Feds give update on probe in deadly Georgia poultry plant incident

2021/2/7 ©TheAtlantaJournalConstitution

Tanks of liquid nitrogen are seen at the Prime Pak Foods poultry processing plant after a liquid nitrogen leak on Jan. 28, 2021, resulted in six deaths and multiple hospitalizations in Gainesville, Ga.. - ELIJAH NOUVELAGE/AFP/AFP/TNS

ATLANTA — The federal investigative board looking into last month’s incident at a poultry processing plant in Gainesville has found that issues on a conveyor appear linked to the deadly chemical leak.

Six workers were killed at the Foundation Food Group on Jan. 28. The plant uses liquid nitrogen to flash-freeze chicken, and an “inadvertent release” happened on one of the plant’s five production lines. About a dozen people were injured and taken to a hospital, and 130 people were evacuated.

The U.S. Chemical Safety and Hazard Investigation Board released the following new details Sunday about the incident:

—The plant had been experiencing unresolved operational issues on the chicken conveyor that appear to have resulted in the accidental release of liquid nitrogen in the flash-freezing bath.

—The Chemical Safety Board has information that Line No. 4 was shut down the morning of the incident. The shutdown was due to operational issues on the conveyor line.

—Foundation Food Group maintenance personnel reported the computerized measuring system indicated a low liquid level in the immersion bath used to flash-freeze the chicken products.

—The liquid nitrogen units were manufactured and installed by Messer and are leased to the Foundation Food Group.

—The Foundation Food Group performs routine maintenance on the Messer-owned equipment.

Nitrogen, often used to flash-freeze food, is odorless, colorless and can reduce the oxygen in the air, cause asphyxiation or burns from the cold.

Killed in the gas leak were Jose DeJesus Elias-Cabrera, 45, of Gainesville; Corey Alan Murphy, 35, of Clermont; Nelly Perez-Rafael, 28, of Gainesville; Saulo Suarez-Bernal, 41, of Dawsonville; Victor Vellez, 38, of Gainesville; and Edgar Vera-Garcia, 28, of Gainesville.

WTF

The Chemical Safety Board’s work is ongoing, and the board’s chairman and CEO, Katherine Lemos, said at a Jan. 30 news conference in Gainesville that a full report could take several years. The board makes safety recommendations but does not issue citations or fines.

The plant is owned by Gainesville-based Foundation Food Group, which formed Jan. 1 after Prime-Pak Foods and Victory Processing merged, according to state records.

Mohamed El-Erian on the GameStop short squeeze: 

'We came very, very close to a market accident'

On the January jobs report:

'It's a disappointing report in many respects'

And he's also the Chief
Economic Advisor at Allianz.




Julie Hyman
·Anchor
Sat, February 6, 2021, 6:45 AM·3 min read

The latest move in the GameStop (GME) roller coaster was a 19% jump in the shares in Friday’s session that wasn’t enough to prevent an 80% slide on the week. While the short squeeze in GameStop and other heavily-shorted names may be abating for now, the factors underlying the action aren’t going away anytime soon. That means regulators’ job is just beginning.

“They have to play massive catch-up,” Mohamed El-Erian, president of Queens’ College at Cambridge University and chief economic advisor at Allianz, told Yahoo Finance Live. “We have done well in reducing systemic risk in the banking system, but what regulators haven’t done well is recognizing risk doesn’t disappear. It morphs and migrates, and it migrated to the non-banks.”

Those non-banks include platforms like Robinhood and other commission-free trading apps, which retail investors used to stage bull raids on GameStop and others. When the platforms were then forced to enact rolling trading restrictions by the trade clearing authority, there was a ripple effect throughout the broader equity market, ending in the worst week for stocks since October. (Stocks since rebounded, with the major averages posting their best weekly performance since November).

El-Erian said while the outburst may have been brief, it sent a signal.

“The biggest signal for someone who’s investing in the market as a whole is that there is a lot of risk-taking, and a lot of leverage. And rightly so, because liquidity is abundant, and the cost of borrowing is so low. But a lot of leverage tends to create excessive risk-taking,” he said. “And therefore, the risk of a market accident goes up. Last week we came very, very close to a market accident — very close. It was avoided through various things, but we came very close.”

The “underlying forces that propelled the uprising” persist, El-Erian wrote in an op-ed in the Financial Times — and could cause more disruptions.


Regulators appear to be in information-gathering mode for now. Treasury Secretary Janet Yellen on Thursday convened a meeting of the heads of the U.S. Securities and Exchange Commission, Commodities Futures Trading Commission, Federal Reserve Board and Federal Reserve Bank of New York. As Yellen said in an interview with ABC, “we need to understand deeply what happened before we go to action.”

That understanding will take time, in part because there are competing constituents, as El-Erian points out.

“You have four competing claims on the regulatory process. One is the protection of the small investors. Two, you have a question of, is Reddit some sort of collusion, some sort of market manipulation? Three, we have questions about the intermediary and hedge funds. Was there collusion there? And four, you have a question of investment suitability.”

Because of the thorny process of teasing all of that out, “I doubt that you’re going to see deterministic action any time soon,” he said.

Julie Hyman is the co-anchor of Yahoo Finance Live, weekdays 9am-11am ET.

Read the latest financial and business news from Yahoo Finance

Robinhood’s Collateral-Crunch Explanation Puzzles Wall Street

Annie Massa, Yalman Onaran and Matthew Leising
Sat, February 6, 2021, 6:00 AM·7 min read

(Bloomberg) -- A week after Robinhood Markets tried to clear the air by explaining why it slapped controversial limits on trading hot stocks, Wall Street’s risk professionals are still perplexed: How was the firm so ill-prepared for an obvious surge in collateral calls?

To the financial industry, anticipating collateral demands from hubs such as the Depository Trust & Clearing Corp. is Brokerage 101. Major firms assign teams to study the DTCC’s methodology, estimate its requests and make sure ample cash is available. Everyone grumbles, sure, but they also know what happens when firms fall short: They scramble for a lifeline or shut down. Robinhood gathered billions from backers to keep it going.

“They obviously fell very, very short,” said David Weisberger, a market-structure consultant who built trading systems at Salomon Brothers and Morgan Stanley. He said he’s been puzzling over Robinhood, given what he called the “well known” requirements of clearinghouses. “This was a franchise-threatening event.”


The Silicon Valley startup left users fuming by temporarily restricting certain purchases at the height of January’s mania over GameStop Corp. and other “meme stocks” that were in the midst of skyrocketing. By the end of this week, as millions of customers were downloading its app to trade the fallen darlings and new ones, risk managers were still stuck on how Robinhood ended up in the predicament.

