Greetings Stashers:

I’m reaching out to help you make sense of markets right now. If you’re confused by the roller coaster we’ve been on in recent days, you’re not alone. 

The market volatility we’re experiencing is in many ways irrational, but it’s also based on some pretty fundamental changes over the past few months. I have been tweeting about this for the last few days.

Inflation is at a 40-year high of nearly 8.5%. Most of us have never seen price increases this high in our lifetimes. This kind of inflation is almost like a tax on the money you earn, wearing away at the value of your weekly paycheck, and making things more expensive every time you go to buy groceries or fill up your car with gas. Such a dramatic increase in the price of your regular expenses feels a lot like taking a paycut, and can cause a lot of financial hardship for everyone if not corrected.

Rising interest rates and a strong economy

In order to set things right, the Federal Reserve is trying to engineer a soft landing for the economy by raising interest rates. Increasing interest rates is kind of like pumping on the brakes of a speeding car. It makes borrowing more expensive, for both businesses and for consumers. (One place that’s been seen and felt is in the mortgage industry, where the rate for the typical 30-year mortgage has risen two full percentage points in just a few months.) But markets are reacting because rate increases tend to put pressure on company earnings, particularly for some of the fast-growth technology stocks that have been responsible for the biggest market gains since the beginning of the pandemic. The worry is that the Fed may act too aggressively, and unintentionally slow the economy too much, leading us into a recession. 

Here’s the good news: the economy is strong. The unemployment rate is at its lowest rate since the 1970s. This morning, the government reported continued strong job growth.  Wages are on the rise for many workers.  Employees are in the driver’s seat, demanding new jobs and higher pay. Consumer spending has also rebounded as people return to dining out, vacations, and other things they put on hold at the beginning of the pandemic.

Invest, don’t trade

We always say never to trade, but to invest. Trading is an attempt to time the market and guess which direction it will go in the short term.

Timing the market is extremely tricky, and staying invested is key to long term success.  Despite some of the volatility we’ve witnessed over the past few days, as of last night the S&P 500 is down only 0.5% over the past year. More importantly, taking a longer term perspective, it is up 41% over the past 3 years and over 200% over the past 10 years. Numerous studies have found that investors who try to time the market, and sell when markets experience volatility, tend to miss out on the big gains that typically follow. 

A year ago, Bank of America did a study showing returns in the market since 1930. Here’s what they found: From 1930 through 2020, the market was up 17,715%. However, if you excluded the 10 best days each decade, basically one trading day per year, the overall return would only be 28%. 

Over time, markets tend to go up. You’ll notice this chart includes some pretty steep sell-offs in the past, such as the Dotcom bust, the mortgage crisis that led to the recession in 2009 and, more recently, the sell-off that occured in March 2020 when the Covid pandemic began.

*This  graph is not a prediction or projection of performance of an investment or investment strategy. The rate of return on investments can vary widely over time, especially for long term investments including the potential loss of principal. Source: Yahoo Finance. Past Performance does not guarantee future results.The rate of return on investments can vary widely over time, especially for long term investments including the potential loss of principal. For example, the historical average annual rate of return on the S&P 500 is around 7.5%. Source:FactSet, annualized return for the period of 1/31/2001 – 2/11/2021.) The lowest 12-month return was -43% (March 2008 to March 2009). The S&P 500® is a market capitalization weighted index and one of the common benchmarks for the U.S. stock market. Investing involves risk including the loss of principal. This information is for educational purposes only and should not be construed as investment advice.

It’s normal to feel nervous when the market goes down, but panic selling can hurt your portfolio rather than help it. We think it’s best to focus on the long-term, invest in a diversified portfolio, and automate investing with Auto-Stash. 

Whether markets go up or down, you should stay the course and only look to change your plan when your personal circumstances change (not when the market moves one way or the other). Auto-Stash can be your best friend right now, allowing you to buy investments at lower prices. I want you to look back at this time in a few years knowing you picked up investments throughout the entire market cycle.. When you build your portfolio, we recommend buying a mix of bonds and stocks, both inside the U.S. and in other locations globally. If you already have a diversified portfolio, bravo—keep adding to it on a regular basis. 

Another option is to consider Smart Portfolio. You can find this in the Stash app or upgrade your subscription to our Growth plan. It’s a personalized portfolio that Stash’s investment team of financial experts developed and recommends for you based on your risk profile. We recently added a small exposure to cryptocurrencies in Smart Portfolio. While cryptocurrencies tend to be volatile, we believe this small exposure could help long-term performance, especially during periods of high inflation. 

Follow the Stash Way

The Stash Way is our investment philosophy regardless of market volatility. It emphasizes regular investing, investing for the long term, and diversification. Simply, consider putting small amounts of money in your investments, on a regular basis.  We make this easy with Auto-Stash. Now, more than ever, is a time to set it and let Auto-Stash work its magic.

Long-term investors (that’s you) shouldn’t be concerned with timing the market, it’s about time in the market. I’ve said this before and I’ll keep saying it—no one can predict exactly what will happen tomorrow or next week.

Here at Stash, we are looking out for your best interests and we’ll keep sending you these types of messages to follow The Stash Way of investing.  Stash+ subscribers will also get a deep dive into what’s going on in the market in this month’s Market Insights Report.  We’ve got your back and will keep you informed and educated about the markets and long-term investing.

I am so excited for the future,

Brandon Krieg, CEO & Co-Founder

The post Understanding Market Moves appeared first on Stash Learn.

Volatility is a measure of risk

When it comes to investing, risk isn’t necessarily a bad word. All investing involves some measure of risk that you could lose money. That’s where understanding volatility comes in: it can help you measure the amount of risk a particular investment carries.

