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The 3 most important lessons I'm teaching my kids about money all boil down to the same core concept

Sat, 05/11/2019 - 10:46am

  • Author Eric Rosenberg is open about money with his two young daughters.
  • He teaches them that you have to work for money, that cash and credit card payments are the same thing, and that you have to save now to have money later.
  • The most important money lessons he's teaching his kids boil down to the same core concept: It's important to plan for your future instead of only using your money for what you want right now.

As the dad of two little girls, I'm always thinking about how my money decisions today impact the long-term financial health of my family.

I learned a ton of valuable money lessons from my Grandpa Joe, who was a college marketing professor, and my parents. Now that I have my own kids, I want to pass on the same lessons and more.

Some families turn money into a taboo, which makes it nearly impossible for kids to learn important lifelong money skills. By engaging my kids with budgeting, saving, and long-term planning at a young age, I hope to teach them to do as well as I do with money if not better.

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Here are some of the most important things I'm trying to teach my kids starting at just 3 years old.

1. You have to work for money

I work at home, which gives my kids a different impression of what it means to have a job than most kids. While I don't hop in the car and head off to an office each day, I do head into a home office where I can lock myself away for work.

My kids see me at home and think every time is a good time to play. While I certainly take advantage of working at home and playing with my kids throughout the day and week, they know that work time means I can't come play.

"Why can't you come play, dada?" My 3-year-old has asked this more than once. She knows the answer: Dada has to work to make money. This lets us buy things like food, toys, clothes, and pay for our house. It's important to use terms she can relate to and understand.

2. Cash and card payments are the same thing

When we go to the checkout counter at most stores, I pull out my credit card to maximize my miles and points. This is another opportunity for kids to be detached from money, however. Even adults struggle with this when paying with plastic. That's why some experts suggest a cash-only budgeting system.

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I have never paid a penny of credit card interest and work with my wife to stay within a reasonable spending plan each month. For my kids, that means teaching that we have to pay for things we take from stores. That may mean cash or a card, but you always need to have the money saved before you can spend it.

3. You have to save now to have money later

When I was in third grade, I asked my mom if I could have all of my money from my savings account to buy Mighty Morphin Power Rangers toys. Clearly, according to my nine-year-old self, this would be the pinnacle of human existence. I still have some of those toys in my parents' basement, but I'm thankful my mom cut me off after buying just a few.

My little girl has similar whims, though now for things like Doc McStuffins, Paw Patrol, and whatever other show she enjoys at the moment. I find myself passing on the important lesson from my mom. If you buy something today, you won't have money for what you want later.

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What you want later may be better than what you want today. That's why it is important to save now so you can do what you want to do later on.

In an era where about 40% of American households could not afford to pay for a $400 emergency from savings, clearly many parents did prioritize teaching their families these basic lessons. But whatever your financial situation, or however old your kids may be today, it is never too late to fix our own finances and help our kids learn to make better money decisions.

All of these lessons come back to one core concept: It is important to plan for the future and not just use your money for the whims of today.

If you have $100, does it burn a hole in your pocket or inspire you to save? By teaching my kids the right money mindsets, and applying them to my own life, I'll help them build great saving habits that can serve them for decades to come.

Want to sock away more money for the future? Consider these offers from our partners:

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We drove a $40,000 Mazda CX-5 that takes on the Toyota RAV4 and Subaru Forester. Here are its coolest features.

Sat, 05/11/2019 - 9:37am

  • The Mazda CX-5 has been updated for 2019 with the addition of Apple CarPlay and a new turbocharged engine.
  • The Mazda CX-5 compact SUV competes directly against the Toyota RAV4, Honda CR-V, Subaru Forester, and Nissan Rogue.
  • The base 2019 Mazda CX-5 Sport with front-wheel drive starts at $24,350, while the top-of-the-line Signature trim starts at $36,890. With options and fees, our Signature trim CX-5 came to an as-tested price of $39,905.
  • We were impressed by the turbocharged CX-5's bountiful power, sporty driving dynamics, stylish design, and high-quality interior.
  • Visit Business Insider's homepage for more stories.