Reached for comment, a company spokesperson referred to a Thursday blog post by the president and chief operating officer of Robinhood Securities, Jim Swartwout.

“We have grown rapidly. And we have, at times, encountered challenges as we’ve scaled to meet this moment,” Swartwout wrote, describing how the firm’s growth and a surge in trading volume fueled collateral demands. “To say the overnight increases in volume Robinhood experienced last week were extraordinarily high would be a vast understatement. The surge was magnitudes higher than the norm.”

Chief Executive Officer Vlad Tenev has linked the trading restrictions to a roughly $3 billion collateral call that arrived early Jan. 28 from part of the DTCC, which Robinhood has said contributed to a 10-fold jump in weekly clearinghouse deposit requirements for equities. While Tenev has credited the DTCC for being reasonable and ultimately accepting $700 million, he has at times portrayed its formulas as opaque, noting they include a “discretionary” component.

“We don’t have the full details” of how the DTCC arrived at its initial demand, Tenev told Elon Musk last weekend in an interview broadcast on the social-conversation app Clubhouse. “It would obviously be ideal if there was a little bit more transparency so we could plan better around that.”

The rejoinder from industry executives: It’s pretty much just math.

‘Shame on Them’

In interviews, more than a half-dozen senior risk executives -- some from Wall Street’s largest firms -- reacted with bemusement to any assertions that the magnitude of the DTCC’s demands can’t be anticipated. They spoke on the condition they not be identified, in some cases because they interact with Robinhood.

They acknowledged there’s always complaining about the difficulty of pinpointing what clearinghouses will seek, and that things can go wrong. Some executives even recounted times when they got pressed for millions of additional cash on short notice. But overall, the group said that large, well-run firms don’t get surprised by requests that threaten to empty their pockets.

One brokerage executive said Robinhood should have ensured it had enough capital or stopped processing trades of volatile stocks. Charles Schwab Corp.’s TD Ameritrade, for example, began limiting bets on certain meme stocks the day before Robinhood did. Robinhood’s later restrictions were more severe, tapering off into the week that followed.

“Once every decade or so there are improbabilities that occur,” said Weisberger, who now runs cryptocurrency venture CoinRoutes. Self-clearing firms such as Robinhood need to know what potential demands they could face. “If they studied it and came up with an answer and it was wrong, well shame on the people who studied it,” he said. “If they didn’t study it, well then shame on them.”

Avoiding Surprises

The DTCC bases much of its deposit demands on elements including a clearing member’s concentration in volatile stocks, the volume of trades occurring, imbalances in buying and selling, and the firm’s financial condition. The more a brokerage is exposed to erratic shares, the more collateral it has to post. The less capital a brokerage has on hand, the more severe its surcharge may be.

The goal is to protect the broader financial system from trading defaults. To make collateral calls predictable, the DTCC says it provides “reporting and other tools to our clearing members to help them anticipate their margin requirements for a particular portfolio.”

The nightmare that clearinghouses are designed to avoid is that a brokerage loses so much money before a trade is completed that the firm can’t hold up its end of the transaction. Without a clearinghouse, one firm’s failure could cascade through the financial system. Unwinding just one trade means undoing all of the subsequent transactions if that share already was resold.

A broker-dealer’s collateral burden rises if it lends money to customers, and especially if they bet heavily on, say, stocks that have recently multiplied in value, as GameStop and others did last month. If prices suddenly crash -- which also happened -- it raises the risk that clients may not be able to repay their margin loans, leaving the brokerage to eat their losses. Some of the recent stock declines may be attributable to Robinhood liquidating clients’ positions to head off defaults on loans, according to Wall Street risk managers.

“Someone’s got to pay,” said Eric Budish, a professor of economics at the University of Chicago’s Booth School of Business. If you’re a brokerage, “you have capital to deal with that existential risk. I was surprised Robinhood didn’t have more capital for that scenario.”

Margin lending constituted about 20% of Robinhood’s $6.7 billion balance sheet in mid-2020. Robinhood tapped credit lines and raised about $3.4 billion from investors at the end of January.

Robinhood, founded in 2013, has been hiring Wall Streeters to help integrate the startup into the more traditional financial system. The firm appointed former Securities and Exchange Commission member Dan Gallagher, Fidelity Investments’ Norm Ashkenas and Wells Fargo & Co.’s Kelly Zigaitis to senior legal and compliance roles.

Robinhood’s Prescription

This week, Robinhood offered its own prescription to avoid future problems: The U.S. stock market should abandon its two-day settlement system and switch to a real-time process.

Moving the U.S. equity market to instantaneous settlement is a huge undertaking that would require years of work. Two components of trading would probably need to be digitized: The securities and the cash to pay for them. Digitally representing a security like a stock or bond isn’t difficult and a small-scale effort by Paxos Trust Co. to use blockchain to settle stock trades in near real-time received a green light from the SEC in 2019.

Digitizing U.S. dollars to pay for stocks is years off, if it ever happens. Another hurdle is all of the banks, brokerages, hedge funds and trading firms that buy and sell shares would need to update their systems to make the change. The transition would no-doubt be expensive.

Australia embarked on a plan to do just that in 2016 when Digital Asset Holdings announced a deal with ASX Inc. to remake the Australian Stock Exchange so settlement times could be cut from days to minutes. The project has been extended repeatedly and is currently two years behind schedule.

Meanwhile, Robinhood is fortunate to have access to venture capital to weather a rough patch, said Joanna Fields, founding principal at market structure consultancy Aplomb Strategies.

“There are firms that have controls, governance frameworks and processes, and that do not have the capability of getting that kind of capital infusion,” she said.

©2021 Bloomberg L.P.

Toshiba CEO Kurumatani Shouldn’t Put Politics and Personal Agenda Before Shareholders




Toshiba Corporation’s 1 Trillion Yen ($9.5 Billion) Investment Plan Blindsided Shareholders


Toshiba Sets Operating Income as Growth Target at Potential Expense of Shareholder Value


Toshiba CEO Kurumatani Resists Modern Corporate Governance Standards


Other Japanese Companies Have Taken Far Bigger Strides to Improve Governance


Farallon, Effissimo Request More Transparency, Seek EGMs


Toshiba Trades at Steep Discount to Peers, Likely Reflecting Governance Concerns

By Jarrett Banks and John Jannarone

Toshiba Corporation was once the face of corporate Japan’s global rise. As a 50 percent partner in Time Warner’s film and television business in the early 1990s, it passed on the movie adaptation Michael Crichton’s Rising Sun, in what was seen as a power move.

