Should You Be Buying What Robinhood Is Selling? | Sidnaz Blog


In rare cases, such pitches have paid off big time. More often, you’d have done yourself a favor by taking roughly half your money and lighting it on fire instead.

Just as Robinhood isn’t the first brokerage to offer commission-free trading, it isn’t the first to seek to “democratize” investing or to sell a piece of itself to its own customers.

On June 23, 1971, Merrill Lynch, Pierce, Fenner & Smith Inc. became the first New York Stock Exchange firm catering to individual investors to offer its shares to the public.

Thirsty for fresh capital in a struggling stock market, Merrill flogged its shares to its own customers, tapping the firm’s “awesome recognition among that vast segment of the population,” reported The Wall Street Journal the next day. “Primarily small investors, the type long championed by Merrill Lynch, quickly purchased the entire amount.”

Nearly 400 insiders at the firm unloaded a total of 2 million shares in the offering. From its initial $28 per share, the stock shot to about $42—a 50% pop—then closed around $39. That valued Merrill at 30.5 times its prior-year earnings, much higher than the overall stock market’s price/earnings ratio of 18.7.

Less than three weeks later, Merrill announced that its net earnings had fallen nearly 50% from the prior quarter.

For the rest of 1971, Merrill’s stock lost 9.4%; the S&P 500 gained 4%, counting dividends.

In 1972, when the S&P 500 rose nearly 19%, Merrill sank 7.7%. And in 1973-74, when the S&P 500 lost 37%, Merrill’s stock slumped by 61%. In its first three full years, Merrill’s stock lost three-quarters of its value; the S&P 500 fell only 5%.

Here in 2021, Robinhood’s offering is one of several trading and investing IPOs:

Coinbase Global Inc.,

the cryptocurrency exchange, went public in April, and

Acorns Grow Inc.,

which helps users invest in tiny increments, said in May that it expects to go public later in the year. Since its Apr. 14 debut, Coinbase is down about 27%. Robinhood fell 8% on its first day of trading Thursday.

One of Wall Street’s oldest and frankest sayings is “When the ducks quack, feed ‘em”—meaning that whenever investors are eager to buy something, brokers will sell it like mad.

Back in 1971, that was the brokers’ own shares. Roughly half a dozen major firms sold stock to the public soon after Merrill, including Bache & Co. and Dean Witter & Co. By 1974, according to data from the Center for Research in Security Prices LLC, several of them had dealt losses at least as devastating as Merrill’s.

In 1987, Jane and Joe Investor got invited to join in on the fun of Charles Schwab Corp.’s IPO, when roughly three million of the offering’s eight million shares were reserved for employees and customers of the firm.

Unlike Merrill, which was rescued from the brink of failure in 2008 when

Bank of America Corp.

bought the firm, Schwab went on to generate spectacular long-term performance. Over the full sweep of time since its 1987 IPO, Schwab is up more than 26,500%, or 17.9% annualized. The S&P 500 gained less than 3,500%, or an average of 11.3% annually.

However, Schwab went public in late September 1987. Only 18 trading days later, on Oct. 19, the U.S. stock market took its biggest one-day fall in history, plunging more than 20%.

Schwab’s stock got brutalized. In their first year, Schwab’s shares fell 59.1%. After three years, the market as a whole had gained 0.6% annually; Schwab’s stock lost an annualized average of 6.9%, according to CRSP.

How many of the original buyers in 1987 stuck around long enough to reap the giant rewards that came much later? That’s impossible to know, but the likeliest answer has to be: very few.

Every once in a while, outside investors in a brokerage IPO do well.

Goldman Sachs Group Inc.

began trading on May 4, 1999. If you’d bought Goldman stock in the IPO and held it ever since, you’d have earned 9.1% a year, versus 7.6% in the S&P 500, according to FactSet.

Yet Goldman was a giant then, as it is now; it was late to the IPO party because it had held on to its partnership structure for so many years. Most brokerage IPOs, like Robinhood’s, occur when the firms are younger and smaller.

That makes them typical. Companies selling shares to the public for the first time tend to be small, with minimal profits; they also require additional invested capital to sustain their rapid growth.

That’s what Savina Rizova, global head of research at Dimensional Fund Advisors, an asset manager in Austin, Texas, calls “a toxic combination of characteristics that points to low expected returns.”

On average, IPOs have severely underperformed seasoned stocks in the long run. And, history suggests, brokerages doing IPOs are better at timing the market for themselves than for you.

Write to Jason Zweig at [email protected]

More from The Intelligent Investor

The brokerage app Robinhood has transformed retail trading. WSJ explains its rise amid a series of legal investigations and regulatory challenges. Photo illustration: Jacob Reynolds/WSJ

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Crypto ‘Yield Farmers’ Chase High Returns, but Risk Losing It All | Sidnaz Blog


One of the hottest trends in cryptocurrencies is a financial activity that dates back to biblical times: lending money to earn interest.