The Mazda CX-5 is one of the most popular offerings in what is arguably the most competitive segment of the US auto market. Introduced for the 2017 model year, the CX-5 doesn't sell quite as well as the segment-leading Toyota RAV4 and the Honda CR-V, but it's no slouch. 

Through April, Toyota has sold just shy of 118,000 RAV4s, while Honda has moved about 116,000 CR-Vs. During the same period, Mazda sold a respectable 47,000 CX-5s.

Last year, Business Insider had the chance to spend a week with a 2018 Mazda CX-5. We were impressed by the CX-5's stylish design, stellar driving dynamics, and a cabin that felt surprisingly luxurious. However, the CX-5 wasn't quite perfect. It is adequately powerful, but its standard naturally aspirated four-cylinder engine lacked the punch of a turbocharged unit. On the inside, the infotainment system was lackluster.

Read more: We drove a $40,000 Mazda CX-5 Turbo to see if it's the perfect compact SUV. Here's the verdict.

This year, Mazda has made several updates to the CX-5, including the addition of the turbocharged engine from the larger CX-9 SUV.

Recently, we spent some time with a 2019 Mazda CX-5 Signature AWD, clad in a gorgeous Deep Crystal Blue Metallic paint job.

"What Mazda has managed to do is deliver, hands down, the best-driving mass-market compact SUV money can buy," We said in our review of the 2019 CX-5. "It's an impressive feat considering it's fighting for sales in arguably the most brutally competitive segment of the market where everyone brings their A-game."

"And for that reason, if I had $40,000 to spend, the 2019 Mazda CX-5 Signature would be the compact SUV for me," we added.

The base 2019 Mazda CX-5 Sport with front-wheel drive starts at $24,350, while the top-of-the-line Signature trim starts at $36,890. All-wheel-drive is a $1,400 option on the Sport, Touring, and Grand Touring trims. It's standard on Grand Touring Reserve and Signature trims.

With options and fees, our Signature trim CX-5 came to an as-tested price of $39,905. It's the most expensive mass-market compact SUV Business Insider has ever tested.

Here's a closer look at its coolest features: 

SEE ALSO: We drove a $32,000 Subaru Forester that rivals the Honda CR-V and the Toyota RAV4. Here are its coolest features.

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1. Turbocharged engine: Our top-spec test car had the upgraded 2.5-liter turbocharged engine that can produce up to 250 horsepower using premium-grade fuel. Power output is reduced to 227 horsepower if you use regular gas. The engine is shared with the Mazda6 sedan and larger CX-9 sedan. It's strong, smooth, and delivered a strong fuel economy.

2. Sleek styling: The crossover retains its striking and stylish looks, punctuated by the large Mazda corporate front grille and angular headlights.

Unlike the front end, the rear of the CX-5 is rounded with short overhangs.

See the rest of the story at Business Insider

Check out the pitch deck that Sandbox VR used to get Andreessen Horowitz as lead investor in a $68 million round, and watch the investors discuss the pitch

Sat, 05/11/2019 - 9:35am

Sandbox VR, a location-based virtual reality startup, landed Andreessen Horowitz as a lead investor in its $68 million Series A in January. A new video shows exactly how the startup convinced the famed investment firm to sign on. 

Andrew Chen, the Andreessen Horowitz partner on the deal, shared a video on the firm's YouTube channel that gave a "director's cut" of the team's pitch meeting, including the investors' discussion after Sandbox VR CEO and cofounder Steve Zhao left the room.

In the video, Chen says that one of the primary reasons the firm chose to invest in Zhao's company was the physical experience of the product, which reduces motion sickness and isn't as bulky as other consumer VR headsets.

Read More: This 29-year-old VC helped start Microsoft's investment fund. Now, she's joining the 50-year-old Mayfield Fund to help it invest in 'unhyped' markets.

Chen also explains in the video that he was also impressed with the unit economics data Zhao had included in his deck. He was able to convince the firm's investment team that the math worked, and that the company could turn a profit as it was presented.

The video is possibly the best look yet at what it's like to meet with the storied Silicon Valley investment firm, which famously invested in companies including Facebook, GitHub, and Lyft. 

