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‘Markets are on a vodka-Red Bull’: Behavioral investing analyst on his top 3 concerns about Reddit-fueled trading – CNBC

Posted: February 6, 2021 at 6:51 pm


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The stock market's Reddit-fueled trading frenzy could lead to undesirable outcomes for even the most successful of retail investors, behavioral finance analyst Dan Egan told CNBC's "ETF Edge" this week.

People seeking connection online during the pandemic and the rise of commission-free trading have given way to a speculative boom that raises concerns about retail traders getting burned, he said in a Monday interview.

"It sort of feels like the markets are on a vodka-Red Bull," said Egan, Betterment's vice president of behavioral finance and investing. "You need the Red Bull for the energy and the intensity and the vodka for the questionable judgment."

With swaths of retail traders now sitting on big gains in stocks such as GameStop, Egan's concerns were threefold.

First, he worried that those who racked up significant returns and sold out will not only have to pay a hefty tax bill, but will develop high confidence that they'll be able to achieve the same outcome in a different stock a relatively unlikely bet.

Second, he worried that those who realize they will owe high capital gains taxes after they close out of their positions will get stuck in their positions waiting for them to lose value or for tax rates to fall, thus limiting themselves from potential gains in other investments.

Third, he worried about those who may have been burned and will never trust the stock market again.

"[They're] going to miss out on the core economic engine of growth over the rest of their lives that could've helped them with their retirement savings," Egan said.

While Reddit forums are far from new, their recent popularity in the investing world could accelerate the secular shift to more personalized separately managed accounts (SMAs), Q.ai CEO and co-founder Stephen Mathai-Davis said in the same "ETF Edge" interview.

"There has been a secular movement to digital financial investing tools from traditional finance over that period of time," said Mathai-Davis, whose robo-investing platform uses artificial intelligence to research and time the market.

"It's definitively counter-cultural, in my opinion as you see this movement to decentralized online communities where people are learning from each other," he said. "These online communities are growing exponentially."

As investors increasingly try to align themselves with particular themes and millennials enter a period of massive generational wealth transfer, "bespoke" investing through SMAs should gain traction, the CEO said.

"It's customer-centric with a focus on how they're perceiving value," he said. "I think too often the finance industry really focuses on the value add we're delivering to the user as opposed to focusing on what the user really wants as value."

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'Markets are on a vodka-Red Bull': Behavioral investing analyst on his top 3 concerns about Reddit-fueled trading - CNBC

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February 6th, 2021 at 6:51 pm

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Investment bank Greenhill pulls forward revenue to give results a boost – Crain’s New York Business

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Greenhill said the revenue was recognized in accordance with generally accepted accounting rules.

This is not some sort of pulling a little revenue out of one quarter and putting it in another, Chief Executive Scott Bok said on a conference call. Theres pluses and minuses in every given quarter [and] the pluses were a little higher this time around.

Mergers-and-acquisitions advisers used to collect their hefty fees when mergers were completed, but the accounting rules were changed in 2018. Greenhill now pockets fees when services are transferred, according its annual report.

That change made a big difference to Greenhill, which hasseen revenues and stock price slump as competing boutique M&A advisers and large banks seized market share. Last year, to save money, the firmrelocated from 300 Park Ave. to a smaller office at 1271 Sixth Ave., the former Time Life Building.

The big boost to Greenhills fourth-quarter results came from an estimated $48.5 million fee for advising on DuPonts $26 billion acquisition of International Flavor and Fragrances, KBWs Brown said. That merger closed this week.

Brown observed that Greenhills future deal revenues are looking thin. Based on other deals it had a role in last year, the firm has $16.4 million in fees to collect, Brownsaid.

Bok said hes bullish on business getting better.

Were hopefulto build on 2020s results, he said, rather than see 2020 as something thats been diminished by the way 2020 ended for us.

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Investment bank Greenhill pulls forward revenue to give results a boost - Crain's New York Business

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February 6th, 2021 at 6:51 pm

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More bubbles, less shorting. What the GameStop craziness could mean for the future of investing – CNBC

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Tiffany Hagler-Geard | Bloomberg | Getty Images

The stock market is known for being unpredictable and volatile, and any sense of normalcy was blown up during the recent GameStop rally.

Most of us know the story by now: After discovering that several hedge funds had bet on the video game retailer losing value, people banded together on the Reddit forum WallStreetBets to drive up its share price by 1,500%. Over the course of January, GameStop's stock price ballooned to a high of $483 from a low of $17.

The bubble already appears to be popping, with GameStop shares down to around $55 as of Friday.

Still, the event is unlikely to be soon forgotten, experts say.

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The Reddit forum of retail investors vowing to take on Wall Street still has more than 8.5 million subscribers (or as they call themselves, "degenerates"). And Netflix is already in talks to make a film dramatizing the battle royale between giant hedge funds and a pack of individual day traders.

What's more, experts say the event tells us about what's bringing people into the market these days and what that could mean for investing in the future.

In many ways, the GameStop rally resembles bubbles of the past, but it has some unique characteristics, too, experts say.

"What is new is the scale and speed of the event," said Veljko Fotak, associate professor of finance at the University at Buffalo.

The ubiquity of smartphones on which people can download investing apps, the availability of cheap or free trading and "a pandemic with a lot of restless energy," are all factors that contributed to the video game retailer's rally, said Dan Egan, vice president of finance and investing at Betterment.

Populism spreading across the globe is yet another factor that fueled the bubble, Fotak said. "Some investors were motivated not just by pure greed, but also by a desire to 'stick it to the man,'" he said.

Many people are also brought into the market these days when they see friends or people they follow on social media touting certain stocks, said David Sekera, chief U.S. market strategist at Morningstar. Some of these posts are very convincing: Users on Reddit, for example, were exchanging high-level analysis on GameStop's finances.

"The days that equity research was limited to the large, bulge bracket Wall Street firms is long past," Sekera said.

All of these events that propelled the GameStop bubble could spur many more.