Highly volatile investments are those that experience large price swings. A stock with lower volatility generally involves less risk than a stock with higher volatility, because the amount by which the value may drop tends to be lower. And while a higher volatility stock suggests greater risk, it may also provide the opportunity for a greater return if the price increases quite a bit.  

You can think of stock market volatility like the waves on an ocean. When you’re rowing your boat on the open sea, some journeys are smooth sailing: small waves, pleasant breezes, clear skies, and straight-ahead navigation. Journeys to more exotic, hidden destinations, however, might require navigating waters that are a bit choppier, with bigger waves, unexpected gusts, and storms rolling in. If you have a more ambitious destination in mind, you might decide the more turbulent waters are worth the risk.

Stock market volatility and investing

Risk and change can be scary, particularly when your money is concerned. Knowing your risk profile can help you decide how much risk you’re comfortable with and, in turn, the level of volatility you can tolerate in your portfolio.

A higher volatility stock suggests more risk, but may also provide opportunity for a greater return.

If someone tells you they can predict the future of the market, run the other way! No one has that ability. Regardless of the futility of attempting to predict what the market will do, we all want reassurance that we’re investing with as much information as possible. That’s what volatility is all about: a measurement you can use to get more insight into the potential risks of investing.

We’ve learned to predict other uncertain things in our lives, like the weather forecast, based on available information. To navigate the waves of an unpredictable stock market, investors seek to forecast and analyze the volatility of stock prices. Two common ways to do that are looking at standard deviation and the beta coefficient.

What does standard deviation mean in stocks?

One way experts try to predict the risk of an investment is by looking at its behavior in the past. That might mean investigating the history of a stock or fund’s performance to gauge its realized, or historical, volatility. Based on that information, investors can calculate the standard deviation, a measure of how much the investment’s returns tend to vary from its average return. 

A smaller standard deviation means a less volatile investment. The larger the standard deviation, the higher the volatility and, therefore, the higher the risk. 

What does “beta” mean in stocks?

You might hear finance folks talk about “beta” in stock market volatility. They’re referring to something called the beta coefficient, which can tell you how volatile a stock is compared to the overall market. 

Calculating the beta of a stock indicates whether it’s more or less volatile than the market as a whole or if it’s about the same. The market’s beta is 1.0. If a stock has a beta of 1.0, its volatility is the same as the market. If a stock has a beta of less than 1.0, however, it is less volatile. For example, a stock with a beta of 0.9 will move at a rate of 90% of the market. The same is true of the opposite: a stock with a beta over 1.0 is more volatile than the market. That might offer the possibility of higher returns, but it also carries more risk that the stock price will drop significantly.  

What is volatility’s relationship to your portfolio?

Your investing goals and risk profile can help determine how much volatility you’re comfortable with in your portfolio. For instance, if you have an aggressive risk profile or are planning to keep your investments over a longer time period, you might be able to tolerate more volatility because you have time to weather the ups and downs of the market. Are you more of a conservative investor? Choosing securities with less volatility may better align with your risk tolerance. 

Stash recommends a diversified portfolio in order to spread your risk across a number of different types of investments and help balance some of the possible risks of stock market volatility.

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The post What is volatility in the market? appeared first on Stash Learn.

What is an index?

Like the index in a recipe book, an index in the stock market is a list. But instead of recipes, it lists securities. And rather than helping you find terms in a book, it helps experts measure the market’s behavior.

What is “the market”?

The phrase “the market” gets tossed around a lot, often without much context. Let’s break down what it means. 

A stock market is a generic term for a physical location, like the New York Stock Exchange (NYSE), an electronic exchange like the Nasdaq, or any other mechanism to buy and sell securities, such as stocks, bonds, funds, and other investments.

The NYSE and the Nasdaq are the largest stock exchanges in the U.S., but there are many other stock exchanges in the country and all over the world. 

“The market” or “the stock market,” isn’t just one thing or one place. When people talk about the market, they often mean stock markets generally or a subset of stock markets, like U.S. stock markets. 

There are many stock markets, trading the stock of thousands of companies, some of which might have millions of shares. That means understanding and measuring the market can be a daunting endeavor. Stock indexes can help.

What’s an index for the stock market?

Because the market is so large and complex, it’s nearly impossible to measure the behavior of the whole thing. Indexes help solve that problem by looking at representative pieces of the market.

An index, in the stock market world, is a list of securities intended to represent the market, either as a whole or a subset of the market. Using a limited group of securities as a proxy for the market addresses the logistical challenges of measuring the entire market. And if the index is reliable, it can be used to understand the market more broadly.

Who creates indexes?

Anyone can create an index. But selecting representative securities, plus tracking, analyzing, and communicating about their behavior, is a highly specialized task. Thus, the reputation of the index provider determines how much weight the index carries with investors and experts.

These are some of the most important and referenced indexes in the financial world. If you remember any indexes, it should include these:

• S&P 500
• Dow Jones Industrial Average
• NASDAQ Composite
• Russell 3000

What kinds of indexes exist?

There are many indexes in the stock market landscape, and each has its own goal. For example, perhaps the most well-known and referenced index is the S&P 500. It’s a list of 500 large companies traded on the NYSE and Nasdaq, representing over 80% of the available market capitalization. It aims to give investors a window on the market overall.

The S&P 500 is not industry-specific. It includes companies such as 3M, Ford, and  Apple. It’s also not exchange specific; for example, Apple trades on the Nasdaq and 3M trades on the NYSE. Instead, its primary requirements for inclusion are size and trade volume.

Other indexes track sectors of the market, like technology, or industries, such as clean energy, aerospace, or fossil fuels. Some indexes may even focus on companies in the cannabis industry or companies working on artificial intelligence technologies.

