Will Tim Cook have to #FreeFortnite?

Anyone planning on bidding on the ‘Charlie Bit My Finger’ NFT?

In 3:14 minutes, you will learn:

  • 5 headlines that pretty much sum up the week
  • Why Tim Cook is the star witness of a major legal battle
  • The difference between investing and trading
  • Our rec of the week

Five headlines that sum up the week

1. Nvidia’s four-to-one stock split will happen in July

This morning, Nvidia announced a four-to-one stock split, which will go into effect on July 20. The stock, which has seen 68% growth in the last year despite the current global chip shortage, rose over 4% this morning following the news and is currently trading at a little over 3%. Nvidia plans to release its Q1 earnings next week. Analysts anticipate the company reaching a one-year earnings growth of 82%.

2. Bitcoin, once valued at $64,829 in April, is now worth $37,000

A lot can change in a month. One day you’re worth as much as brand new 2020 Mercedes E 450 Coupe, and next thing you know it your value has plummeted by nearly 50% – in only a month. What do you get when you combine bad PR sourced by Elon Musk, a crypto crackdown from the world’s second largest economy and a major sell-off by nervous investors? Bitcoin at an insane discount. If you’re one to buy the dip, do so with caution. The dip may not be here yet. 

3. Bank of America raises minimum wage to $25

“Forget the $15 minimum wage debate, let’s make things even spicier,” said Bank of America, maybe. Bank of America is setting an entirely new bar for the labor market by bumping up its minimum wage to $25 per hour. CEO Brian Moynihan, who appeared on CNBC’s mad money, said “We want that kind of talent in our company and we’re willing to pay what it takes to get it.” The company pledges to fully make this transition across the company by 2025.

4. AT&T has agreed to sell its WarnerMedia segment to Discovery

Discovery CEO, David Zaslav, will lead the new company (which has yet to be named). At this point, it’ll cost both companies a lot of money if one gets cold feet. AT&T will owe a $1.77 billion breakup fee if it backs out – Discovery would have to pay AT&T $720 million. The only thing that would enable these two businesses to walk away free from financial obligation is if regulators block the merger, which is something AT&T is no stranger to.

5. Microsoft is retiring Internet Explorer

For all of the Mac users out there, you’re probably wondering, “wait… Internet Explorer is still a thing?” For everyone who uses a Lenovo ThinkPad for work, you will unfortunately need to move to Firefox or Chrome (if you haven’t already), because Microsoft is no longer updating or supporting Internet Explorer. Don’t panic quite yet – you have a little over a year to vet out an alternative. Internet Explorer’s retirement date is scheduled for June 15, 2022.

ICYMI: Epic Games and Apple’s court battle heats up, and it’s more than just a business dispute

How it started

In protest of 30% cut Apple and Google each take from purchases made in their online stores, Epic Games updated Fortnite across all platforms and reduced the price of its in-game currency by 20% if they purchased the it directly from Epic. Within the app stores, they did not lower the prices, which obviously cut into the profits that Apple and Google were collecting. 

Source: backlink.io

Both tech giants responded by removing Fortnite, the biggest money maker for Epic Games, from its app stores. Epic Games immediately filed a lawsuit against Apple and Google, stating the reasons being due to antitrust and anti-competitive behavior.

Source: Statista

How it’s going

Nearly a year later, we have finally reached the penultimate episode of this real-life version of Suits. Epic argues that the 30% cut is too large, pointing out that the public promise that Steve Jobs made to developers was for the App Store to break even, making just enough money to cover operations and support developers. Going back on this promise, after developers have invested in iOS, undermines the agreement Apple previously made. 

During Apple CEO Tim Cook’s testimony this morning, he argued that what Epic Games is doing is like “Apple going down to Best Buy and advertising that you can go across the street to the Apple store and get an iPhone.” He defended the 30% commission, and points out that he does offer a reduced commission of 15% to small businesses earning less than $1 million.