"I do think that, to some degree, this herd Reddit movement is going to continue," said Jason Reed, a finance professor at the University of Notre Dame. "We've already begun to see the movement into other equities and assets, like AMC, Blackberry and silver gaining considerable momentum."

As shares of GameStop tumbled on Feb. 2, many Reddit users claimed to be holding onto their stock or even buying more, writing that it wasn't a loss until they sold out.

Source: Reddit

More people investing is positive, but only if they're doing so wisely, experts say.

Those who buy stocks based off posts on social media, for example, are often taking risks with money they can't afford to lose, Egan said.

"One of the biggest concerns is newer investors seeing a 'hot' stock, but not fully understanding the ramifications of investing in it," he said. "A lot of retail investors could lose their shirt."

Fotak said he read of one recent law school graduate who said he was elated by his wins on GameStop.

"He could now afford to pay off his student loans," Fotak said. "Yes, there is a lot of greed at play here.

"But there is also a lot of desperation," he added. "I really, truly, hope he sold right away."

Hedge funds that had shorted GameStop suffered huge losses as the pack of day traders on Reddit bought the stock en masse, shooting up its price. Melvin Capital, for example,lost more than 50% in January.

Those setbacks could make other investors more skittish about shorting, or betting against stocks, experts say.

"After seeing several other funds get carried off the field on stretchers from these short positions, hedge fund managers will be much more cautious as to which stocks they will be willing to short," Sekera said.

Less shorting means a less healthy market, Fotak said.

Bubbles tend to be less common in countries where short sellers are less restricted, he said. That's because short sellers' pessimism can balance out some of the optimism about a certain sector or stock.

"And in this climate, with market valuations at record levels, we need the contrarian views of short sellers more than ever," Fotak added.

Another advantage of short sellers is that they often expose serious problems at companies that other investors and regulators have missed, Fotak said.

"Since they are looking for firms that are overvalued, they are always on the lookout for fraud," he said, adding they often publish research on companies' bad practices.

And so it's unfortunate that the GameStop debacle may curb shorting, Fotak said.

"To the extent that delays the release of negative information, we all suffer from a less efficient market," he said.

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February 6th, 2021 at 6:50 pm

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Alabama-based Acclinate selected for international investment, innovation program – Alabama NewsCenter

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Acclinate has been selected for the 2021 class of the Cox Enterprises Social Impact Accelerator, powered by Techstars. Acclinate is a minority-owned, Alabama-based company that strives to achieve health equity and personalized health care for all by diversifying genomic data and clinical research.

The Social Impact Accelerator program provides virtual mentoring, funding and global connections to 10 for-profit, mission-driven companies. Acclinate is the only Alabama company to be selected for the 2021 class.

I have a passion for using business to make a positive societal impact, said Del Smith, co-founder and CEO of Acclinate. I also believe that businesses that are effective in creating that impact achieve significantly higher returns and valuations. Cox Social Impact Accelerator by Techstars provides the visibility, mentorship and access to customers to help Acclinate scale.

Cox Enterprises is a key supporter of programs designed to nurture technology startups and a founding sponsor of Techstars, an internationally recognized startup accelerator that helps entrepreneurs boost their early-stage businesses and product development efforts through education and funding.

This class gives me confidence that we can and will make this country a more equitable and inclusive place to live, said Barry Givens, managing director of Techstars Social Impact, in a press announcement about the 2021 class. We hope this class will be a shining example of the opportunities that exist to impact social justice, and will highlight the importance of supporting diverse founders who are tackling these issues.

In 2020, Techstars hosted its inaugural Techstars Alabama EnergyTech Accelerator class in Birmingham, elevating Alabama as an entrepreneurial hub. The Techstars Alabama EnergyTech Accelerator is supported byAlabama Power, theEconomic Development Partnership of Alabama(EDPA), theAlabama Department of Commerce,Altec,PowerSouthandthe University of Alabama.

When deciding to invest in companies that are solving century old problems rooted in systemic racism, it makes perfect sense to have companies with home bases in Alabama like Acclinate, said Givens. My hope is that while they are solving the issues with health disparities in communities of color, they will also be a shining example for the next generation of Black boys and girls to aspire change in the world through STEM and innovation.

Acclinate started in Huntsvilles HudsonAlpha Institute for Biotechnology. (contributed)

Acclinate opened a location in Birmingham in 2020. (contributed)

Acclinate is part of the Cox Social Impact Accelerator by Techstars program. (contributed)

Acclinate opened a location in Birmingham in 2020. (contributed)

Founded in 2019, Acclinate has continued to expand, with locations in Birmingham and at the HudsonAlpha Institute for Biotechnology in Huntsville. In 2020, the company established the #NOWINCLUDED program, which is dedicated to spreading knowledge about health care disparities for people of color and encouraging a diverse population to be included in medical research so the results reflect and can protect all people.

I am, of course, excited for what acceptance into the program means for our company, now and in the future, said Tiffany Whitlow, co-founder and chief development officer. Im even more excited as I look forward to what it will allow us to accomplish in the communities we seek to serve. Working with the other founders who were chosen to participate in the 2021 Social Impact Accelerator places invaluable mentorship and collaboration at our front door. We are ready for whats next and encourage everyone to join the #NOWINCLUDED community.

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Alabama-based Acclinate selected for international investment, innovation program - Alabama NewsCenter

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February 6th, 2021 at 6:50 pm

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Buick’s Nine-Year Investment In Tiger Woods Was Ruinous For Everyone Except Golf – Jalopnik

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HBO Max debuted its new two-part documentary about the life of Tiger Woods last month. It covers the golf icons early victories, struggles with relationships and his ballooning ego as fans and corporate sponsorships poured in. Unfortunately for Buick, its multi-million dollar investment in Tiger Woods ended with it facing down bankruptcy. It got off light.

Buick sponsored Tiger Woods at the height of his early career successes, as detailed in HBO Maxs new documentary, cleverly titled Tiger. The sponsorship lasted from 2000 to 2008 and ended as a result of the global financial crisis. It was also right at the beginning of a personal struggle for Tiger Woods. I cant help but wonder what the sponsorship actually accomplished for both parties, if anything, now that the dust has settled.

