The end of a free market? | GameStop controversy

This week drew regulatory attention as retail investors found themselves shut out of their trading platforms after the buying frenzy for GameStop and other companies such as AMC Entertainment, Koss Corp and BlackBerry. 

The public is outraged that we cannot be allowed to manage our own risk, whereas hedge funds are allowed to continue as normal. Not only can they continue actively trading whatever stocks they like, they are taking advantage of retail investors being blocked from participating in markets. Trading platforms are protecting corporate interests while compromising the ordinary people. Retail investors know there are risks involved but rules of the free market should allow each individual to make that choice. 

What is happening feels like market manipulation, but is legally justified and legitimate. Many retail investors have been forced to lose a lot of money after trading was blocked for headline companies such as GameStop and AMC Entertainment. By “protecting retail investors from high risk”, many of us have lost out, majorly. 

So what is a free market?

Institutional investors support a free market when it suits them and then turn a blind eye when regulations are put in place! In economic theory, a free market describes a system where the price of goods and services is determined by consumers on the open market. In this system supply and demand create an equilibrium that self-regulates and is devoid of any government forces. The idea is to allow the system to maintain itself without the need of a governing body. In this type of market there is no need for tariffs to restrict trade or other economic tools as economic forces can themselves as a control. 

Photo by Josie Stephens on Pexels.com

Why has trading been restricted?

Most brokerages have halted buying in stocks that have had major rallies this week, including GameStop and AMC Entertainment. Retail investors are left outraged as they have no opportunity to participate in these highly lucrative markets.

Shares in GameStop dropped on average 55% after blocks to buying were put in place. On Thursday, large US broker Robinhood halted buying shares of the video game retailer GameStop, cinema chain AMC and tech pioneer BlackBerry, causing a huge drop in price. GameStop was down 44% and AMC closed at a huge 57% loss.

Large hedge funds had put billions on GameStop to fall. Yet when the power of Reddit encouraged a buying frenzy that pushed share prices to over 700% in just one week, these hedge funds were losing out. 

Hedge Funds who attempted shorting GameStop thought they were guaranteed profit by betting the out-of-date gaming company would continue to fail. However, they didn’t account for the power of the people who pushed the price in the opposite direction. A lot of investors were sceptical how long this frenzy could last, but with the story gaining traction across social media the stock has skyrocketed and brought some other dying companies along for the ride. 

Amateur investors who follow the Wall Street Bets subreddit have been encouraging buying GameStop shares to push up the price. Here, common retail investors are acting together as market makers. By pushing up prices this steeply, short sellers (ie Hedge Funds) incur huge losses driving them to buy back the shares they have borrowed from other investors to prevent even greater losses. This process is known as covering. Although this saves Hedge Funds, it encourages prices to rise higher as it adds to the demand. 

So why would brokers want to manipulate markets?

Essentially they want to cover their own backs. Brokers rely on large hedge funds to supply markets with shares. As hedge funds have so much capital they can tie up a large proportion of a certain stock if they choose, which is how they can influence markets – through controlling supply. 

Also, free brokers like Robinhood and Trading212 that advocate accessible trading don’t make money off transaction fees like some brokers. Their main income is by selling data that is gathered from retail traders to big Hedge Funds. Therefore , it is in their best interests to support Hedge Funds. 

By banning buying shares of GameStop and others, these free brokerage platforms are then only allowing selling. This reduces buying pressure and then allows the price to fall as retail traders can only supply stock and no longer demand it. Overall by reducing the price, Hedge Funds don’t lose so much on their short position and brokers benefit by supporting the survival of hedge funds that might’ve otherwise gone under. 

Threatened Legal Action

There are many people campaigning for  legal action to be taken against brokerages for market manipulation – by restricting sales of particular shares. 

Founder of Robinhood (the biggest US brokerage) publicly stated they had based their decision to limit shares based on regulatory requirements. 

“We made a tough decision today to temporarily limit buying for certain securities. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits.”

It is not just anonymous investors on Reddit who have commented on this debacle. Dave Portnoy, a high-profile amateur trader has attacked Robinhood, a platform that advocates for more accessibility on Wall Street. He tweeted

“‘Democratizing finance for all’ except when we manipulate the market, cause too many ordinary people are getting rich,” .

Analyst Neil Wilson said :

“what is so unusual is the peculiar vigilante morality of the traders pumping the stock. They seem hell-bent on taking on Wall Street, they seem to hate hedge funds and threads are peppered with insults about ‘boomer’ money.It’s a generational fight, redistributive and all about robbing the rich to give to the millennial ‘poor’.”

The public is outraged that we cannot be allowed to manage our own risk as brokers block buying certain stocks. Meanwhile Hedge Funds take this opportunity to their advantage, overpowering the market making moves of retail investors. This situation is rare but brings up some big questions about how the trading system works. If you aren’t ready to bet your money, download BullBear.

Trading 101: Bull and Bear Markets

The terms “bull” and “bear” are commonly thrown around in the investing world to describe market conditions. But how should this affect how you trade? 

These terms describe how the stock markets are doing – whether they are increasing or decreasing. It is always a great idea to see what the general markets are doing as this will impact your portfolio and give you insight on the best strategy to use. Read on to understand more about how these conditions affect how you trade. 

Bull v Bear

A bull market is a market that is rising, usually during a time of economic stability. Whereas, a bear market describes a market that is falling, that occurs when an economy is receding. 

A bull market describes a sustained increase in prices. This reflects on how investors feel the markets are going, during a bull market investors are positive the uptrend will continue long term. A bull market arises when a country’s economy is strong and there are low levels of unemployment. These conditions set a spending consensus as people are in a good economic position, in turn increasing consumer spending and pushing prices higher. 

During a bull market there is a lot of buying pressure creating a strong demand for stocks. This pushes share prices up as investors compete for the low supply of available equity. 

On the other hand, a bear market describes one that is in decline. There is also a metric to help define a true bear market. When a market has fallen over 20% from recent highs it can be described as a true bear market. Overall in a bear market, share prices fall. The economy is commonly slow or in a period of recession when a bear market occurs and is usually accompanied by high unemployment rates as companies struggle to support their workforce. People here have less disposable income and tend to be more cautious with how they use their money. Spending less reduces demand and decreases prices on stock markets. 

During a bear market there is a greater selling pressure meaning more people are selling than buying. The low demand and high supply means share prices drop. As markets fall many investors close their positions and withdraw their money as it is hard to tell where the market bottom will be. When this happens there is a high selling pressure making market prices fall even lower. This downward spiral continues until the market hits a bottom.

