with customers returning and sales rising, according to reports.

The post All About Chipotle’s Turnaround appeared first on Stash Learn.

The Dow Jones Industrial Average increased 1.5%, after tumbling 608 points the previous day, and the S&P 500 gained 1.7% by mid-day Thursday, October 25, following decreases of more than 8% from their respective and recent all-time highs.

These fluctuations are a normal part of how markets work. Read on and we’ll tell you all about it.

What sent shares up on Thursday?

Positive earnings reports from Ford, Microsoft, Twitter, and Visa sent shares up on the Dow, S&P 500, and Nasdaq.

How to cope with volatility

When markets fall, the temptation might be to sell your holdings. We get it. Losing money is no fun. But selling when markets drop is the wrong thing to do. You could end up locking in your losses.

Over time, various studies show investors who try to time the market tend to lose money relative to those who just buy and hold diversified portfolios.

By buying and holding onto your position, and even adding to it as stock prices go down, you have the potential for more gains over time if you can handle the volatility in your portfolio.

Consider diversification

You can also adjust your portfolio to invest more in bonds. Bonds have their own risks, including being subject to interest rate increases and inflation.  But in addition to being a good way to diversify your portfolio, bonds are generally considered safer than stocks as their performance tends not to move in tandem with equities.

For example, when stocks go down, bond prices tend to increase, particularly when the economy is entering a recession. You should never panic as there is a relatively simple way to reduce the volatility of your portfolio–just allocate more of your portfolio holdings to bonds.

Some bonds, such as U.S. Treasuries, are considered among the least risky investments.

Don’t try to time the market

Remember, trying to predict which way the market is heading is called market timing. It’s when you try to make guesses, often with incomplete or incorrect information, about whether markets will go up or down, and then buy or sell according to whether you think your investments will make or lose money.

Over time, various studies show investors who try to time the market tend to lose money relative to those who just buy and hold diversified portfolios.

Why did stocks fall before?

• Interest rates for benchmark bonds such as the 10 year U.S. Treasury continue to trend higher. This could make it more expensive for businesses and consumers to borrow.
• Corporate earnings have shown some weakness, which might indicate the economy could be slowing.
• More recently, concerns about the trade war with China increasing costs for U.S. businesses has also been a factor. China, the second largest economy in the world, is also one of the big purchasers of U.S. products, and China’s economy has slowed.
• Geopolitical concerns around Italy and recent turmoil in Saudi Arabia have an impact. These types of risks based on political events can make markets nervous.

Look to The Stash Way

We’ve boiled down our investing philosophy into three basic principles that we call the Stash Way:

• Invest for the long-term
• Invest regularly
• Diversify

Over the years, market gains have outpaced standard savings rates in bank accounts. Over time, markets tend to rise. From 1928 through the end of 2017, the S&P 500 had an annual return of 9.65%. Going forward, experts predict its returns will be closer to 5.5%.

With the power of compounding and regular investing, a well as purchasing a wide variety of stocks, bonds, funds, and other securities, you have the ability to build wealth for the financial future you want.

That said, all investing carries risk, and it’s important to know that you can also lose money in your investments. Keep reading Stash Learn so you stay in the know and don’t let emotions guide your decisions.

Keep calm, keep Stashing

Stash lets you start investing for as little as $5. You can buy select single stocks and ETFs on the Stash platform, which can help you build a diversified portfolio. Turn on Auto-Stash, take a deep breath and keep Stashing.

The post Yes, The Stock Market is Volatile. No, Don’t Freak Out appeared first on Stash Learn.

By the end of the trading day, the Dow, one of the key market indexes, closed down more than 800 points, or 3%—the steepest single-day decline for the index since the market correction in February. The S&P 500 sank 3.3% and the tech-centered Nasdaq fell 2.5%.

So what do you do when the markets go haywire?

Dollar-cost averaging through tough times

If you’re invested for the long-run and can handle the market volatility, one strategy to consider is called dollar-cost averaging. It’s essentially putting aside a set amount of money and investing it regularly over time.

Even if you take small amounts and invest them every week or every month, that can add up through the power of something called compounding. (Compounding is when the growth on the assets you own also grows, which can have a significant impact on your wealth in the long term.)

Over time, the highs and lows of the stock market should balance themselves out.

Of course, not everyone has the stomach to continue buying on the dips. That’s okay, too. If you’re more risk-averse, you can still invest for the long haul by holding more bonds in your portfolio. Bonds can help reduce the volatility of your returns as you ride out the ups and downs of the stock market.

Diversification is another key strategy you should employ. You can read more about that here.