Instead of just waiting for their


ether or other digital coins to rise in value, cryptocurrency investors are now actively chasing returns by lending out their crypto holdings or pursuing other strategies to earn yield. Such “yield farming” can earn double-digit interest rates, far higher than the rates one can get with dollars.

It is a high-stakes endeavor. Investors run the risk of having their digital wealth stolen by scammers or erased by sudden bouts of volatility. The space is also largely unregulated. Yield farmers aren’t protected by the Federal Deposit Insurance Corp., which compensates depositors when banks fail.

Yet the promise of outsize returns in a low-yield environment has helped attract mainstream attention. In the past year, professional and amateur investors alike poured tens of billions of dollars into yield farming, according to industry analysts and data providers.

“Yield farming is not much different than buying high-dividend paying stocks or high-yield unsecured debt or bonds,”

Mark Cuban,

the billionaire owner of the Dallas Mavericks and an active crypto yield farmer, told The Wall Street Journal. “There is a reason they have to pay more than other companies. They are at greater risk.”

Even pros can get hurt. In June, Mr. Cuban lost money when Titan, a digital currency in which he was earning yield, crashed to zero.

Mark Cuban, owner of the NBA’s Dallas Mavericks, is an active crypto yield farmer.


Richard Shotwell/Invision/Associated Press

Instead of putting their money in a bank, yield farmers typically hand their cryptocurrencies to computer programs. Some of these programs lend coins to borrowers and collect interest for the yield farmers.

For example, if an investor wanted to earn interest on tether, a so-called stablecoin that seeks to maintain the same value as the U.S. dollar, she could link her digital wallet to Aave, a crypto-lending platform.

Aave would lend out the investor’s tether funds and pay the interest directly into her digital wallet. As of late Friday, Aave was offering an annualized yield of around 2.9% on tether. Such yields can fluctuate minute to minute based on lending and borrowing activity.

Aave is among the bigger players in decentralized finance, or DeFi, the fast-growing segment of the crypto market in which yield farmers generally look for returns. DeFi projects try to replicate traditional financial activities, such as lending and borrowing, using cryptocurrencies.

Some upstart DeFi projects tout annualized returns of 30% to 50% or more. The catch is that returns are often denominated in tokens that depositors receive as rewards for using their platforms. If the tokens lose value, that erodes the value of the returns.


Do you think cryptocurrency is a passing trend, or is it here to stay? Join the conversation below.

Yield farmers can also lose money to fraud. DeFi projects are frequently run by anonymous teams that sometimes abscond with investors’ funds in scams known as rug pulls. From January to April, DeFi frauds cost investors $83.4 million, according to CipherTrace, an analytics firm.

“It’s the virtual equivalent of handing your money to a stranger and expecting them to give you your money back,” said

Ryan Watkins,

a senior research analyst at the crypto-data firm Messari.

Marcio Chiaradia,

a digital-marketing professional in Irvine, Calif., began yield farming in December. He lost a few hundred dollars on a rug pull called MoltenSwap that was offering a yield of more than 1,000%, he recalled. But Mr. Chiaradia said his record has been mostly positive.

“It feels like the beginning of the internet, with these weird and crazy things that are not going to be around in the long run,” said Mr. Chiaradia, who is 39 years old and has committed several thousand dollars of assets to yield farming. “But I feel like there are some DeFi sites that are going to stick around.”

It is hard to measure the exact amount of yield-farming activity, but a rough proxy is the total assets deposited as collateral with DeFi projects. That metric—called total value locked—has swelled to $74 billion from less than $2 billion a year ago, according to the data provider DeBank.

Nonfungible tokens, or NFTs, have exploded onto the digital-art scene. Proponents say they are a way to make digital assets scarce and therefore more valuable. WSJ explains how they work and why some question whether they are built to last. Photo illustration: Jacob Reynolds/WSJ

Some popular yield-farming strategies don’t have direct analogs to traditional finance. In “liquidity mining,” investors put digital coins in pools of assets run by decentralized crypto exchanges such as Uniswap and collect a slice of the exchanges’ trading fees.

In a related strategy known as “staking,” investors lock up their coins to support the integrity of a currency’s underlying computer network. In return, they are paid in new coins, earning interest.

There is a huge gap between dollar interest rates and the yields available in cryptocurrencies—even in stablecoins purportedly tied to the U.S. dollar. The national average interest rate for savings accounts is 0.06%, according to Meanwhile, crypto platforms offer depositors annualized returns of 1% to 10% or more on dollar-pegged stablecoins.

Such discrepancies have arisen because of the huge demand for borrowing digital currencies, said

Marco Di Maggio,

a Harvard Business School professor who has studied crypto lending.

The demand comes mostly from trading firms that can reap profits from various strategies, Mr. Di Maggio says. One strategy, for instance, involves exploiting the difference between the price of bitcoin and futures contracts linked to the price of bitcoin in months to come. But it takes significant amounts of capital to make such strategies work. Since the crypto firms often can’t borrow from banks, they turn to crypto-lending platforms, where they are willing to pay high rates.

