Tag: ESG investing

  • The Hottest Investing Trend Today – ESG

    The Hottest Investing Trend Today – ESG

    The Hottest Investing Trend Today - ESG
    ESG investors who combine these stocks with traditional assets and generate better returns. ESG stocks become the hottest investing trend.

    By Guy Avtalyon

    Everyone would like to know what is the hottest investing trend today. Despite many expectations that it easily could be pharmaceuticals or biotech stocks due to the current pandemic, the new investing trend is quite surprising. Some would expect that developing a new vaccine for the new coronavirus could attract investors’ attention. But it looks that some other industry has more potential. Some other stocks are able to generate better returns. We are talking about ESG investing. 

    Yes, that’s true. ESG stocks generate better returns than the overall market all the time. And it is pretty interesting if we know the ESG stocks carry less volatility then many many other stocks. Even if it is surprising, ESG investing is a fast-growing trend. So if anyone asks you what is the hottest investing trend today, you\re free to say ESG and you’ll be right.

    What is ESG investing?

    ESG investing is also known as sustainable investing. It is all about environmental, social, and governance. These three classes are massively under investors’ attention and a lot of money is already invested in this sector. We can discuss whether it is a smart investment decision or not but data shows it is. Take a look at this chart below. 

    The chart shows the S&P 500 ESG index’s relative performance. We can see that it has outperformed its benchmark by approximately 3 percentage points during the past 52-weeks.

    Investing is related to the future. No matter what are you looking for the main goal of investing is to improve your future. Stocks also want to develop their better performances in the future, so it looks like they have the same goal as investors. But why is ESG the hottest investing trend today? How does it become such a profitable class for investors? As we said, ESG stocks generate better returns, they generate profits and hence, reward all investors involved. 

    Why is ESG the hottest investing trend now?

    The global trend for many years is sustainability. That means the sustainable company plans the future and plans to be present in the future, not just to shine for a few years, to get a few bucks and turn all operations off.
    ESG investing is a common term for investments that seek better returns. The other goal is the long-term impact on the environment, society. Sustainable investing comes in forms of ESG, impact investing, socially responsible investing or SRI, and also, values-based investing. The other school of thought adds ESG under the umbrella of SRI where there is also, ethical investing and impact investing.

    The Financial Times describes ESG  as “a generic term… used by investors to evaluate corporate behavior and to determine the future financial performance of companies.” 

    Today, almost the whole of civilization is working on sustainability, and the businesses that do the same are popular and supported. Bank of America published a study that shows that 86% of customers believe companies should consider ESG problems. For example, data from that study reveals that 94% of Generation Z and 87% of Millennials are very interested in this issue. For them it is important, (well, not only for these two generations), that the companies’ focus is on renewable energy, waste management, diversity. Also, consumers showed a great level of determination in the answers about the company’s reputation toward their focuses on the environment. How the companies treat it is maybe one of the main criteria when customers have to decide if the company has a good or bad reputation. 

    Sustainable investing strategies

    ESG is the hottest investing trend today. It outperformed the market in recent years. So it looks the gap in returns will only grow as time goes by.
    ESG investing is influential, and it’s only increasing. Bank of America estimates that $20 trillion is going to flow into ESG funds in the next two decades. For the purpose of comparison and to have a real picture how big is that amount you have to know that the entire S&P 500 is worth about $25.6 trillion. 

    ESG investing strategies are not new but here are some tips.

    Choose the best in the class. This strategy includes the selection of the best performing or most modernized companies recognized by ESG analysis. 

    Investing strategy based on engagement activities such as active ownership of shares, voting on company governance is one of them, for example. The goal of this long-term process is to influence the behavior of the ESG company. 

    ESG integration into traditional financial analysis and investment decisions. This strategy focuses on the possible impact of ESG issues on company outlook. That in turn may change the investment decision. For example, if the impact of ESG is positive, the company is likely to look more favorable as an investment opportunity. 

    As you can notice, momentum is growing. Shareholders are demanding action more and more. The consequences arise for companies that fail to adjust.
    Conscious capitalism is a management strategy that highlights adjusting the business with shareholders to share success. A company that matches that goal not only runs for profits to shareholders, but also takes care of employees, the environment, clients, and community. That generates long-term profitability.

