How Robinhood Investors Beat Buffett at His Own Game

Author: Frank Holmes
Date Posted: July 17, 2020 Read time: 47 min

Weeks before the S&P 500 bottomed, many millennial Robinhood investors began picking up coronavirus-impacted airline stocks. The buying spree continued even after Warren Buffett announced that he'd dumped his holdings.

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

robinhood mobile investors

If you’ve listened in to some of my interviews or online presentations since the start of the pandemic, you may have heard me discuss Robinhood, the no-commission trading app favored by millennials. According to the company, the median age of users is 31. Many are first-time investors.

In the first quarter, the startup reported that some 2 million new accounts were opened, which was more than Schwab, TD Ameritrade and E*Trade combined.

For some investing veterans, the narrative has been that Robinhooders are clueless kids living in their parents’ basements, whose haphazard day-trading has destabilized stock prices. They took their $1,200 pandemic relief checks (which contributed to record disposable income growth in April) and loaded up on tech stocks, making markets frothy, some might say.  

record disposable income growth supported tech stock rally
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I won’t make the case that there’s no truth to this characterization. Tech stocks are indeed among the biggest movers so far this year, with electric vehicle (EV) maker Tesla and teleconferencing app Zoom on top. Not only has the rally made Tesla CEO Elon Musk $41.2 billion richer this year, but market caps of the “Big 5” tech firms (Apple, Amazon, Microsoft, Google and Facebook) now account for more than 21 percent of the total market cap of the S&P Composite 1500.

tech companies on top in 2020 so far like zoom, tesla and netflix
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A recent Bank of America survey, in fact, found that three quarters of fund managers believe tech stocks are the “most crowded” trade in history. As if to underline this belief, as many as 40,000 Robinhood accounts added shares of Tesla during a single four-hour period on Monday, according to Bloomberg. (According to third-party, which compiles trading activity data on Robinhood, Tesla was the second-most popular stock of the past week, following biotech firm Moderna, which released promising results of an experimental coronavirus vaccine this week.)

But I think it’s unfair to lump all Robinhood traders in the same basket.

Besides such criticisms sounding “elitist,” it just isn’t possible for Robinhooders’ trading activity to have such an enormous impart on the market. According to research firm Alphacution, the average Robinhood account is $4,800, making the combined value of all accounts trading on the app around $48 billion. Says Nir Kaissar, founder of asset management firm Unison Advisors, that sum is “a tiny fraction of the roughly $11 trillion in market value added to U.S. stocks since the market bottomed on March 23.”

Robinhood Traders Rebuff Buffett with Positions in Airlines

Another reason not to dismiss Robinhooders so quickly is that many of them made some masterful calls in this last downturn. Days and weeks before the S&P 500 bottomed, many began picking up coronavirus-impacted airline stocks. The buying spree continued even after Warren Buffett announced in early May that he had dumped all of his shares in the top four carriers, Delta, American, United and Southwest.

This was a case of retail Robinhooders beating Buffett, perhaps the most famous value investors of all time, at his own game.

I happen to agree with investor Bill Miller, who commented in May that if you don’t own the airlines, “then you’re making a bet against the vaccine.” Clearly many Robinhood investors agree as well. Since the start of the year, the number of accounts holding airline stocks has ballooned an unbelievable 1,200 times to just under 40,000 as of today.

Since its low on March 19, the NYSE Arca Airline Index has recovered 46 percent, a return that I believe would have been much higher at this point were it not for another huge spike in cases and hospitalizations. The number of commercial air passengers screened by the Transportation Security Administration (TSA) continues to bounce off the bottom, though at a slightly slower rate than in weeks past.

Buffett Missed Amazon and Google, Not to Mention Bitcoin and Gold

This isn’t the first time Buffett has been wrong about a stock or industry. The Oracle of Omaha famously missed Amazon and Google early on. “I was too dumb to realize,” he said in 2018. “I did not think [Amazon CEO Jeff Bezos] could succeed on the scale he has.”

Warren Buffett admitted to missing google quote

“We blew it,” Buffett said on a separate occasion, referring to the decision not to buy Google. His longtime business partner Charlie Munger added: “I feel like a horse’s ass not for identifying Google. I think Warren feels the same way. We screwed up.”

Below you can see exactly what Buffett missed out on. For the 15-year period, shares of Google parent company Alphabet were up 938 percent, compared to Berkshire Hathaway, up 222 percent.

Warren Buffett admitted to missing google
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And then there’s bitcoin and gold, the latter of which has been one of the strongest assets of 2020 so far.

I say all this not to bash Buffett, whom I very much respect, but to contextualize Robinhood traders’ contrarian bet on airlines. They could have followed his lead and sold (or avoided) airline stocks altogether. I’m happy they had the forethought not to.