In the summer of 2001, Woods Nike sponsorship was worth over $100 million. CNN Money mentioned it as a passing note in a larger story wondering how far the player could take golf and when hed peak. At the start of Woods initial deal with Buick in 1999, it was estimated to be worth around $5 million a year, though it was extended multiple times before it was mutually terminated a year early on Dec. 31, 2008.

Buick had good reason to put money into Tiger; golf was getting big, and he was the one pulling in the eyeballs. Sunday viewership of Woods during the 2001 Buick Invitational received a Nielsen Media Research rating of 5.7 (equivalent to approximately one million U.S. homes per rating point), beating out the competing NBA All-Star game. The following weeks Bob Hope Chrysler Classic, in which [Woods] did not play, had an average rating of 2.7, CNN Money concluded.

Buick seemed to be getting its moneys worth. One year into sponsoring him, Woods won the aptly-titled 2001 Buick Invitational. The car company showed its gratitude by presenting Woods with his own concept car. Buick claimed to have designed the 2001 Bengal Concept with him specifically in mind, hence the cat name. It was a two-plus-two convertible notable for having a six-speed automatic transmission mounted in front of its supercharged 3.4-liter V6, and tiny rear doors opening into space for rear seats that could comfortably accommodate two sets of golf clubs.

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The Bengal was meant for a market of new youthful golfers inspired by Tiger Woods. With the terminal economic condition looming, the Bengal never made it to production. As for Buicks dreams of throngs of young golf fans flocking to the brand, those buyers never quite materialized.

Buick ultimately dodged the scandal that in 2009 cost Woods millions of dollars in corporate sponsorships. Buick had cut its ties at the end of 2008 for its own reasons. Its parent company General Motors was on a direct path toward bankruptcy. Amid the historic economic recession, GMs executives were sure it could not survive.

If anything, its surprising the sponsorship lasted as long as it did. Buick faced years of declining sales, and didnt end its second five-year sponsorship agreement (estimated to be $7 million a year) with Tiger Woods until just one year before it was set to expire.

For all of the eyeballs Woods brought to Buick, it didnt help move any cars. The automakers U.S. sales plummeted as Woods ascended. Buick sales fell 54 percent from 2000 to 2007, as ESPN reported in 2008 via Wards AutoInfoBank, despite the millions of dollars paid to the golfer Buick was still defending its decision to maintain its sports sponsorships while begging for billions of dollars in federal relief from the U.S. government. Not a great look. From ESPN:

GM has been making dramatic cuts in advertising as it tries to conserve cash. The nations largest automaker spent nearly $7 billion more than it took in last quarter and has warned that without federal help, it may reach the minimum amount of cash required to run the company by the end of the year.

Mark LaNeve, GMs vice president for North American marketing, said GM and Woods started discussing an end to the deal earlier this year, and it had nothing to do with the Detroit Three automakers quest for $25 billion in federal loans.

But GMs statement said the decision was made as part of the search for budget efficiencies during a difficult economy for General Motors.

In the final weeks of 2008, GM planned its complicated bankruptcy and restructuring. GM came to an end and New GM took its place, as recounted by Jay Alex, architect of the plan, writing for Forbes Magazine in 2013. Hummer, Saturn, Saab and Pontiac were left behind. Chevrolet, Cadillac, GMC and Buick stayed.

The data at the time must have reflected that Buick was worth saving, likely thanks to new international growth, particularly in the steadily booming Chinese market that had just become the second-largest car market in the world in 2007. On its own, Buicks sales in the Asia-Pacific market grew 11 percent in the same year. Meanwhile, as his former sponsor crumbled, Tiger Woods health was deteriorating from the wear of his sport, leading him to more surgeries and more issues with his medications, while partying away from his family and conducting affairs with various women.

It was clear that Tiger Woods and his fathers intense dedication to golf was paying off, literally, in vast sums of money. And it was transforming his personality. As HBOs Tiger documents in its second episode, the star went from a geeky, motivated teenager to someone he himself described as entitled in an interview, more reflective of other popular, wealthy and single sports celebrities he hung out with. Despite his 2004 marriage, his partying increased. But it wasnt just this wealth and fame that contributed to the reported personal turmoil in his marriage and relationships behind the scenes.

As the HBO documentary highlights, Tiger shared a very complicated and strained relationship with his parents, and particularly with his father Earl Woods. Earl repeatedly hyped his son as something more than just a kid who was good at golf, more than just the next celebrity athlete, and more than anybody could have expected him to be. In one interview clip, he claimed his son was the chosen one who would touch people all over the world, saying, I dont know yet exactly what form this will take. But he is the Chosen One. Hell have the power to impact nations. Not people. Nations. The world is just getting a taste of his power. Now, imagine the implications of growing up, isolated from friends, focused on sports and thats what youre promised, probably every day. It would have a significant impact on your outlook.

Earl repeatedly claimed in interviews that he and his son shared a brotherly relationship, and their circle was known to celebrate Tigers incredible victories with parties often hosted by tournament sponsors, some of which were naturally, sponsored by Buick. The documentary reveals more information about Earl Woods various alleged affairs with women while traveling and touring with Tiger, affairs that led Tiger to keep secrets from his mother. Woods longtime caddie, Stevie Williams, also admitted to exposing Tiger to his various affairs during his upbringing and early career.

In 2009, Tiger Woods was discovered to be cheating on Nordegren with Rachel Uchitel. In the documentary, Uchitel claims she met Tiger Woods at a party she was hosting in New York City, where he gave her his phone number after a short conversation. The couples affair continued, along with later allegations that Woods was also seeing other women.

In late 2009, Woods was involved in a car crash in his Cadillac Escalade just outside his home in the middle of the night, reportedly following an altercation stemming from Nordegrens discovery of evidence of one of his affairs. Despite Buick having already ended its sponsorship with Woods, General Motors responded by rescinding Woods other benefits, like his free access to some GM vehicles.