Putting indexes to work with Stash

So how do you know what indexes to follow? It depends on your investment strategy. You may want to pay attention to what’s in an index. In the stock market, there are a tremendous number of companies and sectors, so consider focusing on indexes that contain securities most relevant to your portfolio. That can help you understand how your investments could behave in the future. And following big-picture indexes can be a way to grasp what’s going on with financial markets in general and give you insight to support a long-term investing strategy. 

The post What Is an Index in the Stock Market? appeared first on Stash Learn.

It’s been a while since I last wrote to you, but it’s important for you to hear my message today concerning the recent market downturn. 

If you’ve been watching the market, you might start feeling a little anxious, but it’s important not to focus on the short-term noise. The only guarantee I’ll ever give you is that markets will go up and they’ll go down, and nobody can say with certainty where they will be tomorrow. However, over time markets tend to go up.

We are living in unprecedented times, and everyone is confronting unique challenges. Foremost, we’ve been living through the pandemic for nearly two years now. And government policies aimed at helping the economy through the downturn have also helped spark historic inflation. More recently, the Federal Reserve announced it will raise interest rates, as it wraps up a monetary program that has assisted the economic recovery.  While that’s a good thing, this has led to the market sell off we’ve seen over the last few weeks. But, at Stash, we always keep our sights set on the long-term opportunity. 

So let’s take a closer look.

Market performance over time

We’ve shared this graph with you before, but it’s essential to keep top of mind. The following shows the performance of the S&P 500 for the last 25 years. The S&P 500 is an index that reflects the earnings of the 500 biggest companies in the U.S., and it’s considered a benchmark for the entire stock market. Over time, you’ll see that the price of stocks tends to go up. You’ll notice this chart includes some pretty steep sell-offs in the past, such as the Dotcom bust, the mortgage crisis that led to the recession in 2009 and, more recently, the sell-off that occurred in March 2020 when the Covid pandemic began.

*This  graph is not a prediction or projection of performance of an investment or investment strategy. The rate of return on investments can vary widely over time, especially for long term investments including the potential loss of principal. Source: Yahoo Finance. Past Performance does not guarantee future results.The rate of return on investments can vary widely over time, especially for long term investments including the potential loss of principal. For example, the historical average annual rate of return on the S&P 500 is around 7.5%. Source:FactSet, annualized return for the period of 1/31/2001 – 2/11/2021.) The lowest 12-month return was -43% (March 2008 to March 2009). The S&P 500® is a market capitalization weighted index and one of the common benchmarks for the U.S. stock market. Investing involves risk including the loss of principal. This information is for educational purposes only and should not be construed as investment advice.

When the markets fall, it can be scary, but also it can be a great investing opportunity, just like when the markets go up. Here’s the thing: We’ve been in a bull market for more than ten years with stock prices basically going up. Some may say the price of equities, or stocks, is perhaps even too high.

And when stock prices fall, as they have for the past few weeks, it’s a chance for you to add to your investments at lower prices. (As a reminder Investing involves risk. You should always take your personal circumstances into consideration when making investment decisions.) 

How should you invest now?

It’s normal to feel nervous when the market goes down, but panic selling can hurt your portfolio rather than help it. We think it’s best for everyone to invest in a diversified portfolio and automate their investments with Auto-Stash. Whether markets go up or down, you should stay the course and only look to change your plan when your personal circumstances change (not when the market moves one way or the other). Auto-Stash should 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. When you build your portfolio, we recommend buying a mix of bonds and stocks, both inside the U.S. and in other locations globally. If you already have a diversified portfolio, bravo—keep adding to it on a regular basis. 

Another option is to consider Smart Portfolio. It’s a personalized portfolio that Stash’s investment committee of financial experts developed and recommends for you based on your risk profile. 

Follow the Stash Way

The Stash Way is our investment philosophy regardless of market volatility. It emphasizes regular investing, investing for the long term, and diversification. Simply, consider putting small amounts of money in your investments, on a regular basis.  We make this easy with Auto-Stash. Now, more than ever, is a time to set it and let Auto-Stash work it’s magic.

Long-term investors (that’s you) shouldn’t be concerned with timing the market, it’s about time in the market. I’ve said this before and I’ll keep saying it—no one can predict exactly what will happen tomorrow or next week.

Here at Stash, we are looking out for your best interests and we’ll keep sending you these types of messages to follow The Stash Way of investing.  Stash+ subscribers will also get a deep dive into what’s going on in the market in this month’s Market Insights Report.  We’ve got your back and will keep you informed and educated about the markets and long-term investing.

All my best,

Brandon Krieg, CEO & Co-Founder

The post When Markets Turn: Stay Invested, Stay Diversified 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.

Here is what that term means.

IPO: When a company goes public

Going public is shorthand for something called an initial public offering, or IPO. 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 additional capital to invest in and grow their 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.

Which companies have gone public?

The short answer: most large companies you’ve heard of, and any companies whose stock you can purchase as an individual investor.  If you’re investing on Stash, you’re investing in companies that have gone public.

How does a company ‘go public?’

To ‘go public,’ companies must hire an investment bank, such as Goldman Sachs, or J.P. Morgan to help conduct the process, also known as underwriting. These banks are responsible for everything from preparing the legal documents to finding investors to buy the initial shares or as so banks refer to IPO shares.

Once all parties involved in the process have coordinated their efforts, they decide on the date the company will have its IPO.

Have you ever seen people clapping and smiling in the news, after ringing the opening bell of the NYSE? Many times, that’s the celebration of an IPO.

That moment is also the first time a company’s stock trades in a major public stock exchange, which is usually a big milestone for the business.

It’s not all balloons and clapping and bells. When a company is publicly traded, there are also significant legal requirements it must follow.