What does this mean for investors?

Investing in the stock market should overall post positive returns over long-term periods. This makes investing in a bear market (one that is declining) more dangerous as most stocks lose value and prices can fluctuate a lot over a small period of time. Bear markets are therefore less common and often don’t last very long. 

Bear markets over time from Investopedia

Investor sentiment will affect if a market rises or falls. In a bull market, investors are more optimistic and are looking to buy stocks in the hope to obtain profit. Whereas, during a bear market the market sentiment is negative as investors become standoffish as prices fall. This keeps money safely in bank accounts rather than invested in equity, causing the price decline to continue. 

How markets change

Certain events can give a small change in markets but it is the longer term trend that determines whether a market is bull or bear. Sometimes a market can be stagnant as it doesn’t go in either direction. Small increases and decreases would cancel out any overarching trend making an overall flat market. 

How do I take advantage of these markets?

In a bull market you can take advantage of the positive market by buying stocks before most investors catch on. Buying low and selling high will get you a tidy profit. Overall the market prices should rise so it is key to ride out any small bumps along the way. 

Whereas, in a bear market prices are consistently falling over an extended period of time.  This increases the chances of losses as even if you invest in the hopes the trend will turn, it is difficult to judge where the true bottom will be. In this situation short selling can be the best way to gain profits as you are only betting markets will fall in the short-term. 

Understanding market conditions will help you become a better trader. Using different strategies in bull or bear markets will maximise profit and protect against poor moves. If you want to understand more about market moves, download BullBear

How Reddit caused GME to explode | Stock Market News

After the Reddit group Wall Street Bets told followers to go long on GameStop (GME), the stock has been rising in a momentum bubble, gaining a massive 1,000% since last year.  The shares have gained 245% so far this year and are up a further 28% in U.S. premarket trading Monday. But it is sure to crash imminently. 

GameStop was the most watched stock in the US on Friday as profits for longs and options were the hot topic across all platforms. What is so unbelievable is the growth the stock has seen over the past few days, gaining 51.08% on Friday alone. GameStop shares were even halted twice on Friday due to the extreme price action

One redditor posted on Wall Street Bets they invested $565 last year which has grown into a phenomenal $117,110. 

So why did GameStop rocket? 

The company is a dying retailer selling gaming computers and equipment and saw this boost purely from the hype of social media players on the platform Reddit. The price of the stock is highly detached from reality, meaning this bubble has to pop sometime soon! The stock trades higher now than the peak of the business back in the 2000s. The downfall of GME happened when you could start downloading games straight to your device in 2007, making retail stores selling the physical games redundant. In the world of brick-and-mortar retail, if you don’t adapt, you don’t survive. 

GME price chart from Yahoo Finance

Starting from December, investors were betting the stock would go up and fast. This sparked a feedback loop. This process of delta hedging describes mass buying call options equalling the force of market makers, yet market makers such as the New York  Stock Exchange didn’t act on this.

GameStop added three new board members from RC Ventures on January 11th  – Alan Attal, Ryan Cohen and Jim Grube. These transfers will provide the expertise in e-commerce, online marketing, finance and strategic planning needed to revive the gaming and entertainment company.

Mr. Cohen said, “We are excited to bring our customer-obsessed mindset and technology experience to GameStop and its strategic assets. We believe the Company can enhance stockholder value by expanding the ways in which it delights customers and by becoming the ultimate destination for gamers. Alan, Jim and I are committed to working alongside our fellow directors and the management team to continue to transform GameStop. In addition, we intend to bring additional ownership perspectives to the boardroom.”

Short squeeze

Ever increasing share prices force short sellers out of their positions making them buyers in the “short squeeze”. This pushes share prices even higher, encouraging retail investors to buy in. This makes the stock price inflate so high it is almost laughable . This cycle continues as long as those who have gone short continue to be forced out of their position and those who have gone long still hold hope that stock prices will rise higher. 

While Citron Research’s $20 price target for GameStop could be correct for the long-term, the price rise from retail investors pushing GME have seen the share price rise to $60 in the short term. There simply aren’t enough shares to sell short.

There is one hedge fund that has hit the jackpot by going against the bearish consensus back in April 2020. The South Korean hedge fund, Must Asset Management, bought  4.6% stake in GameStop. The chief executive officer commented this morning “We have become less bullish and turned more neutral on GameStop. This stock will continue to be very volatile and unpredictable in the short term.”

Financial institutions were right but have majorly lost out by selling short. The hedge fund Melvin Capital Management suffered, overall being down 15% this year because of its GameStop short position. 

Is it too late to go long now?

The short answer is yes, it is too late. Looking at the fundamentals, this stock is definitely going to crash, and soon. We are unlikely to see a turnaround unless the company uses its newfound growth to invest in the business. A rumour on Reddit says GameStop could become the new centre for customizable gaming computers – making use of the remaining stores for consultations and gaming. This may just be a pie in the sky idea, whereas in reality online competitors such as OriginPC.com and DigitalStorm.com make a physical store a pretty unattractive option. After all, how many gamers would rather go to a store than order online? 

We can be reassured that GameStops success is not here to last as their market cap no way matches the height the stock price has reached. In this case the retailer was smart to buy back shares as the value has increased tenfold. It also now gives them the ability to sell their shares publicly at a much higher price. 

GameStop market cap from Seeking Alpha

What will stop GameStop rising higher?

As the price rise isn’t attached to the true value or performance of the company, the short squeeze will continue to push prices higher. Once this positive feedback loop is broken, the stock will crash. While GME stock could continue to run over $65, this will only be in the short term. 

Isn’t this market manipulation? 

The subreddit Wall Street Bets may be open to accusations of market manipulation. This could lead to Reddit itself or a regulatory agency closing the group. This is only a likely outcome if the stock crashes and a lot of investors complain, which is more than possible. This boost in small trader call buys causes gamma hedging which involves buying the underlying security to avoid risk similar to what market makers do to manipulate prices to increase. This market manipulation isn’t accountable to one individual so is likely to become a big issue. 

The GameStop bubble is a fantastic example of how retail traders can influence markets and cause growth that isn’t based on fundamentals. While some players are winners, others are losers. This just proves the risk playing with stock markets bring. Learn to trade risk-free with BullBear

Should I buy SolarEdge? | Biden boosts green tech stocks

This week we are going to look at a stock that isn’t so well covered in the press. SolarEdge is a renewable energy company that is a front runner of its sector. With Biden’s new commitments to green energy, how high will it grow?