Although times have changed and the company is no longer involved in the film industry, Toshiba President and CEO Nobuaki Kurumatani seems stuck in the past when it comes to value creation and corporate governance.

Founded in 1875 just a few years after the Meiji Restoration that ended rule under the shogunate, Toshiba is much older than other Japanese electronics majors like Hitachi, Panasonic and Sony. But the usual way of thinking at Japanese conglomerates toward foreign shareholders—we’ve been running the show for centuries and don’t care about your opinions—isn’t going to cut it anymore.

Overseas investors bailed out Toshiba in 2017 by participating in a $5.4 billion share offering after accounting scandals and concerns about its nuclear power business threatened the Japanese company’s survival. But now, Mr. Kurumatani doesn’t want to listen to those investors or others seeking reform.

Toshiba’s pursuit of growth in operating income rather than prudent value creation has been painful for shareholders, with the company making serial acquisitions that rarely worked out. There is a risk that Mr. Kurumatani hasn’t learned from the past. So far, he appears concerned about making the company bigger rather than return on investment, which requires serious capital discipline.

Toshiba doesn’t have a good track record of successfully integrating acquisitions, and investors are right to ask why this time could be any different. Major acquisitions and investments have led to write-downs, indicating Toshiba may have wandered into businesses where it didn’t belong.

That has translated to an abysmal stock performance. The shares have fallen 47% in the last decade while the benchmark Nikkei 225 has nearly tripled.

The massive conglomerate, which employs 130,000 people, narrowly avoided a delisting from the Tokyo Stock Exchange three years ago after multibillion-dollar losses at its Westinghouse nuclear unit pushed liabilities beyond its level of assets. It was forced to sell its prized semiconductor business and take an infusion of cash from a large contingent of activist shareholders. The writedowns and accounting scandals triggered a management shakeup and the appointment of Mr. Kurumatani, the first outsider named CEO in over half a century.

Although Japan has made a concerted effort in recent years to bring corporate governance up to a higher standard, Mr. Kurumatani has been shifting strategy with the wind. In December, activist fund Farallon Capital, which owns a 5.37% stake, asked the conglomerate to convene an extraordinary general meeting of shareholders to seek approval before the company can make significant changes to the Toshiba Next Plan. Farallon said it was deeply concerned that Toshiba suddenly announced a growth strategy that was materially different from the plan already in place.

Amazingly, shareholders explicitly requested the ability to have a say on capital allocation policy at the 2020 annual meeting. That provision exists at many other Japanese companies but had been absent at Toshiba until last year. But just a few months later, Mr. Kurumatani essentially went rogue by announcing his big M&A plans.

Such a flagrant disregard for shareholders could cause trust in Mr. Kurumatani to erode. Any nods to the will of shareholders appear to be transactional moves designed to temporarily mollify them rather than earnest corporate policy changes.

But shareholders are unlikely to give up. Last year, Singapore-based activist fund Effissimo Capital Management, Toshiba’s largest shareholder with a 10% stake, narrowly failed to install three directors on the Japanese company’s board. This year, things could easily swing the other direction.

Then there are Mr. Kurumatani’s political connections – which he has possibly used to interfere with shareholder votes. The Financial Times reported that, ahead of Toshiba’s July 2020 AGM, the former head of Japan’s Government Pension Investment Fund held private discussions with Harvard Management Co., which subsequently abstained from voting.

Equally alarming are signs of potential meddling in vote counts themselves. Another large Toshiba shareholder, 3D, discovered that the votes on about 5 million of its shares hadn’t been counted by Sumitomo Mitsui Trust, the shareholder services firm that administered the voting for Toshiba. At the same time, Toshiba engaged Goldman Sachs to defend it against activists – a likely costly engagement that will burn precious resources.

Neither Toshiba nor Farallon responded to emailed requests for comment from CorpGov while Effissimo didn’t answer multiple phone calls to its Singapore office.

Shareholder Return Since Mr. Kurumatani Become CEO in April 2018 – Bloomberg

Mr. Kurumatani struggles with a dicey 58% approval rate among shareholders. That’s partly due to questionable actions in 2020 such as Toshiba’s buyout of chip-equipment maker NuFlare Technology along with accounting irregularities at its Toshiba IT-Service unit.

Toshiba returned to the top section of the Tokyo Stock Exchange on Jan. 29, after more than three years in its second tier. The inclusion will require passive funds to buy an estimated 58 million shares, or 13% of outstanding stock. This could have been a moment to rejoice for activist shareholders. But instead, Mr. Kurumatani has many shareholders worried about big M&A.

Toshiba should focus on growing organically, shedding money-losing assets and finding a sturdier financial footing. That would be of more value to shareholders in the long term.

Toshiba’s share price indicates investors have little faith in current management’s ability to do the right thing. Toshiba trades at a multiple of 13.6 times forward earnings, according to Sentieo, an AI-enabled research platform. That’s among the lowest valuations in the company’s peer group, with Nidec Corp trading at 54 times, Tokyo Electron LTD at 24 times, and Sony at 23 times.

But even a P/E multiple is an overly flattering way to benchmark Toshiba. The company is sitting on net operating losses worth at least a couple billion dollars. That suggests the market values the core business considerably less than its $16 billion market capitalization.

Mr. Kurumatani’s tenure as CEO was supposed to restore confidence after years of mismanagement and scandals. Instead, he has generated little value for shareholders, with the stock going sideways until a very recent pop – likely due to the company restoring its status on the Tokyo Stock Exchange’s first section rather than any prudent decisions by Mr. Kurumatani.

As an outsider, Mr. Kurumatani has a genuine opportunity to effect positive change at Toshiba – perhaps even to guide the company back to its former glory. But if he cannot find a way to get along with shareholders, there may be some painful days ahead.

Contact:

editor@corpgov.com

www.CorpGov.com

Editor@CorpGov.com

Twitter: @CorpGovernor

CAPITALI$M WITH CHINESE CHARACTERISTICS

China Hedge Funds Add $200 Billion, Trouncing Wall Street

Bloomberg News

Sun, February 7, 2021



(Bloomberg) -- China’s army of tiny hedge funds are pulling further ahead of their better-known foreign competitors with outsized gains helping them attract more assets.

The nearly 15,000 funds offered by Chinese managers returned 30% on average last year, with the best-performers surging 10-fold, according to Shenzhen PaiPaiWang Investment & Management Co. That dwarfs the average 12% gain for hedge funds globally.

The out-performance is another impediment to global funds such as Bridgewater Associates and Two Sigma, which have struggled to make inroads into China’s 3.8 trillion yuan ($588 billion) hedge fund market since it was opened to foreign firms four years ago. Local funds added a record 1.3 trillion yuan in assets last year.