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Gold Market

This week spot gold closed at $1,810.42, up $11.72 per ounce, or 0.65 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 1.81 percent. The S&P/TSX Venture Index came in off 1.43 percent. The U.S. Trade-Weighted Dollar fell 0.72 percent.

Date Event Survey Actual Prior
Jul-14 Germany CPI YoY 0.9% 0.9% 0.9%
Jul-14 Germany ZEW Survey Expectations 60.0 59.3 63.4
Jul-14 Germany ZEW Current Situation -65.0 -80.9 -83.1
Jul-14 CPI YoY 0.6% 0.6% 0.1%
Jul-15 China Retail Sales YoY 0.5% -1.8% -2.8%
Jul-16 ECB Main Refinancing Rate 0.000% 0.000% 0.000%
Jul-16 Initial Jobless Claims 1250k 1300k 1310k
Jul-17 Eurozone CPI Core YoY 0.8% 0.8% 0.8%
Jul-17 Housing Starts 1190k 1186k 1011k
Jul-23 Initial Jobless Claims 1280k 1300k
Jul-24 New Home Sales 700k 676k


  • The best performing precious metal for the week was silver, up 3.24 percent and marking six weeks of consecutive gains. Silver was strong again this week as the metal neared $20 an ounce, a level last seen in September 2016. The metal is up 66 percent from its March lows due to stronger demand for use in solar. Silver is also riding the wave of higher gold prices.
  • Wheaton Precious Metals CEO Randy Smallwood said that mining companies could raise as much as $3 billion by selling shares of future output. “Any time there’s a bit of financial stress in the industry it always opens up financial opportunities for us,” said Smallwood. Royalty companies such as Wheaton provide upfront payments to miners in exchange for the right to buy metals at a discount in the future, reports Bloomberg. Wheaton says it has been “very active” on potential deals, including one valued at $1 billion.
  • Gold-backed ETFs had a 17th straight week of net inflows while silver-backed ETFs had a 12th straight week, according to Bloomberg data. However, investors in the gold futures market have been reducing positions. Eddie van der Walt writes that there has been a shift of balance in the gold market where the futures market is being crushed by “big boy” ETFs.

ETF investors buy gold while relative futures positioning is trimmed
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  • The worst performing precious metal for the week was gold, up 0.65 percent; likely investors are diversifying their investment across the other precious metals, particularly silver. Gold futures slipped on Thursday after strong economic data was released. China reported GDP expanding 3.2 percent in the second quarter after contracting 6.8 percent in the first quarter. U.S. retail sales exceeded forecasts in June for a second straight month.
  • Barrick Gold said its costs to produce gold and copper rose in the second quarter. The all-in-sustaining cost to produce one ounce of gold was 7 percent to 9 percent higher in the second quarter compared to the first quarter, according to a company statement. Bloomberg reports that Barrick’s production was down for the last three months largely due to COVID-19 disruptions in Argentina and planned maintenance shutdown in Dominican Republic.
  • The world’s two largest diamond producers said their combined sales were down 94 percent from a year earlier in the second quarter to just $130 million in rough stones. Bloomberg reports that De Beers and Alrosa PJSC both reported second quarter sales on Thursday.


  • Diego Parrilla, the hedge fund manager who runs the “doomsday” fund that has soared 47 percent so far this year, is betting that gold is only getting started. Parrilla believes that gold could rise to $3,000 to $5,000 an ounce in the next three to five years. “What you’re going to see in the next decade is this desperate effort, which is already very obvious, where banks and government just print money and borrow, and bail everyone out, whatever it takes, just to prevent the entire system from collapsing.”
  • India’s biggest gold jeweler, Titan Co., said that although it faces a substantial hit from the coronavirus, it does have faith that gold will remain an attractive asset class for protecting wealth. Managing Director C.K. Venkataraman said in a report that “following the outbreak of the pandemic, the perception of gold as an asset class has improved considerably.” The jeweler expects consumers to spend relatively more on gold compared to other discretionary goods.
  • EDL Capital, a Swiss hedge fund, plans to offer investments denominated in gold and silver to protect clients against the risk that record stimulus spending will hurt currency values, reports Bloomberg. “With the two new precious metal share classes, we want to offer investors a way to protect themselves against such scenarios” of potential hyperinflation and currency basement, said Jannik Wenger, head of investor relations at EDL Capital.


  • Edward Altman, the creator of the Z-score that predicts corporate bankruptcies, says that this year’s “mega” insolvencies are just getting started. More than 30 companies with liabilities exceeding $1 billion have already filed for Chapter 11 since January, reports Bloomberg. “There was a huge buildup in corporate debt by the end of 2019 and I thought the market would gain some much-needed de-leveraging with the Covid-19 crisis. Now, seems like companies are again exploiting what seems to be a crazy rebound,” said Altman.
  • U.S. consumer sentiment unexpectedly turned pessimistic in July with the University of Michigan sentiment index falling 4.9 points. The index had increased by 5.8 points in June. “The decline is a potentially troubling sign for the economy and underlines that confidence and consumer spending will be closely tied to whether the rapidly spreading coronavirus is brought under control,” says Bloomberg’s Scott Lanman.
  • The Labor Department reported that 1.3 million Americans filed for first-time jobless claims in the latest week. Although 10,000 lower than the previous week, it is higher than estimates of 1.25 million.