SolarEdge Technologies, Inc. (SEDG) reached its yearly high this week at $377. The company’s share price has risen over 20% in the past few months seeing a massive year-on-year growth of 173.32%. Morgan Stanley rated the company as “overweight” with a target price of $354 meaning it is in a strong position to grow. This equates to a 19% upside from Wednesday’s closing price. 

If we compare the performance of SolarEdge against the S&P 500 we can see it is growing much faster than the top 500 companies in the US.

Price growth of Solar Edge (blue line) compared to the S&P 500 (grey line) from the Motley Fool.

News

SolarEdge has seen one big setback this year due to fresh competition. The renewable energy company has rocketed up from its low of $180 in September when Tesla launched a solar inverter, which was previously a market dominated by SolarEdge. 

SolarEdge price chart from summer 2020 to present from Yahoo Finance

Of course the big news that affects green stocks is Bidens pledge to support green energy solutions. This news presents a great opportunity for the solar technology company and a huge turnaround from the previous office. While President Trump promoted the use of high-polluting fossil fuels, President Biden has imposed a moratorium on oil in the Arctic National Wildlife Refuge and advocated a $2 trillion green energy plan to “achieve a carbon pollution-free power sector by 2035.” He has also extended the solar investment tax credit for another two years to encourage more widespread implementation of solar energy solutions. With the recent changes made by Biden, hours after his inauguration, green technologies should be more favourable! Biden made a bold move rejoining the Paris climate agreement that Trump had dropped out of. People see him setting a precedent of action and restoration, making many US stocks rally

Furthermore, renewable energies are becoming more cost effective, Garvin Jabusch, investor at Green Alpha Advisors, remarks the cost of generating electricity from solar methods has reduced by 90% over 10 years. Making solar energy creation much more affordable and therefore attractive will surely boost the growth of this sector and SolarEdge’s stock price.

Analysts consensus on buy or sell from Yahoo Finance

Buy or Sell?

Not sure whether now is the right time to sell? If you think recent events are overhyping the potential of SolarEdge then selling high and buying again at a lower price will be the best route to maximise profit. 

Looking to buy? Now might be a little late to enter the game, with the company price much higher than the industry average indicating an adjustment is on the way. 

However, expert analysts overall see SolarEdge as a BUY. 

Price Forecast

In the short-term the stock will fall (over the next 2 months) as a bearish pattern was detected with a triple moving average crossover. Whereas longer term the stock will rise and then flatten, with the possibility of the price even falling in a few years time. So depending on how long you want to hold SEDG stock determines whether now is a good time to buy.

NasdaqGS:SEDG Earnings and Revenue Growth January 19th 2021

Overall SolarEdge has a sunny future ahead (pardon the pun). Although slightly negative over the current year, longer term the company will see considerable growth. 

Growth EstimatesSEDG
Current Qtr.-46.70%
Next Qtr.-2.10%
Current Year-9.50%
Next Year15.90%
Next 5 Years (per annum)20.00%
Past 5 Years (per annum)33.18%
Growth prospects for SolarEdge from Yahoo Finance.

Not sure whether to buy or sell? Try our risk-free trading app to understand more about the markets before you risk your hard-earned money. 

Trading 101: How to diversify your portfolio

Diversifying your portfolio follows the basic advice of ‘don’t put all your eggs in one basket’. If you diversify you mitigate risk and prevent you from losing money. 

You can diversify across assets and different asset classes. Diversifying your assets includes investing in a range of shares or ETFs. There are many different investment types to diversify your portfolio with: bonds, property, art, crowdfunding shares, P2P lending, and cash. You can also consider diversifying across industries and national economies by investing in companies from different countries and categories.

Why diversify?

Diversifying is the best way to guard against risk. There are two types of risk you need to be aware of:

  • Specific risk: the risk in investing in any particular asset which includes: competition, company success, and industry conditions. You can gain an understanding of the level of specific risk by analysing the past volatility of that particular stock or the industry as a whole.
  • Systematic risk: the risk to a market, asset class or financial system. This is the downturn in the stock market, recessions or depressions. These tend to be more general movements in the economy. 

Diversification protects against specific risk by reducing your exposure to a particular stock or industry and reduces vulnerability to problems companies and industries can face. 

In downtimes diversification is even more important as you are protecting yourself from fragile industries and companies that will go bust. Systematic risk also induces less dramatic market downturns, where diversification can insulate you from risky companies that may bring large losses. 

How to diversify

It is as simple as spreading your investments across a number of different shares. If you want to go the extra mile you could measure your risk and appropriately mitigate against it by following these targets:

  • Limit each stock to holding more than 10% of your portfolio
  • Invest in at least 15 different stocks
  • Invest in at least 2 ETFs
  • Invest across at least 5 different industries
  • Spread your investments across the globe
  • Invest in at least 1 alternative

You can do some research and decide which industries and countries carry the highest risk so you can include these as part of your portfolio,  but make sure to limit how much investment you weigh on the most vulnerable of assets. It can be tempting to invest more heavily in an industry you are familiar with or has high potential such as green energy or emerging tech companies, but even these will carry their own risk and potentially earn you great losses. Perhaps the UK cuts funding for green technology or maybe a change in data privacy laws limits the growth of some tech companies. 

ETFs

You should build a portfolio of stocks which are different in a variety of ways: industry, company growth stage, country and reliance. 

A great way to diversify your portfolio if you are unsure how to pick specific shares is investing in an ETF which provides you with diversification across a whole stock index like the FTSE 100 or the S&P 500. You can put the bulk of your investment into ETFs and reserve a portion of your funds for investing in riskier but potentially more profitable individual stocks. 

Diversifying to reduce systematic risk can include investing in different asset classes. Asserting control and being smart by diversifying will preserve your portfolio and mitigate against risk over time. Why not learn to invest risk-free with BullBear.

This is not investment advice and should only be used as research and entertainment purposes only. All investors should make their own decisions and take on their own risks. If in doubt speak to a professional investment advisor. 

How much of my income should I save or invest?

If you are thinking about saving or investing some of your income, you’ve come to the right place! There is no set rule on how much to put away as the amount will really depend on your goals and financial situation. Read on to see how you can work out your goals and how to save for them. 

Investing is the best way to grow wealth over a long-time. If you started planning how to save and invest your income, you could achieve your financial goals! Investing is a great way to overcome inflation and makes your money work for you rather than letting it lie dormant in a savings account. Wondering how much money to set aside? Read on.