It was later revealed that Woods was reported initially unresponsive by the police officer responding to his crash, likely due to medication he was known to take to help him sleep. After a $164 fine, four points on his license, months of therapy and the release of multiple reports of affairs with other women dating back to 2007, Woods and Nordegren divorced in August of 2010.

Tiger Woods didnt save Buickremember there was a 54-percent drop in sales figures over six of the seven full years of the sponsorship deal. You cant blame Woods specifically, though. The brand was still seen as a car for older buyers, but Woods may have helped with that.

The average age of the brands buyers also dropped. Around 2001, the average age was in the low 70s, but it has since fallen to 66 for Buick sedans and 53 for the Enclave, ESPN.com reported in 2008. Woods was paired up with the then all-new Enclave crossover in its marketing materials, and, 78 percent of consumers who bought the SUV previously had not been Buick owners, according to the same article. Maybe it was Tiger, maybe it was just that crossovers and SUVs were booming in America before the Recession.

Perhaps the program just needed a few more decades of a beloved Tiger, a few more golf titles to get those age numbers into the 40s, but it never happened. What really saved Buick when choosing which brands would live on under New GM was the promising growth of sales in the rapidly expanding Chinese car market. GM reported global sales grew by three percent and regional Asian Pacific sales grew 17 percent in 2007, which was a promise that has paid off for GM today. If I was Tiger, I guess Id take credit for that.

For Tiger Woods, the mutually-terminated near-nine-year Buick deal left him with millions, but those years also included scandal and divorce, public shame and millions in lost sponsorships. He was denounced by golf organizers and faced the ire of the country.

Thanks to the 2009 federal government bailout that offered up billions to finance the New GM, today Buick is arguably healthier than ever. Its one of the largest American automakers established in China, with a full lineup from luxury minivans to all-electric station wagons. As for the sport of golf, its popularity continued after Tigers prime passed, but with him to thank for a new generations excitement for the sport. Tiger Woods himself has managed to successfully return to golf after not one but two scandals, the second involving him getting arrested in 2017 for driving under the influence of prescription medication. Despite that, and despite four knee and four back operations, he still manages to show flashes of his brilliance, coming back with an iconic win at the Masters at Augusta in 2019.

It was not the money that led Tiger Woods astray, but rather the overbearing and unsustainable pressure of his youth, beginning at birth with his father. His decisions, his commitment and dedication to his sport at the cost of family and everything else, is what led to his scandals. That pressure also made him the thing that the sponsorship money was paying for, and what dad always wanted him to be: a winner.

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Buick's Nine-Year Investment In Tiger Woods Was Ruinous For Everyone Except Golf - Jalopnik

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February 6th, 2021 at 6:50 pm

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The Lesson Of GameStop: Investing Is Not A Game – Forbes

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In a matter of days, GameStop has gone from being a dying retail chain to the latest obsession of media and markets. Along the way, the GameStop saga has morphed into a lesson in American populism, an allegory of Main Street taking a pound of flesh from Wall Street.

To recap: Video game retailer GameStop was struggling to survive even before the pandemic struck, and Covid-19 only worsened its ailing condition. Hedge funds on Wall Street smelled blood and took out massive bets that the companys shares would drop, maybe even to zeroso-called short trades or short positions.

Meanwhile, a group of stock market enthusiasts who congregated in an online chat roomReddits WallStreetBetscame to the realization that they might just be able to beat the Wall Street guys at their own game. It took time, but they did just that, aided and abetted by commission-free trading platforms like Robinhood.

Much is being said about this unlikely story, and the drama will keep unfolding for some time. But theres an immediate lesson to be learned from the GameStop saga: Investing isnt a morality tale, and its not a game.

One of the most notable aspects of the GameStop caper was how rapidly people sorted themselves into two groups. On one side, there were those who saw the members of the Reddit chat room WallStreetBets as a righteous force.

According to this narrative, the WallStreetBets traders were sticking up for GameStop and its employees, at risk of joining the ranks of the unemployed if hedge fund managers like Leon Cooperman were allowed to keep driving the stock lower and pushing GameStop into bankruptcy.

The opposing narrative included the market professionals and the Wall Street titansCooperman and his crowd.

The professionals took to television and constructed a narrative that retail investors (a.k.a. regular people) were manipulating the market for their own gain and pushing the price of GameStop well above its fundamentals. After all, who could possibly believe that GameStop is as valuable a company as Delta?

This dialectic was only heightened after zero-commissions online broker Robinhood restricted purchases of GameStop and a short list of other stocks recently popular with the Reddit rabble. Robinhood played to both sides of the debate, claiming both that financial markets had become a voice for the voiceless while their move was a risk-management decision..

This move prompted many, including politicians on Twitter, to claim the game was rigged in Wall Streets favor. Why let big guys short companies in the first place? Someone, they reasoned, needed to stick up for the little guy.

Hedge fund executives arent a sympathetic lot, and they tend to make themselves look worse when they go on television to complain about the folks at home and their trades. The day traders of Reddit and WallStreetBets have a fraction of their money and cloutits truly a mob of Davids battling with hedge fund Goliaths.

But somethings been lost in the black-and-white debate: Day trading isnt a strategy the public should be rooting for. In many if not most cases, day trading is more akin to gambling than investing. Research has shown that stock pickers cant consistently deliver a higher return than an index with a broad array of companies like the S&P 500.

And when some do, even those who are professionals, usually its because they get lucky.

University of Wisconsin professor Werner De Bondt estimated that more than 10% of stock mutual funds are likely to beat the average performance of the average equity fund three years in a row, just as a matter of chance (the authors emphasis), wrote Gary Belsky and Thomas Gilovich in Why Smart People Make Big Money Mistakes.

As humans, were endowed with a rich catalogue of behavioral biases that make us think that were smarter than we actually are.

Hindsight bias makes us overconfident about our ability to accurately predict and explain events. We always just knew this or that thing was going to happeneven if we didnt actually predict this or that thing at all, or we were off by huge intervals.