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Index Summary

  • The major market indices finished mixed this week. The Dow Jones Industrial Average gained 3.76 percent. The S&P 500 Stock Index rose 2.31 percent, while the Nasdaq Composite fell 0.42 percent. The Russell 2000 small capitalization index gained 5.32 percent this week.
  • The Hang Seng Composite lost 4.28 percent this week; while Taiwan was down 0.09 and the KOSPI rose 1.54 percent.
  • The 10-year Treasury bond yield rose 1 basis point to 0.624 percent.

Domestic Equity Market

SP 500 Economic Sectors weekly performance
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  • Industrials was the best performing sector of the week, increasing by 5.80 percent versus an overall increase of 1.34 percent for the S&P 500.
  • Hanesbrands was the best performing S&P 500 stock for the week, increasing 22.66 percent.
  • Raymond James analyst Matthew McClintock raised his view on Hanesbrands to strong buy from market perform, citing HBI’s “inherent competitive advantages of scale, strong brands, and in-house supply chain.” In addition, HBI’s two largest customers, Walmart and Target, are trading near record high valuation levels, indicating that Wall Street believes they are “retail winners and that likely implies their largest vendor partners should also be winners,” he wrote.


  • Consumer discretionary was the worst performing sector for the week, decreasing by 1.62 percent versus an overall increase of 1.34 percent for the S&P 500.
  • Fortinet was the worst performing S&P 500 stock for the week, falling 11.44 percent.
  • Netflix tanked on missing earnings and a disappointing subscriber-growth forecast. The stock plunged as much as 8.5 percent after the report even though it added 10 million subscribers last quarter.


  • Facebook has plans to bring its competitor to TikTok — called Reels — to Instagram users in the U.S. as early as August. Reels, which has already debuted in India and other countries, will live inside of Instagram “stories” as an option for sharing short-form video content similar to TikTok.
  • PlayStation 5 production reportedly doubled as demand for gaming is surging due to coronavirus lockdowns, reports Business Insider. The reported increase amounts to 10 million PlayStation 5 consoles before March 2021.
  • SoftBank might be selling its chip design company Arm Holdings — or taking it public, writes Business Insider. The British company recently scored a big win after Apple announced that it will transition away from Intel chips for its Mac computers and will instead use Arm-based architecture.


  • Small-cap companies are expected to post year-over-year earnings declines of approximately 90 percent, reports Reuters. Companies report their second-quarter results over the next several weeks, compared to a 67 percent hit for mid-caps and 44 percent for large-caps, according to Jefferies. That would be the largest drop since the fourth quarter of 2008, data from S&P Dow Jones Indices showed.
  • Nearly two-thirds of health-care industry leaders anticipate the coronavirus pandemic will continue into the second half of 2021 or longer, writes Bloomberg. The availability of an effective vaccine is the top concern for 71 percent of the respondents, according to a Lazard survey of 221 executives and investors across the health-care industry.
  • Talk of a bubble in technology has been gaining traction, and there is some statistical data that backs the argument. The ratio between the Nasdaq 100 Index and Russell 2000 Index is the highest since the last tech boom between December 1999 and June 2000, approaching a three-standard-deviation move from its mean quarterly average since 1985. The tech-heavy gauge began to roll over earlier this week, possibly stalling above 11,000.

The Economy and Bond Market



  • Retail sales rose for the second straight month. Sales increased 7.5 percent in June from the prior month, beating estimates of 5 percent growth from economists surveyed by Refinitiv.
  • Industrial production rose 5.4 percent in June, the second gain after a steep drop in March and April. Wall Street economists had forecast a 4.1 percent gain, according to a MarketWatch survey.
  • Moody’s has a reassuring forecast for bondholders: It doesn’t expect the pandemic to push any of them into a default this year. “The classic strengths of rated state and local governments in particular — the ability to disconnect spending from revenues, their broadly stable revenue structures, typically ample reserves, and good coverage for even narrow special tax pledges — enable us to reasonably look beyond the current crisis,” Al Medioli, a senior vice president at Moody’s, said in a statement with its annual default study. 


  • The budget deficit expanded to $864.1 billion in June, reflecting a record $1.1 trillion in outlays tied in large part to a surge in spending by the Small Business Administration that oversees the Paycheck Protection Program. The gap in the first nine months of the current fiscal year totaled $2.7 trillion, almost three times as big as the shortfall registered for the entire 2019 fiscal year.