The company must first register with something called the Securities and Exchange Commission (SEC). The SEC is a federal agency that regulates the company and lets them know what rules they must follow in order to get listed on a public stock exchange. One rule is quarterly filings of financial statements, so investors have a current and regularly updated picture of the company’s fiscal health.

Getting listed on an exchange

Stock exchanges such as the NASDAQ publish lists of companies that have recently issued, or soon will issue, shares for sale to the public. This IPO list can be found here.

Fun fact: Ever wonder how companies choose their ticker symbols? For more on how these letters are chosen and regulated, check out: How to Read a Stock Ticker: A Quick, Fun Guide.

The post What’s an IPO? What It Means When a Company Goes Public appeared first on Stash Learn.

The nation’s central bank, known as the Fed, sets a key interest rate that determines interest rates that consumers pay on everything from credit cards to car loans, as well as the interest paid on bank accounts, among other things.

By leaving interest rates where they are, the Fed is reversing a policy of rate increases that it followed throughout 2018. It cited low inflation and strong employment as reasons for staying the course, but also noted consumer spending is slowing.

Here’s a short explainer on the Fed, and its role in the economy, and setting interest rates.

What does the Federal Reserve Do?

The Federal Reserve is the central bank of the U.S. It oversees 12 district banks, which together are responsible for the monetary policy of the U.S.

The Fed’s mission is to oversee the health of the nation’s financial system. It attempts to keep the economy strong and growing by enacting policies to maintain low inflation and healthy employment levels. It does this primarily by adjusting interest rates, and lending money to the nation’s banks.

The central bank can adjust something called the federal funds rate, which is a short-term rate that it charges banks to borrow and lend money to one another. The federal funds rate forms the basis of other interest rates, such as for credit cards and mortgages, and it even factors into the yield offered by many bonds.

The Fed has been steadily increasing interest rates since 2014. The increases follow a seven-year period when the central bank left interest rates at or below 0%, to stimulate the economy following the recession.

It raised rates four times in 2018, and it’s current benchmark rates is between 2.25% and 2.50%. The last time the Fed raised rates was in December, 2018.

Although the central bank is supposed to operate independently from politics, President Trump has pushed back heavily against the increases, fearing they could affect the stock market. He recently suggested on Twitter that the Fed should slash interest rates, something the Fed did not think was necessary.

What does this mean for the stock market?

In December news of the interest rate hike sent stock indexes tumbling, because the Fed also suggested the pace of economic growth might cool off in the next year.

When interest rates go up, it can also make borrowing costs for businesses, not just consumers, increase as well. That can eat away at profits for some companies, and that can also factor into stock market swings.

Markets dropped on Wednesday, because the Fed did not cut rates, according to CNBC.

Check out this message about the value of long-term investing (and avoiding market noise) from Stash’s CEO Brandon Krieg.

The post What’s Going on With the Federal Reserve and Interest Rates? appeared first on Stash Learn.

That may sound like something uttered by your buddy at the local watering hole, but these words are actually attributed to the ancient Greek philosopher Plato (whether he actually said them is still up for debate).

Plato, as he was with many other subjects, was onto something: People like beer.

People like beer so much, in fact, that in 2016, we collectively chugged down 186.89 million kiloliters (roughly 49.4 billion gallons), according to analysts. And in the U.S., where we have a wide selection of alcoholic beverages, beer is still the reigning champion. U.S. consumers who drink alcohol regularly favor beer over both wine and liquor by a solid margin.

To satisfy America’s thirst, roughly 60,000 people work in breweries across the country, producing billions of gallons of beer every year.

Source: BLS

Though the industry is being pulled in two different directions–small beer producers (often called “craft” brewers) have exploded in popularity, while the industry overall consolidates into the hands of a few, big corporate players–consumers are reaping the benefits in the form of large, and growing, choices.

And they are even willing to pay more–beer prices climbed more than 50% between 2006 and 2016. The increases are partly due to increased demand for, and subsequent shortages of, hops and barley.

Source: BLS

Tapping the keg: How beer got here

People’s consumption of beer and other alcohol even predated the invention of writing. Archaeologists have found evidence of booze-making in China dating back 9,000 years ago. In parts of Eastern Europe and the Middle East, people began making wine 7,400 years ago.

While the science of fermenting and brewing evolved around the world over thousands of years, commercial brewing reached the U.S. in the 1600s. By the mid-1800s, there were as many as 140 breweries in operation in the U.S., and the industry continued to grow until the Prohibition era.

With the ratification of the Eighteenth Amendment, a constitutional ban on the production and sale of alcohol that lasted from 1920 to 1933, thousands of commercial and independent breweries in operation around the country went underground or shut down completely.

After Congress repealed Prohibition, the industry again kick-started, and brewers were once more able to operate at full-steam. Fast forward to today, and the U.S. is home to roughly 6,400 beer producers making hundreds, if not thousands of different ales, stouts, lagers, and more.

The modern U.S. beer industry

The confounding thing about the modern U.S. beer industry is that it’s simultaneously a vast, competitive space and increasingly monopolistic. In 2000, there were 22 major beer companies in the U.S., but thanks to consolidation, by 2012 there was just a handful.

Here are the biggest U.S. beer producers (by production) as of 2018, according to industry data:

1. Anheuser-Busch InBev (Budweiser, Stella, Michelob)
2. MillerCoors (Miller, Coors, Molson, Blue Moon)
3. Constellation Brands (Corona Extra, Modelo)
4. Heineken (Amstel, Red Stripe, Tecate)
5. Pabst Brewing (PBR, Schlitz, Rainier, Colt 45)

But nipping at the big boys’ heels are a handful of small, but growing craft brewers. They include Boston Beer Company, Chico, California-based Sierra Nevada Brewing Co., Fort Collins, Colorado’s New Belgium Brewing Company, and Deschutes Brewery, based in Bend, Oregon.