We also dont tend to remember our misses, or we chalk them up to dumb luck. Experimental subjects rate themselves as significantly better at predicting the outcomes of coin tossesa totally random activitythan others making the same predictions. The subject tend to remember their successes and forget their mistakes. To sum up, its a game of heads I win; tails its chance.

In the Battle of GameStop, the day traders have been celebrated for crushing the hedge funds who were betting that shares of GameStop would tank.

This particular form of tradingarranging so that you profit when a stock declines in valueis called short trading or short selling. To be sure, short sellers have never been a particularly popular breed. Napoleon reportedly once referred to short sellers as enemies of the state.

Trouble is, short sellers arent always the bad guys.

Michael Lewiss book on the housing market and how it helped cause the Great Recession, The Big Short, told the story of a handful of gadfly investors who pulled off huge, lucrative short trades. They saw the huge bubble in home values in 2005-2006 and assumed it wouldnt end well. Their trades didnt make them heroes, but they were certainly not villains, either.

More recently theres the case of electric vehicle company Nikola Corporation and short-seller Hindenburg Research. Nikola was a hot Nasdaq-listed startup that aimed to become the Tesla of long-haul trucking. Trouble is, its business turned out to be mostly hot airHindenburg Research exposed the company for being founded on empty promises and shorted its stock.

Its worth asking: Didnt Hindenburg save countless investors from making a bum investment in Nikola Corporation? Short trading isnt always a black-and-white narrative.

The Wall Street Journal recently profiled Jaime Rogozinski, the man who years ago created WallStreetBets but has since left the group.

The story describes how Rogozinski started the community back in 2012 because he was tired of being told not to pick stocks in online forums, and he didnt really like the talking heads on television. So he crafted an online watering hole where like-minded people could congregate and take on the market. Rogozinski wanted to have fun.

Thats a problem.

Investing isnt supposed to be fun. When you do investing right, you get rich slowly, via the gradual process of compounding value. Its the phenomenon that explains why retirement investing works at all, and it takes a long time to make a real difference to your bottom line.

Take a well-diversified index fund based on the S&P 500. You can earn an average return of about 10% annually with an investment like this, if history is any indicator. It may not provide the adrenaline high of GME, but it minimizes the risk you arrive to the stock market party too late, buy high and are forced to sell low when a trading bubble inevitably bursts. This is the unlucky fate of many who bought into GameStop after the rally was already done.

And you can still enjoy the spectacle from afar. If youre so inclined, pick a team, rage against the other side and revel in the denouement. The coronavirus has rendered much of what was once enjoyable moot anyway.

But dont try to have fun with money you cant afford to lose.

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The Lesson Of GameStop: Investing Is Not A Game - Forbes

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February 6th, 2021 at 6:50 pm

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4 Unstoppable Growth Stocks to Invest in Right Now – Motley Fool

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Investing in the age of the coronavirus disease 2019 (COVID-19) pandemic hasn't been easy. Last year, the benchmark S&P 500 registered its fastest bear market nosedive in history, with the CBOE Volatility Index climbing to an all-time high in March.

But if there was one clear bright spot, it was the overwhelming outperformance of growth stocks. The prospect of persistently low lending rates, coupled with ongoing fiscal stimulus from Washington, has created a perfect environment for growth stocks to flourish.

Of course, not all growth stocks are created equal. If you have money just waiting to be put to work in the market, you'll want to seek out unstoppable growth stocks that have clear-cut competitive and innovative advantages. That's why the following four companies are worth investing in right now.

Image source: Getty Images.

If you're after a company that represents a close-to-surefire investment over the next five to 10 years, robotic surgical system developer Intuitive Surgical (NASDAQ:ISRG) is worth buying.

Intuitive Surgical is best known for developing the da Vinci surgical system, which is used in hospitals and surgical centers in place of laparoscopic surgeries to make more precise incisions in various soft tissue procedures. In 20 years, the company has installed just shy of 6,000 da Vinci systems worldwide.

That might not sound like a lot, but it's far more than all of its competitors combined. For two decades, Intuitive Surgical has been able to build up rapport with the medical community to ensure that it's the go-to assistive device for surgeons.

More importantly, the company's operating model is designed to get better with age. In its early years, most of Intuitive Surgical's sales were derived from its pricey da Vinci systems ($0.5 million to $2.5 million each). However, these are intricate systems to build, which means margins were often mediocre, at best.

Over time, the company's higher-margin operating segments -- instruments sold with each procedure and system servicing -- have become a larger portion of total sales. Thus, as more systems are installed, Intuitive Surgical's operating margins should rise.

Also, it's not just da Vinci that can drive sustainable low-double-digit growth. The launch of Ion in 2019 provides hospitals with a new and far less invasive robotic-assisted device to take lung biopsies.

The runway for robotic-assisted surgical devices is huge, and Intuitive Surgical is on the leading edge of that innovative wave.

Image source: Getty Images.

Another unstoppable growth stock that seemingly never lets down its shareholders is payment-processor Mastercard (NYSE:MA).

Keep in mind that Mastercard isn't impervious to economic downturns and recessions. During both the Great Recession and the COVID-19-induced recession, spending by businesses and consumers dropped, as would be expected. The thing is, periods of contraction tend to be substantially shorter than the multiyear periods when the U.S. and global economy are expanding. This is a numbers game, and Mastercard finds itself on the side of overwhelmingly good odds of success.

It's also important to recognize that, unlike banks, credit unions, and even some of its processing peers, Mastercard isn't a lender. Though this might have some folks scratching their heads, given how well-known the Mastercard brand is worldwide, avoiding lending means the company has no direct ill effects during a contraction or recession. Not having to set aside capital to cover loan or credit losses is precisely how Mastercard continues to deliver a profit margin of 40% or higher.

There's plenty of opportunity for Mastercard to expand its processing infrastructure globally, too. A majority of the world's transactions are still being conducted in cash, which presumably gives the company a long runway in which to tackle underbanked regions.