Why did the markets just drop?

The sell-off follows a string of good economic news, including record low unemployment, increases in wage growth,  and a number of strong company earnings reports for the third quarter.

So what gives? We’ll break it down.

Bond yields are rising. It’s a little complicated, but let us explain. The yield on something called the 10-year Treasury—a bond issued by the federal government whose yield tends to affect other interest rates and borrowing costs such as mortgages and credit cards—increased to 3.24%.

While rising interest rates are generally a sign that the economy is doing well, they can also eat into the profits of companies. Why? Companies often have to borrow in order to fund their operations. And as their costs to borrow go up, that can reduce the amount of money they have.

Treasuries are responding to the Federal Reserve, the nation’s central bank. The Fed has been increasing a key interest rate called the federal funds rate since last year, in an attempt to control inflation and economic growth. (Central bankers decreased the rate following the financial crisis, to spur business.) The federal funds rate is a short-term rate that the Fed charges banks to borrow and lend money to one another. The federal funds rate also forms the basis of other interest rates in the economy.

Tech stocks led the way down. The so-called FAANG stocks of Facebook, Amazon, Apple, Netflix, and Google, whose parent company now calls itself Alphabet, have been some of the top stock market performers this year.

But on Wednesday, FAANG and other tech stocks led the market down. By the close of markets, Amazon’s share price dropped more than 6%; Netflix share price fell 8.38%, according to reports. Apple sank 4.6% and Microsoft dropped 5.4%, according to CNBC.

The Stash Way

At Stash, we want to take the mystery out of investing.

We know there can be a lot of confusing terms, and it can be intimidating, even scary, to figure out the smartest way to put your money in the market or to even get started buying your first stock, bond, or fund.

That’s why we’ve boiled down our investing philosophy into three basic steps that we call the Stash Way:

• Invest for the long-term
• Invest regularly
• Diversify

Stay strong, keep Stashing. Turn on Auto-Stash.

The post What Caused the Market to Drop? appeared first on Stash Learn.

The accord, which waived economic sanctions on Iran in exchange for a halt to its nuclear weapons program, was originally put into place by the Obama administration in 2015.

Under the deal, Iran agreed to concessions, most notably reducing its uranium stockpile, and allowing inspectors from the International Atomic Energy Agency to monitor its declared nuclear sites.

Trump, however, has decided to reverse course and withdraw the U.S. from the agreement, while also reinstating sanctions on Iran.

What’s a sanction?

A sanction is a type of penalty, typically levied by one nation or group of nations on another in an effort to deter or punish certain behavior.

In this case, Iran was sanctioned by the U.S. for attempting to build a nuclear weapon. Those economic sanctions–which are commercial or financial in nature–were meant to put pressure on the Iranian government by hurting the country’s economy through blocked trade and transactions.

In pulling out of the nuclear pact, Trump announced that the U.S. will reinstate sanctions previously lifted under the deal.

American allies, including leaders from France, the U.K., and Germany, unsuccessfully tried to pressure Trump into recertifying the deal.

Why is Trump pulling out of the deal?

There isn’t a clear answer, though Trump has said that he wants an agreement that sticks tougher restraints on Iran, including limits on its nuclear fuel production. He also opposes the current deal’s sunset provision, which allows Iran to resume its nuclear program after 2030.

Trump has called the accord, in its current form, the “worst deal” and “an embarrassment.”

Trump has also claimed that Iran was cheating or not sticking to the terms of the deal; A claim to which he has provided no evidence, and that his own intelligence agencies have refuted.

The immediate fallout

The immediate effects of Trump’s decision are that American allies–notably countries in the European Union–will be alienated, and strain already tense relationships.

“France, Germany, and the UK regret the U.S. decision to leave the JCPOA,” French President Emmanuel Macron tweeted following Trump’s announcement. “The nuclear non-proliferation regime is at stake.”

Iran, taking America’s cue, could also decide to violate the terms of the deal and ramp up nuclear activities.

Iranian leaders have, however, said they’re willing to continue working within the accord’s framework with its co-signers for the time being.

Business and the economy

There are also many business dealings–between both American and European companies–in the works involving Iran. Boeing, for example, could lose $20 billion in aircraft sales to Iran as a result of Trump’s decision. General Electric, also, had deals in place to supply Iran’s oil and gas sector with equipment, which could now be threatened.

Another company, Volkswagen, returned to Iran after 17 years once the nuclear deal was signed and sanctions were lifted. Now that the deal is off, it may need to once again pull out of the country.

French aerospace company Airbus, like Boeing, may also need to scuttle its plans to sell planes in IranAir, Iran’s national carrier.