 

Here's the pitch deck Sandbox VR used to land Andreessen Horowitz as the lead on its $68 million Series A funding:

SEE ALSO: Many traditional VCs are hesitant to buy into cannabis startups, but these investors are taking the plunge







See the rest of the story at Business Insider

Goldman Sachs' glitzy new trading floor; Billionaire real-estate investor Sam Zell says now is 'the time to accumulate capital'

Sat, 05/11/2019 - 9:15am

 

Hey Readers!

It's been a whirlwind week. From Uber's disappointing IPO, to trade war tensions with China followed by hopes of a deal from a "beautiful letter" received by Trump, the market was definitely a roller-coaster. 

Apart from all the markets madness, hedge fund reporter Bradley Saacks spent the past week in Las Vegas at Anthony Scaramucci's infamous SALT Conference. But while the schmoozy conference has been known in the past for its hedge fund headliners (and wild after parties), investing titans like Steve Cohen and Bill Ackman were conspicuously absent this year from the event. In their place were a number of former Trump administration officials, like former chief of staff John Kelly and former attorney general Jeff Sessions. 

If you're new to the Wall Street Insider newsletter, you can sign up here.

The shift away from a focus on hedge funds comes as the industry grapples with performance issues. 2018 was a rough year for the market and even as funds gained an average of 5.4% in the first quarter of 2018, nearly $15 billion left the industry in that period.

This means it's also getting harder for more rank and file hedge funders to attend SALT, Bradley reported, as travel budgets are getting tighter. ("It's easier to get approval for a conference in a convention center in Dallas over a Las Vegas casino," said one investor). 

Vegas wasn't the ony place triggering bad hedge fund headlines. In Chicago at the Morningstar conference, AQR founder Cliff Asness said it's a "pretty crappy" environment for his firm's quantitative investing style (though he's sticking by the strategy).  

As returns lag, hedge funds are getting creative as they look for any edge they can get. Stay tuned for more stories from us on this theme.

To all the moms out there, happy Mother's Day! Questions? Feedback? Please email me at ooran@businessinsider.com.

Have a good weekend!

Olivia 

Goldman Sachs' glitzy new London trading floor is the size of a soccer field — but traders worry they'll be 'caged in like battery hens'

Goldman Sachs has told its staff to "get 'move ready' now" for the transfer to the bank's new 1.1-million-square-foot London headquarters, around the corner from St. Paul's Cathedral and within the ancient Roman walls enclosing the Square Mile.

The building, in Plumtree Court in Farringdon, cost an estimated £1 billion and will host about 6,500 employees. The plush trading floor is the site's centerpiece. It's the size of a stadium soccer field. The bank boasts that it's the biggest trading floor in the UK capital.

According to an April 29 "Plumtree Court Newsletter" to Goldman's London staff, seen by Business Insider, the bank called on workers to shred documents in need of shredding, take home umbrellas and other items, and clear workspaces before the big move starting in the summer.

READ MORE HERE>>

Wall Street banks have seen electronic trading chip away at their control of the corporate bond market. Now they're fighting back.

Investment banks that help big money managers trade corporate bonds are looking to lead the next great change in the rapidly evolving fixed-income markets.

The US corporate bond market, which stood at $9.2 trillion in 2018, according to data from the Securities Industry and Financial Markets Association, has traditionally traded over the phone because of its size and complexity.

In recent years, however, an increasing amount of volume has begun to trade electronically thanks to the rise of electronic trading marketplaces like MarketAxess and Tradeweb. These types of venues handle roughly 26% of all US corporate bond trading, the vast majority of which involves smaller bonds that are easier to transact on and therefore considered more liquid.

Now, numerous leading investment banks are looking to trade corporate bonds electronically with their clients directly, potentially cutting out these electronic trading marketplaces.

READ MORE HERE >>

BlackRock is quietly building a team of 30 data scientists to create a next-generation stock-lending platform

The world's largest asset manager is on a mission to automate and innovate through its growing artificial-intelligence team.

BlackRock founded a Palo Alto, California-based group called AI Labs last year, directed by the Stanford professor Stephen Boyd. Now, according to job postings reviewed by Business Insider, the 30-member team is tackling projects including next-generation lending platforms and automating human tasks.