Image source: Getty Images.

If high-growth tech stocks are more your thing, then cloud-native cybersecurity stock CrowdStrike Holdings (NASDAQ:CRWD) should be on your buy list.

For starters, CrowdStrike and the entire cybersecurity industry should benefit from the growing number of businesses pushing online and into the cloud. This was a shift we were witnessing prior to the pandemic, but it's been pushed into overdrive with consumers and enterprise clients working and shopping remotely.

The beauty of CrowdStrike's Falcon platform is twofold. First, it leans on artificial intelligence to grow smarter over time. Each week, Falcon oversees in excess of 3 trillion events, and therefore becomes more effective at recognizing potential threats to its clients' data. Secondly, having been built in the cloud, Falcon is faster at recognizing threats and can often do so for a lower aggregate cost than on-premises security solutions.

But the proof for CrowdStrike is in the proverbial pudding. Over the past 14 quarters (3.5 years), the number of clients with four or more cloud-module subscriptions has catapulted from 9% to 61%. By getting its existing clients to spend more, the company has already achieved its long-term subscription gross margin target of 75% to 80%.

What's more, its annual recurring revenue as of the end of October was $907 million. That compares to an estimated total addressable market of nearly $39 billion by 2023. CrowdStrike is just getting started.

Image source: Getty Images.

Finally, should you want an unstoppable growth stock with its fingers in a little bit of everything, Singapore-based Sea Limited (NYSE:SE) is worth scooping up. Sea has three very different operating segments, all of which offer sustainable double-digit (or perhaps triple-digit) growth.

For the time being, the company's digital entertainment division is responsible for the bulk of its positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). As you might imagine, people being stuck in their homes due to COVID-19 has fueled gaming interest. In the September-ended quarter, active gamers grew by 78% to 572 million, with the number of quarterly paying customers more than doubling to 65 million.

However, it's Sea's online Shopee platform that's really turning heads. Investors are always on the lookout for the next Amazon, and Sea's Shopee platform really seems to be resonating with consumers in Southeastern Asia. E-commerce revenue in the third quarter was up 173%, with the gross merchandise value on its online platform doubling to $9.3 billion. This is a region of the world with a burgeoning middle class, so it's not hard to envision Shopee growing a triple-digit rate in the near term.

Lastly, Sea's digital financial-services segment is really gaining traction. Since Southeastern Asia is one of a handful of underbanked regions of the world, giving people access to digital wallets could help resolve a lot of financial-service issues.

Don't be surprised if Sea Limited doubles its sales every two or three years this decade.

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4 Unstoppable Growth Stocks to Invest in Right Now - Motley Fool

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February 6th, 2021 at 6:50 pm

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Gov. Wolf’s Plan to Invest Billions in Education, Cut Taxes for Working Families Draws Praise – pa.gov

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Yesterday, Governor Tom Wolf delivered his budget address for the 2021-2022 fiscal year. The governor laid out a plan that lowers taxes for working families while making a historic investment in public education.

The governors plan will lower barriers like underfunded schools, an unfair tax system and an unlivable minimum wage that make life harder for Pennsylvania families. The plan will reaffirm our commitment to build the strongest education system in the country, cut taxes for working families, get Pennsylvania back on track after the pandemic, build on bipartisan progress and change Harrisburg by demanding accountability.

The plan calls for major investments that will help Pennsylvanians succeed, including fully and fairly funding our schools so that all students receive a high-quality education and reforming our workforce development system to address inequities, support workers and establish the well-trained workforce businesses need. At the same time, the governors plan will cut taxes for businesses and working class families.

It is possible for us to have a budget that works for families, for businesses and for our economy, said Gov. Wolf. By improving the quality of education our children receive and cutting taxes for families just starting out, we are investing in our future a future in which more Pennsylvanians can build financial stability for themselves and their children.

The governors plan has received broad support from education professionals, good government groups, faith leaders, labor organizations, environmental advocates and others. See what they have to say:

Budgets are moral documents. This greatly increased education budget, with the majority distributed in a more equitable way, reflects the commitment of our interfaith leaders to the students of Pennsylvania and the future of the Commonwealth. For years we have called on Gov. Wolf to fully fund and fairly distribute the resources needed to educate our students and we are glad to see him answer our call.

We applaud Governor Wolf for a bold proposal that meets the unique moment we find ourselves in. From pushing for a long-overdue increase in the minimum wage to investments in workforce development and small business assistance, to an historic increase in funding for public education and tax cuts for working families, this is the kind of bold investment in our communities that will help Pennsylvania rebuild, rebound and move towards a better future.

Now is not the time for our leaders to hesitate. We cannot reverse the health and economic devastation left in the wake of a global pandemic with a tepid response from our elected officials. Governor Wolf is drawing a line in the sand, and we can only hope that Republican leadership in the General Assembly will be willing to join the governor, in the spirit of bipartisanship, to make these pragmatic investments that their constituents and their communities so badly need.

We support a $1.5 billion public investment that is dedicated to moving Pennsylvania toward funding each school district equitably and adequately, with the resources to support it. Lets get to work.

We commend the governor for his ongoing commitment to public education. There is nothing more important than investing in our schools and students. Gov. Wolf has been a leader on these issues, and PSEA looks forward to a continued partnership with him and lawmakers from both parties to ensure our students are successful and our schools are fairly funded.

Like PSEA, Gov. Wolf has made it a priority throughout his term in office to advocate for equitably and adequately funding all of Pennsylvanias schools. These issues are very important to PSEA, and we are grateful that this historic proposal elevates these critical issues.

We look forward to fully reviewing this plan and identifying opportunities for PSEA to work with the governor and the Legislature to find the best and fairest way possible to achieve greater equity and adequacy in school funding. This is an issue that PSEA has long championed and will continue to do so.

The pandemic has made it clearer than ever that Pennsylvanians need a budget that invests in our communities and our future. Our Commonwealth is in a position that requires a reckoning of decades of disinvestment, neglect, and apathy. The most vulnerable have had to bear the brunt of the devastation. We fully support raising the minimum wage and building financial security for working families.