“Foreign players are handicapped in China,” said Yan Hong, director of the China Hedge Fund Research Center at the Shanghai Advanced Institute of Finance. While many global funds are “patient” given the potential riches of cracking the Chinese market, their persistently small size adds to regulatory constraints, “making it hard for them to distinguish themselves.”

China’s early economic recovery from the pandemic fueled rallies in stocks and commodities, lifting returns across all eight hedge fund strategies tracked by PaiPaiWang. Macro funds, which trade across asset classes, were the best-performer, returning an average 41%, compared to the global average of 10%.

Shenzhen Qianhai Jianhong Times Asset Management added leveraged bets on stocks seen to benefit from the pandemic, such as glove makers and office supply companies shortly after the outbreak, then later made early dives into consumer stocks and vaccine makers as growth started to stabilize, according to China Times. Its Jianhong Absolute Return No. 1 fund ended the year with a 831% return, the best among stock funds, according to PaiPaiWang.

Only three of the 32 foreign firms that have won a license to operate in China’s hedge fund market -- UBS Group AG, D.E. Shaw & Co. and Winton Group Ltd. -- have garnered more than 2 billion yuan at their onshore private fund businesses -- a key condition to be allowed to access the interbank bond market that’s crucial for bond and macro strategies, according to Yan.

Their small size also makes it harder to win distribution deals from banks, the biggest source of new clients, Yan said.

The lack of scale also hampers foreign funds’ access to markets such as over-the-counter options because they can’t meet Chinese brokerages’ requirements for assets under management, according to Fangda Partners.

Top Quants

Meantime, the number of local hedge fund firms with at least 10 billion yuan in assets more than doubled last year to 63, according to Licai.com. Growth is most impressive among quant funds, with the four biggest tripling assets last year, according to Chinafund.

“Money is increasingly gravitating toward the biggest players, with the top 10% soaking up most of the inflows,” said Liu Ke, head of research at Hengtian Wealth Management. “The trend is accelerating.”

While some foreign quant firms are attracting strong inflows with offshore products that invest in China, they are struggling to win recognition onshore as the under-performance of their fundamental-driven strategies last year further erodes the appeal of their already short track-records, according to Qiu Huiming, founder of Shanghai Minghong Investment Management Co.

“Although foreign managers have stronger name recognition globally, the past two years showed that Chinese quant players still have the edge so far,” he said.

Chinese quants also further honed their machine-learning skills, with such funds tracked by Howbuy Wealth Management Co. beating mainstream multi-factor strategies by 12 percentage points.

Minghong’s assets doubled last year to about 60 billion yuan, making it China’s largest quant fund. Its offshore market-neutral product, which also invests in China, returned 32% last year, beating the global average of 3.4%, according to Eurekahedge.

Still, “it’s not a game where success is determined in the short-term,” Yan said. “As policies loosen further, foreign players’ advantages could gradually emerge.”

(Updates with information about foreign funds in China)


©2021 Bloomberg L.P.

U.S. Treasury's Yellen: Americans earning $60,000 should get stimulus checks

Sun, February 7, 2021

U.S. President-elect Joe Biden announces members of his economic 

policy team in Wilmington, Delaware

WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen said on Sunday that American workers who earn $60,000 per year should receive stimulus checks as part of the White House's proposed $1.9 trillion coronavirus relief package.

"The exact details of how it should be targeted are to be determined, but struggling middle class families need help," Yellen said on CNN’s "State of the Union."

The White House has said it is open to negotiation on who should be eligible to receive the proposed $1,400 checks, and has declined to specify where it thinks the income cutoff should be.

"President (Joe) Biden is certainly willing to work with members of Congress to define what's fair and he wouldn't want to see a household making over $300,000 receive these payments,” Yellen said, without offering further detail.

If Congress approves the $1.9 trillion plan, the country would get back to full employment next year, Yellen said. Otherwise, she said, unemployment would linger for years.

Republicans on Capitol Hill have resisted the administration’s COVID-19 relief plan, concerned it would unnecessarily increase the national debt following the $4 trillion in aid Congress passed last year.

Speaking on the ABC News' program "This Week," Republican Senator Roger Wicker said he thought his party would be willing to support something in the $600 billion to $700 billion range.

Biden has said he would like to win bipartisan support for his plan, but that Republicans were falling far short of the mark in terms of what needs to be done. He said Democrats would go it alone if needed.

The president, Yellen and other administration officials have warned repeatedly that the danger to the economy would be going too small with stimulus efforts, not too large.

Last week, the House and Senate approved a budget plan that would allow a coronavirus relief bill to clear the Senate with a simple majority vote of 51.

Under normal rules, 60 votes would be needed. The Senate is split 50-50, with Vice President Kamala Harris representing the tie-breaking vote for Democrats.

Asked about the risk of over-stimulating the economy and generating inflation, Yellen said: "We have good tools to deal with that risk if it materializes."

(Reporting by Linda So; Editing by Tim Ahmann and Bill Berkrot)

Janet Yellen Re: Cryptocurrencies and Terrorists

Kelsey Williams
Sun, February 7, 2021


Here are the statements she made in response to a question from Sen. Maggie Hassan, who asked Yellen during her confirmation hearing on Tuesday about the dangers of terrorists using cryptocurrencies:

“You’re absolutely right that the technologies to accomplish this change over time, and we need to make sure that our methods for dealing with these matters, with terrorist financing, change along with changing technology,” Yellen said.

“Cryptocurrencies are a particular concern. I think many are used – at least in a transaction sense – mainly for illicit financing.

“And I think we really need to examine ways in which we can curtail their use and make sure that money laundering doesn’t occur through those channels.” 

ARE TERRORISTS USING BITCOIN?

Are terrorists using Bitcoin to finance their “illicit” activities? And, to what extent?

I understand the concern about money laundering, but it is doubtful that “many” cryptocurrencies are used “mainly for illicit financing”. If that is the case, then why is the Secretary of Treasury encouraging lawmakers and regulators to “curtail” their use?

To answer that, we need to understand what Bitcoin and other cryptocurrencies are – in simple, straightforward terms.

Cryptocurrencies offer a PRIVATE process for digital transfer of money. Every single transaction is recorded within a decentralized tracking system. The privacy is attractive for tax and regulatory reasons.

Is tax-avoidance an issue of concern for Ms. Yellen? In her role as Secretary of Treasury, the answer is probably yes. Although, at this point, the volume of financial transactions in all cryptocurrencies likely isn’t large enough to justify excessive concern on her part.

