5-Chart Friday (1/15/21)

By Charlie Bilello

15 Jan 2021


This week’s 5-Chart Friday is sponsored by YCharts. Mention Compound to receive 20% off your subscription when you initially sign up for the service.

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5 charts from the past week that tell an interesting story in markets and investing…

1) A Clear Signal of Insanity

Last Thursday morning, Elon Musk sent out this tweet to his 41 million followers…

What’s Signal?

It’s a messaging app for your phone and an alternative to WhatsApp, which has been criticized recently for privacy concerns (sharing data with Facebook, its parent company).

Naturally, traders immediately looked to profit, finding a company called “Signal Advance” and bidding its shares up to astronomical levels (from $6 million market cap to $739 million).

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Why is that a signal of insanity?

Signal Advance is a small health care company that has absolutely nothing to do with the nonprofit company called Signal or its messaging app.

2) Bitcoin, Stimulus, and Small Caps

Bitcoin investors saw their first major correction since hitting new all-time highs last November, a 28% decline over the course of 3 days.

Investors seemed to quickly buy-the-dip, however, with the prospect of another few trillion in national debt coming soon.

On that front, President-elect Joe Biden outlined his plan for another $1.9 trillion in stimulus which would include the following…

The market narrative has been that this stimulus will be extraordinarily bullish for small companies in the US, and we saw another surge higher to start the year in the ratio of Small Caps to Large Caps…

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3) Airbnb and the IPO Party

Airbnb’s stock has surged higher to start the year. Incredibly, at over $110 billion market cap, it is now worth more than the 6 largest hotel chains (Marriott, Hilton, InterContinental, Hyatt, Wyndham, and Choice) … combined.

This is more than double its IPO price from last month and 5x higher than its private market valuation last April…

Many want to join Airbnb at the IPO party, and we’ve seen a record start to the year in SPACs, raising $15 billion in just 2 weeks…

4) Inflation Cometh

While the Federal Reserve continues to maintain that “there is no inflation,” market prices continue to indicate otherwise.

This week we saw Corn, Wheat, and Soybeans surge to their highest levels since 2014.

5) Signs of Hope

Covid-19 hospitalizations declined over the past week for the first time since September. Hopefully this a trend that will continue as hospitalizations are a leading indicator of deaths.

The US has now given 11.9 million doses of the covid-19 vaccine. After a slow start, the pace seems to be picking up as many states are broadening the eligibility and figuring out solutions to bottlenecks in the system.

Israel will likely be the first country to reach herd immunity, with over 20% of its population vaccinated in just a few short weeks. There is much the world can learn and apply from their efforts.

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And that’s it for this week. Thanks for reading.

Have a great weekend everyone!

-Charlie

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Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For our full disclosures, click here.

About the author

Charlie Bilello

Charlie is the founder and CEO of Compound Capital Advisors.

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