U.S. budget gap expands to monthly record in june 2020 amid spending in excess of 1 trillion dollars
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  • Consumer sentiment turned pessimistic in July, defying forecasts for further improvement after the resurgent coronavirus nearly wiped out emerging confidence around reopenings. The University of Michigan’s preliminary sentiment index decreased 4.9 points to 73.2, reversing most of the prior month’s 5.8-point gain.
  • The number of Americans who filed for unemployment benefits rose more than expected last week. Initial weekly jobless claims came in at 1.3 million for the week ending July 11. Economists polled by Dow Jones expected 1.25 million. It was also the 17th straight week in which initial claims totaled at least 1 million.


  • Municipal bond investors should get on board with New York’s Metropolitan Transportation Authority debt even though the mass-transit agency needs an additional federal bailout this year to avoid potential service cuts and layoffs, according to Citigroup. “We seriously doubt that New York state or federal government officials will allow any risk to its viability,” Vikram Rai said about the agency.
  • U.S. Manufacturing PMI is expected to move up to 52 from 49.8 while the Services PMI is expected to move up to 51 from 47.9. That would be a welcome sign for the economy as both would cross the 50 mark threshold between expansion and contraction.
  • Compared with other corners of the fixed-income markets, analysts at Bank of America say some municipal securities still look like a bargain. Even as yields on top-rated tax exempt bonds have dropped back to where they were before the March selloff caused by the coronavirus shutdown, those on more risky securities haven’t fully recovered. State and local government bonds that are rated in the lowest investment-grade tier are yielding around 3 percent, about two full percentage points more than AAA rated debt.


  • Nearly two-thirds of health-care industry leaders anticipate the coronavirus pandemic will continue into the second half of 2021 or longer. The availability of an effective vaccine is the top concern for 71 percent of the respondents, according to a Lazard survey of 221 executives and investors across the health-care industry that was published Thursday.
  • About $4 billion of government debt has been sold for parking facilities, which had already faced long-term threats from ride-sharing companies, self-driving cars and working from home. S&P Global Ratings on Wednesday slashed the credit rating on debt for public parking garages in Baltimore, Maryland, by three notches to junk, saying that the financial hit from the coronavirus is “outside of management’s control.”
  • Bilateral trade fell 15 percent in 2019 after President Trump began imposing tariffs on Chinese imports and China responded in kind. It had surged by an annual average of 11 percent from 2001 to 2018. The pandemic and new fights over market access are further depressing trade tensions.

Energy and Natural Resources Market



  • The best performing major commodity was lumber, up 10.51 percent, marking a fifth straight week of gains. Lumber is benefitting from the surge in home improvement projects and housing starts. China’s imports of raw materials surged to record highs in June as the world’s top commodity consumer recovers from the pandemic. Capital Economics said in a note that China’s “import volumes were particularly strong, which points to robust domestic demand as well as some opportunistic buying prices were low.” The country imported the most oil ever in June.
  • Copper continues to soar on hopes of a global recovery and due to supply disruptions out of top producing Chile. The red metal hit its highest level in two years on Monday and is up nearly 50 percent since March. However, the rally could be ending based on recent movement of copper futures.

technical analysts see signs copper rally may be ending
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  • MP Materials, a leading producer of rare earth materials, will be listed on the NYSE through a merger with Fortress Value Acquisition Corp. Bloomberg reports the combined company will have an estimated post-transaction equity value of $1.5 billion with over $500 million net cash to fund growth. MP Materials owns and operates Mountain Pass – the only rare earth mining and processing site of scale in North America.


  • The worst performing major commodity was natural gas, down 5.26 percent. Soaring summer heat driving retail demand wasn’t enough to offset weak industrial demand for the fuel. Norilsk Nickel reported a pipeline leak of fuel of 44.5 tons near the village of Tukhard in the Arctic. This comes just weeks after a major fuel spill in May. Norilsk’s shares are down nearly 20 percent since the first spill.
  • Crude oil fell back below $41 a barrel on signs that the global demand recovery is slowing. OPEC+ said it would start tapering production cuts in August. Oil rose to its highest level since March on Wednesday on signs that U.S. crude inventories would fall.
  • The world’s two largest diamond producers said their combined sales were down 94 percent from a year earlier in the second quarter to just $130 million in rough stones. Bloomberg reports that De Beers and Alrosa PJSC both reported second quarter sales on Thursday.


  • Shell is making a big bet on the LNG trading future by making an investment in online platform developer GLX Digital. The company is one of many using web-based trading to modernize physical commodities trading and help deepen liquidity.
  • Democratic presidential candidate Joe Biden said that he would call for setting a 100 percent clean-energy standard in the U.S. by 2035 and would commit to investing $2 trillion over four years on green energy. This is up significantly from his previous call for $1.7 trillion in spending over 10 years. If Biden does win the election in November, it could shift even more money toward renewable.
  • Thailand’s state-controlled energy company, PTT Pcl, is selling $63 million worth of bonds to fund tree-planting projects across the country, reports Bloomberg. The bonds have a maturity of three years and a coupon rate of 2.25 percent. CEO Auttapol Rerkpiboon said “we try to keep our environmental disturbance to a minimum.”