Some fun facts to get you in the mood…

  • 9% of Brits have no savings at all.
  • The average person in the UK has around £7,000 saved.
  • Only 3% of people in the UK invest in stocks and shares ISA.
  • 33% of Brits own shares.
  • 75% of millennial’s and gen Zer’s consider investing compared to 40% of the silent generation.
  • Most people (55%) invest due to the poor interest rates on savings accounts.
  • 73% of men consider investing compared to 61% of women.
  • On average, people hold their shares for 0.8 years.

Should I save or invest?

The answer is both! 

First of all it is good to get an understanding of the difference between saving and investing. Most people will do a mix of both as they can serve different purposes, but again this is all down to your personal circumstances and could be wildly different to anyone around you. 

Saving is the concept of putting money aside to save for something like a holiday or house deposit or in case of emergencies. Most saving involves putting your money into savings accounts held with a bank or building society. Most people save a portion of their money no matter how small, as it is a long-term way of purchasing things you want and making sure you aren’t living paycheck to paycheck. Putting your money in a savings account is safe, and having your money out of reach helps a lot of us actually stay disciplined enough not to dip into it!

Investing is using some of your money to grow more money –  to build profit. This may take the form of investing in stocks and shares or property. Typically, you should not invest money you are not willing to lose as there is a lot of risk involved in investing. Investing should be a means of growing your wealth but should not be relied upon. 

How do I decide how much to put away?

Set up an emergency fund that will cover around three months support – including rent, food and other essentials. By having a pot of money in case something goes wrong or life takes you by surprise you can be protected against the worst and give you the reassurance that you have three months to find another income source say, if you were made redundant. 

Save regularly to reach your goals. If your circumstances allow, saving at least 10% of your monthly income will help build up funds to spend on more expensive and infrequent expenses. This could cover anything from buying gifts at christmas to saving for a wedding or your first home. It is all about what you want to do in life. 

Pay off debt first. Not everyone is in the position to save, if you are under money pressure then deal with this first! There is no point saving for a holiday if you are building interest with unpaid credit cards. 

When is it better to invest rather than save?

How much you want to invest really depends on what your financial goals are over the short, mid and long term. I know it can be scary thinking 10 or even more years ahead, but you will thank yourself in the long run. 

Your short-term goals will cover what you want to do in the next few years and it is best to build up the money to do this in a savings account. Putting money into investments will reap a much greater reward than keeping it in a savings account. You should be aware however, that the interest you earn on savings will not match inflation rates. This means the buying power will reduce, if only a little.

Whereas, longer-term goals may benefit from you investing rather than saving. You should consider how much risk you are okay with. If you wanted to pay for a wedding in five years, how gutted would you be if you couldn’t because you lost all your money in a risky investment that didn’t pay off. It is typically safer to invest over long periods (10 years plus) when fluctuations in markets will be smoothed out and the growth of your initial investment will dominate. Over long time scales, investing will bring you a much greater return on your money and overcome the negatives of inflation that affects savings. Whether you invest in high growth stocks or sturdy-growing ETFs is up to you, but it is worth diversifying your investments due to the risk involved with investing in a single stock or commodity. 

GoalSituationSave or invest?
Buy a carIf your car is on the brink you will need to think about buying a new one soon!Save – you will need the money soon.
Go on holidayIf you enjoy holidays in exotic locations each year – consider the cost.Save for this summer and consider investing for the next few. Maybe you could afford the Carribean rather than Bognor Regis if you invest.
Put down a deposit for a homePerhaps in 5 – 10 years time you’d like to buy your own home.A mixture or save and invest. Your plans would be set back if you didn’t achieve this goal but you want to be able to achieve it as soon as possible.
Support childrenChildren are expensive and need supporting for almost 20 years. Similar to the above, it would be a disaster if you couldn’t support a family in the short to mid term, but perhaps investing to help support them flying the nest would work. 
Enjoy retirementThis might be close or very far off, consider if you want to retire early and what sort of retirement you want. Invest – you have a long time for your money to grow.

How much you invest will also depend on your income and your career prospects. If you’ve just started your own business and it will take five years to break even then investing would not be sensible at this point. But if you are jumping up your career ladder and don’t see yourself spending that much in the short to mid term then investing would be extremely beneficial. It is a spectrum after all – controlled by risk-appetite, situation and goals. 

Calculating how much to invest

Making a plan

  1. List and total up all your outgoings: rent, food, expenses, travel, paying off student loans or car payment plans. These are the things that you cannot avoid paying for. 
  1. Then list and calculate how expensive achieving your goals are and on what timescale, this could be: buying a car, buying a house, marriage, retirement. If you want to opt-in for a pension scheme, consider this here. 
  1. Next consider how much you currently earn and how much this might change over the future. What salary increase are you expecting? Will you share your income with your partner?
  1. Consider your risk appetite. Typical investments return 6.5% per year but this could be more conservative or high risk if you decide. 

Let’s use an example: 

  1. Say you have an annual income of £40,000 and live in London. Your rent, expenses and activities such as entertainment and holidays costs you half of your income. 
  2. You are in a relationship and are hoping to get a start-home together in the next five to ten years. You should then look at the likely cost of achieving your goal, whilst considering those that may contribute such as a parent or partner and account for inflation and rising house prices. You will share the cost with your partner, so for a £800,000 home, your half of the deposit will cost you £60,000 as you are a first-time buyer. You also want to put away 10% each month as an emergency fund
  1. You should also consider how your income may grow, if you are a high-achiever and are likely to be promoted regularly then you may see a salary increase of 10% a year – the average is 4% per year. You also use a retirement calculator that suggests building £700,000 in capital to retire at 68. This will mean saving £500 per month if you start at age 25. Most people need a retirement income of two thirds of their salary.  
  1. You want to invest with the typical risk which is 6.5% annual rate of return. You invest in various stocks with fairly low volatility. 

Income: £40,000, increase 4-10% pa

Essential expenses: £20,000

Goal: £60,000  deposit in 5-10 years

Outgoings: £6,000 pension, 9% salary on student loan

Investment return: 6.5%

How much to invest? 

If you invest the remainder of your income, you can afford your goal at the end of year 5!

YearSalaryExpensesOutgoings (student loan & pension)SavingsRemainder to InvestInvestment Worth
140000200009600400064006400
2428002000098524280866815631.42
3457962000010121.644579.611094.7627447.3394
449001.722000010410.15484900.17213691.393242028.67316
552431.84042000010718.865645243.1840416469.7907259569.00028
656102.069232000011049.186235610.20692319442.6760780275.4503
760029.214072000011402.629276002.92140722623.6634104369.6518

What rules are out there?