Crypto interest rates will fall as the market matures, Mr. Di Maggio predicts. Moreover, a crypto price crash would cool the current frenzy for digital-currency loans. “It’s sustainable as long as there is a bull market and demand for leverage,” he said.

Meanwhile, companies such as the exchange operator

Coinbase Global Inc.

hope to benefit from lofty cryptocurrency interest rates. Last month Coinbase announced a program in which customers can earn 4% annual yield on stablecoin USD Coin. And the yield is low by crypto standards. BlockFi, a crypto-lending startup, offers depositors a 7.5% annual yield on the same coin.

“It’s getting more accessible to people who aren’t crypto-native,” said

Peter Johnson,

a partner at Jump Capital, a venture-capital firm that has backed BlockFi and a number of DeFi projects.

“If you just want to earn 4% on your dollars, there are now ways to do that without having to know a lot about crypto,” he said.

Bitcoin, Dogecoin, Ether: Cryptocurrency Markets

Write to Alexander Osipovich at [email protected]

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Latest News Today – Try These Investment Options If You Are Looking For


Here Are Five Alternative Investment Options For Bull Market

Most people would tell you to invest in the market when it is down but showing potential to bounce back. They would also advise you it’s safer to not make any new investment when the market is nearing an all-time high. As the Indian economy showed a “V-shaped” recovery after the pandemic slowed a little, the stocks have hit record highs again this year. The rally that started with blue-chip companies has now caught up mid-caps and small caps. The question now arises what should investors do?

Waiting for the market to come down to invest money is a negative approach and may not always bear fruits, say financial experts. Additionally, this may result in loss of opportunity. The best approach, say experts, is to find alternative investment options if you feel anxious about a market correction. Here is a list of options you may try.


Investing in this precious metal is always an option worth trying, given its relative consistency and demand. It is widely considered a tangible inflation hedge and a liquid asset. It is a long-term store of value. Investors can buy and hold physical gold in the form of bars and coins or invest indirectly through gold mining stocks or in digital gold.


In the long run, investing in artefacts can be rewarding. Often the price of an art shoots up over a period of time, as its rarity grows. But investors should keep in mind that maintaining an art could be difficult and expensive.

3.Real estate

Most people invest in property as an easy way out to avoid the complexity of understanding the stock market, which also requires regular monitoring. This is, again, a long-term investment option and requires a large sum of money at once. But there can be regular benefits if you rent out the property.

4.Investing in business

If you have a good amount of disposable money which you do not want to invest in the market, you can use it to grow your own business. Businesses require regular investments, but they have the potential to give the highest returns of all other investment options.


While cryptocurrencies are highly volatile and speculative, they can be an alternative to traditional options. Digital coins have risen in popularity all over the world. However, it’s crucial to know that they have no legal backing in India yet.


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Don’t Believe the Inflated Yields on Inflation-Protected Bond | Sidnaz Blog


Mutual funds and exchange-traded funds that buy TIPS, or Treasury inflation-protected securities, are boasting yields of 8% or more in a bond market where even 4% looks outlandish. Such funds took in an estimated $36.3 billion in new money in the first half of 2021, according to Morningstar—a record for any six-month period since TIPS funds were born in the late 1990s.

If an 8% yield tempts you to join them, listen up. These funds that purport to fight inflation are, ironically, inflating their own reported yields.

I’ve written about this problem before, but it’s never been worse. This week, every single inflation-protected security was trading at a negative yield to maturity before inflation. Yet more than two dozen mutual funds and ETFs that own these bonds are reporting yields of 6%, 7%, even 8% or more.

These Yields Are TIPSy

The reported yields on mutual funds and exchange-traded funds investing in inflation-protected government bonds vary wildly, depending on how they calculate their income.



















Vanguard Inflation-Protected Securities (Admiral)

iShares TIPS Bond ETF




PIMCO Real Return Institutional

Fidelity Inflation-Protected Bond Index



FlexShares iBoxx 3-Year Target Duration TIPS ETF

Invesco Short Duration Inflation Protected (R5)

Fund, Net assets (billions)

Vanguard Inflation-Protected Securities (Admiral), $36.99

iShares TIPS Bond ETF, $28.85


Schwab US TIPS ETF, $18.43


PIMCO Real Return Institutional, $12.38

Fidelity Inflation-Protected Bond Index, $9.67

SPDR Portfolio TIPS ETF, $2.62


FlexShares iBoxx 3-Year Target Duration TIPS ETF, $1.48

Invesco Short Duration Inflation Protected (R5), $0.58

Fund, Net assets (billions)

Vanguard Inflation-Protected Securities (Admiral), $36.99

iShares TIPS Bond ETF, $28.85


Schwab US TIPS ETF, $18.43


PIMCO Real Return Institutional, $12.38

Fidelity Inflation-Protected Bond Index, $9.67

SPDR Portfolio TIPS ETF, $2.62


FlexShares iBoxx 3-Year Target Duration TIPS ETF, $1.48

Invesco Short Duration Inflation Protected (R5), $0.58

How the heck can that be? Are investors expecting double-digit rises in the cost of living? Or are fund companies exploiting a regulatory loophole for marketing purposes?