  • The U.S. is warning of sanctions against companies involved in Russia’s pipelines to Europe and Turkey. U.S. Secretary of State Michael Pompeo said, “get out now or risk the consequences.” Some argue that the 745-mile Nord Stream 2 pipeline would give Russia “undue” control over energy supplies to Europe.
  • The coronavirus is killing oil workers at an unparalleled pace in Mexico. 202 employees and five contractors have died at Petroleos Mexicanos, the state-owned oil producer. Data reviewed by Bloomberg found that no other company has reported deaths that come close to that figure. Social distancing can be difficult while on offshore drilling platforms and Mexico was slow to enforce virus protection measures.
  • Although demand for commodities is strengthening in China, Rio Tinto Group worries that a second wave of COVID-19 infections could weigh on the overall outlook for commodity demand. “The uncertainty in the marketplace is because there is no doubt – it’s not a question of if, it’s a question of when – we will have a second wave of COVID-19,” said CEO Jean-Sebastien Jacques. The commodity giant notes that they have seen signs of recovery in construction and automotive in the U.S. and Europe, but that it has been slow.

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Emerging Europe



  • Turkey was the best performing country this week, gaining 3.5 percent. President Recep Tayyip Erdogan announced that Istanbul’s Hagia Sophia will be converted from a museum into a mosque with payers services staring next week, reasserting Turkey’s role as a Muslim power on the global stage. Sasa Polyester, a chemical company, was the best performing equity trading in the iShares MSCI Turkish ETF (TUR), gaining 27 percent over the past five days.
  • The Czech koruna was the best performing currency this week, gaining 1.3 percent. The country successfully sold 300 million euros ($343 million) showing confidence in the government’s plan to support an economic recovery. The bids were three times oversubscribed. 
  • Consumer discretionary was the best performing sector among eastern European markets this week.


  • Hungary was the worst performing country this week, losing 1.1 percent. Ongoing political tensions with Brussels put pressure on equites. Hungarian Fidesz’s membership was formally suspended in 2019 over rule-of-law concerns but still is part of the governing body. However, the fate of Hungary’s ruling Fidesz party may be decided in September, Blomberg reported. MOL Hungarian oil and gas, was the worst performing stock trading on the Budapest Stock Exchange, losing 3.2 percent over the past five days.
  • The Russian ruble was the worst performing currency in the region this week, losing 1.5 percent. Russia’s central bank is expected to lower its interest rate further next week. The price of Brent crude oil was little changed this week.
  • Industrials was the worst performing sector among eastern European markets this week.


  • The European Commission’s proposed 750 billion euro ($853.35 billion) coronavirus recovery fund for EU member states implies an unexpectedly generous package for countries in central and eastern Europe that could significantly benefit their economies. The CEE region accounts for around 11 percent of the 27-member European Union’s gross domestic product but has been provisionally allocated 187 billion euros, or 25 percent, of the ‘Next Generation EU’ plan’s money.
  • Russia plans to grant local technology companies more than 76 billion rubles ($1.1 billion) in annual tax breaks to help diversify the country’s economy away from oil and gas production, Bloomberg reported. Support measures include reduction in profit tax from 20 percent to 3 percent for software producers and electronic developers.
  • The European Central Bank (ECB) meeting took place of Thursday; purchases under its emergency program will continue to be conducted in a flexible manner over time. The Governing Council continues to expect monthly net asset purchases under the asset purchase program (APP) to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates. In addition, this weekend Europe may finally agree on 750 billion-recovery fund to fight the negative effects of COVID-19.


  • Turkish banks continue to support the lira by buying the local currency. The gap between banks foreign-currency assets and liabilities has almost doubled this year to $8.3 billion, according to the latest data from the banking authority. That is equivalent to 25.9 percent of its capital, and beyond a 20 percent threshold that it is allowed to breach just six times a year. The Turkish currency may continue its depreciation against the dollar once banks stop supporting it.

Turkish state banks' net foreign currency shortfall exceeds legal limit
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  • On Wednesday, the Trump administration hardened its efforts to prevent the completion on the Nord Stream 2 project and TurkStream natural gas pipelines by warning companies involved in the projects it will be subject to U.S. sanctions unless they halt their work. The move will put more tension on the U.S. – European ties as well as anger Russia. The U.S. has been an opponent of the NS2 pipeline, which would transport natural gas about 750 miles under the Baltic Sea from Russia to Germany, making Europe dangerously dependent on Russia.
  • Some European countries started to report increased number of coronavirus cases. Italy registered 233 new infections on Friday compared with 230 on Thursday. Spain reported the steepest daily jump in coronavirus infections in over two months on Thursday, with 580 new cases registered as of the previous day, up from 390 reported on Wednesday. As a result, the authorities have reimposed restrictions in some areas of Catalonia.