There must be another reason. There is; and that reason encompasses territory far beyond the potential loss of tax revenue.

MS. YELLEN’S REAL REASON FOR CONCERN

The reason: lack of control.

We live in a highly regulated society. Our financial system is the epitome of stringent regulation and control. That control is evident in the process involving financial transactions and the transfer of money.

The ever-present middleman in clearing all financial transactions is the bank; ultimately the US Federal Reserve. And, as we know, Ms. Yellen is a former board chair of the Federal Reserve.

Financial transactions in Bitcoin and other cryptocurrencies are “off the grid” so to speak. That means that they are unreported and do not come under the purview of the regulators.

However, it is not realistic to think that the system will be allowed to function unimpeded on its own for long. This is especially true if the dollar volume of transactions increases in significance.

Ms. Yellen’s inference of terrorists using cryptocurrencies appears to be an attempt to justify curtailment or clampdown on financial activity that is currently not under the purview of those who are in control.

It is naive and short-sighted to think that those who claim to have regulatory authority would sit idly by without making a concerted attempt to intervene in areas where activity is perceived as a threat to their own (the regulators) interests.

(also see Judy Shelton – Thank You; Janet Yellen – She’s Back)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!

This article was originally posted on FX Empire

GREEN CAPITALI$M

Green Tech Could Create The First Trillionaire

Editor Oilprice.com
Sun, February 7, 2021, 

Big tech has ignored green tech, but make no mistake: The world’s first trillionaire could well come from the green tech sector.

And right now, while the only clear front-runners are Elon Musk--already the world’s richest person--and Bill Gates, the world’s second, the biggest redistribution of capital is probably still coming …

It’s opening up massive new opportunities for the next round of high-profile green-tech entrepreneurs, from Facedrive’s (TSX.V:FD) Sayan Navaratnam and Plug Power’s (NASDAQ:PLUG) Andrew J. Marsh to Blink Charging’s (NASDAQ:BLNK) Michal D. Farkas and Fisker’s (NYSE:FSR) automotive design legend, Henrik Fisker.

Everyone knows it.

The New York Times’ veteran tech journalist, Kara Swisher, is 100% certain: “The world’s first trillionaire will be a green-tech entrepreneur. That’s trillionaire. With a ‘T’.”

Billionaire VC Chamath Palihapitiya knows it, too.

In an interview with CNBC, this former Facebook exec who left to found the Social Capital venture firm, said: “The world’s richest person should be somebody that’s fixing or fighting climate change.”

While others are fixated on immediate returns, Palihapitiya is fixated on a lucrative future.

And now, two Silicon Valleys--the original and the Canadian “Tech Triangle” that is aiming to compete with California’s version--are preparing to turn North America into the Saudi Arabia of clean energy.

Tesla, for one, isn’t just the world’s biggest EV manufacturer; or even the world’s biggest car company right now.

It’s a distributed energy company that also makes batteries, solar panels and the Powerwall. They aren’t just pumping out electric vehicles. “They are figuring out how to harvest energy, how to store it, and then how to use it to allow humans to be productive," notes Palihapitiya.

It’s certainly becoming easier to imagine Elon Musk as the world’s first trillionaire.

But the rest of the green-tech energy crew have the financial aspects of climate change on their mind, and this is where investors need to be looking for future returns.

So, Tesla isn’t just a car company. Nor is Facedrive (TSXV:FD,OTC:FDVRF) just a carbon-offset ride-hailing platform, even if that was its flagship vertical. It’s a force for change.

Nor is PlugPower just another battery company. It’s developing hydrogen fuel cell systems to replace conventional batteries in equipment and vehicles powered by electricity.

Likewise, BLNK isn’t just another extension cord, so to speak, for electric vehicles. It’s arguably a major EV missing link--and an explosive one.

And Facedrive goes beyond this even with multiple verticals potential.

Facedrive, one of the most exciting companies to come out of Canada’s rapidly rising “Silicon Valley” pioneered carbon-offset ride-sharing in 2019, when the giants in this segment were busy ignoring climate change and butting heads with local authorities all around the world. It was the first to offer customers the choice of an EV, gas powered or hybrid ride, and now it’s expanding into the United States with plans for Western Europe. It was also the first to take the far more sustainable approach of working with local authorities, such as by planting trees to offset carbon with the City of Toronto, rather than against them.

But that was just the opening salvo …

It’s hit the carbon-offset food delivery segment just as hard, launching with the acquisition of Foodora from one of the world’s most reputable food delivery companies: Delivery Hero.

And its most recent acquisition of Washington, D.C.-based Steer gives it a solid presence in the United States … but it’s much bigger than that: Steer is an EV subscription company that plans to disrupt the auto industry in two very important ways. First, it intends to get many more people into EVs by offering them an on-demand virtual showroom of cars. Second, it fully plans to revolutionize the way we view car ownership. How? By getting people into an entire lineup of EVs that are delivered to their door at the swipe of a finger by a super smooth-running concierge app that takes all the hassle out of owning a car, including insurance and maintenance.


It’s targeting a massive generation of millennials who are much more likely to support it …

A generation that will dictate what happens next with the auto industry, and how it all ties in to climate change.

While a global pandemic and a major shift to remote work have lured millennials back into car ownership, don’t expect it to be the same as years gone by. Numerous studies have shown millenials value “access” to a private car over ownership, and they want it on-demand in a process that is as easy as the click of a button. And they overwhelmingly value EVs over conventional cars.

That’s why Facedrive stock is up over 200% in a month, and over 2200% since its launch.


That’s also why PLUG is up over 100% YTD:


And why BLNK has seen gains of over 2300% in 12 months:


These are the innovators of our present …

And the green tech millionaires, billionaires and possibly trillionaires of our future.

They are the disruptors or understand what is dictating the market. And they understand it from a financial perspective.

Even the new King of Wall Street, BlackRock, is convinced that big money is going to the innovators who understand climate change and green tech. The innovators who understand this financially.

Big money is already refocusing on companies with real sustainability, says BlackRock CEO Larry Find. And “the tectonic shift we are seeing will accelerate further”.

“More and more people do understand that climate risk is investment risk. ...When finance really understands a problem, we take that future problem and bring it forward. That’s what we saw in 2020, and what we’re seeing now,” Fink said Tuesday on CNBC’s “Squawk Box.”

The Race Is Already Underway

TSLA (NASDAQ:TSLA) is without a doubt one of the hottest stocks on Wall Street. As one of the world’s most exciting -and important- car makers, it has made going green a must in this incredibly competitive industry. Its modern design has become the standard. You would have to go out of your way to not see a Tesla when walking around major cities like San Francisco and Hong Kong.