    How to trade  ESG stocks

    First, do your research. Open an account to trade ESG stocks. Fund your account and pick the company. You can use your account to invest in ESG stocks by buying shares or trade on the price movement using spread betting or CFDs. You can go long or short on ESG stocks like with any other stock. Also, you don’t need to take ownership of any shares.

    Where to find the hottest investing trend?

    For example, tech startups are some of the hottest investing trends. They broadly implement sustainable practices and make up a respectable part of ESG investing. Innovation-focused companies that develop advanced technologies, do it in a way that is in the best interest of civilization. For example, Microsoft or Apple, both are among the largest sustainability-focused companies. They generated great returns to their investors in the past few decades. And also, the important part is their reputation among customers. It’s excellent. 

    Since ESG investing isn’t all about the environment, something is about community impact or employee satisfaction. These companies are recognized as employee-friendly, also. These characteristics will drive their share prices in the future to stay on the top in the investment world.

    Still, some will argue that taking this approach in investing could mean reducing returns. But some researches advise otherwise. For example, you can choose the easiest approach and buy ESG-focused ETFs that track the index. Some of them outperformed their benchmarks last year and continue this year also. ESG investments had record amounts of capital inflows in Q1 this year.

    ESG has a great influence on reducing risk. Adding ESG stocks in investment portfolios can help investors to reduce risk. Consider ESG and prioritize stocks. They have to align with the values most important for you. Use the ratings from an ESG agency to examine the company.
    One note, climate change ruled the headlines at the beginning of this year. Seizing fossil fuels is an issue per se, many companies announced that would limit investment in coal, for example. So, ESG investments are possible to have strong growth in the coming years and decades. ESG investing is the hottest investing trend today and an excellent way to profit.

  • Investment prediction for 2019 – Traders Paradise prediction

    Investment prediction for 2019 – Traders Paradise prediction

    Investment predictions for 2019 - Traders Paradise prediction 1The image is taken from depositphotos.com

    By Guy Avtalyon

    Investment prediction for 2019. is in front of you, so let’s start.

    Investment prediction is a really tricky job. This year has been full of market volatility, climate disasters, personal data frauds, economic insecurity.

    And now, in the end, we are waiting for a fresh start? Things never go in that direction. It looks that 2019 promises to be in a mess. That’s why Traders Paradise is trying to predict what will be real in the next year. And we find this, some other guys may find something different:

    Bear market – is here

    Nearly half the stocks in the S&P 500 index are in a bear market at the end of this year. They are down 20% from their highs.

    The second-largest stock exchange in the world by market capitalization, NASDAQ, is officially in bear territory. If you don’t know yet how to trade- here’s our full guide.

    All signs are pointing to more damage to the stocks.

    Equity markets in more than 20 countries are in bear territory. Investors are worried about how bad it will be and how long it will last.

    Bears are necessary and unavoidable cycles in markets and have been for centuries. But they are cruel. This will be a great theme in 2019. That is our investment prediction.

    And each investor should be prepared and to diversify the portfolio. 

    Artificial Intelligence (AI)

    One investment prediction, more.

    Japanese tech company Groove X introduced a robot whose task is to make people happy. The “Lovot” uses artificial intelligence. It can mimic human empathy.

    This cute robot represents the revolution of artificial intelligence. “Robot” can feel emotions and communicate with people. It is 3kg tall and 43cm tall, the optical camera helps it move. And can be our new friend for $5,300. Some cost us even more.

    There’s a vertiginous line of AI applications on the table right now. We expect this term will be very popular in 2019 and the list will become larger.

    Obviously you can find all sort of information on the internet about machine learning and AI, like these articles on Wikipedia for example, but the concept is quite simple: You run an algorithm (there are many) on the set of data, and once the algorithm is finished, the software will know how to run by itself on new sets of data, even if it’s never been seen.

    There are 2 types of algorithm methods READ HERE

    Socially Responsible Investing – Impact investing

    Socially responsible, or ESG investing accounts for environmental, social, and governance factors. But does not necessarily result in worse performance. There are those that think ESG investing can outperform the markets, and there are those who strongly believe the contrary. There are specific examples that will back up both sides of the argument.