China Region



  • Pakistan was the best performing country this week, gaining 3.2 percent. Parliamentary Secretary for Foreign Affairs Andleeb Abbas said that Pakistan wishes to resolve all outstanding issues with India, including the Kashmir dispute, through peaceful means. PAK Suzuki Motor Co., a car maker, was the best performing equity among stocks trading in the China iShares Large-Cap. ETF (FXI), gaining 12.7 percent over the past five days.
  • The Indian rupee was the best performing currency this week, gaining 32 basis points. The currency appreciated due to stronger fund flows into fixed income assets.
  • Consumer staple stocks were the best performers in the Hong Kong Stock Exchange.


  • China was the worst performing market this week, losing 5 percent. Despite stronger economic data released by China this week, equites sold off on worries that better-than-expected, second-quarter GDP was not supported by stronger consumption. Growing tensions between the United States and China also soured investors’ moods. President Trump removed Hong Kong from special trading status. ZTE Corp., a communication equipment company, was the worst performing equity among stocks trading in the China iShares Large-Cap. ETF (FXI), losing 12 percent over the past five days.
  • The Indonesia rupiah was the worst performing currency this week, losing 2.4 percent. The currency fell after the central bank cut interest rates and signaled the possibility of further policy actions.  
  • Information technology stocks were the worst performers in the Hong Kong Stock Exchange.


  • China’s market capitalization, or value of domestic equities, is approaching $10 trillion for the first time since 2015. The value of Chinese stocks hit $10 trillion five years ago, then erased more than $5.2 trillion in just three months. Analysts are positive that the milestone could be hit in the next few days and Goldman Sachs and Morgan Stanley predict that this bull market could last for another few months at least.

China market capitalization approaching $10 trillion for the first time since 2015
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  • China’s central bank is planning to test its digital currency, according to people with direct knowledge of the matter. The bank has enlisted platforms operated by Meituan Dianping, a food delivery giant backed by Tencent Holdings, to help with testing. Bloomberg News writes that this is a major step forward in mass adoption of the digital currency.
  • The Bank of Indonesia cuts it key interest rate for a second straight month to 4 percent, which is the lowest since the current rate system was adopted in 2016. Bloomberg notes that Indonesia has been one of the more aggressive central banks in Asia and expects its economy to grow 0.9 percent to 1.9 percent this year.


  • The U.S. ended its special relationship with Hong Kong this week after previous threats from President Trump. “Hong Kong will now be treated the same as mainland China,” Trump said in a speech at the White House on Tuesday. Hong had a special status since 1992 that allowed goods passing through its borders to undergo different controls than those in mainland China.
  • The United Kingdom has banned China’s Huawei from its 5G telecom network, reversing a January decision to allow it a limited role. U.K. operators have until 2027 to remove existing Huawei equipment from its networks. The government cited uncertainty around Huawei’s supply chains. President Trump had been pushing allies to dump Huawei arguing it is a threat to national security.
  • Retail sales in China fell 1.8 percent in June, after a 2.8 percent decline in May. This was below the Bloomberg average estimate of 0.2 percent growth. CLSA wrote “although we see a gradual recovery in consumption, momentum appears to have decelerated, which may have been due to increased concern over a third wave of the epidemic.”

Blockchain and Digital Currencies



  • Of the cryptocurrencies tracked by CoinMarketCap, the best performing for the week ended July 17 was Ink Protocol, up 1,463 percent. Bitcoin held steady this week, hovering around the $9,000 mark.

bitcoin hovers around $9,000 week of July 15
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  • After a recent integration with booking giant Expedia, cryptocurrency travel platform saw the number of rooms booked through its platform grow sharply, reports CoinTelegraph. The firm’s booking revenue increased by 75 percent in two weeks after partnering with Expedia, and the overall number of bookings grew by 68 percent over the same period.
  • BlockFi Inc., a cryptocurrency lender funded by billionaire Peter Thiel and internet entrepreneurs the Winklevoss twins, has welcomed a new top lawyer as it continues to search for a new CFO, writes BloombergLaw. Earlier this month Jonathan Mayers joined the BlockFi team as its first-ever general counsel. Mayers is the latest in a string of lawyers hired in the cryptocurrency sector, the article explains, which is ramping up its compliance capabilities in an effort to “legitimize itself among regulators and traditional financial services institutions.”


  • Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week ended July 17 was PLAAS FARMERS TOKEN, down 79.72 percent.
  • Lobbyist Jack Abramoff pleaded guilty by telephone Tuesday to criminal charges that he illegally promoted to investors a cryptocurrency called AML BitCoin, writes Bloomberg. Abramoff acknowledged that he misled investors while promoting the blockchain-based digital token through the NAC Foundation.
  • As reported by CoinTelegraph, Binance is said to be “operating a recognized market” without authorization from the Malaysian regulator. On Thursday, the top crypto exchange was added to the Securities Commission Malaysia’s lit of authorized entities earlier today. So far, only three crypto platforms have received full approval from the local watchdog.


  • Singapore’s Temasek Holdings Pte will support efforts to commercialize blockchain projects, writes Bloomberg. The fifth and final phase of Project Ubin, a central bank initiative, has been completed, Temasek announced Monday. The last phase developed a prototype for a blockchain-based payments network and tested connectivity with other applications, the article explains. Temasek’s Deputy Chief Executive Officer Chia Song Hwee said that Project Ubin validated Temasek’s efforts to explore and build blockchain solutions focused on digital identity, digital currencies and financial asset tokenization.
  • Revolut, a U.K. fintech firm, is bringing bitcoin and Ethereum trading to U.S. customers, writes CoinDesk. Its customers in 49 U.S. states can now buy, hold and sell bitcoin and ether on the digital bank’s crypto platform. Revolut gained the regulatory permission to do this by partnering with New York-based trust company Paxos.
  • The People’s Bank of China (PBOC) is planning to add the Tencent-backed food delivery giant Meituan Dianping to its list of platforms, writes CoinTelegraph. It will test real-world use cases of the digital yuan. Meituan Dianping is a Beijing-based food delivery platform that currently has over 435 million active users, creating a huge opportunity for the mass adoption of the digital yuan.


  • Without agreeing or denying the accusations, crypto financial app Abra has settled charges from both the SEC and the Commodity Futures Trading Commission related to its offering of swaps deemed unlawful by the regulators, writes CoinDesk. Abra and its Philippine-based partner company Plutus Technologies were formally charged with selling security-based swaps to retail investors without registering or selling them on a recognized national exchange.
  • Multiple bills that threaten encryption are moving through the U.S. Senate, writes CoinDesk, and could pose a threat to technology that protects users’ privacy. “The government basically would have mass surveillance powers into all of our communications,” said Zcoin Project Steward Reuben Yap, specifically referencing the LEAD Act. “It’s saying, ‘Let’s drop the pretense and let’s just go for it.’ I think it’s really scary. It’s not just about cryptocurrencies as a whole though, it’s really about freedom.”
  • On Wednesday, someone hacked Twitter and then used bitcoin to capitalize on it. But why? As explained by CoinDesk, bitcoin was built from the ground up to evade third party interference, making it a “natural tool in the hands of a world-class hacker.”

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Leaders and Laggards

Weekly Performance
Index Close Weekly
10-Yr Treasury Bond 0.62 +0.01 +1.63%
Oil Futures 40.58 +0.96 +2.42%
Hang Seng Composite Index 3,734.29 -207.19 -5.26%
S&P Basic Materials 384.72 +26.11 +7.28%
Korean KOSPI Index 2,201.19 +33.29 +1.54%
S&P Energy 278.27 +16.46 +6.29%
Nasdaq 10,503.19 -44.56 -0.42%
DJIA 26,671.95 +965.86 +3.76%
Russell 2000 1,473.32 +74.40 +5.32%
S&P 500 3,224.73 +72.68 +2.31%
Gold Futures 1,812.40 +8.60 +0.48%
XAU 140.16 +3.61 +2.64%
S&P/TSX VENTURE COMP IDX 674.95 +2.99 +0.44%
S&P/TSX Global Gold Index 366.59 +4.04 +1.11%
Natural Gas Futures 1.71 -0.07 -3.93%


Monthly Performance
Index Close Monthly
Korean KOSPI Index 2,201.19 +60.14 +2.81%
10-Yr Treasury Bond 0.62 -0.12 -15.56%
Gold Futures 1,812.40 +76.80 +4.42%
S&P Basic Materials 384.72 +31.84 +9.02%
S&P 500 3,224.73 +111.24 +3.57%
DJIA 26,671.95 +552.34 +2.11%
Nasdaq 10,503.19 +592.66 +5.98%
Oil Futures 40.58 +2.62 +6.90%
Hang Seng Composite Index 3,734.29 +176.58 +4.96%
S&P/TSX Global Gold Index 366.59 +57.15 +18.47%
XAU 140.16 +25.75 +22.51%
Russell 2000 1,473.32 +46.79 +3.28%
S&P Energy 278.27 -19.62 -6.59%
S&P/TSX VENTURE COMP IDX 674.95 +115.16 +20.57%
Natural Gas Futures 1.71 +0.07 +4.33%