TIPS are notes and bonds, issued by the U.S. Treasury, whose value varies with changes in the monthly Consumer Price Index. When that measure of inflation rises, the principal value of each of these securities goes up; so does its interest payment. When inflation declines, the TIPS’ value and interest fall with it.

TIPS pay interest, albeit not much these days—a 5-year note sold in April has a coupon of 0.125%. A big chunk of the return instead comes from the inflation adjustment to the principal.

On websites and in other marketing, funds display what’s commonly known as SEC yield. That number is sky-high right now.

Under rules from the Securities and Exchange Commission, funds take “dividends and interest” earned per share during the prior 30 days, deduct expenses and annualize it. The resulting SEC yield tends to be roughly what you’d get if you multiplied the previous month’s net income by 10 or 12.

The SEC’s rules for calculating its yield, however, don’t say whether to include the inflation adjustment or leave it out.

And that gives fund companies a lot of leeway.

As the economy roared back, the Consumer Price Index came in at unusually high levels of 0.8% in May and 0.9% in June. Those are monthly numbers, so funds that annualize them and include the inflation adjustment to principal in their income have been reporting monster SEC yields. To believe in that yield is to imagine that such fluky numbers are sustainable.

Among the many examples this week were the $9.7 billion Fidelity Inflation-Protected Bond Index Fund (SEC yield: 7.11%), the $12.4 billion Pimco Real Return Institutional Fund (8.2%) and the $29.2 billion

iShares TIPS Bond ETF


More from The Intelligent Investor

“To help our clients make fully informed investment decisions,” says a Fidelity spokesman, “we [also] disclose the distribution yield for our bond funds, which is a better reflection of the shareholder experience.”

Distribution yield measures a fund’s income payouts, which also can include cost-of-living adjustments to principal.

Steve Rodosky, co-portfolio manager of Pimco’s inflation-protected bond funds, says the firm calculates and displays the yield “in accordance with the SEC rules.” Pimco’s disclosures also present distribution yield and estimated yield to maturity. As of July 14, for instance, at Pimco’s 1-5 Year U.S. TIPS Index ETF, the SEC yield was 8.79%; distribution yield, 6.89%; and the yield to maturity, 0.55%.

The U.S. inflation rate reached a 13-year high recently, triggering a debate about whether the country is entering an inflationary period similar to the 1970s. WSJ’s Jon Hilsenrath looks at what consumers can expect next.

“From a market-expectation perspective, the estimated yield to maturity is a more stable indicator” than SEC yield, says Daniel He, another co-manager of Pimco’s TIPS funds.

In addition to SEC yield, says Karen Schenone, a fixed-income strategist for iShares, “investors should also look at yield to maturity and real yield” (or TIPS income adjusted for the inflation rate). Those measures are also displayed on iShares’ website and in other marketing materials.

Earlier this year, iShares added a pop-up disclaimer to its website: “An exceptionally high 30-day SEC yield may be attributable to a rise in the inflation rate, which might not be repeated.”


How are you hedging against inflation in your portfolio? Join the conversation below.

At least $109 billion is invested in TIPS funds with SEC yields of 6% or more, according to Morningstar—roughly half the category’s total assets.

Not all have chosen to report inflated yields, though.

State Street Global Advisors is reporting negative SEC yields on several funds, including SPDR Bloomberg Barclays 1-10 Year TIPS ETF and SPDR Portfolio TIPS ETF. Vanguard Group also shows negative reported SEC yields on its TIPS funds.

“In my view, including the inflationary adjustment to the principal [in] the SEC yield is incredibly misleading,” says

Matthew Bartolini,

head of ETF research at State Street Global Advisors. “It assumes that, on a go-forward basis, the inflation reading in the prior months will be persistent” even though the Consumer Price Index can vary wildly from month-to-month. “And many are unaware of this.”

Right now, “the market is experiencing very high month-over-month inflation, and a calculation that annualizes inflation accretion may reflect an overstated view of expected yield,” says a Vanguard spokesman. “Our practice has been to avoid that adjustment, which results in SEC yields on Vanguard funds with TIPS exposure appearing lower than other firms. Conversely, during periods where monthly inflation is negative, our SEC yield may look higher.” The firm feels this approach represents its TIPS funds’ real yield consistently and accurately, he says.

In short, you can’t earn 8% income in a 2% bond market. And funds that claim to be protecting against inflation should protect their investors against inflated expectations, too.

