Back to List

What We’re Reading This Week

Bitcoin
I’m not surprised that criminals are using Bitcoin. I’m also not surprised that they don’t love it any more. One aspect of Bitcoin (that its permanent, public record) doesn’t really lend itself to criminal activity. Yes, it is designed to be anonymous but only to an extent. As I’ve said before, people using Bitcoin are doomed to repeat history because by using Bitcoin they have chosen to ignore history. 
It was only a matter of time:
“Sleuths have developed databases and techniques for digesting that information to eventually nab wrongdoers. Say, for example, a coffee shop in Berkeley is known to have a certain Bitcoin address, and a wallet used by an extortionist transfers the same amount there every morning at 9 a.m. Police can stop by and make an arrest.”
Illegal activity seems to favor a new currency called monero. To me, the ultimate progression of this is people printing their currencies, putting them in duffel bags and exchanging them in dark alleys where they belong. Then, of course, you have to figure out how to launder your Bitcoins and put them back into circulation. 
However, in defense of the cryptocurrency, its price doesn’t really seem to be impacted.

Underwriting 
In investment banking, it’s not unusual to do some analysis for free in the hope that you will do some other analysis for money. Generally speaking, you are hoping to be overpaid for the second analysis, thereby recouping your costs for the free analysis. For example, an investment bank might analyze a potential merger for free so that they could be in a company’s good graces, and eventually be paid to help underwrite a bond offering. 
In Asia, things are changing. Recently, a handful of banks have accepted ultra-low fees ($1) for underwriting bond deals in India and Asia. In this case, the work they want to be paid for is currency swaps and trading commissions. Obviously, these banks have never read the book, “If You Give a Moose a Muffin.” 
That’s because, if you give a moose a muffin, he’s going to want some jam to with it. And so on…
If banks keep this up they should be able to get most investment banking done for free by 2025. 

Spotify IPO
Wait, that’s not right, Spotify will just go public, without the IPO. Spotify has announced its intention to list directly on the exchange and not make an initial public offering. 
If you think about the stock market as an auction (with bids and stuff) then an IPO is like two auctions.  First, the bank handling the IPO gets bids from investment companies and uses those numbers to calculate what a company will be worth in the open market. Then, they list at that price and the second auction begins. Sometimes nothing exciting happens (when banks get the price right) and sometimes exciting things do happen (when banks get the price wrong). Most of the time it’s the former. With Spotify, it will be wholly different. There is no prior trade price, no IPO price, and no fixed supply or price direction from current shareholders. It will just trade at whatever price people are willing to bid. Wow. 

Also,

Taking stock of a very weird year in markets

The challenge for Vanguard’s new CEO: Keep a behemoth growing 

How high-frequency trading hit a speed bump 

Russia and Venezuela’s plan to sidestep sanctions: Virtual currencies

Pension funds’ dilemma: What to buy when nothing is cheap?

Stockpickers’ fees set to suffer from ETF price war 

Ocado apologizes to short seller it mistook for angry customer 

Passive funds can “smooth the ride” of an active portfolio 

The cashless society has arrived— Only it’s in China 

Amazon shipped more than 5 billion Prime items in 2017

That magazine cover doesn’t make Apple shares a ‘sell’

Fannie-Freddie overhaul might mint hedge fund riches, losses

Goldman takes one-time $5 billion hit from new U.S. tax law 

 

Gainplan LLC is a Registered Investment Adviser. This blog is solely for informational purposes and not a solicitation to invest. Advisory services are only offered to clients or prospective clients where Gainplan LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Gainplan LLC unless a client service agreement is in place. Please contact a financial advisory professional before making any investment.

Gainplan LLC provides links for your convenience to websites produced by other providers or industry related material. Accessing websites through links directs you away from our website. Gainplan LLC is not responsible for errors or omissions in the material on third party websites, and does not necessarily approve of or endorse the information provided. Users who gain access to third party websites may be subject to the copyright and other restrictions on use imposed by those providers and assume responsibility and risk from use of those websites.

 

Categories: Industry Ideas, News, The Market