Tesla sinks to almost two-year low on Elon Musk stock sales (2 min read)
According to the SEC filings published on Tuesday night, Elon Musk sold nearly $4 billion worth of Tesla shares. The proceeds are speculated to finance his acquisition of Twitter that was closed recently. The shares were sold over three days where the stock declined about 11%. After the news came out, Tesla shares dropped another 6% on Wednesday to its lowest since Nov 2020. Investors are also concerned how Musk and his team of engineers will split time between Twitter and Tesla.
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Meta laying off more than 11,000 employees (3 min read)
Meta is cutting 13% of its staff which is more than 11,000 employees. The layoff came amid a tough time for Meta as their shares lost another 20% in October after giving a weak Q4 guidance. Investors were concerned about Meta’s rising expenses in developing the Metaverse that has cost $9.4 billion this year, while the company's overall sales have been declining for consecutive quarters. Mark Zuckerberg said he wants to take accountability for these decisions and plan on focusing investments on a small number of high priority growth areas next year.
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Homeowners Have Lost $1.5 Trillion in Equity Since May (2 min read)
US home equity dropped by 8.4%, about $1.5 trillion, since its peak in May. The equity of an average borrower is down roughly $30,000 from earlier this year. The number of homeowners underwater have also climbed up and most of them purchased their home in 2021 and 2022. In terms of home values and sales from a historical perspective, the US housing market still looks strong but that is only because it rose from record heights earlier this year.
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Stocks plummet after midterms, Cryptos continue to fall (4 min read)
The major indexes lost more than 2% on Wednesday over the mixed results from the midterm election and the anticipation of inflation data release next day. Stocks rallied for three days based on expectation of Republicans gaining ground but that failed to materialize. The crypto markets were also under pressure after exchange Binance said it will walk away from the offer to acquire FTX after reviewing their financials, leaving the company on the verge of collapse.
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Hedge fund strategy in ETF form (2 min read)
Hedge funds are traditionally targeted at accredited investors, but in recent years it has become more accessible through ETFs. An example is the iMGP DBi Hedge Strategy ETF (DBEH). The ETF replicates the performance of the leading 40 equity long/short hedge funds by using futures contracts. Long/short equity is a common hedge fund strategy where the manager sets the portfolio up to anticipate big shifts in the market. The goal is to deliver equity-like returns over time with less risk.
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High dividend yield is still the leader for US factor returns (1 min read)
This article looks at the most common US equity factors in ETFs and how they performed against the stock market overall this year. High dividend yield is the top performing factor as it only had a modest loss. The Vanguard High Dividend Yield (VYM) was only down 1.4% while the S&P 500 lost nearly 19%. Large-cap value had the second lightest loss at about 6.4%. The factor that took the hardest hit was large-cap growth where it lost roughly 30%.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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