Write to Jason Zweig at [email protected]

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Latest News Today – Want To Make Your Child Financially Aware? Here Are A


Here Are A Few Tips On How To Make Your Child Financially Aware

Children can be taught basics of budgeting which includes lessons like saving and spending

The age-old notion of keeping children away from discussions about finances and household expenditures must be done away with in this growing digital age. Introducing your child to financial literacy at a young age is an active way to ensure they are not overwhelmed in the future while making decisions related to finances. Empowering your child with knowledge related to earning, saving, and spending money is a foolproof way to ensure they will grow up to be responsible with their own finances. 

While finer nuances of saving and earning, like the stock market or bank fixed deposits can be explained at a more mature stage of their lives. The basics of finance can be taught while they are still young. 

Here are a few tips on how to inculcate financial awareness in your child: 

  1. Source Of Money

When your child is young they begin to understand your absence for a few hours as you leave your house to work. Explain to them why you work and how money is earned. This will help them understand the value of hard work as well as the concept of how money is earned. 

2) Importance Of Budgeting 

Children can be taught the basics of budgeting which includes important lessons like saving and spending through games. When you go to a market to buy groceries, explain to your child how you spend money on different items. They will understand the importance of not overspending on a single item and instead look for affordable options. 

3) Show Them How You Spend Money

At a young age, children are extremely impressionable and have the tendency to copy the behaviour of the adults around them. Keeping this in mind, demonstrate your own spending habits. For example, while out at a grocery store give your child a list of things to get and let them decide. Once your child returns with the items, explain to them the concept of choosing items of affordable prices or of good quality. 

4) Let Them Earn Money

When your child is young, provide them with the opportunity to earn money rather than just handing them pocket money. Begin a system of paying them for doing household chores, this will teach them the importance of hard work. As they get older allow them to take up part-time jobs while completing their education. 

5) Basic Concepts Of Banking

Once your child is of an eligible age take them to the bank and open an account for them. Explain to them what credit cards and debit cards are and open a savings account for them. Hand over the responsibility of maintaining the finances in the account to them. 


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SoftBank Latin America Fund Leads $28 Million Atom Finance | Sidnaz Blog


SoftBank Group Corp.

9984 -0.18%

is investing in startup investing platform Atom Finance, in a bet by the Japanese conglomerate that a retail trading boom is here to stay.

Atom Finance, founded in 2018, lets individuals track investments and research holdings. In addition to SoftBank, existing investors General Catalyst and Base Partners also took part in the latest $28 million funding round. The investment values Atom at around $150 million, said a person familiar with the matter.

Atom was founded by

Eric Shoykhet,

who covered financial services firms and other sectors from 2015 to 2018 at hedge fund Governors Lane. He believed falling trading costs would prompt more individual investors to trade. This meant that they would need new kinds of tools to guide them.

‘The narrative we never bought into was that active investing was dead,’ said Atom Finance founder Eric Shoykhet.


Atom Finance

In 2019, major brokerages launched no-commission stock trading to stave off the threat from digital upstart Robinhood Markets Inc. Now, all kinds of brokerages compete against each other for retail traders with free trading having become a booming business. It has been particularly transformative in the past year as more investors with free time during the pandemic have wielded growing power over markets, sending meme stocks such as

GameStop Corp.


Atom isn’t a trading platform but it has still been a beneficiary. Hundreds of thousands of users have signed up since its platform launched in 2019. Paying customers increased in the past year, though the firm declined to provide exact details about user numbers.

“We think a lot of that increase in investor participation in markets is here to stay,” said Mr. Shoykhet, 29 years old. “The narrative we never bought into was that active investing was dead.”

Mr. Shoykhet hopes his firm will grow as individuals seek cheap tools to help them invest. A full Atom subscription goes for $9.99 a month, a fraction of how much a Bloomberg Terminal costs.

Atom also plans to license its product to banks and brokerages.

SoftBank led the Series B funding round in Atom through a $5 billion fund it created to focus on Latin America. It reflects SoftBank’s wager that the rise of individuals in U.S. markets will take off in that region too.

This year, Atom pursued a deal on its own to provide products for Banco Inter, a digital bank in Brazil that SoftBank’s Latin America fund has also invested in.

Shu Nyatta,

managing partner for SoftBank’s Latin America fund, said SoftBank later introduced Atom to other portfolio companies in hopes of fueling similar deals.

“The whole idea is to bring high-quality data to people who wouldn’t have access to them,” he said.

Mr. Nyatta said he was drawn to Mr. Shoykhet’s opportunism and willingness to make Latin America a strategic focus. Mr. Shoykhet recently moved to Miami and is planning to open an office there, in part to make it easier to do business with Latin America.

But there is one thing Atom Finance isn’t planning to do for now: It doesn’t want to become a trading application.

Mr. Shoykhet is skeptical about many e-brokerages’ practice of routing trades to big trading firms in exchange for payments. The industry has defended this practice, known as payment for order flow, arguing that it lowers the cost of trading for individuals. Others argue it hurts investors as firms will encourage heavy trading by users to maximize profits—even if those investors take too much risk.