The rule of thumb is to invest 10-15% of your income.

The 50/30/20 rule suggests saving 20% of your income. With 50% for essentials, 30% for discretionary spending and 20% for savings. But this allocation is flexible depending on your income and expenses, where a high earner will have less than 50% for essentials, someone with dependents will have higher than 50% for essentials. If you’re in your 20s or 30s and can earn an average investment return of 6.5% a year, you’ll need to save about 20% of your income to gain the financial independence to actually enjoy life. 

The 4% rule states you could, in theory, use 4% of your savings to live on indefinitely. Following this rule means you need to save 25 times your annual expenses to support yourself. Sadly there are no risk free investments that give you 4% return and this also doesn’t consider changes to inflation. If you saved 20% of your income it would take you 41 years to be financially independent. 

% of Income SavedTime Required To Save 25x Annual Income
1%100 years
2%86 years
5%67 years
10%54 years
15%46 years
20%41 years
25%37 years
50%26 years
75%21 years
90%19 years

Start saving as much as you can until you are comfortable – then start investing. Remember investing just 1% of your income will return you 6.5% of it over one year. If you are in doubt, seek advice from a professional. 

If you are considering investing your money. Learn how best to invest with BullBear!

Is Pinterest a buy?

Over one year Pinterest stock price has increased a massive 233%. Over the past three months Pinterest has increased by 62.4% compared to the market average of just 11%. While the image based social media platform is seeing healthy growth, is it time to buy?

Pinterest was launched in 2010 as an alternative social media platform that focused not on keeping up-to-date with your friends and family but in a more wholesome format of encourage hobbies and goals.The platform shows Pinners visual recommendations (Pins) based on personal interests and then allows users to organise them into collections (Boards). 

Pinterest only launched a decade ago, but now sees 442 million global active users each month. Pinterest has seen a 233% increase in share price since January 2020 from $22 to over $73. Only going public in 2019, have they had enough time to prove they are a worthy investment?

Looking at their financial health, analysing Pinterest’s cash flow they have a sufficient cash runway for three years. Showing they have a long way to grow. 

Pinterest stock performance from CNN Money

News

Pinterest has kept clear of the headlines making it a reliable stock to invest in.

Pinterest has proven very resilient to the pandemic and lockdowns and has come out as a pandemic winner seeing their price increased by seven times since a low in March. Their third-quarter report in October saw sales growing 58% year-on-year with a massive 37% increase in total monthly active users. The company has a market capitalisation of $40.7 billion, valuing it at around 103 times their expected earnings. 

The website is developing  to keep up with other popular social media platforms – transitioning from their simple image model to include more rich media content such as videos, gifs and interactive posts. Having other forms of media can be more engaging and keeps users using their service longer, not to mention keeping up with competitors! Another bonus of having videos and such-like is the higher advertising rates which will bolster revenue growth. 

How does Pinterest perform against competitors?

With the large-cap technology sector fairly crowded, it is good to compare Pinterest’s performance with other market leaders. Zoom Video Communications has a higher probable upside indicating investing in Zoom over Pinterest is favourable. Although compared against Baidu, Pinterest outperforms with a lower downside and greater favourability with institutional investors. Furthermore, Pinterest is more volatile than Snap Inc. it has a stronger buy consensus due to its growth rates. When compared to the giant that is Twitter, Pinterest loses as Twitter has a higher possible upside, more institutional investors (72% compared to Pinterests 55%) and is less volatile. Overall, Twitter is the favourite out of these social-based tech giants. 

CompanyGross RevenuePrice/Sales RatioNet IncomeEarnings Per SharePrice/Earnings Ratio
Pinterest$1.14 billion37.82$-1,361,370,000.00($3.24)-21.58
Zoom Video Communications$622.66 million177.34$25.31 million$0.094,289.89
Baidu$15.43 billion5.4$296 million$5.3644.99
Snap$1.72 billion43.38$-1,033,660,000.00($0.75)-66.6
Twitter$3.46 billion10.51$1.47 billion$1.9922.97
Summary of performance of large-cap tech companies

The antitrust lawsuit filed against Facebook Inc. (which holds Facebook, Instagram and Whatsapp) will likely hold back price growth giving other social platforms , like Pinterest, an opportunity to shine. Pinterest is already making moves, trading with revenues at over 3 times that of Facebook. 

Buy or sell?

Pinterest’s positive performance and consistent reputation see it as a strong buy

Analyst recommendations for Pinterest stock from CNN Business

Sales have grown by 43.37% quarterly and Pinterest has been the subject of 16 research reports in the past three months, indicating there is a strong interest in it’s performance. 

Currently CNN poses Pinterest as a buy, with 16 of 24 analysts backing this. This consensus  has been consistent over January, demonstrating the consistency of Pinterest’s growth. 

If you are looking for a good entry point this short-term price prediction chart should help!

WalletInvestor stock price forecast over the next few days

Price Forecast

Although over the past month performance is at -0.67%, over a three month time frame Pinterest hold a positive 58.62%. 

Using forecasts of 24 analysts, over 12 months, CNN saw Pinterest rising 8.3% in share price – equating to $75.5. The low estimate is -39.7% and the high estimate is 29.1%. 

Pinterest pirce forecast chart from CNN Money

Pinterest forecasts an annual growth of over 50% this year and a revenue growth of 682% over 5 years – this means if you invested £100 today you would earn £782 by 2026. 

Will you buy this sturdy grower? With growth rates of 50% a year, Pinterest appears a safe investment. To keep up to date with the latest stock market news, follow BullBear

What’s happening with Crypto Markets?

Cryptocurrencies have seen a crazy week with bitcoin dipping 20% after an all-time high of $42,122 on January 8th. There is supposed to be a bullish market ahead, with altcoins to follow. Time to buy the crypto dips before they fly high! 

Why did Bitcoin dip on Monday?

Bitcoin dropped 20% since the new all-time high of $42,122 on January 8th. The violent sell-off saw record breaking trading volumes. While there is still potential for bitcoin to drop lower, a new influx of buyers will likely spark an uptrend. Alts didn’t follow with such a large drop, after a small drop of 5% they recovered overnight.

Bitcoin is attempting to bounce back after falling over 30% in the last few days. It is starting to make a recovery while other cryptocurrencies like Ether, Ripple and Litecoin are also creeping back up.

The price of Bitcoin crashed on Monday after reaching an all-time high of $42,122. Bitcoin has been growing at a phenomenal rate, seeing a 940% increase from last year’s low. This is the best performing asset in the financial market with gold only rising 25% and the S&P 500 rising 70%.