Total U.S. beer sales were $111.4 billion in 2017, according to industry data. And while overall beer sales and consumption were down 1.2% year-over-year compared to 2016, smaller producers have gained some momentum. Craft beer sales were up 5% in 2017, and make up around 23% of the overall beer market.

Sobering statistics

While craft brewers appear to be leading something of a renaissance in the U.S. beer market, bigger beer companies have experienced less consumer demand.

In the second quarter of 2018, for example, Anheuser-Busch InBev’s U.S. revenues fell 3.1% as its flagship brands, like Budweiser and Bud Light, struggle. AB InBev’s struggles could be pointing to a bigger change in consumer tastes, however.

Americans are drinking less beer overall than in previous decades and there are a number of reasons why. Younger people, overall, are worried about the health effects that can result from beer consumption. Women are drinking more wine and cocktails, and some minority groups are drinking more liquor than beer, according to reports.  

The defection could be a simple lull in demand, but add in rising prices, which may be exacerbated by tariffs and taxes, and there are a few reasons to feel bearish about the industry’s future, at least in the short-term.

Beer me!

In the long run, however, it may be difficult to bet against beer. Even in the depths of the Great Recession (2009), Americans kept on drinking–and beer was their preferred choice.

And beer can be innovative, too. Some companies, like Constellation Brands and Heineken, are even partnering with cannabis companies to create new THC and marijuana-infused brews. Consumer tastes may be changing, but brewers are evidently reading the tea leaves.

Like certain consumer staples (toilet paper, laundry detergent, etc.), beer is one of those products that many U.S. consumers typically won’t, or can’t, stop buying.

If the thought of investing in the beverage industry whets your appetite, you can get started using Stash.

The post Cheers! All About The Beer Industry appeared first on Stash Learn.

Some are convinced that one or some combination of these three secretly rule the world through clandestine manipulation of our political, legal, and monetary systems. You don’t need to harbor Fox Mulder-levels of paranoia to buy into these theories, but if you follow the internet rabbit hole down far enough, you may end up buying into them yourself.

While the Illuminati and Bilderberg Group are beyond our expertise here at Stash, myths concerning the Federal Reserve are more within our scope.

What is the Federal Reserve?

The Federal Reserve is the central bank of the United States.

It was created in 1913 when Congress developed the Federal Reserve System through the Federal Reserve Act. The Board of Governors is appointed by the president and confirmed by the Senate, and operates out of Washington D.C.

While it’s headquarters is in Washington, D.C., it consists of 12 district banks that operate in geographical regions throughout the country.

Here’s a map of the districts:

What does the Fed do?

The Fed’s primary goal is to promote stable economic growth through monetary policy. Specifically, the Fed aims to maximize employment, stabilize prices (control inflation), and moderate interest rates.

The Fed sets a benchmark interest rate that forms the basis of other interest rates, dictating how much banks charge to borrow from one another, and eventually, how much consumers pay to borrow money from banks.

Because banks are required to be adequately capitalized, they’ll borrow from each other, charging the prevailing rate. This creates a chain effect, with individual consumers as the last link, borrowing money for mortgages, auto loans, college tuition, or more routine daily purchases.

The Fed is a public entity as well as a private corporation, which is the root of most Fed-related conspiracy theories.

Although the Fed is accountable to Congress and the U.S. taxpayers, its individual  banks are considered “independent within the government.”

This means that it doesn’t receive funding appropriated by the congressional budgetary process, and instead, it receives income from interest on government securities to continue operations. If it turns a “profit” from those securities, the earnings are turned over to the Treasury.

But many people still don’t understand the Fed, what it does, and why it exists. It’s a looming government presence, that somehow fiddles with the economy, and because of that, many conspiracy theories about the Fed persist. Including these myths:

The Fed isn’t audited

You’ve probably heard that the Fed isn’t audited, or even seen political signs demanding that we “audit the Fed.” The idea behind the call for an audit process is that the Fed operates independently, and due to its seeming lack of accountability, is operating as a rogue agency into which taxpayer dollars are lost.

The truth is that the Fed is audited–often, in fact. The Fed is reviewed and audited by the Government Accountability Office and the Office of Inspector General to ensure it’s complying with federal laws and regulations. It also publishes its balance sheets–financial documents stating an entity’s assets, liabilities, and capital–and issues regular reports, which are combed through by independent auditors.

You can even look at the Fed’s quarterly reports for yourself.

The Fed is controlled by the Illuminati…

…Or foreign countries, Darth Vader, etc.

There’s long been a debate as to who “owns,” or controls, the Fed. While the Fed does respond to external economic events, it isn’t actually owned or controlled by any one group or entity.

So, what about all of those rumors of foreign interests, wealthy domestic cabals, and the Illuminati?

Foreign financial institutions can’t own stock in a Reserve Bank, ensuring that the system isn’t subject to foreign interests. Domestic banks can buy stock in Reserve Banks, but can’t trade or sell the shares. And as far as anyone can tell, the Illuminati is all but extinct.

The Fed caused the Great Depression

Blaming the Fed has always been in style. Even back in the 1930s, people blamed the economic upheaval on the central bank, and that myth has persisted well into the 21st century.

The idea behind this myth is that the Fed, in response to the crashing economy, tightened the money supply and worsened the crisis. Even the iconic economist Milton Friedman, and former Federal Reserve Chairman Ben Bernanke have argued in support of that theory.

Though still disputed, it doesn’t hold much water, despite the contention by many that the Fed did make mistakes at the time in responding to the recession, which may have prolonged it.