“We don’t think it has users’ best interests in mind,” he said.

Write to Dawn Lim at [email protected]

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South Korea’s Answer to Robinhood and Venmo Lands a $7 Billion | Sidnaz Blog


A South Korean company whose app lets users transfer money, take out loans, trade stocks and check their credit scores has raised funds at a valuation of more than $7 billion, making it one of the world’s most valuable financial-technology startups.

Viva Republica Inc., which operates the multifunction app Toss, said Wednesday it completed a round of fundraising worth 460 billion Korean won, the equivalent of $406 million, with investors including Alkeon Capital Management, Altos Ventures and Greyhound Capital.

The deal highlights how South Korea has incubated numerous unicorns, or private companies worth more than $1 billion, despite a domestic market of fewer than 52 million consumers.

Toss has also benefited from a supportive government stance—in contrast with China where fintech giant Ant Group Co. and smaller rivals have faced intensifying regulatory scrutiny.

In a statement, Viva Republica said it is valued at 8.2 trillion won, or about $7.2 billion, including the new money, which is more than twice its worth a year ago. A recent tally of unicorns by research firm CB Insights showed only 10 such startups world-wide focusing on finance that were worth $7 billion or more, although that list doesn’t include Ant, and some of the largest fintech startups on that list, like Stripe and Klarna, are worth considerably more than Viva Republica.

Global venture-capital investors are starting to note the growth potential of South Korean tech companies, Viva Republica co-founder and Chief Executive Seunggun Lee told The Wall Street Journal in a recent interview. Mr. Lee said such investors were overcoming earlier doubts about opportunities in a relatively small market.

“They find the growth is unparalleled in terms of user base and revenue,” he said. “In terms of the opportunity and market size, it’s massive,” he said, citing factors like dense urban areas and widespread smartphone usage as helping startups to grow.

Viva Republica employees work at the company’s office in Seoul last year.


Jean Chung/Bloomberg News

South Korean startups have been raising funds at a brisk pace. They raised $5.1 billion through more than 800 deals last year, and another $2.4 billion this year through June 11, according to figures from Preqin, a data provider.

In another symbol of the industry’s maturity, in March, local e-commerce giant

Coupang Inc.

made its debut on the New York Stock Exchange. After a first-day trading surge the company was valued at $88 billion, although it has since pared some of those gains.

Mr. Lee said a U.S. initial public offering was an option for Viva Republica. The company plans to follow this fundraising with a subsequent round of pre-IPO funding in the first half of next year, according to a spokesman, who added that a listing could happen as early as 2023.

Toss has capitalized on a boom in stock trading by individual investors in South Korea. The company debuted its investment platform, Toss Securities, in March, and said it drew two million users in a month. In contrast, U.S. counterpart Robinhood Markets Inc. reached the same milestone in 2017, about two years after it began operating, though individual investors were less of a force in markets then.

Toss Securities now has 3.5 million accounts, Mr. Lee said, and his company is preparing to launch a bank.

Write to Frances Yoon at [email protected]

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The Natural-Gas Glut Has Evaporated, Driving Prices Higher | Sidnaz Blog


Natural-gas prices are starting the summer air-conditioning season nearly twice as high as they were a year ago.

Demand for the fuel is picking up as the world’s economies reopen and as Americans dial down their thermostats for what is expected to be a hot summer. Meanwhile, U.S. producers have stuck to the skimpy drilling plans they sketched out when prices were lower, eliminating the glut that was keeping them depressed.  

Natural-gas futures ended Friday at $3.215 per million British thermal units, up 96% from a year ago and the highest price headed into summer since 2017. Futures traded even higher—and regional spot prices jumped—when triple-digit temperatures baked the Southwest earlier this month. Analysts expect prices to be even higher later in the year when it is time to fire up furnaces.

It isn’t just in the U.S. where gas is running high. Dutch gas futures, a barometer for prices in Western Europe, have more than doubled over the past year—including a sharp rise since February—to multiyear highs. In Asia, imported liquefied natural gas is fetching more than five times what it did last June, beckoning tankers full of chilled shale gas across the Pacific.

More expensive gas has stoked demand in international markets for coal, with which gas competes to fuel power plants. Futures prices for thermal coal loaded at a terminal in Newcastle, Australia, have more than doubled from a year ago. The benchmark price has added 27% over the past month and hasn’t been so high in nearly a decade.

If higher prices persist, Americans can expect bigger utility bills. The work-from-home class could feel a pinch. The pandemic shifted energy costs from employers to employees, who have heated and cooled home offices and run electronics when they would normally be away at work. 

Besides being burned to generate electricity and for hot showers and cooking, natural gas is consumed in large volumes to make plastic, fertilizer, steel and cement. Monetary-policy makers don’t consider energy prices when gauging inflation because they are so volatile. Yet climbing gas prices are adding to the costs of producing manufactured goods at a time when investors are on edge about the potential for runaway inflation.