Quarterly Performance
Index Close Quarterly
XAU 140.16 +34.03 +32.06%
S&P/TSX Global Gold Index 366.59 +51.59 +16.38%
Gold Futures 1,812.40 +79.20 +4.57%
DJIA 26,671.95 +3,134.27 +13.32%
S&P 500 3,224.73 +425.18 +15.19%
Nasdaq 10,503.19 +1,970.83 +23.10%
Korean KOSPI Index 2,201.19 +344.12 +18.53%
Natural Gas Futures 1.71 +0.02 +1.36%
S&P Basic Materials 384.72 +80.82 +26.59%
Russell 2000 1,473.32 +295.23 +25.06%
Oil Futures 40.58 +20.71 +104.23%
Hang Seng Composite Index 3,734.29 +385.31 +11.51%
S&P/TSX VENTURE COMP IDX 674.95 +227.55 +50.86%
S&P Energy 278.27 +42.68 +18.12%
10-Yr Treasury Bond 0.62 -0.00 -0.64%


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This commentary should not be considered a solicitation or offering of any investment product.

Certain materials in this commentary may contain dated information. The information provided was current at the time of publication.

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Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (06/30/2020):

Tencent Holdings Ltd.
Barrick Gold Corp
Wheaton Precious Metals Corp
MMC Norilsk Nickel PJSC
MOL Hungarian Oil & Gas
American Airlines Group Inc
Delta Air Lines Inc
Southwest Airlines Co
United Airlines Holdings Inc
Tesla Inc

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment. The Dow Jones Industrial Average is a price-weighted average of 30 blue chip stocks that are generally leaders in their industry. The S&P 500 Stock Index is a widely recognized capitalization-weighted index of 500 common stock prices in U.S. companies. The Nasdaq Composite Index is a capitalization-weighted index of all Nasdaq National Market and SmallCap stocks. The Russell 2000 Index® is a U.S. equity index measuring the performance of the 2,000 smallest companies in the Russell 3000®, a widely recognized small-cap index. The Hang Seng Composite Index is a market capitalization-weighted index that comprises the top 200 companies listed on Stock Exchange of Hong Kong, based on average market cap for the 12 months. The Taiwan Stock Exchange Index is a capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The Korea Stock Price Index is a capitalization-weighted index of all common shares and preferred shares on the Korean Stock Exchanges. The Philadelphia Stock Exchange Gold and Silver Index (XAU) is a capitalization-weighted index that includes the leading companies involved in the mining of gold and silver. The U.S. Trade Weighted Dollar Index provides a general indication of the international value of the U.S. dollar. The S&P/TSX Canadian Gold Capped Sector Index is a modified capitalization-weighted index, whose equity weights are capped 25 percent and index constituents are derived from a subset stock pool of S&P/TSX Composite Index stocks. The S&P 500 Energy Index is a capitalization-weighted index that tracks the companies in the energy sector as a subset of the S&P 500. The S&P 500 Materials Index is a capitalization-weighted index that tracks the companies in the material sector as a subset of the S&P 500. The S&P 500 Financials Index is a capitalization-weighted index. The index was developed with a base level of 10 for the 1941-43 base period. The S&P 500 Industrials Index is a Materials Index is a capitalization-weighted index that tracks the companies in the industrial sector as a subset of the S&P 500. The S&P 500 Consumer Discretionary Index is a capitalization-weighted index that tracks the companies in the consumer discretionary sector as a subset of the S&P 500. The S&P 500 Information Technology Index is a capitalization-weighted index that tracks the companies in the information technology sector as a subset of the S&P 500. The S&P 500 Consumer Staples Index is a Materials Index is a capitalization-weighted index that tracks the companies in the consumer staples sector as a subset of the S&P 500. The S&P 500 Utilities Index is a capitalization-weighted index that tracks the companies in the utilities sector as a subset of the S&P 500. The S&P 500 Healthcare Index is a capitalization-weighted index that tracks the companies in the healthcare sector as a subset of the S&P 500. The S&P 500 Telecom Index is a Materials Index is a capitalization-weighted index that tracks the companies in the telecom sector as a subset of the S&P 500. The NYSE Arca Gold Miners Index is a modified market capitalization weighted index comprised of publicly traded companies involved primarily in the mining for gold and silver. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The S&P/TSX Venture Composite Index is a broad market indicator for the Canadian venture capital market. The index is market capitalization weighted and, at its inception, included 531 companies. A quarterly revision process is used to remove companies that comprise less than 0.05% of the weight of the index, and add companies whose weight, when included, will be greater than 0.05% of the index. Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

The University of Michigan Confidence Index is a survey of consumer confidence conducted by the University of Michigan. The report, released on the tenth of each month, gives a snapshot of whether or not consumers are willing to spend money. The NASDAQ-100 Index is a modified capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the NASDAQ. The NYSE Arca Airline Index is an equal-dollar weighted index of the most highly capitalized companies in the airline industry.