Lebron James =

The educational portion of this newsletter focuses on thematic investing

In 2:55 seconds, you will learn:

  • 5 headlines that pretty much sum up the week
  • PepsiCo’s newest maverick
  • An introduction to thematic investing
  • Our rec of the week

Five headlines that sum up the week

1. It’s beginning to look a lot like inflation

*queue everyone who’s all-in on Bitcoin for this very reason

All eyes are on the Federal Reserve, who did warn us that the country will experience inflation for a short period of time. Since none of us can see into the future, unforeseen circumstances like supply chain shortages, a slow moving labor market recovery and the colonial pipeline shutdown have done the economy zero favors. Last month, we saw a 0.8% growth in the Consumer Price Index (CPI) – the highest increase in over a decade. The price of used cars jumped in April by 10% – a 9.5% increase from March. The stock market suffered as investors fear that the Fed will be forced to raise interest rates sooner. At this time, interest rates remain unchanged. 

2. AMC raises $428 million from recent stock sale

Whether investors simply love the stock or truly want to rescue movie theaters from oblivion, AMC is $428 million richer due to a stock sale of 43 million shares. This has benefited the company greatly, as each sale earned AMC $9.94 in commissions and fees. The company ended Thursday 23.74% higher and looks to continue to rally through the rest of Friday. 

3. Softbank posts record quarterly profit of $45.9 billion

After investing in a number of “Nasdaq Whales” that ultimately tanked, SoftBank has managed to pull off a record quarterly profit of nearly $46 billion. Impressive, right? Ask us again next quarter. The biggest thing to point out is that SoftBanks Vision Fund, a division of the company that dedicates $100 million to investments in tech startups, bet big on South Korea ecommerce startup Coupang, which went public earlier this year. The company has since faced losses of 180%.

4. Uber and Lyft are offering free rides in the name of vaccines

Plenty of good news this week for COVID vaccines. Pfizer was approved for children 12-15, the CDC said that fully vacced individuals can ditch masks and Uber and Lyft is offering free rides to vaccine shots beginning May 24. This supports President Biden’s goal of “at least partly” inoculating 70% of the population before July 4.Read More

5. Tesla will no longer accept Bitcoin due to environmental concerns

Crypto is mined for two reasons: to create new tokens and to maintain a log of all transactions. The growing popularity of crypto consequently does lead to more transactions, which has compounding effects on the environment. In fact, the Bitcoin industry uses the same amount of energy as the country Malaysia. After Elon Musk announced on Twitter that Tesla would stop accepting Bitcoin as a form of payment, the crypto market lost $365.85 billion. Considering Tesla is a pioneer of vehicles that run off of renewable energy, not doing this would contradict everything it represents.


ICYMI: Lebron James is the new face of Mountain Dew Rise

The battle between Coke and Pepsi rages on and this week Pepsi takes the W.

For 17 years, Lebron James has always been a Coca-Cola guy. That all changed this year when he signed a new endorsement deal with Pepsi, making him the face of Mountain Dew Rise Energy drink. 

Breaking into the energy drink market has been a focus of Pepsi – in 2020, there was a 7% increase in sales. Pairing one of the most marketable athletes in the world with a truly insane beverage might be the recipe Pepsi needs to compete with the likes of Monster and Red Bull.

All week, James teased his social media followers of something that was coming soon. The full ad was released on Thursday – and it did not disappoint. While you won’t find him doing what he does best, he does break into a full-blown salsa number.   

PepsiCo is currently up and looks to end the week in positive territory. Coca-Cola Co, on the other hand, looks poised to end the week with some losses.


The difference between thematic and traditional investing

TL;DR

Thematic investing is a strategy that offers focused exposure around objectives, ideas, values and beliefs, and social innovation and advancement. Thematic strategies are similar to other approaches in that you select asset classes that fit a particular “box,” but because themes tend to cut across sectors and market caps, it can provide another method of diversification.

While thematic investment can provide some diversification, funds that are too narrow carry risks of high volatility and low returns. And because thematic investing is new within the last 20 years, “fad” funds can crop up and disappear in a matter of a decade. As such, investors should conduct their due diligence, as with any other investment.

What is thematic investing?

Thematic investing is a strategy that offers focused exposure on assets. This is accomplished by putting your money into “themes.” These themes may be designed around research into long-term market trends, personal values and beliefs, or social ideas.

Thematic strategies are similar to other types of investing in that you select assets that fit a particular classification. In sector investing, for instance, you may target companies in healthcare, energy, or manufacturing sectors, while regional investing puts your money to work in specific markets, such as Europe or Asia.

But unlike other strategies, thematic investing tends to include investments across sectors, industries and valuation. For example, someone interested in environmentally friendly companies might invest in large- and micro-cap stocks in tech, manufacturing and healthcare, thus cutting across both style and segment.

Source: Visual Capitalist

Why thematic investing? 

Thematic investing is a more personalized strategy that provides a way for investors to identify and capitalize on global trends in a new way. It enables you to:

  • Gain exposure to long-term trends, ideas and insights across sectors
  • Capitalize on potential created by economic, technological and social developments
  • Focus on assets that match your goals and interest and expose yourself to innovations that positively impact the world
  • Follow your moral compass across asset classes and international borders

Source: Visual Capitalist

Top thematic investing strategies

ESG Investing – Environmental, Social and Governance (ESG) investing, or sustainable investing, throws your money where your values are. These funds invest in companies that limit their environmental footprint, support their employees, or provide genuine value to their shareholders and communities.

Emerging Markets Investing – Focuses on economies that experience rapid growth – but still have room for advancement. This brings unique investment risks to the table, particularly for investors who jump aboard at the cusp of “emerging” and “developed.” One example of this phenomenon is China; by the time most investors realized how fast China was advancing, it was bordering on its status of economic powerhouse.

Megatrend Investing – Megatrend themes are unusual in that they focus on how demographic and resource changes impact long-term profits. They take advantage of changes in the societal and investment landscape that occur over decades, rather than short-term business cycles. Such slow-moving trends may provide benefits to investors who anticipate long-term, market-shaping events, such as aging populations and decreased resources.

Disruptive Investing – Disruptive themes focus on companies, business models, emerging industries and technology that disrupt the status quo and push for social evolution. Such funds seek to understand shifts in long-term profits while also benefitting from how quickly new innovations disrupt “business as usual.

Outcome-Oriented Investing – These funds help people invest in specific objectives, such as weathering volatile markets, minimizing risk and protecting against inflation. For example, an investor might invest in funds that provide exposure to sectors that perform well during times of increased volatility or inflation, while at the same time investing in growth funds that seek high returns.

Source: Visual Capitalist

The bottom line

Thematic investing is yet another way you could diversify your portfolio and lock in some serious returns. Because thematic investing is still pretty new, you should be mindful of “fad” investment themes that may not hold up in the long-term. As always, if you’d rather not DIY your thematic investments, there are always ETFs at your disposal. 

Alternatively, Q.ai is all about thematic investing and offers investment kits with specific focuses. The difference from the ETFs available is that our kits are fully managed by AI and carry a rules-based approach to investment decisions. This means that you’ll get the diversification that comes with thematic investing but without the risk of overexposure.


Visit our Learning Center for the full “Investing Explained” resource

William Green, author of Richer, Wiser, Happier, shares the best advice he has gathered from interviews of over 40+ legendary investors. Obviously, Warren Buffett is one of the investors discussed, but so is Charlie Munger and Monish Pabrai. Never heard of them? This episode of The Investing for Beginners Podcast will change that.