“These are the consequences of the underinvestment we’ve seen in natural gas,” said Colin Fenton, chairman of investment banking at Houston’s Tudor, Pickering, Holt & Co. “What’s notable is these prices are happening with industrial demand, more than a quarter of the market, so early in its recovery.”

More natural gas has been needed to cool homes and businesses during a recent heat wave that pushed temperatures above 100 degrees in Los Angeles.


David Paul Morris/Bloomberg News

U.S. natural-gas output peaked in December 2019. March marked the 11th straight month in which production in the contiguous 48 states declined, according to the U.S. Energy Information Administration. There are only five more rigs drilling for gas now than the 92 operating at the end of March, according to oil-field service firm

Baker Hughes Co.

Appalachian energy producers, which control the country’s gas spigots, have taken a cautious approach to reopening the wells they shut last spring when the pandemic sank prices. Drillers in the Haynesville shale that straddles Texas and Louisiana have been slow to tap their reserve of wells that have been drilled but not yet fracked to start them flowing. 

Gas producers had suffered for years from low prices caused by their own market-glutting gushers. Shareholders and analysts pressured producers to focus less on growing volume and more on profitability. 

The reward has been climbing stock prices. Shares of gas producers

Range Resources Corp.


Antero Resources Corp.

have been some of the best performers in the rebounding energy sector, both up more than 40% over the past three months. 

A mild start to winter threatened to leave the country’s gas-storage caverns filled to capacity until February, when Texas froze over. Demand for heat shot up at the same time that many ice-choked wells stopped flowing. 

Overseas buyers are clamoring for shale gas to restock depleted inventories after canceling cargoes a year ago. Demand from Mexico has increased with the opening of a new pipeline system south of the border. Drought has reduced hydropower in the western U.S., and it is being made up for with more gas to cool homes and businesses during the heat wave that last week pushed temperatures above 100 degrees in Phoenix, Las Vegas and Los Angeles.


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All the demand has meant smaller injections into U.S. stockpiles, which are built up during the spring and summer ahead of winter, when demand usually outstrips production. U.S. gas inventories, which brimmed near all-time highs in November, are now 16% below last year’s levels and 4.9% less than the five-year average for this time of year.

“In the past we’ve had these demand gains, but they were all overwhelmed by production increases,” said Kent Bayazitoglu, who tracks gas supplies for Baker & O’Brien Inc., an energy consulting firm. “We don’t have that any more.” 

Retail energy companies compete with local utilities to give U.S. consumers more choice. But in nearly every state where they operate, retailers have charged more than regulated incumbents, meaning you may be paying more for your electricity than your neighbor. Here’s why. Photo Illustration: Jacob Reynolds

Write to Ryan Dezember at [email protected]

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For Many Home Buyers, a 5% Down Payment Isn’t Enough | Sidnaz Blog


Would-be home buyers without big piles of cash are getting left on the sidelines.

In the turbocharged housing market, prices are surging and homes on the market are routinely selling for far more than the listing price. Those who can’t afford big down payments are often the ones losing out.

Half of existing-home buyers in April who used mortgages put at least 20% down, according to a National Association of Realtors survey. In 10 years of record-keeping, that percentage has hit or exceeded 50% three times, and all have been since last fall. A quarter of existing-home buyers in April paid cash, the highest level since 2017, NAR said.

Oscar Reyes Santana has been house hunting with his parents and siblings for more than a year in California’s San Fernando Valley. They are all first-time buyers and budgeted for a 5% down payment.

The family bid on at least five homes, each time offering at least $30,000 above the asking price, but they lost out every time, said Mr. Reyes Santana, who is 23.

“It’s been really tough to try to beat everyone else,” he said.

They have all but given up the search for now, and are focused on saving up for a bigger down payment.

Home prices are surging. The median existing-home price rose 19% from a year earlier to $341,600 in April, a record high, according to NAR. That is largely because there aren’t enough homes on the market to meet demand.

In such a housing market, sellers can often choose among multiple offers. Cash buyers have an advantage because they don’t need to secure mortgages, which can make the transaction go faster. Sellers sometimes worry that offers with smaller down payments are likelier to fall through during the loan-closing process, agents say.

The median existing-home price in the U.S. rose 19% from a year earlier to $341,600 in April, a record high.

Many borrowers who can afford only small upfront costs get loans insured by the Federal Housing Administration or the Department of Veterans Affairs. In an April NAR survey of real-estate agents, 27% said sellers were unlikely to accept an offer with an FHA or VA loan, and another 6% said sellers would refuse such an offer. These loans are less attractive to sellers because they have stricter closing conditions, real-estate agents say.

While mortgage originations of all types rose last year as home buying surged, FHA and VA loans lost market share to conventional loans. FHA loans, which often go to first-time buyers, accounted for 10% of home purchases in the first quarter of 2021, the second-lowest level since 2008, according to Attom Data Solutions.