The recent volatility is likely led by the boost in popularity in cryptocurrency. The recent rally wasn’t sustainable which is why Bitcoin crashed as investors withdrew their money thinking a rise any higher without a correction would be too good to be true. 

Another reason Bitcoin has dropped is the US dollar gaining strength. The US Dollar Index rose 1.5% over the past few days sparked by the US’ political crisis and the dominance of coronavirus over Northern America and other parts of the world. The $3 trillion stimulus package that should accelerate US economic recovery has led to rising interest rates, pushing up the dollar. And since cryptos are measured against the dollar, this helped make a noticeable dip. 

Will we see a recovery?

Whales (large bitcoin investors) bought Monday’s price dip presenting confidence in a bullish market. Whale entities (single networks holding at least 1,000 bitcoin) rose to a new record high of 2,140 on Monday. 

Some high-profile investors retain a bullish outlook too. Anthony Scaramucci, founder of SkyBridge Capital, stated the decline in bitcoin this week creates a great opportunity to enter the market. Although, Scott Minerd, an investor at Guggenheim Partners, has expressed his caution that bitcoin is “vulnerable to a setback”. 

This bull run is different to those seen in the past for bitcoin due to the recent support of institutional investors. Previous spikes in volatility were the result of speculative frenzies and had little large investors to control the price change, whereas Monday’s price drop is unlikely to send away whales. 

The short-term outlook or bitcoin however is not positive. David Lifchitz, investor at quantitative trading firm ExoAlpha, said “There could be another dump as outflows from the cryptocurrency exchange Coinbase Pro have dried alongside an increased transfer of coins onto exchanges,” as demand pressures decrease. 

What do the stats say?

The bitcoin price correction might be ending, as several metrics hint at a new bull run. The brief dip has allowed sidelined investors to get back into the market, and with more buyers the price will go up. Following a brief consolidation period after Mondays days drop the long-term outlook looks bullish. 

Some technical charts call for extension of Monday’s bitcoin drop. The Ichimoku cloud tool is great to identify trend direction and momentum. Currently we can see a continuation of the bearish trend as bitcoin is trading below the red cloud line. Chris Thomas, head of digital assets at Swissquote Bank, expects consolidation at $33,000–$36,000 range until next week. This consolidation could end with a bullish move if institutional demand perks up. The attraction of buying bitcoin at a dip may be just enough to encourage fresh buying activity. 

Bitcoin Ichimoku cloud – chart from TradingView, Patrick Heusser

The number of active addresses is ever increasing – this metric considers how many tokens are being transacted daily. With more investors the price of the underlying asset is sure to increase. Bitcoin active addresses figures are at an all-time-high at 1.34 million, seeing a 8.8% increase in a single day. 

Similarly the number of active entries is at a high, showing investors are actively using Bitcoin’s blockchain. A massive 25% increase from the previous all-time high in 2017 can be witnessed. 

So is investing in crypto worth it?

Bitcoin is the strongest cryptocurrency out there, although all cryptos have high volatility. 

Cryptocurrencies avoid a centralised financial institution meaning they avoid inflation. If a government creates new money through a stimulus then inflation is sure to follow. Owning crypto is holding a stake in the value of a currency solely controlled by markets. It is more difficult to exploit or manipulate people who don’t rely on a central authority. 

However, crypto is not entirely immune from inflation. Mining crypto is comparable to printing money, though, the difference between the Federal Reserve and Bitcoin minors is that the miners are rewarded for their efforts. Halving means every one ‘block’ mined is cut in half every 210,000 blocks produced, which equates to a reduction every four years. There are around 2.5 million bitcoins left to mine, are the diminishing returns worth it? 

Why are cryptos unpopular with financial institutions?

Speculation has meant large pension funds and traditional investors are unlikely to hop-on the crypto bandwagon any time soon. Cryptocurrencies are not a suitable alternative to safe-haven assets and don’t help protect against risk. The high volatility and the fact that cryptos are not based on any underlying asset, only market pressures, makes them a high risk investment. Whilst more traditional investment institutions have kept away from the crypto market, hedge funds have been getting onboard due to the growth potential.

Mother of All Bubbles

The Bank of America’s chief investment strategist, Michael Hartnett, claims bitcoin is “the mother of all bubbles” concerning the recent rally. Bitcoin is an extremely crowded trade with the price being solely controlled by demand. In other words, investing in bitcoin or any other crypto for that matter is essentially putting all your eggs in one basket – even a small drop could see all your investment becoming worthless. 

Bitcoin’s price from 2019 to present day from markets.Bitcoin.co

Bitcoin strikes as a clear frontrunner when comparing past bubbles. In the late 70’s gold saw a price surge of over 400% and nothing has gone above this level since. 

Cryptocurrency cannot provide a hedge for equity investments as the price of a stock tends to move with crypto trends. Crypto can see high volatility, on Monday Bitcoin traded at $10,000 below its peak of $42,000 just days before.  The steady drip of reputable investors has helped grow the bubble.

What about altcoins? 

With Bitcoin pulling back from record highs, alternative cryptocurrencies are taking the spotlight. Bitcoin was 87% and ether was 78% from their all-time highs (ATH) on Jan 11th, where other coins were miles away from their ATH. This suggests there is a lot of potential for altcoins to climb higher, irrespective of bitcoin’s recent bull run. 

The high profile of the bitcoin bull run has encouraged newbies to join the crypto game due to FOMO. Some beginner investors see the low price tag of altcoins and invest due to their affordability. Altcoin movements follow those of bitcoin so are still risk-on.

What do you think will happen with crypto markets? Will we see a brief stabilisation before cryptos climb higher or will the bubble be popped? Keep up to date with the latest stock market news with BullBear.

Does working from home really save you money?

There are a lot of financial benefits that come to mind when you work from home rather than commuting to the office. With the average Brit saving £55 per week working from home, this gives you a monthly chunk to invest. But are you saving as much money as the average?

Working from home has many benefits, it saves you time, money and stress. But saving on transport fees, food and more can easily save upto £50 a day for high spenders. If you cut travel costs, socialising and other expenses that you would do working at an office you could easily save £500 a month! That is £500 a month that you can invest, to grow your wealth and invest in your future.

Working from home is the ‘new normal’ for nearly half (49%) of workers in the UK. The Office for National Statistics showed £157 billion was saved over the the first lockdown back in Spring 2021 with the average employee saving £495 a month working from home. 

