July 12, 2021 Sign Up

By Overheard on Wall Street

The best response is often "You're probably right."

Good morning! What an action packed weekend we had. Djokovic equaled Nadal and Federer's 20 slam record with his 6th Wimbledon and 3rd Grand Slam win of the year. Italy won the Euros after handing England a heartbreaking penalty loss. Its not coming home, it's going to Rome.

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1. Story of the Day: Branson Takes Flight

Yesterday Richard Branson became the first billionaire to escape the earth to the edge of space and make it back successfully. It took only 17 years of development and over a billion dollars of investment in Virgin Galactic. “I have dreamt of this moment since I was a kid, and honestly nothing could prepare you for the view of Earth from space,” Branson said after landing.

Jeff Bezos, who is expected to make the trip himself on July 20th, sent his congratulations to Branson on Instagram. Elon Musk was apparently hanging out with Branson before the launch (see memes below) and extended his best wishes as well. Virgin Galactic and Blue Origin (Jeff Bezos' space company) are both competing for suborbital tourism, which has shorter flights and requires less training as passengers only go to the edge of space. Meanwhile an orbital flight, which Elon Musk's SpaceX is targeting, can cost tens of millions of dollars as passengers spend days or weeks in space.

Virgin Galactic said it plans to initiate paying passenger flights in 2022. The company has reportedly 600 reservations backed by $80 million in deposits. Tickets have sold for as much as $250k. Richard Branson's bestie, Elon Musk, is a ticketholder as well.

Short Squeez Takeaway: Branson's successful flight has opened the door for space tourism. Space tourism is expected to generate $4 billion in annual revenue by 2030. The market will expand as the cost of space travel comes down. The space wars have officially begun with Virgin Galactic, Blue Origin and SpaceX fighting it out for the top spot. If you can afford it, a space flight would make for a cool first date though.

2. Markets Rundown

• All three major indexes ended at records Friday, underscoring a powerful rebound in equities a day after one of the worst selloffs since mid June.

Movers & Shakers

• (+) Stamps.com ($STMP) +64% after announcing a deal to be acquired by Thoma Bravo for $6.6 billion.
• (+) Pitney Bowes ($PBI) +15% in a reaction to a rival Stamps.com being acquired.
• (–) Peloton ($PTON) -5% on reported insider selling activity.

3. Top Reads

4. Book of the Day: Shape: The Hidden Geometry of Information, Biology, Strategy, Democracy, and Everything Else

How can you stop a pandemic from sweeping the world? How do computers learn to play Go, and why is learning Go so much easier for them than learning to read a sentence? These are all questions about geometry.

If you're like most people, geometry is a boring and dimly remembered exercise you gladly left behind in ninth grade, along with your braces.

The book, Shape, reveals the geometry underneath some of the most important scientific, political, and philosophical problems we face.

Geometry doesn't just measure the world, it explains it. This book will show you how.

5. Daily Visual: Industries Offering Full Time Remote Work

Source: Yahoo Finance

6.  Daily Acumen: Small Cap Value: Part 1

Professors Gene Fama (University of Chicago) and Ken French (Dartmouth) have studied the performance of stocks by different factor combinations (small cap, large cap, value, growth).

Small cap value stocks outperformed by a wide margin. Annualized inflation-adjusted returns between 1927 and 2005 for the total stock market were 6.7% vs 12.1% for the small cap value index.

If you invested $5,000 per year over a 40-year period at the inflation-adjusted total stock market return of 6.7%, you would end up with $986,000. Investing solely in a small cap value index, would have yielded $4,420,000.

Tomorrow, we’ll share a calculator showing how to build a small cap value portfolio while reducing volatility that comes with investing in small cap stocks and the risks involved.

7. Memes of the Day

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