Elon Musk, or Papa Musk as he is lovingly called on Reddit’s Wall Street Bets, had his eye on prize long before the green energy hype started building. In fact, he released the first Tesla Roadster back in 2008, making electric vehicles desirable when people were laughing at first-gen electric vehicles. Since then, Tesla’s stock has skyrocketed by over 14,000%.

In addition to producing one of the most desirable electric vehicles on the market, Tesla is ramping up its solar game, as well. Tesla’s Solar Roof project aims to change the way houses function. It replaces traditional roofs with stronger, and arguably more aesthetically pleasing, solar panels that can power your entire home. It also comes in as the lowest-cost-per-watt solar option in the American market.

Tesla is leading the charge into a green future, and nothing can stop it. Elon Musk had a brief stint as the world’s richest man, but he could be returning to that position in no time, and perhaps even be the world’s first trillionaire if he plays his cards right.

XPeng Motors (NYSE:XPEV) may be fresh on the scene in the Chinese electric vehicle boom, but is looking to follow in its American cousin’s footsteps. Though it only recently went public in the U.S., it’s already taken the market by storm. Riding on the coattails of the success of Tesla and NIO, it has carved out its own demand, especially among the younger generation of traders looking for the next big company to blow. Since its NYSE debut in August, the ambitious electric vehicle company has risen significantly thanks to its promising financials and growing demand for its stylish vehicles.

And retail investors aren’t the only ones showing interest in this EV newcomer. Xpeng has also garnered a ton of interest from Big Money. Earlier in 2020 the company raised over half a billion dollars from giants like Aspex, Coatue, Hillhouse Capital and Sequoia Capital China. Recently, Xpeng has even secured another $400 million from heavy hitters such as Alibaba, Qatar Investment Authority and Abu Dhabi’s sovereign wealth fund Mubadala.

As the demand for electric vehicles continues to grow, newcomers like Xpeng provide an excellent opportunity for investors to jump on this undeniable trend even if the missed out on Tesla’s meteoric rise to glory.

Automakers aren’t the only ones benefitting from the electric vehicle hype, either. Billionaires couldn’t keep their hands off of Plug Power (NASDAQ:PLUG) last year, with giant BlackRock’s Larry Fink piling in heavily, among other heavy hitters. Why? Partly because Plug Power is already providing its hydrogen-powered tech solutions to big-name retailers, but overall, because the green revolution is clearly happening and unfolding as we speak. It helps that Plug's full-year guidance implies year-on-year sales growth of around 35%, even if profit won’t come for a while.

Morgan Stanley's Stephen Byrd believes green hydrogen will become economically viable quicker than investors appreciate saying Plug Power's deal with Apex Clean Energy to develop a green hydrogen network using wind power offers a chance to tap into "very low cost" renewable power and helps accelerate the shift to clean energy. Plug has a goal for over 50% of its hydrogen supplies to be generated from renewable resources by 2024.

The company has also just announced a partnership with Universal Hydrogen to build a commercially-viable hydrogen fuel cell-based propulsion system designed to power commercial regional aircraft. The initiative will help bring Plug's proven hydrogen ProGen fuel cell technology to new markets.

FuelCell Energy (NASDAQ:FCEL) is another alternative fuel stock that has turned heads on Wall Street. Up over 1200% since February 2020, FuelCell has been one of the biggest winners over the election season, with President Biden campaigning for a carbon-free America.

In fact, analysts even estimate the U.S. could spend as much as $1.7 trillion on clean energy initiatives over the next 10 years. And that’s great news for companies like Blink, Plug and FuelCell.

Though many expected FuelCell to return to earth in the short-term, it has continued to climb. And its long-term trajectory is solid. It has spent years building a patent moat and developing solutions that will tie into the energy transition perfectly. With more and more money piling into the clean technology industry, FuelCell is well positioned to climb even higher.

Microsoft (NASDAQ:MSFT) is going above and beyond in its emissions goals, aiming to be carbon neutral in the next ten years. A feat that will not be an easy task for such a massive technology corporation. Additionally, Microsoft has also pioneered new solutions to aid other companies in curbing their emissions as well.

Bill Gates’ tech giant has made numerous investments in clean energy across the globe. From Ohio to the Netherlands, Microsoft is pouring millions into solar and wind projects to not only help reduce its own carbon footprint, but also help neighboring communities do the same.

In addition to its investments and green operations, Microsoft is also getting into the auto-game. Microsoft’s Azure cloud-based infrastructure and edge computing is going to be pivotal in this new industry. Not only will it allow automakers to analyze data and optimize their products, it will give them the opportunity to conduct advanced tests and simulations to fine-tune their software in risk-free environments. It’s even partnering with leaders in the auto industry such as Renault and Audi.

Mark Everest, Information Systems Development Manager, Renault Sport Formula One Team noted, “There are so many factors that are constantly changing and can affect race strategy: track temperature, tire performance, what the other drivers are doing. Simulation helps us quickly understand how to configure the car for a particular track."

Canada’s Silicon Valley is joining the ESG race, too. Shopify Inc (TSX:SHOP) Canada’s own e-commerce giant helps users build their own online stores. It has huge clients – everyone from Tesla to Budweiser are on board. And the company is beloved by millennial investors. In addition to its revolutionary approach on e-commerce, Shopify is playing an increasingly active role in creating a greener tomorrow. It has committed to spending at least $5 million annually to help combat climate change. It’s even making cuts throughout its own operations, decommissioning its data centers and sourcing renewable power for its buildings.

Telus Corporation’s (TSE:T) long-standing commitment to putting its customers first fuels every aspect of its business, has had it a definitive leader in Canada. In fact, Telus Health is one of the country’s biggest healthcare IT providers. And it’s done so with sustainability in focus.

Driven by its goal to connect all Canadians for good, it has contributed over $55 in community giving, reduced emissions by 31% and has four consecutive years on the Dow Jones Sustainability World Index.

Shaw Communications Inc (TSE:SJR.B) is one of Canada’s leading telecom infrastructure and cloud service providers. Its dominance in Canada’s telecom sector means that if any internet-based services want to operate, they’ll likely be utilizing the company’s infrastructure. After all, without telecoms, these TaaS companies would not be able to operate. And that’s not necessarily a bad thing when you consider Shaw’s sustainability goals. In fact, it is one of the biggest customers of Bullfrog Power which sources its electricity from a blend of wind energy and hydropower.

Magna International (TSX:MG) is a great way to gain exposure to the explosive EV and ESG market without betting big on one of the new hot stocks tearing up among the millennials right now. The 63-year-old Canadian manufacturing giant provides mobility technology for automakers of all types. From veteran Detroit automakers like GM and Ford to luxury brands like BMW and Tesla, Magna is a key supplier to all of them.