    People are often asking us what is a social enterprise, and we are usually answering by asking “what is social investing?”. Sometimes the phrase is social impact investing; sometimes it just impacts investing.

    Impact investing carries risk, that’s true. But also it generates great returns and impact. It is smart and moreover, profitable to invest in companies that actively have positive social or environmental influences. It is a step further than divesting from negative impacts. For example, allocate your investment portfolio away from fossil fuels. Instead, use your money to consciously tackle society’s challenges. And to make a financial return, of course.

    Investors’ concerns

    Investors sometimes ask how much return they will have to trade-off in order to make impact investments.

    Firstly, there is no “impact see-saw”. Just because a business is creating a more positive impact, that does not mean they are creating a less financial return. Indeed, in many cases, because the impact is at the heart of the business model, the more impact they create, the more profit they make, and vice versa. Some research even suggested that impact-focused businesses are more sustainable and profitable in the long-term.

    In any investment, there are different levels of risk and return and there are also different levels of impact. An impact investment may be riskier. It has high returns and high impact. Or, it could be less risky since it brings market-rate returns and significant social or environmental impact.

    As with any investment, it depends on the business or the fund.

    The statistic shows that 89% of investors making impact investments find these are meeting their return expectations, and 54% of investors are targeting market-rate or above market-rate returns.

    There are many ways to get involved in impact investing. Crowdfunding has even helped retail investors, who have less risk capital, to get involved in this space.

    Generally, our investment prediction that this kind of investment will be more popular in the next year.

    Blockchain

    Traders Paradise’s investment prediction is this will be one of the most popular terms in 2019.

    Blockchain technology provides a way to make transactions and transfers online without the use of an intermediary. Instead of trusting a third party to keep the transaction history safe and accurate, blockchain technology lets you seal “pages” of transactions with a key code for security.

    One of the most relevant reasons that many companies are adopting blockchain technology is efficiency. We can all realize how exchanges can become quicker. And simpler too, when they don’t have to go through a third party. It’s also beginning to move document authentication toward obsolescence, removing a step in the translational process.

    How To Make Money With Blockchain Technology READ THIS TOO: 

    Blockchain technology can also make companies feel like their information is safer and more secure. In an age where hacking banks cannot always resist off attempts to attack people’s financial privacy. Therefore, blockchain technology is a way to feel a greater sense of control over transactions.

    Short Selling

    Many experienced investors think that short selling has an important part in the markets. It improves price discovery and rational capital allocation. At the same time,  prevents financial bubbles and finding fraud.
    Shorting is a trading strategy where traders are selling a borrowed stock with a belief that it will drop in value. So, they can buy it back later at a lower price. Academic research has shown the stocks of companies that complain about short-sellers tend to falter.

    Investment prediction can be an ungrateful job

    This term is already hot.  Let’s show how much on the example of TESLA.

    It is a stressful time to be an investor in Tesla, of course. On September 29th shares in the electric-car manufacturer soared by 17% after its boss, Elon Musk, settled fraud charges with America’s Securities and Exchange Commission (SEC). Just days later, on October 4th, a series of belligerent tweets by the firm ’s founder sent shares tumbling by more than 7%.

    You might be interested Apple is charging its batteries with Tesla’s employees 

    The tweets in question were targeted at short-sellers, who aim to make money by selling borrowed shares and buying them back later at a lower price. With a quarter of its publicly traded shares lent out to facilitate short-sellers’ bets, Tesla is one of the most heavily shorted companies in America. Elon Musk has publicly feuded with short-sellers for years, calling them “haters”, “jerks” and “not super smart”. Research suggests that such insults are undeserved. Short-sellers are savvy investors who help to keep the market’s exuberance in check.

    So, Traders Paradise believes that short-selling may continue in the next year. The bear market just started.

    So, think about this investment prediction.

    Unlike Amazon stock – which we truly believe will rise and get to new highs.

    Our investment predictions are based on personal research and act as an observation about what we all can expect in the coming year. But we have to admit, nothing good. We hope we are wrong.

    Anyway, we wish you a healthy, happy, and fruitful new year! You can have it!