READ MORE HERE>>

Billionaire real-estate investor Sam Zell says now is 'the time to accumulate capital' for future real-estate buys as a glut approaches

The billionaire real-estate investor Sam Zell is building up his pool of cash, planning to put it to use in a couple of years.

Compared with four or five years ago, prices for real estate have become "less speculative" but are still too high for Zell's taste, the founder of Equity International told attendees of this week's SALT conference in Las Vegas.

"I think there's going to be an opportunity" in the next few years, Zell said, to buy cheap apartment and office buildings because of oversupply.

READ MORE HERE >>

CBD companies were courted hard by a unit of US Bank — but they got ghosted despite having a 100% legal business

Elavon, a payment processor that's a subsidiary of US Bank, courted CBD clients through intermediaries and dropped them months later, numerous CBD startup founders told Business Insider.

Elavon sent the founders a letter in the mail — a copy of which was obtained by Business Insider — citing federal uncertainty around CBD products.

The CBD founders were delighted to be working with a company with a reputation like Elavon's. When Elavon pulled out, it was a huge blow.

READ MORE HERE >>

The tech head at the $1.7 trillion investment firm Pimco tells us how a new tool is turning every employee into a data scientist

Pimco has plenty of data scientists — but now, the $1.7 trillion investment firm wants every employee to be one.

The firm's chief technology officer, Dirk Manelski, told Business Insider in a recent interview that the firm was building a data-science platform for all employees to use. While the firm has been integrating data science for decades, the centralized platform represents an evolution from the earlier days, when employees would ask particular groups for reports or numbers.

Now, Manelski wants each of the firm's 2,500 employees to be a "citizen data scientist," meaning they'd be able to use basic tools that fit their particular needs, regardless of position or location.

READ MORE HERE >>

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13 easy things you can do to increase the value of your home, according to real-estate agents

Sat, 05/11/2019 - 9:05am

If you're looking to sell your home, you probably want to do everything you can to sell it at the best price possible. 

Business Insider asked real-estate agents about the easiest ways to increase a home's value. Several of them said getting rid of clutter is the easiest way to spruce up your home, while others advised upgrading your light fixtures, removing rugs and carpeting, and replacing your bedding with a simple white duvet.

Here are 13 easy things you can do that will increase the value of your home, according to real-estate agents.

SEE ALSO: 11 things that make a home unsellable, according to real-estate agents

DON'T MISS: 10 things real-estate agents wish they could tell you — but won't

1. Get rid of clutter.

Several real-estate agents said getting rid of clutter is the easiest way to spruce up your home.

"The simplest and least expensive thing that you can do is rid your home of clutter," Deborah Ribner of Warburg Realty told Business Insider. "A buyer needs to be able to envision their things in your home, and when a home is too cluttered ... it's hard for them to do that. Think bare minimum."

Ribner recommends clearing off bookshelves, coffee tables, kitchen counters, and dishes and beds for pets. You should "think of your home as being as much of a blank canvas for buyers," she said.

Rachel Lustbader of Warburg Realty suggested getting rid of old, worn furniture as well. 

"Buyers want to see the future in their new home, not the past," she said.



2. Put away family photos.

Several agents recommended putting away your family photos when you're trying to sell your house.

"Remove all family photos, children's artwork on the refrigerator, and declutter," Julie Brannan of Compass said. "You want them to superimpose their own circumstances on the home, not look at yours."



3. Switch out your cabinets and appliances instead of redoing the whole kitchen.

"If your kitchen is dated and appliances are worn out but you don't want to redo the whole kitchen, consider a cabinet refacing and change out the appliances," Christopher Totaro of Warburg Realty told Business Insider. "It's a plug-and-play upgrade. It's as easy as calling your local home-center to schedule a consultation."

He added that it's possible to add a new countertop without replacing the cabinets. 



See the rest of the story at Business Insider

The week Trump drove the stock market nuts: Here's a play-by-play of how his trade war with China wreaked havoc and erased $1.4 trillion in market value

Sat, 05/11/2019 - 8:05am

  • The US stock market entered the week riding high, but saw its historically strong start to 2019 thrown into disarray as President Donald Trump reignited his trade war with China.
  • The benchmark S&P 500 lost 2.2% in its worst week of the year, while roughly $1.4 trillion was erased from global stock indexes at one point.
  • Visit Business Insider's homepage for more stories.