Rebuilding our workforce is more important than ever, and we are excited to be part of re-envisioning workforce and economic development. We were part of the multi-stakeholder Workforce Development Command Center, and now the problems and solutions we identified will be addressed. We need to raise wages for workers, and that starts with the most vulnerable workers, stated President Rick Bloomingdale.

Reinvesting in education and educators is a commonsense approach to addressing long-standing inequality and building a better future for Pennsylvania. Our schools were already some of the most segregated in our country. This systemic discrimination, compounded with income inequality, especially affects people of color, leaving them further behind. The worst consequence of this is the overall impact inequality has had on children, whose future will have an impact on us all.

Brick and mortar schools face unprecedented challenges without the full support and adequate funding they need, while cyber and charter schools continue to exploit an unregulated system. Many of these for-profit institutions take full advantage of a global health pandemic to their economic advantage. There is no reason we cant have a good public school in every community. The inequity of COVID-19s impact on children in poverty must be a wake-up call for everyone. Furthermore, Pennsylvanians need good jobs that sustain families and raise the quality of life for working families in our communities, remarked Secretary-Treasurer Frank Snyder.

SEIU members work tirelessly everyday to ensure that our basic way of life is not disrupted during the real threat of COVID-19, the threat of police violence or the growing existential threats to our democracy. They deserve to work in and send their children to safe, functioning schools and to earn more than a poverty wage. Thats why we stand strong with Governor Wolf on this budget and call on the state legislature to do its part to see it through.

Pennsylvania Association of Rural and Small Schools Executive Director Dr Edward Albert This robust budget proposal for education is much needed. Too long Pennsylvania has been one of the worst states for funding education. This proposal allows Pennsylvania schools to educate students so they may be competitive, in the world upon high school graduation. Thanks Governor Wolf for the courage to propose this budget.

Governor Wolfs proposed budget for the year that begins in July 2021 is a bold plan to address not only the problems facing Pennsylvanias students, workers, and businesses as a result of the pandemic, but also the economic and racial inequities that have plagued our state for decades.

Governor Wolf presented his 2021-2022 budget under the cloud of the COVID-19 pandemic afflicting our state and country, the resulting economic recession, and protests against police violence. In response, the governor has proposed a budget that addresses taxes, education, wages, and criminal justice so that all Pennsylvanians can benefit, no matter where they live or what they look like. His proposals will begin to break down the economic, racial, gender and immigration status inequities that for too long have limited the ability of too many Pennsylvanians to thrive.

Governor Wolfs 2021-2022 budget address demonstrates the need to move Pennsylvania forward in a way that unites us behind the important decisions facing the Legislature. We are pleased with the Governors focus on improving the lives of the everyday working people and ensuring that we get through this pandemic and begin to rebuild our communities and livelihoods. With the looming pandemic that has had devastating impacts on the Commonwealth not yet behind us, Governor Wolf has proposed investments in our communities, education, schools, workforce and small businesses that will lay the foundation of a shared economic recovery, building a better Pennsylvania for all families. UFCW Local 1776 is steadfast in our support of the Administrations proposal for a $15.00 minimum wage increase and ending pre-emption against minimum wage, a policy that is long overdue. Furthermore, we are excited to partner with the Legislature in the quest for legalizing adult-use recreational cannabis in a way that is worker friendly and helps deliver valuable revenue for the Commonwealth. While there is much more work to be done, we believe this budget proposal puts working Pennsylvanians first and are pleased to support it.

Governor Wolfs budget proposal demonstrates that he understands the extensive unmet needs in Pennsylvanias public schools and the unfairness of our current funding system. The proposed historic investment of $1.5 billion in public K-12 education would substantially increase resources available to students in the commonwealths most profoundly underfunded schools and make significant progress toward closing the resource and opportunity gaps that harm our most vulnerable children and threaten Pennsylvanias future workforce, tax base, and economy.

Gov. Wolfs proposed charter school funding reforms would bring even more fairness to the commonwealths school funding system by more closely matching charter school tuition payments with the schools actual costs and saving more than $200 million in taxpayer money each year. No charter school should reap a profit off of students with disabilities. And cyber charter schools should not be awash in so much excess funding that they can waste millions of taxpayer dollars every year on multi-million dollar advertising campaigns, lavish CEO salaries, and more.

The Clean Power PA coalition applauds Governor Tom Wolfs proposal to use hundreds of millions of dollars in annual proceeds from the Regional Greenhouse Gas Initiative (RGGI) to support Pennsylvania workers and create economic growth. The Governor is seeking to use RGGI funds to assist workers and communities affected by the rapidly changing energy landscape, help industrial and commercial businesses reduce carbon emissions, create jobs through investments in greenhouse gas abatement, energy efficiency and clean and renewable energy, and empower communities that have experienced disproportionate environmental impacts.

Once approved, RGGI could produce as much as half a billion dollars for Pennsylvania in its first year alone. We cant afford not to join our neighboring northeast states that have been able to take advantage of billions of dollars of economic investment through RGGI.

In his proposal, Governor Wolf clearly recognizes the economic reality Pennsylvania faces when it comes to energy generation, the ground is shifting beneath our feet and its happening quickly. Pennsylvania must move forward to take advantage of new economic and energy opportunities, and RGGI is an opportunity to do so while tackling climate change and protecting public health.

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Gov. Wolf's Plan to Invest Billions in Education, Cut Taxes for Working Families Draws Praise - pa.gov

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February 6th, 2021 at 6:50 pm

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Tackle These 3 Investing Myths Before You Make the Wrong Play – The Motley Fool

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With the big game coming up soon, your attention is probably focused on whether the Kansas City Chiefs or the Tampa Bay Buccaneers will end up the winners. But if you're ready to claim the title of MVP in achieving financial success, it doesn't hurt to take a little time to think about how you can invest your money in a way that's sure to pay off bigger than any football bet.