Conversely, during the financial crisis, the Fed expanded the money supply, which we’ll explain a bit later.

It prints and distributes cash (and manipulates the economy)

Yet another pervasive (or conflated) myth about the Fed is that it can (and does) print cash–in an effort to manipulate the economy.

You could make the argument that the Fed’s mandate is, actually, to manipulate the economy, but the prevailing conspiracy theories insist on something more insidious. Mainly, these theories all tie back into each other; They’ll state that the Fed can crash or bolster the economy for political purposes and that the people who are secretly pulling the strings are the ones behind it all.

These theories are mostly seriously misconstrued versions of the truth.

First, the Fed doesn’t print money. The U.S. Treasury controls whether cash is printed, and the U.S. Mint prints money. The Fed does control the money supply, though, which is likely what confuses people.

And as for manipulating the economy? To some extent, the Fed can exert influence. And there’s an ongoing debate whether or not the Fed has too much power in that regard. But the idea of the Fed intentionally propping up (or crashing) the economy on a whim? There isn’t much evidence to support it.

The Fed did, however, have an active role in rescuing the U.S. economy during the financial crisis of 2008. It did this–through a process that came to be known as quantitative easing– -by lowering interest rates, purchasing bonds, and pumping money into the banking system.

As the financial crisis spread around the world, other nations responded by using models similar to the one the Fed put in place.

The Fed is unconstitutional

Is the Fed unconstitutional? There are many who believe that’s the case because the U.S. Constitution doesn’t specifically say anything about a creating a central bank.

Given the important role that the Fed plays in our economy, this has led many to push backs on whether the Founding Fathers ever anticipated a central bank messing with the economy.

So, is it unconstitutional? The Fed actually falls into a gray area since the Founding Fathers’ document doesn’t actually address it. But it does address the government’s authority in creating money and regulating commerce, which is the basis for the Fed’s creation.

Though the arguments about the Fed’s constitutionality can be lengthy, financial experts generally consider the central bank to be a legal and necessary part of the U.S. financial system.

The Fed may be a mysterious, misunderstood government authority with some sway over what happens in the U.S. economy. But if you’re worried about the Illuminati and wanton unaccountability, put your fears to rest.

The post 5 Myths About the Federal Reserve You Shouldn’t Believe appeared first on Stash Learn.

The Spartans and Mongol hordes of ancient times were embroiled in conflict—their cultures were defined by it. That’s a far cry from modern America, where only 3.5 million, or roughly 1%, of the population, are members of the military or Department of Defense.

Though a relatively small number of people actively suit up as members of the U.S. military, the costs of outfitting them have increased substantially over the years.

While a Spartan warrior needed only a spear, helmet, and shield to go to war, modern soldiers are equipped with much more than that; And often enter the battlefield in vehicles or aircraft that cost millions, if not billions of dollars.

To put it another way, modern defense is big business. It’s not merely banging on a piece of steel to produce a sword anymore. It involves researching and developing aircraft, satellites, and ever-bigger weapons.

And if President Trump is serious about getting his space army, he’s going to rely on that very same industry to get it.

What is the aerospace and defense industry?

The aerospace and defense industry comprises companies that produce aircraft and spacecraft for both military and civilian use. It also includes manufacturers of military equipment, vehicles, and weapons, such as missiles and bombs.

It does not, however, include companies that manufacture or sell guns and ammunition for hunting and recreational use. It also excludes companies engaging in non-aviation related commercial services at airports, like restaurants and shops.

Even excluding those industries, aerospace, and defense is a prodigious industry that employs tens of millions of Americans and drives billions of dollars in revenue every year.

16% of the national budget, or more than $600 billion, goes directly toward defense and homeland security-related activities. Most, if not all of that money ends up going to companies in the defense industry.

In 2016, the sector employed 2.4 million people in the U.S., and generated $872 billion in sales.

Though there are hundreds of active firms, some of the sector’s largest companies include Boeing, Lockheed Martin, and Northrop Grumman.

The American taxpayers pour an enormous amount of money into the defense and aerospace sector. While a lot of that money seemingly disappears into a black hole (literally, perhaps—you never know what DARPA is up to), a lot of it goes toward developing products and technologies that directly benefit the public.

So, what does the sector actually produce? Perhaps the easiest way to break it down is like a Navy SEAL: By land, air, sea, and beyond.

Land

While aerospace companies mostly operate in, well, the air and in space, defense companies produce all sorts of terrestrial weapons and technologies.

For example, military and defense contractors play a huge role in shoring up our national security measures, and the fact that most of America is relatively safe is due, at least in part, to these companies.

They build military bases and facilities to defend the borders, tanks and related vehicles for the military, and other arms and weapons.

Air

Defense and aerospace companies are always hard at work on next-generation fighter jets and military aircraft. They’re also churning out orders for the U.S. and other militaries, too.

One example is the current-gen Lockheed Martin F-35 Lightning II, which can cost more than $122 million per plane. Another is the General Atomics MQ-1C Gray Eagle, an unmanned aerial drone made by General Atomics for the U.S. Army at a cost of around $31 million per unit.

But while they do design and sell weapons and military equipment for governments, companies like Boeing also build airplanes for commercial enterprises, too.

Airplanes, for example, have become more efficient over the years. This has led to cheaper airfare and shorter trips.

Sea

Don’t forget about the ocean, which is not only incredibly important for national defense, but is rife with resources and is perforated with valuable trade routes. While most of our battles are fought on land and in the air, the ocean is still the world’s biggest freeway for international trade.

And while it may not seem like much has changed in ship or seafaring technology over the years, defense companies are hard at work creating next-generation ships and floating fortresses with which the U.S. and other countries can engage in military operations.