They say all good things must come to an end, and that certainly rang true this past week for the US stock market.

Equities entered Monday riding high after a historically strong start to 2019. But by the time Friday afternoon rolled around, they'd suffered through their worst week of the year. As of Thursday's close, the MSCI All-Country World Index of global stocks had already seen $1.4 trillion of market value erased.

But that summary hardly does justice to the turbulence felt along the way, which frayed investor nerves and led many to wonder if this was the beginning of the end for the 10-year bull market.

The rocky week actually kicked off last Sunday, well before regular-hours trading began, after President Donald Trump used his notorious Twitter fingers to rekindle the trade war between the US and China.

The president said he was planning to increase tariffs on $200 billion of Chinese goods to 25% from 10% and slap fresh tariffs on an additional $325 billion worth. Overnight stock-market futures tumbled on the news, and the market dove at the Monday open.

Read more: Buy Amazon and Google, sell Apple and Exxon: Here's an in-depth look at Goldman Sachs' newly unveiled strategy for fighting the trade war

The subsequent few days saw investors and equity indexes whipsawed by both incrementally positive and negative developments. After nearly recovering its deep loss by Monday's close, the benchmark S&P 500 then finished Tuesday 1.7% lower — its third-biggest daily decline of the year.

Those losses grew across Wednesday and Thursday, then continued into Friday. Then, finally, Treasury Secretary Steven Mnuchin stemmed the bleeding with a single word: "constructive" — said in reference to the US-China trade talks.

The US and China may not have struck a final trade accord in the end, but that was all investors needed to hear to shift back into buying mode. The S&P 500 erased major losses from earlier on Friday and finished 0.4% higher.

But considerable damage was already done. With a 2.2% loss over five days, the S&P 500 ended up suffering through its worst week of 2019. Stock indexes around the world took a similar beating. Here's a roundup of the damage:

Read more: This under-the-radar trade can help you beat the market as tariff tensions flare — even if stocks are getting crushed

But no discussion of the stock market's wild week is complete without an acknowledgement of the conditions that left it so vulnerable in the first place.

Prior to Trump's Sunday tweetstorm, the US equity market was priced to perfection. That meant strong corporate earnings growth, an accommodative Federal Reserve, and a positive trade-war outcome were all baked into record levels. With so much viewed as going right, any minor tremor was bound to have a major impact.

What's perhaps most intriguing about Trump's escalation of the trade conflict is that it left him open for blame in the almost certain event of a stock-market sell-off. After all, throughout his presidency, he's regularly taken credit for the market's successes, and placed blame on others — usually the Fed — for its failures.

In the end, perhaps it was always Trump's plan to have Mnuchin fly in at the 11th hour to alleviate concerns. But the road he took to get there was long and winding. At this point, only one thing is certain: Investors around the world will be watching intently for signs of his next move.

Rebecca Ungarino, Theron Mohamed, and Jonathan Garber contributed reporting.

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There are 360 ways to add Uber to FAANG and analysts already disagree over where to put it (UBER)

Sat, 05/11/2019 - 8:00am

  • If Uber turns into the high-growth tech stock of bull analysts' dreams, the ride-hailing company could disrupt the longstanding acronym of FAANG.
  • FAANG represents the five of the most popular and high-value tech stocks: Facebook, Apple, Amazon, Netflix, and Google.
  • Though Uber just started trading on Friday, two analysts have already proposed adding Uber to the list. But they disagree on where to add it in. 
  • There are 360 different ways U can be combined with FAANG. 
  • Visit Business Insider's homepage for more stories.

Uber disrupted the taxi industry with its mobile ride-hailing platform. And now that it's a public company, it's disrupting financial analysts' mnemonic devices.

Though just hours out of the gate, two analysts have already proposed eventually adding Uber to FAANG — though neither agreed where U belongs in the mix.

FAANG is an acronym for five of the most popular and high-performing large-cap tech stocks: Facebook, Apple, Amazon, Netflix and Google.

Before Uber can join FAANG, the company will have to prove that it can continue to add value over time and succeed in the public markets in a way that is yet unconfirmed after its first rocky day of trading. 