Like Magna, Westport Fuel Systems (TSX:WPRT) is another major hardware and tech provider in the auto-industry. It builds products to help the transportation industry reduce their carbon footprint. In particular, it provides systems for less impactful fuels, such as natural gas. In North America alone, there are over 225,000 natural gas vehicles. But that shies in comparison to the global 22.5 million natural gas vehicles globally, which means the company still has a ton of room to grow.

By. Felix Williams

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**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**

Forward-Looking Statements

This publication contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this publication include that the demand for ride sharing services will grow; that Steer can help change car ownership in favor of subscription services; that new tech deals will be signed by Facedrive and deals signed already will increase company revenues; that Facedrive will be able to expand to the US and globally; that Facedrive will be able to fund its capital requirements in the near term and long term; and that Facedrive will be able to carry out its business plans. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that riders are not as attracted to EV rides as expected; that competitors may offer better or cheaper alternatives to the Facedrive businesses; changing governmental laws and policies; the company’s ability to obtain and retain necessary licensing in each geographical area in which it operates; the success of the company’s expansion activities and whether markets justify additional expansion; the ability of the company to attract drivers who have electric vehicles and hybrid cars; and that the products co-branded by Facedrive may not be as merchantable as expected. The forward-looking information contained herein is given as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.

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CEO of Egypt's Juhayna detained, share price tumbles

Sun, February 7, 2021

A truck of Juhayna transports products of juice and milk from a factory in Cairo, Egypt

CAIRO (Reuters) - Shares in Egypt's Juhayna Food Industries dropped sharply in early trading on Sunday after the company said a second top official had been called for questioning and detained.

The company, Egypt's largest dairy products and juices producer, confirmed the detention of CEO and deputy chairman Seifeldin Thabet in a disclosure to Egypt's bourse regarding a pending investigation into his father, ex-chairman Safwan Thabet, who was arrested in December.

"The company has no further information regarding the detention/investigation to disclose at this point," Juhayna said.

It said the investigation against Safwan Thabet regarded "personal accusations unrelated to the company".

Thabet's lawyer was not immediately available. A spokesperson for Juhayna said the company had no further comment.

Juhayna's shares tumbled 17% as trading opened on Sunday and were 10.55% down when the stock exchange closed at 1200 GMT.

Two security sources and a judicial source said Seifeldin Thabet was detained late on Saturday as part of investigations into alleged financing of terrorist groups.

In 2015 a judicial committee established by the government issued a decision ordering the seizure of Safwan Thabet's assets due to alleged links to the Muslim Brotherhood, which is banned and listed as a terrorist organisation in Egypt.

Security sources told Reuters in December that Juhayna's chairman was detained for alleged "financial irregularities". The Interior Ministry has not commented.

After Safwan Thabet's arrest, Juhayna appointed his son, Seifeldin, as acting chairman. It later appointed Mohamed el-Dogheim as chairman.

(Reporting by Ehab Farouk, Patrick Werr and Ahmed Mohamed Hassan; Writing by Aidan Lewis; Editing by Hugh Lawson and Elaine Hardcastle)

ROARING TWENTIES REDUX

'The only option to grow your money': 

Why new investors bought stock during the pandemic

Susan Tompor, Detroit Free Press
Sun, February 7, 2021

The ability to put just a few extra bucks into stocks. A pandemic panic that drove stock prices way down for many companies that have a future ahead. Easy to use apps.

And throw in a little extra cash via government stimulus checks and some extra time when major league sports teams stopped playing during the pandemic, you couldn't see a movie at a theater and college graduates started working remotely back home.

All of those factors contributed to growth among new investors in 2020.

Sure, many of us who are accustomed to setting aside a little bit of each paycheck in our 401(k) plans didn't see this one coming. Maybe we heard a college student in the family talking about stock picks. We certainly couldn't help but notice as we watched the GameStop battle unfold in the headlines in January.
A man wears a mask as he passes the New York Stock Exchange, Monday, March 9, 2020. The dizzying action in financial markets escalated Monday as stocks moved closer to a bear market and oil prices fell the most since 2008.More

But now you've got to wonder who are all these new investors, many times younger investors, who seem to have some power to move markets?
'Perfect storm' for new investors

More than 10 million new brokerage accounts were opened by individuals in 2020 — more than ever in a year, according to an estimate by Devin Ryan, equity research analyst at JMP Securities.

Last year created the "perfect storm" for investing, Ryan wrote. The brokerage industry moved toward zero on commission rates late in 2019, making it less expensive to invest, and there was an "unprecedented backdrop created by the COVID-19 pandemic."

We saw extreme market volatility, more people working from their home offices and kitchen tables, and more digital transformation, including the customer's willingness to trade stocks via brokerage apps.

Hezekiah Lockridge, 21, opened his first brokerage account in late 2020 after his mentor at his company, Citizens Bank, suggested that he try out the stock market. He uses a brokerage app.

He owns one stock, Apple, and plans to invest in other stocks, possibly in a smaller upstart, at some point. He has about $2,000 in a brokerage account, half in Apple.
Hezekiah Lockridge, 21, began investing in late 2020. He says: "The stock market is the only option to grow your money."

Lockridge graduated in December 2019 from the University of Michigan-Dearborn with a degree in finance. And he remembers going to school and hearing it drilled into his head that people need to save for retirement early in life and take some risks to be able to retire comfortably at age 65.

"Right now, having it in a savings account doesn't get you anywhere," said Lockridge, who lives at home in Ypsilanti, Michigan, and works remotely.

Low interest rates, even with CDs, aren't very helpful to savers.

"The stock market is the only option to grow your money."
New investors are younger, more diverse

A newly released report called "Investing 2020: New Accounts and the People Who Opened Them" outlines some interesting trends.

New investors tend to be young, lower income and more racially and ethnically diverse, according to the collaboration by the FINRA Investor Education Foundation and NORC at the University of Chicago.

The study was done in October 2020 after the market meltdown in March but before the wild show in January where everyone watched the battle between the hedge funds and everyday traders.

'This is life-changing': Meet the Redditors behind the GameStop saga

Robinhood CEO: We're helping those left behind by Wall Street, not hedge funds

GameStop-Robinhood revolution: Stock frenzy echoes anti-establishment anger behind Trump's rise, analysts say

GameStop's stock price hit $483 a share in trading on Jan. 28. The videogame seller closed at $325 a share on Jan. 29 — its highest price after a social media frenzy where investors on Reddit's WallStreetBets drove the stock higher and higher.