Whilst some people are saving money due to physically not being able to spend it in shops due to various lockdowns, others have adopted a new frugality that comes with the uncertainty of a global pandemic. A survey by Hargeaves Lansdown found people are likely to stick with this shift with 32% of people saying they would go out less in future, 31% cutting back on impulse buying, 30% cutting on clothes and 15% reduced spending on food during the day. If you have accumulated from accidental savings, what could you do with the money? We recommend investing it

How are you saving money?

  1. Commuting
Photo by Life Of Pix on Pexels.com

This might be the most obvious expense you save on when shifting to working from home. If you drive to work you can save on fuel, maintenance and running costs. Or if you use public transport, not having to get the tube everyday or that occasional Uber really adds up! When your commute is less than 10m there is no need to splash out on transport. Some people have even sold their cars to save on that expense, after all, if you are not using it why pay for the running costs. 

  1. Wardrobe
Photo by Pixabay on Pexels.com

One of the best luxuries about working from home is the shift to more casual dress. Swapping that tie and shirt for a nice t-shirt might not seem like a money saving hack but believe me, it adds up! Think about the cost of smart shoes compared to your slippers or the dry-cleaning costs you will save on. People have also been more likely to sort-out their wardrobes during the pandemic auditing what you’ve already got meaning you are less likely to buy new items. Having retail outlets closed for a large portion of the pandemic has also helped curb the likelihood of spending on clothes. Oh, and not to mention how much you are saving by doing DIY haircuts. Looking good has never been less important. 

  1. Food
Photo by Tim Gouw on Pexels.com

When you have to commute to the office it is easy to pick up a nice coffee en route and to go to a cafe on your lunch break. £3 on a takeaway coffee, £8 on a bougie sandwich and that one or two beers after work at £6 a pop easily add up, but is also very easy to do. If you tot up your coffee spend alone, a daily coffee can cost you £3000 a year! But during the pandemic with everything shut, and their no temptation of being in close proximity to expensive food and drinks you can save a hell of a lot. Not only do you cut down on eating and drinking through the workday, with more and more people starting health kicks during the pandemic you can cut back on ready-meals, fast-food and takeaways that are typically high in salt and fats to slims your waist, but also trim your outgoing costs. 

  1. Childcare and dog walkers
Photo by Sharon McCutcheon on Pexels.com

A huge expense that parents experience is childcare for small children. If both parents work, childcare is almost unavoidable and is an expense that can really put a dent in earnings. Given the reduced childcare opportunities and requirement for home learning, looking after your own kids (whilst exhausting) can save you a lot of money! Not paying for professional childcare, like a nursery, after school club or nanny, whether it’s your decision or not, is a great way to save money and working from home means you have more chances to bond with your kids and be more involved in their learning. 

While not as expensive as childcare, dog walkers can cost a small fortune. Dog Walking or doggy daycare services can be expensive, especially if you are working long hours. But with the shift to working from home your furry friend can snuggle up to you for free! Although we can’t promise you’ll be as productive with a pet to distract you. 

  1. Tax breaks

New working from home tax breaks such as a government allowance and home office expenses can work wonders for your wallet. If your employer doesn’t pay for your new desk, chair or monitor you can claim tax relief through a P87 form. Anything that is a home office essential can fit into this scheme, including travelling for work (excluding commuting), upto a total of £2,500 a year.  Most workers in the UK can claim tax relief off the government! Anyone who has been made to work from home since April 2020 is eligible to claim tax relief off HMRC. 

Worked from home in the UK? You can claim £60 – 125 tax relief

In October, HMRC launched a new microservice meaning that anyone working from home, even for ONE DAY, could automatically get the whole year’s tax claim for working from home. This sounds too good to be true right? But after checking everything was legit, we found it really is worth it to claim this tax relief!

Martin Lewis, money-saving expert, contacted HMRC to receive this quote: “We recognise that the working-from-home situation is very fluid this year, so we’re accepting claims for the full year’s expenses. That includes even if people have only worked from home for some of the year, to avoid needing to contact us if you have to work from home again.” This essentially means the HMRC are willing to give away a year’s tax relief for people working from home as little as one day to save on processing costs. 

The tax relief covers increased costs for working from home, e.g. heating and electricity that wouldn’t usually be expected if you were out of your home and in the office. An average energy bill last year cost £1,254 equalling £3.50 a day, demonstrating the large cost of powering your home. But due to the shift in working from home due the coronavirus pandemic, a lot of Brits have been forced to work remotely. This tax relief scheme has always been around but has only seen a higher profile this year after the launch of the HMRCs microservice. 

So how do they put a price on working from home costs? Electricity and heating costs for working hours can be difficult to calculate, therefore the HMRC simplify this cost to £6 per week. If you think you have greater costs from working from home, you can claim more, but will have to provide evidence of bills – this might be more hassle than it is worth. 

Overall, you can receive between £62 and 124 a year depending on your tax rate. Those on the basic rate will receive £62/year and those on a higher tax rate can get £124 a year, calculated on the tax relief per week. The weekly breakdown surmounts to £1.20/week if you’re a basic-rate (20%) taxpayer, £2.40/week if you’re a higher-rate (40%) taxpayer, or £2.70/week if you’re an additional-rate taxpayer (45%). What makes this scheme great is that it is quick and easy to claim a one off payment. 

You can claim this tax relief through the government’s working-from-home microservice that will add the tax relief via your tax code in one lump sum.

What can you do with that extra £500 a month?

So if you take the average saving of UK workers per month when working from home versus working in an office, you can see a saving of £500 each month! We recommend you invest your money in a passive income stream that can help support your future. 

While it is hard to speculate, if you invested £500 a month just 10 years ago you can build a wealth of around £60,000, acknowledging inflation costs at 1 – 3% a year. If you choose the right investment vehicle you could yield a 8% rate of return, meaning investing your £500 each month can get you a total of £91,500 after 10 years. If you invested in a more risky option, like individual stocks, you could yield an investment much greater than 8%, although with more risk means a less predictable outcome. A safer option would be investing in an ETF, which weathers market volatility better and doesn’t run the risk of losing all your money if one company fails to perform. If you invested £500 a month in the S&P 500 for 10 years, you’d have around £120,000 today – that’s a 225% total return. If you want to keep things local, another popular ETF is the FTSE 100 which has the top 100 most highly capitalised blue-chip companies in the UK, investing in a low risk investment as these companies are all well-established. ETFs have the advantage of having low operating costs and being tax efficient compared to actively managed mutual funds. 

Working from home is here to stay! One study found remote employees work on average 1.4 days extra per month compared to those working in the office boosting productivity and saving on office costs.