But Wedbush analyst Dan Ives thinks Uber is well on its way to transforming FAANG into FAAUNG.

Read more: PayPal already lost $37 million on the Uber investment it just made as part of the IPO

"Uber is clearly one of the most transformational companies in the world as the company has essentially single handily changed the nature of transportation worldwide," wrote Ives in a note on May 1. Ives set a price target of $65 for the company.

"While it will take time we ultimately believe the traditional FAANG tech club which is viewed as bellwether for investors worldwide will over the coming years accept a new member into this group and thus broaden into 'FAAUNG' given the barometer of consumer spending that Uber brings to the table on the transportation and mobility front," Ives wrote.

Not everyone agrees.

Like Ives, Naeem Aslam is bullish on Uber. But unlike Ives, Aslam, the chief market analyst at ThinkMarkets, thinks FAANG is about to become FAANGU.

"As expected the Uber IPO wasn't going to sell hot off the shelf, investors were wary about the demand especially after what happened to Lyft," Aslam wrote in an email Friday. "But that doesn't mean it is not a good stock, Uber has the ability to join the FAANG, and for me I see that term changing very soon to 'FAANGU.'"

Altogether, there are 360 possible ways to add Uber into FAANG. 

As Business Insider's resident mathematician and Senior Quant Reporter Andy Kiersz explains, the total number of combinations of the six-letter acronym is 720, but you then need to account for the double As (which represent Apple and Amazon).  That still leaves a lot of name options to choose from. 

Will FAAUNG and FAANGU compete side-by-side in a cash burning, price slashing drag race like Uber and Lyft? Or will one of them come out ahead? Which one is the sauce, and which will leave analysts feeling unpumped?

Whatever the case, victory will be short lived. Once Airbnb and WeWork enter the public markets, analysts will have 6720 possible permuatations to sort through before settling on the perfect combination for the new cohort of high-growth tech stocks.

Here are all of the ways Uber can disrupt FAANG (pick your favorite):