As the reinstatement of sanctions all but puts a stop to those deals and more, it could also create stock market volatility and have other economic effects.

Trump’s decision also increases the possibility of military action in the future–assuming Iran resumes work toward building a nuclear weapon.

What you should prepare for

For the average American,  the single biggest–or at least most noticeable–consequence of Trump’s decision is likely to be rising fuel prices.

Gas prices have already been on the rise over the past year, and reinstating economic sanctions on Iran, the world’s fifth-largest oil producer, could result in higher prices at the pump.

The terms of the nuclear deal allowed Iran to export oil to other countries. But with sanctions reinstated, it will no longer be able to export, and as a result, the global oil supply will get smaller. Lower supply can lead to higher gas and home heating prices.

Aside from costlier commodities, your portfolio could also be in for a wild ride as the markets react.

For example, the markets dropped considerably after Trump announced tariffs on Chinese goods, stoking fears of a trade war. The markets could act similarly regarding Iran.

There’s also a strong possibility that defense and aerospace stocks could rise or drop if the U.S. considers military action. The same could be true for domestic oil companies if world oil supplies shrink.

The post Trump Scrapped the Iran Nuclear Deal, and Here’s How It Could Affect You appeared first on Stash Learn.

Will the market go up and down? YES. The market will go up and it will go down, and sometimes it will trade sideways. Right now the markets are facing some political noise. And often with noise comes volatility, or turbulence.

Long-term investors shouldn’t be concerned with timing the market. I’ve said this before and I’ll keep saying it — no one can predict exactly what the market will do tomorrow or next week.

No matter what the market does, continue to buy small amounts of your investments on a regular basis.

I’ve invested through a lot of market cycles and trust me, if an investment professional tries to sell you on a magic formula to crack the market, I recommend contacting the U.S. Securities and Exchange Commission immediately.

No matter what the market does, continue to buy small amounts of your investments on a regular basis. This is called dollar-cost averaging and it’s really important.  On Stash, we have $5 investment minimums so you can consistently buy small amounts of your investments.

Consider market fluctuations as opportunities to continue adding to your portfolio at lower prices. If the market keeps dropping, keep adding those little amounts. If the market goes up, keep adding those little amounts.

Take a look at these examples from the last 10 to 20 years:  

The past 15 years have been turbulent and these charts reflect how the market responded. You’ll see gains and declines through the dotcom bust, 9/11, the Great Recession, wars in Iraq and Afghanistan, and three separate presidential administrations. But staying the course has proved to be the way to go.

Imagine if you’d bought small amounts of these investments all through these ups and downs. You would have harnessed the gains from when the market was up, and bought more when the market was down.

My point is that no one could have predicted these past events. And no one can predict the future. Investing consistently over time is a strategy you can use for the long term.

We are your investment adviser and our interest is in looking out for you, helping you to save and invest. Although we can’t predict the future, try not to sweat the ups and downs.

Turn on Recurring Transactions to make sure you keep investing through every market cycle.

It’s all about the time you are in the market that counts, not how you time it.

Keep Stashing,

Brandon Krieg
CEO, Stash

The post It’s All About Time in the Market, Not Timing the Market appeared first on Stash Learn.

On Friday, the NASDAQ, the largest index of publicly traded technology stocks in the U.S., shed about $100 billion. Until that point, the tech sector had been up about 17% for the year.

It’s a reminder, experts say, that tech stocks can be volatile, or subject to big swings in their share prices. That’s why it’s a good idea to diversify, and invest in a variety of industries, geographical regions, and categories of businesses. That way your portfolio won’t take as big a hit when a sector has losses.

What the tech sell-off means

Here’s a closer look at what happened last week:

Just five companies caused the big swing, according to Bloomberg. Those stocks are Apple, Microsoft, Alphabet, Amazon and Facebook.

They account for 30% of total weighting of the NASDAQ index. Over the last few days, they were responsible for 75% of the index swing, according to reports.

The biggest loser was Apple, whose stock had fallen by 6.2% percent by Monday, shedding $50 billion of value on concerns about iPhone sales. Google’s parent company Alphabet lost about 4% of its stock value, and $30 billion worth of market cap, and Microsoft lost 3%, or about $17 billion of market cap over the same time period.  

Since Monday, the NASDAQ has begun edging up again to regain some of its losses.

Nevertheless, the selloff is a sign that investors are shifting their cash around, moving into stocks that may be undervalued, such as financial and energy, some experts say.  

The post Tech Sell-Off: A Great Lesson On Why Diversification Is Important appeared first on Stash Learn.