Back in early October, GameStop was trading around the $9 a share range.

But the first week of February proved to be brutal with GameStop trading around $70 a share.

The research involved surveying 1,291 households from NORC’s probability-based panel. The survey was fielded between Oct. 26 and Nov. 13, 2020.

Based on the survey, 57% of the respondents opened a new taxable investment account in 2020. Among investors who opened a new account in 2020 in the sample, 66% were new investors who had not previously owned a taxable investment account, making this their first experience buying stocks in a taxable account.

Here's a look at some stats:


The majority of new investors are white. But the report indicated that 17% of new investors last year were Black, while 15% were Hispanic/Latino and 10% were Asian.


About 33% of the account balances for new investors had less than $500. This is money outside of any 401(k) or tax-favored retirement account. If you break it down to new adult investors who are younger than 30, the study indicates that 41% had less than $500 in stocks in taxable accounts.


Many new investors aren't making anything close to six figures. The study noted 24% of new investors earned less than $35,000. That compares with 7% who are experienced investors who opened a new account in 2020 but had an investing account earlier.

Many factors are helping those who don't have big paychecks to play the market. The hurdle isn't as high as it was years ago now that several brokerages offer no-minimum and low-minimum balance brokerage accounts. No-commission trades cut down an investor's cost, too.

"Some of these new brokerages have offered opportunities to enter the stock market that haven't been there before," said Angela Fontes, vice president of Behavioral and Economic Analysis and Decision-making at at NORC at the University of Chicago.

Many communities that have been under-represented in investing, including Black households and Hispanic/Latino households, are able to invest and open a brokerage account without having $25,000 or so to invest, as they might have needed in the past, she said.
Why are newcomers investing?

While many were shaking in their boots about what could happen next to their 401(k)s in March, many younger investors decided to take a chance and shop for possible bargains.

Joseph Mutone, 22, said he decided to buy stocks when he heard the market was crashing back in March 2020 as fear of the pandemic's impact on the U.S. economy flourished.

Mutone, who graduated with a degree in music from the University of Michigan in Ann Arbor in May, said he first opened a brokerage account in 2019. But he didn't do any investing.
Joseph Mutone, 22, of Bloomfield Township, said the market meltdown at the start of the pandemic motivated him to look for bargain prices for stocks in early 2020.More

The app remained on his phone and the market meltdown motivated him to reactivate that account.

"I didn't do too bad," said Mutone, who is now working toward a master of accounting degree at Oakland University and working as a tax intern for PwC.

He bought stock in ONEOK, an owner of one of the nation’s premier natural gas liquids systems, at around $27 a share in mid-March last year. It was trading around $42.50 a share in early February — a gain of around 57% in less than a year.

Mutone, who lives in Bloomfield Township with his parents, said he started investing with less than $3,000. He had saved the money from his job working as a church organist.

He does his own research and uses the Seeking Alpha app for news and information. He talks with his dad about his strategies.

"People are starting to see there is a lot of benefit to investing," Mutone said. "I've been getting calls from my friends asking me how do you get started."

Some younger investors seem to add a social component to investing, Fontes said.

The report noted that 51% of people age 18 to 29 years old said they opened a new investment account in 2020 after receiving a suggestion from a friend. And 31% acted after a suggestion from a family member.

Mark Lush, manager and behavioral scientist in the Behavioral and Economic Analysis and Decision-Making team at NORC at the University of Chicago, said the big dip in the stock market at the beginning of the pandemic drove a lot of interest in stocks.

People who opened new brokerage accounts in 2020 gave three common reasons: The ability to invest with a small amount of money (35%), wanting to invest for retirement (27%), and dips in the market that made stocks cheaper to buy (26%).

And 19% reported that they had received some money, perhaps including stimulus cash, that gave them extra cash to invest. About 12% said they had money from a sign-up bonus.
What are the risks ahead?

On the downside, experts say, research indicates that there's a lower level of investor literacy among new investors who opened a taxable account for the first time in 2020.

"What we're seeing is they're actually saying one of the actual reasons they're opening an account is to learn about investing, which is sort of interesting," Fontes said. "This is one of the goals."

On the one hand, you might find it odd that people risk their money perhaps before learning about investing. But I understand the logic, especially if you're putting a small amount of money at risk.

I'm not a wonderful baker or cook, like my mother or sister. Over years, though, I've learned quite a bit. And I didn't learn how to bake lemon bars or cook chili just by reading a recipe.

If you want to bake or cook, you've got to make discoveries along the way and deal with a few flops. (Key tip: Adding some chopped chipotle peppers to a recipe does not mean the recipe calls for dumping in an entire can.)

With anything, it is important to keep learning and try to correct any mistakes along the way.

New investors more frequently relied on the advice of friends and family, instead of financial professionals or their own personal research. But many used a variety of information sources, as well.

The survey noted that 14% of brand new investors turned to social media when making investment decisions; 27% turned to the news media and 38% turned to friends and family.

And 10% of new investors said they turned to online chats to get stock tips and investing advice.

"Those numbers might be a little higher now," Gary Mottola, FINRA Foundation research director, said referring to the publicity that online sites like Reddit's WallStreetBets received as part of the GameStop frenzy.

More financial literacy is needed. A free e-learning program for new investors is at www.finra.org/investors/learn-to-invest.

"It's really important for new investors to understand risk," Mottola said.

Mottolla told me that some new investors are showing a bit of a disconnect between their goals and their game plans.

More than half of new investors, Mottola noted, said they were buying stocks as a way to save money for retirement.

But oddly enough, the new investors are using taxable, non-retirement accounts to invest. They could be missing out on the important tax breaks offered to retirement savers who set aside money in a 401(k) plan, a Roth IRA or a traditional IRA.

And 23% said they're saving for an upcoming expense, such as paying for a wedding or buying a car. Yet are those investors underestimating the short-term risks and overlooking the real possibility that they could lose a good deal of their money in the short term if stock prices fall?

A key investment tip: You shouldn't sacrifice money you can't afford to lose, if you're chasing short-term returns.

Mottola noted that most investors reported they were willing to take average financial risks expecting to earn average returns. But they might have been taking on greater risk than they realized.

Most new investors (64%) were taking on greater risk by using their brokerage accounts to buy individual company stocks, not more broadly diversified mutual funds. Only 28% of new investors were using the brokerage accounts to buy mutual funds.

You've got to know your goals and get a game plan that will get you there.

Contact Susan Tompor via stompor@freepress.com. Follow her on Twitter @tompor.

This article originally appeared on Detroit Free Press: Stock market flooded with new investors during COVID-19