A prime example is the Navy’s newest aircraft carrier, the USS Gerald R. Ford, which was commissioned in July 2017. The nearly $13 billion ship is the world’s largest aircraft carrier and will carry the F-35 fighter jet, among others.

Space

While there’s still a need for classic military and defense equipment, the future of the sector may lie far beyond the sky—in outer space.

The U.S. and other countries have traditionally used public funds to pay for space travel and exploration, but we’re starting to see more private capital and investment enter the market.

Companies like Blue Origin and SpaceX, both founded by billionaire businessmen, are becoming integral parts of the American space program, and could soon start ferrying paying passengers past the stratosphere and into orbit.

There are also national security implications, as President Trump recently laid out in his idea for a space-based branch of the military, which could further increase public investment in the sector.

The sky may be the limit for some industries, but this probably isn’t one of them.

Want to explore the world of aerospace and defense? Check out these sector-related funds and single stocks available now on Stash.

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The Federal Communications Commission (FCC) voted on Thursday to overturn a critical set of regulations known as net neutrality.

The debate over net neutrality–regulations that say all content that flows over broadband networks must be treated fairly and equally–has been one of the most complicated discussions happening in the public sphere and in the business world in recent months.

What happened?

The FCC is the government agency that regulates radio, telephone, TV and cable communications.

The commission’s five-person board voted 3-to-2 to overturn the regulations, which were put in place in 2015 under the Obama Administration. The commissioners voted along party lines, with a Republican majority prevailing.

“We are helping consumers and promoting competition,” Ajit Pai, the FCC’s chairman appointed by President Trump, said prior to the vote, according to the New York Times. “Broadband providers will have more incentive to build networks, especially to underserved areas.”

Those in favor of the federal guidelines say they keep down costs for consumer broadband access, while ensuring a level playing field for content providers, which range from tiny tech startups to dynamos such as Netflix.

Those opposed to the rules generally say they have throttled innovation and hamper the ability of internet service providers to invest in and grow their networks.

Next steps

Numerous consumer groups, tech companies, and Internet activists have threatened to sue the FCC to maintain existing net neutrality regulations. There has also been a push among some members of Congress to introduce legislation that would make net neutrality the official law of the land.

Nevertheless, broadband providers will have immediate discretion to begin offering new packages with new pricing schemes that could potentially favor some content over others, according to the Wall Street Journal.

Bitter divide

In a sign of how contentious the vote was, Mignon Clyborn, one of the FCC’s Democratic commissioners, had this to say, in a statement following the decision:

“I dissent from this fiercely-spun, legally-lightweight, consumer-harming, corporate-enabling Destroying Internet Freedom Order. I dissent, because I am among the millions who is outraged. Outraged, because the FCC pulls its own teeth, abdicating responsibility to protect the nation’s broadband consumers.”

Net neutrality explained

Net neutrality is a phrase coined by Columbia Law School professor Timothy Wu in 2003.

It’s the principle that says all data that flows over the internet–composed of computer networks that operate invisibly in the background every time you look at Facebook from your smartphone or watch Netflix shows from your desktop computer, for example–must be treated the same way.

The networks are operated by broadband companies often referred to as internet service providers, or ISPs, and they include companies such as AT&T, Comcast, Verizon, and Time Warner.

Net neutrality regulations said these ISPs couldn’t play favorites, for example by prioritizing their own programming by delivering it more quickly to consumers. They also couldn’t block or slow down downloads of legitimate content, even if it competed with a similar product they may have or own.

Without net neutrality, some experts have postulated the Internet could be carved into “fast lanes” and “slow lanes”, enabling network providers to simply prioritize their own programming over content from competing companies. They’d do that by potentially delivering it at faster speeds, or demanding payment for faster access to networks.

The post The FCC Just Voted to End Net Neutrality: Now What? appeared first on Stash Learn.

President Trump has named Jerome Powell as the next chairman of the nation’s central bank.

Pending Senate confirmation, he will replace Janet Yellen, the first woman to head the Federal Reserve, who was appointed by President Obama in 2014. Yellen’s term expires in early 2018.

By tapping Powell, Trump is breaking with tradition. Presidents usually allow their predecessor’s Fed chair picks to remain on the job for a second term. But Powell is reportedly considered a safe choice who is likely to continue on with his forerunner’s policies.

Jerome Powell will replace Janet Yellen, the first woman to head the Federal Reserve, who was appointed by President Obama in 2014

Who is Jerome Powell?

Powell, a Republican, has been a member of the Federal Reserve’s seven-member Board of Governors since 2012. He also served as an Undersecretary of the Treasury for George H.W. Bush, and was an attorney and investment banker in New York, according to his Federal Reserve profile.

He was a partner at the private equity firm Carlyle Group, where he reportedly amassed a personal fortune of up to $55 million. He has a reputation as a consensus builder who studies issues carefully before making decisions, according to the Washington Post.

Yellen has overseen interest rate increases as the economy has improved, and ended a bond repurchase program associated with the financial crisis.

Powell is considered a reasonable pick who won’t dramatically alter the course of the central bank. He is, however, considered by some to be more pro-business with regard to regulations than his predecessor.

What does the Federal Reserve do?

The Federal Reserve is the central bank of the U.S. It oversees 12 district banks, which together are responsible for the monetary policy of the U.S.

The Federal Reserve’s mission is to oversee the health of the nation’s financial system. It attempts to keep the economy strong and growing by enacting policies to maintain low inflation and healthy employment levels. It does this primarily by adjusting inflations rates, and lending money to the nation’s banks.