What will you do with your extra money? Put it towards electricity and heating or invest it? Make your money work harder with BullBear

Should you buy or sell gold?

Gold prices are likely to have a bullish run this quarter, although prices are rocky right now.  The Democrats win in the Georgia Senate Runoff Elections supports the delivery of a fiscal stimulus said to push gold prices higher, although gold price is currently bearish. With gold in a current dip and overall prices set to increase, is it time to buy?

Gold is a metal commodity which is valued against the US dollar. Gold holds its value well, making it a safe haven for investors, although recently gold has been rockier than usual especially with the distraction of rising Bitcoin, investors are turning to crypto. Despite this, gold is a great hedge against inflation and typically follows opposite trends to stocks and bonds, meaning when typical markets decline, gold can increase. This means it is a great investment for uncertain times like these. 

Gold stocks and gold ETFs are the easiest way to invest in gold – there are two types of ETFs, those that track gold stocks such as VanEck Vectors Gold Miners ETF or a direct tracker of gold prices such as GLD ETF. It is good to be aware that investing in gold mining stocks such as Barrick Gold, Newmont and KirklandLake Gold finances gold miners and helps them make more profit. Increasing the price of gold inflates the bottom line to increase the profitability of miners, supporting the industry as a whole and feeding back profit into your investments. 

A record price of $2,070 was observed mid-2020 before falling back to $1,770 at the start of December. Will we see gold hitting the $2000 mark or declining over 2021? The jury is out.

Recent news

Gold prices sank below $1900 per ounce this week as Senate runoff elections and the riots in the US Capitol rose the dollar and Treasury yields higher. Despite this, gold is expected to continue its upward momentum as Democrats are set to release more fiscal help to revive the US economy. 

Following the Georgia elections on Tuesday the gold price rose to $1,950 with SPDR Gold Shares ETF seeing a 2% price jump. Now the Democrats have secured a win in both Georgia runoffs taking charge of the Senate, fiscal support can be given out encouraging gold prices to rise. The fiscal stimulus will push up the federal deficit and debt creating a nurturing environment for gold prices to creep up. 

Contrary to what was expected, the price drop in gold is largely accountable from Dow’s action to put a risk-on market alert for the historically safe-haven commodity. This sparked a swift sell-off as investors were nervous investing in gold no longer guaranteed profits. 

Fiscal policy is an important control on gold price. In December, the Federal Reserve policymakers suggested a shift to tighten policy was ahead also making gold a less attractive investment. Although they are holding loose policy for the next year so don’t be put off too quickly. 

While liquidity is flooding financial markets and central banks commit to keeping policies loose in the short term to increase price pressures to push gold higher, hopes for the end of the pandemic due to various vaccines being rolled out has dampened investors reliance on gold as a safe-haven commodity. 

Another factor that affects gold price is increased buying of physical gold in Asian markets this time of year. Consumer demand may pick up with the Chinese festival of the Lunar New Year coming up that has historically pushed up prices in January. Although with economic recession and the global pandemic limiting festivities, will we see the effect of this?

Buy or sell

There is uncertainty whether you should buy or sell gold at the moment as price forecasts range from large gains to large losses. Moving averages recommend buying whereas technical indicators suggest selling. Whereas, markets show investors voting with their feet with a slight bias to buying gold. 

Considering the Democrats win hitting the news this Tuesday, Gold currently sees an overall buy at 50-60% of traders buying.  The strength in buying is currently weak but is increasing day-on-day. 

Long-term gold is a hedge against inflation making it a robust investment. Over 1 year, gold futures rose 20.5%. In August, Warren Buffett’s Berkshire Hathaway bought shares of gold miner Barrick Gold indicating the future is bright. However, there has been a fair amount of movement over the last few months and not all of it positive. 

Retail traders are mostly net long at almost 3 to 1. Although net-long traders have dropped by 7.2% since last week and those who are net-short are 41.4% higher than last week showing this pattern is reversing. This summary seems to suggest Gold prices may only fall short-term and see a reversal soon as more traders are starting to go net-long over the past few days. 

Chart from Investing.com

Price prediction

In mid-November Goldman Sachs chief commodity strategist, Jeff Currie predicted a $2,300 12-month target for gold. His bullish prediction was based on a forecast of rising inflation due to the poor economic state and doubts as to how the US dollar will perform in the current economic climate.

If we look at predictions just one month ago, there was an optimistic outlook for gold. Using a monthly chart, gold continues to rise following the ascending trend since summer 2019. XAU/USD is expected to rise above $2,000 early to mid-2021 using this prediction.

Forecast Poll 2021 from FXStreet

Since then, expert opinion has been more bleak with some predictions showing a price fall over the next 12 months. The future of gold is rocky with predictions over the next 12-months seeing a downtrend to $1767.

Graph from tradingeconomics.com

Over the short-term gold is likely to see a rise. Gold tends to benefit from times of greater volatility. The past few days saw gold volatility rise correlating to a rise in gold price. Rising gold volatility has almost always given a bullish outcome. 

The gold price outlook is bullish over the first quarter of 2021, although there is some dispute over this. We recommend you look at the graphs and resources provided to judge for yourself. 

Considering government deficits and interest rates staying low the economy is looking for growth post-pandemic. It might surprise you but gold is not the best performing commodity out there. Silver prices’ recent trends suggest that it may likely lead gold prices in the future. One thing that is more solid in terms of predictions is that gold will not likely be the frontrunner of growth with other metals such as silver, platinum, iron, nickel or copper likely to outpace gold prices this quarter. 

After a correction to the bullish trend, a fresh bullish impulse is expected to rise gold prices over this next year. Commitment to support the recovery of gold from governments and central banks could see gold push above the $2,000 mark. August and November saw highs setting a bull flag that was watched closely over December. Gold prices have passed the 38% Fibonacci retracements of the 2020 low high range of 1928 but have not yet passed the November high of 1965. If this level was broken a bullish run could be ahead, opening up the possibility of a move to $2000 or higher. The markets are likely to be jumpy until an influx of buyers bring up the price. Short-term however, there will likely to be some dips, opening up the chance to go short. 

The table below is a good summary of what has been discussed. Gold’s future over the next 12-months is highly uncertain, possibly the most uncertain in recent history! Whether gold is a buy or sell is really open to opinion. 

Table from UK investing

Apply the same principles to buying gold as any stocks or ETFs meaning wait for the right buying point and do your research as to how stocks will perform. If you are uncertain whether to enter the gold markets, try our risk-free trading simulator app first! BullBear provides investing practice for free!