To do that, it's helpful to tackle some big investment myths that may be holding you back from achieving your full potential.

Image source: Getty Images.

Day trading may seem like a quick, easy way to make a profit -- especially as there have been some recent highly publicized instances of people making a lot of money due to speculative trades. And lots of new investors have been able to take advantage of recent market volatility to make a quick buck.

But remember back in 2016 when victory appeared all but certain for the Atlanta Falcons before the New England Patriots staged a massive comeback? Most day traders are the Falcons right now: They may be feeling pretty confident, but chances are very good it won't be long before their luck turns around.

The bottom line is, anyone can have a good quarter or do well for ashorttime by day trading if they get lucky. But this isn't a strategy that's likely to be met with success in the long term. But just as having Tom Brady on your team is the most surefire way to get to the big game, there's also a surefire way to build wealth: Develop a solid investment thesis and build a diversified portfolio of stocks you'll be happy to hold over the long term.

While day traders may have a problem of overconfidence in their skills, many others shy away from investing because they aren't confident enough. And that's a big mistake, because if you don't get on the field, you won't even have a chance to win.

The truth is, youdo need to have a certain measure of expertise to successfully pick individual stocks. But you can also get your money into the market even if you know next to nothing about investing. It's easy to do that by buying exchange-traded funds that track the performance of the market as a whole, or that track specific types of stocks such as small caps or large caps.

ETFs can provide instant diversification and you only need to do a little bit of research to figure out how to build a portfolio of funds that charge low fees and present minimal risk. So don't take a pass on investing just because you believe you need to become Warren Buffett to make money.

You know what's worse than missing a touchdown? Missing out on the chance to invest because you think you need a fortune to get started. The reality is it's easier than ever for the average person to get their money into the stock market. Most brokers don't require minimum deposits to open an account any more, nor do they charge commission fees for trading that would make it impractical to invest with small sums.

And a growing number offer fractional shares, which means you can invest in any company, even those with high per-share prices, since you no longer need to buy a full share. You're able to specify which business you want to bet on by determining the dollar amount you want to invest and purchasing whatever fraction of a share your money will buy you.

So while attending the biggest football event of the year may be something only the wealthy can afford, you don't need thousands of dollars to start making smart plays in the market. Now that we've tackled these myths more effectively than Aaron Donald tackles quarterbacks, you're ready to get started.

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Tackle These 3 Investing Myths Before You Make the Wrong Play - The Motley Fool

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February 6th, 2021 at 6:50 pm

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Bill Gates Says This Simple Formula Tells You Exactly How to Invest in Green Energy – Inc.

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Bill Gates.Photo: Getty Images. Illustration: Inc. Magazine

Looking for a new investment or a lucrative industry for your new startup? Look no further than green energy. With world leaders, including a new administration and Congress, fully aware of the severity of the climate crisis, any company or technology that helps reduce greenhouse gases might seem like a good bet. But, according to Bill Gates, some are more worthwhile, and have a bigger impact than others, and there's a simple way to tell which is which. To be most effective against climate change--and most financially successful--look for companies and technologies that reduce or eliminate the "green premium."

The green premium is the difference in cost between something that makes climate change worse and something that doesn't, Gates explainsin an excerptfrom his forthcoming book How to Avoid a Climate Disaster published by Time. The green premium comes about because the cost of most products does not reflect their impact on the environment. Take jet fuel. "The average retail price for a gallon of jet fuel in the U.S. over the past few years is $2.22," Gates writes. "Advanced biofuels for jets, to the extent they're available, cost on average $5.35 per gallon." Thus, the green premium for those zero-carbon jet fuels is $3.13 per gallon, a premium of more than 140 percent.

Are airlines likely to pay that? Unless there's a government incentive to do so, such as a carbon tax, the answer is certainly no in an industry that competes almost solely on ticket price and that has been badly battered by the pandemic. So a company trying to sell today's biofuels to the airline industry isn't likely to get very far. On the other hand, one that can find a way to bring the cost of biofuel in line with traditional jet fuel would likely do very well. This is why, Gates writes, "During every conversation I have about climate change, green premiums are in the back of my mind."

Fighting climate change isn't just for do-gooders, it's also for entrepreneurs and investors who want to be seriously rich, according to Chamath Palihapitiya, billionaire VC and founder of Social Capital.Palihapitiya says it should surprise no one that Elon Musk is the world's richest man, because Tesla is a company addressing climate change head-on.

Though he may not use the term, Musk is well aware of the green premium, and he's made eliminating it a major focus at Tesla. The company may have started out with the $100,000 Roadster, but it's worked hard to bring the price of its cars down ever since, and now offers the Model 3 at a starting price of about $38,000.

What industries offer opportunities with low or no green premiums? Producing electricity in both the U.S. and Europe is a good example, Gates writes. "Changing the entire U.S. electricity system to zero-carbon sources would cost roughly 15 percentmore than what most people pay now. That adds up to a relatively low Green Premium of $18 a month for the average home." Which is why the area is ripe for investment, and why the coal industry may be in trouble.

But while non-fossil-fuel electricity and electric vehicles capture a lot of the public's attention, they're not the biggest solutions to the climate crisis. Gates notes that the biggest source of greenhouse gases is manufacturing, which accounts for 31 percent of them. Electricity production is a close second at 27 percent, followed by agriculture. Transportation comes in fourth at 16 percent, followed by heating and cooling buildings. We have to address all these industries, Gates writes, or else, "you're not going to solve the problem."

In other words, this area is not only ripe for innovation but there are billionaire investors eager to back ideas that can lower emissions with a low green premium across a wide range of industries. That's why Gates invested in Heliogen, which is working to make solar energy viable for manufacturing, and why Palihapitiyarecently leda big investment in Sunlight Financial, a fintech company that facilitates financing for residential solar installations.

That could provide some inspiration for your own next venture or investment. Just make sure you keep the green premium in mind.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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Bill Gates Says This Simple Formula Tells You Exactly How to Invest in Green Energy - Inc.

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