FAANGU, AFANGU, AAFNGU, NAFAGU, ANFAGU, FNAAGU, NFAAGU, AFNAGU, FANAGU, NAAFGU, ANAFGU, AANFGU, GANFAU, AGNFAU, NGAFAU, GNAFAU, ANGFAU, NAGFAU, FAGNAU, AFGNAU, GFANAU, FGANAU, AGFNAU, GAFNAU, GNFAAU, NGFAAU, FGNAAU, GFNAAU, NFGAAU, FNGAAU, FNAGAU, NFAGAU, AFNGAU, FANGAU, NAFGAU, ANFGAU, AFGANU, FAGANU, GAFANU, AGFANU, FGAANU, GFAANU, AFAGNU, FAAGNU, AAFGNU, AGAFNU, GAAFNU, AAGFNU, NGAAFU, GNAAFU, ANGAFU, NAGAFU, GANAFU, AGNAFU, NAAGFU, ANAGFU, AANGFU, AAGNFU, GAANFU, AGANFU, UAANFG, AUANFG, AAUNFG, NAUAFG, ANUAFG, UNAAFG, NUAAFG, AUNAFG, UANAFG, NAAUFG, ANAUFG, AANUFG, FANUAG, AFNUAG, NFAUAG, FNAUAG, ANFUAG, NAFUAG, UAFNAG, AUFNAG, FUANAG, UFANAG, AFUNAG, FAUNAG, FNUAAG, NFUAAG, UFNAAG, FUNAAG, NUFAAG, UNFAAG, UNAFAG, NUAFAG, AUNFAG, UANFAG, NAUFAG, ANUFAG, AUFANG, UAFANG, FAUANG, AFUANG, UFAANG, FUAANG, AUAFNG, UAAFNG, AAUFNG, AFAUNG, FAAUNG, AAFUNG, NFAAUG, FNAAUG, ANFAUG, NAFAUG, FANAUG, AFNAUG, NAAFUG, ANAFUG, AANFUG, AAFNUG, FAANUG, AFANUG, FGANUA, GFANUA, AFGNUA, FAGNUA, GAFNUA, AGFNUA, NGFAUA, GNFAUA, FNGAUA, NFGAUA, GFNAUA, FGNAUA, FANGUA, AFNGUA, NFAGUA, FNAGUA, ANFGUA, NAFGUA, NAGFUA, ANGFUA, GNAFUA, NGAFUA, AGNFUA, GANFUA, UANFGA, AUNFGA, NUAFGA, UNAFGA, ANUFGA, NAUFGA, FAUNGA, AFUNGA, UFANGA, FUANGA, AUFNGA, UAFNGA, UNFAGA, NUFAGA, FUNAGA, UFNAGA, NFUAGA, FNUAGA, FNAUGA, NFAUGA, AFNUGA, FANUGA, NAFUGA, ANFUGA, GNFUAA, NGFUAA, FGNUAA, GFNUAA, NFGUAA, FNGUAA, UNGFAA, NUGFAA, GUNFAA, UGNFAA, NGUFAA, GNUFAA, GFUNAA, FGUNAA, UGFNAA, GUFNAA, FUGNAA, UFGNAA, UFNGAA, FUNGAA, NUFGAA, UNFGAA, FNUGAA, NFUGAA, AFUGNA, FAUGNA, UAFGNA, AUFGNA, FUAGNA, UFAGNA, GFAUNA, FGAUNA, AGFUNA, GAFUNA, FAGUNA, AFGUNA, AUGFNA, UAGFNA, GAUFNA, AGUFNA, UGAFNA, GUAFNA, GUFANA, UGFANA, FGUANA, GFUANA, UFGANA, FUGANA, NUGAFA, UNGAFA, GNUAFA, NGUAFA, UGNAFA, GUNAFA, AUNGFA, UANGFA, NAUGFA, ANUGFA, UNAGFA, NUAGFA, NGAUFA, GNAUFA, ANGUFA, NAGUFA, GANUFA, AGNUFA, AGUNFA, GAUNFA, UAGNFA, AUGNFA, GUANFA, UGANFA, FGAAUN, GFAAUN, AFGAUN, FAGAUN, GAFAUN, AGFAUN, FAAGUN, AFAGUN, AAFGUN, AAGFUN, GAAFUN, AGAFUN, UAAFGN, AUAFGN, AAUFGN, FAUAGN, AFUAGN, UFAAGN, FUAAGN, AUFAGN, UAFAGN, FAAUGN, AFAUGN, AAFUGN, GAFUAN, AGFUAN, FGAUAN, GFAUAN, AFGUAN, FAGUAN, UAGFAN, AUGFAN, GUAFAN, UGAFAN, AGUFAN, GAUFAN, GFUAAN, FGUAAN, UGFAAN, GUFAAN, FUGAAN, UFGAAN, UFAGAN, FUAGAN, AUFGAN, UAFGAN, FAUGAN, AFUGAN, AUGAFN, UAGAFN, GAUAFN, AGUAFN, UGAAFN, GUAAFN, AUAGFN, UAAGFN, AAUGFN, AGAUFN, GAAUFN, AAGUFN, UGAANF, GUAANF, AUGANF, UAGANF, GAUANF, AGUANF, UAAGNF, AUAGNF, AAUGNF, AAGUNF, GAAUNF, AGAUNF, NAAUGF, ANAUGF, AANUGF, UANAGF, AUNAGF, NUAAGF, UNAAGF, ANUAGF, NAUAGF, UAANGF, AUANGF, AAUNGF, GAUNAF, AGUNAF, UGANAF, GUANAF, AUGNAF, UAGNAF, NAGUAF, ANGUAF, GNAUAF, NGAUAF, AGNUAF, GANUAF, GUNAAF, UGNAAF, NGUAAF, GNUAAF, UNGAAF, NUGAAF, NUAGAF, UNAGAF, ANUGAF, NAUGAF, UANGAF, AUNGAF, ANGAUF, NAGAUF, GANAUF, AGNAUF, NGAAUF, GNAAUF, ANAGUF, NAAGUF, AANGUF, AGANUF, GAANUF, AAGNUF

SEE ALSO: A complete guide to the weird and wacky tech-bro slang used by former Uber CEO Travis Kalanick

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NOW WATCH: 5G networks will be 10 times faster than 4G LTE, but we shouldn't get too excited yet

Vanguard's CEO just revealed it's in the early stages of building a new tech platform for wealth advisors as it goes head-to-head with BlackRock's Aladdin

Sat, 05/11/2019 - 8:00am

  • Tim Buckley, Vanguard's CEO, said the firm is building a technology platform for financial advisors, which will be similar to its wildly popular Personal Advisor Services. 
  • It will likely be rolled out by 2021. 
  • Vanguard joins other asset managers like BlackRock building platforms for financial advisors to use with their clients. 
  • Visit Business Insider's homepage for more stories.