The central bank was responsible for making sure the financial system didn’t freeze up during the financial crisis that began in 2008. It flooded the banking system with cash, and decreased interest rates to below 0%. It also was responsible for a program called quantitative easing, where it bought up trillions of dollars worth of government bonds, which helped shored up the financial system.

The post Who is Jerome Powell? Meet Trump’s New Fed Chair Pick appeared first on Stash Learn.

On Wednesday, the Food and Drug Administration (FDA) approved a new treatment for certain kinds of blood cancer. Called Yescarta, it’s the second “living drug” therapy for cancer approved this year.

What’s unique about the treatment is that it uses something known as gene therapy, which re-engineers the body’s immune system cells, called T cells, to target cancer specifically. The treatment, dubbed CAR-T in scientific lingo, prompts the body’s own protective cells to recognize and fight cancer.

About 80,000 people a year are diagnosed with blood cancers, which include leukemia and lymphoma

Kite Pharma, of Santa Monica, California, developed Yescarta. In September, drug maker Gilead purchased Kite for close to $12 billion. That was the largest acquisition that Gilead has ever made, and the purchase signaled to financial analysts that the pharmaceutical company planned to move into new forms of drug treatment.

Healthcare companies working toward new cancer treatments

About 80,000 people a year are diagnosed with blood cancers, which include leukemia and lymphoma. In tests of Yescarta, nearly three quarters of those treated reportedly saw reduction in blood cancer, and remained healthy 8 months later, according to the Associated Press.

In August, the FDA approved a similar therapy for blood cancer, called Kymriah, from drugmaker Novartis, of Switzerland.

The downside: The new treatments are expensive, currently costing between $370,000 and $500,000, according to reports. Yescarta and Kymriah can also have serious side effects, according to both companies. Yescarta has been approved for use in patients where at least two other cancer treatments have proven ineffective.

Kymriah is also approved for use on a restricted basis, according to Novartis.

Want to learn more companies that are making advances in healthcare? Check out Modern Meds and Doctor, Doctor, two funds available on Stash.

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The DJIA reached a previous milestone in August, when it surpassed 22,000. This is also the fourth 1,000-point climb for the DJIA in the past year, according to MarketWatch. The index is up 15% for the year.

What is the Dow Jones Industrial Average (DJIA)?

The DJIA is an index of 30 of the largest companies in the U.S., often referred to as blue chip stocks. The index includes familiar company names such as consumer products company Procter & Gamble, fast food chain McDonald’s, and footwear manufacturer Nike, among others.

Could it go higher?

Although there’s plenty of talk about about a bubble in stock market prices, the economy continues to be on sound footing, many financial experts say. The unemployment rate in the U.S. is 4.2%, its lowest level since 2001. Interest rates, which affect business borrowing and consumer spending, continue to be low. And for many, hiring remains strong.

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* See footnote.

In addition, a slew of big company names from Netflix to Bank of America have reported stronger than expected earnings for the third quarter, which has helped to push indexes into historic territory.

The DJIA is an index of 30 of the largest companies in the U.S., often referred to as blue chip stocks.

“Corporate profits are strong,” David Wessel, director of the Hutchins Center at the Brookings Institution told National Public Radio on Tuesday. “Interest rates are low, which is good for stock prices because investors are looking for someplace to put their money [where] they get a better return than in bonds or bank accounts.”

Here are some other reasons why financial experts postulate the stock market indexes continue to climb:

• Congress is getting ready to debate tax reform, which could include major cuts to the corporate tax rate, a reduction in the number of tax brackets, and cutting the tax rate for the highest earners.
• President Trump has made deregulation one of his top priorities, which has a potential impact on businesses in just about every sector.
• The DJIA is made up of big companies, and many are releasing better than expected corporate earnings for the third quarter, which ended September 30. Investment banks Goldman Sachs and Morgan Stanley beat analyst expectations, according to reports.
• Healthcare stocks are also up, according to the Wall Street Journal, and are helping to drive gains in the DJIA.

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On Sunday, roughly two million people in the Spanish region of Catalonia voted to separate from the rest of the nation and form its own country.

The vote was immediately declared unconstitutional by Spain’s top courts, and police moved quickly to squash protests by voters in favor of secession. The vote even prompted King Felipe VI of Spain, who usually stays quiet on political matters, to condemn the move to secede.

The vote in Catalonia would be roughly equivalent to a state like Texas voting to secede from the U.S., which from time to time it has seemed to consider doing.

Why does the vote in Catalonia matter?

Politics affects economies and stock markets. Following the Catalonia vote, something called the IBEX, which is roughly equivalent to the S&P 500 in the U.S. but contains 30 of the largest company stocks in Spain, fell about 3% on Monday.

The euro, the common currency of the European Union (a bloc of 28 countries, primarily in Western Europe), also reportedly fell 0.5% on Monday, the day after the vote.

Catalonia is responsible for roughly 20% of the country’s economy, and a quarter of the country’s exports

Spain has only recently emerged from a crushing, decade-long recession that has left nearly 20% of citizens there unemployed. Catalonia, a small region in the northeast of Spain, is an economic powerhouse, responsible for roughly 20% of the country’s economy, and a quarter of the country’s exports.

One of the country’s most vibrant cities, Barcelona, is located there. And while the rest of Spain has suffered from high jobless rates, its unemployment rate is reportedly lower at 13%.

Catalonia vote: Part of a trend

The Catalonia vote is part of wave of separatist and nationalist sentiment sweeping Europe.

Greece has toyed with the idea of leaving the European Union due to a debt crisis that began more than a decade ago. In 2016, Great Britain voted to leave the European Union in an event that has come to be known as Brexit.

The roots of the Catalonia vote are complex and longstanding. The region has its own language and culture, and was also key in the Spanish Civil War in the 1930s.

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