“It’s very hard to get my FHA offers accepted,” said Olivia Chavez Serrano, a real-estate agent in Los Angeles.

Bigger down payments can cushion the housing market in a downturn. In the 2007-09 recession, home buyers who had made tiny down payments were quickly underwater as soon as home prices started to fall.

A lump sum of 20% or more can be hard to come up with as home prices skyrocket, especially without help from family members. “I’d say at least 50% of my first-time home buyers are getting gifts right now,” said Chris Borg, a mortgage broker at Vantage Mortgage Group Inc.

Low-down-payment loans and down-payment assistance programs are touted by affordable-housing advocates as crucial tools for increasing the homeownership rate, particularly for minority buyers. In 2019, a higher proportion of FHA and VA borrowers were Black or Hispanic compared with conventional-loan borrowers, according to the Urban Institute. Some congressional Democrats have proposed new down-payment assistance initiatives to help first-time buyers.

Surging home prices are also complicating appraisals, which means some buyers are being forced to shell out more cash than they had expected.

Appraisals are based partly on recent sale prices for comparable homes in the area. When housing prices rise quickly, appraisal values don’t always keep up. Mortgage lenders will typically lend only enough to cover the appraised value of a home, so when an appraisal comes in low, the buyer has to make up the difference or let the deal fall through.

Oscar Reyes Santana and his family bid on at least five homes, each time offering at least $30,000 above the asking price, but they lost out every time.

For example, a buyer who plans to put 20% down on a $500,000 purchase expects to pay $100,000. But if the home is appraised at $450,000, the cash payment goes up to $140,000—the sum of the $50,000 shortfall plus a $90,000 down payment.

Many buyers are still getting offers accepted without putting 20% down. First-time home buyers who used mortgages paid 9.1% down on average year-to-date through mid-May, though that is up from 8.4% for all of 2020, according to CoreLogic. Repeat buyers paid 16.6% down on average.


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Briana Stansbury, who works at a community college in Portland, Ore., recently made an offer on a two-bedroom house. She used a 5%-down loan program that Freddie Mac offers for first-time buyers, and she agreed to go through with the purchase even if the appraisal came in as much as $10,000 below her purchase price of $371,500.

That put Ms. Stansbury at risk of having to come up with extra cash in a hurry, but she had lost out on bids for other houses and thought it would give her a leg up.

Ms. Stansbury lost sleep while she waited for the appraisal. But it came back above the sale price, and she closed on the house in May.

Danyell Allen of Cedar Park, Texas, felt ready to buy a house this year. She had saved up for a 5% down payment. Her children wanted to paint their walls and adopt a pet, which they can’t do in their rental house.

But after losing out on more than 10 offers, she called off the search. “The lowest I heard I was beat out on any home was $30,000 over asking price,” she said. “That’s not something I can do.”

Prices are surging in part because there aren’t enough homes on the market to meet demand.

Write to Nicole Friedman at [email protected] and Ben Eisen at [email protected]

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What Inflation? Stock Funds Rise Again | Sidnaz Blog


Nothing has been able to derail the monthly winning streak for mutual-fund investors.

But things came close in May.

Worries about inflation helped to cause volatility in stocks and other investments during May. In the end, however, stock funds—along with the overall stock market—once again came out on top. U.S.-stock funds tracked by Refinitiv Lipper (including mutual funds and exchange-traded funds) squeaked out an average return of 0.5% in May, to push their year-to-date gain to 14.2%.

It was the seventh straight monthly gain for U.S.-stock funds.

International-stock funds did even better in May, with a 3.2% gain, though their year-to-date gain of 10.2% still trails their U.S. counterparts.

“The market has been resilient in the face of accelerating inflation,” says

Jay Hatfield,

portfolio manager of an energy-focused exchange-traded fund,

InfraCap MLP

ETF (AMZA). It has helped that the Federal Reserve has indicated that It won’t taper, or slow the pace, of its bond-buying stimulus until there is full employment.

He says there are still sectors of the market that are undervalued and thrive in an inflationary environment, including energy, materials, financials and real-estate investment trusts. “As inflationary expectations rise, the market is rotating into these sectors and out of tech rather than declining on an absolute basis,” Mr. Hatfield says.


May 2021 fund performance,
total return by fund type.

Lipper’s financial-services funds category rose 2.5% in May, to push the year-to-date gain to nearly 28%. Natural-resources funds were up 8.2% in May, to push the year-to-date gain to more than 36%.

Real-estate funds were up an average 0.8%, to make the year-to-date gain nearly 17%.

Bond funds also rose for the month. Funds tied to intermediate-maturity, investment-grade debt (the most common type of fixed-income fund) were up 0.4%, to trim their year-to-date decline to minus 1.8%.

Mr. Power is a Wall Street Journal news editor in South Brunswick, N.J. Email him at [email protected].

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