This is currently going on as we write this, but one thing is for certain. Apple can afford to lower the commission it takes from App Store purchases. Epic Games can afford to pay the 30% commission. At this point, this legal battle is about different things – and it certainly comes off that way. 

For Epic Games, the public perception is that the company is sticking up for the little guy. For Apple, it appears to be about the principle. Regardless of winners and losers, Epic Games comes out on top for taking a stance on behalf of the smaller developers who would otherwise not be able to afford to.

The difference between investing and trading

TL;DR

  • Investors take a long view on the market. They may invest in retirement funds, ETFs, bonds, and individual stocks for years or even decades at a time.
  • Investors are more likely to ride out short-term losses, and typically incur fewer trading fees over time
  • Traders utilize short-term strategies to “beat the market” and maximize daily, monthly, or quarterly returns
  • Traders often pounce on short-term losses to profit from even minor fluctuations, and may incur more trading fees over time, depending on their broker

What is investing?

The goal of investing is to build wealth over the long haul – years to decades – by building a well-diversified portfolio. They may divide their portfolio into goals, with each section carrying a varying degree of risk, such as:

  • Investing in retirement funds, like 401(k)s or IRAs
  • Saving for a down payment on a house or new car
  • Building a college fund for themselves or their children

And, unlike trading, investors don’t sell off positions in their portfolio at the first sign of trouble – even if their portfolio takes a significant hit. Instead, they ride out the downtrends (and maybe even increase their holdings to “buy the dip”) on the hope that prices will rebound even higher on the other side.

At the end of the day, investors, unlike traders, stick to the mantra, “The market will always perform.”

Source: icef.org

What is Trading?

The goal of trading, on the other hand, is to “beat the market” – and the returns seen in buy-and-hold investing. Instead of buying long positions to hold in their portfolio, traders get in and out of positions as quickly as they can turn a profit.

To do this, traders take advantage of small, short-term price fluctuations – either up or down – and jump on opportunities as they arise. For instance, if political uncertainty in Europe were to raise the price of U.S.-based mining companies for three hours, traders would snap up the stock in minutes – and sell again when it showed signs of trending downward.

And instead of waiting out downturns in the market, they may initiate a stop-loss order to automatically sell their assets if the price falls below a predetermined point.

Is investing or trading better for your portfolio?

When it comes to your portfolio, the average person is usually better off investing, rather than trying to time the market or beat the S&P with frequent trading. After all, traders may see great gains – but a single blip in the market can wipe out your success in an instant.

Additionally, traders often increase their inherent risk through leveraging, or borrowing money to buy assets, such as trading on margin and short selling. Not to mention, trading is often a speculative game involving quick decisions, educated guesses, and gambling on a whim.

 How to Invest Wisely 

  • Create an investment plan for buying, selling, and rebalancing
  • Identify under what circumstances it’s okay to exit a position – and when to buy the dip
  • Research your options to build a well-diversified portfolio that suits your goals
  • Consider the benefits of retirement funds first, as tax-advantaged accounts may produce more in gains and tax-related savings than traditional investing

 How to trade wisely (if you must)

  • Develop a plan to dictate when you’ll buy and sell positions
  • Stick to your rules even if the market is hot
  • Decide how much money you could afford to lose in the market
  • Record your transactions meticulously – and know that short-term gains in the market are taxed up to 37%

The bottom line

If you’re a self directed trader, keep in mind that many advanced traders are using sophisticated algorithms and even modern supercomputers to trade for margins as small as 0.01% gains. Regular day traders may not be able to keep up, which is why traders are exposed to a much higher risk for significant losses. 

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

Nothing – not even a global pandemic – could keep venture funding from pouring into tech companies across the U.S. To no one’s surprise, California received the most in 2020 – nearly half of the $161.5 billion. However, there are several new states that have risen in significance to VC’s – and we’re not talking about Texas. Check out Crunchbase’s report on venture capital funding trends from 2020.