Vanguard is building a tech platform to better tap the $6 trillion of assets that financial advisors oversee as it plays catch-up with peers like BlackRock in the digital wealth space. 

At a media roundtable at the Morningstar Investment Conference in Chicago on Thursday, Vanguard CEO Tim Buckley highlighted the success of its Personal Advisor Services, which connects individual investors with more than $50,000 to Certified Financial Planners for a 0.3% or lower fee.  

Now, the asset manager is building a similar platform for financial advisors, after hearing that professionals wanted to use elements of the service, like technology-driven risk analysis, for their clients. 

See more: The man who upended investing by founding $5.1 trillion Vanguard says he admires only 3 rivals and even made some money off one of them

"Expect us to invest more and more in advice," Buckley told reporters. "We're here to help clients, whether they come directly to Vanguard or through advisers, to achieve a better retirement, put their kids through college. If we can help lower the cost of advice, we'll do that. If it's not direct, we'll do it through advisors."

The financial advisor platform will likely be rolled out by 2021, he said, noting it's too early to know if it'll be a revenue stream for the privately-held company. Buckley said early iterations of the program are being piloted with advisors. 

BlackRock's similar effort, Aladdin Wealth, is a growing focus for the asset manager. The platform is driving revenue from the fees advisors pay and, in some cases, more assets to BlackRock, Business Insider reported last month. Aladdin Wealth, which was rolled out two years ago, now has 30,000 users, but lots of runway as there are about 300,000 financial advisors in the US alone

In November, BlackRock said it would buy a minority stake in financial technology firm Envestnet for $123 million. About 92,000 financial advisers use Envestnet's wealth management platforms, which include portfolio management, reporting and other capabilities. 

Asset managers are increasingly interested in building digital tools to work more directly with financial advisors, who oversee more than $6 trillion in assets in North America alone, according to a report last month from McKinsey. That survey showed the continued growth of fee-based advisors, who are more likely than commission-based stock pickers to embrace digital tools and index funds to lower the cost of portfolio management. 

"They can pass those savings onto their clients; they can free their time up to do more for their clients beyond portfolio management," Buckley said at Morningstar. "If we can give them pieces of our engine so they can do that better, we'll be doing that."

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NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

Former Uber exec says it slumped at IPO because investors don't 'understand the Uber story,' and predicts a comeback fueled by autonomous technology (UBER)

Sat, 05/11/2019 - 6:09am

  • Uber's first day of trading was not a rousing success, with stock slumping almost 8% from its IPO price.
  • Emil Michael, a former high-ranking executive at Uber, told CNBC this happened because investors do not properly understand how valuable the company is.
  • He said that the company's work on autonomous driving technology will drive future growth and reinvigorate the share price.
  • Uber CEO Dara Khosrowshahi said that it will take more than one day to judge Uber, and said factors like the trade war with China had dented performance.
  • Visit Business Insider's homepage for more stories.

A former Uber executive trying to explain the company's lackluster performance on its first day of market trading blamed the slump on investors who "don't understand the Uber story."

Emil Michael, a former senior vice-president of business for Uber, said that the market was failing  to appreciate the value of less-visible parts of the business, like the autonomous technology division, which he said would drive future growth.

Michael was speaking with CNBC's "Closing Bell" show as Uber ended its day at $41.57 per share, a 7.62% fall from its IPO price of $45.

The former exec left Uber during a tumultuous management shake-up in 2017 that also saw the exit of CEO-founder Travis Kalanick, but retains stock in the company.

You can watch his interview here:

Michael said:

"So I think what you're seeing is investors still have to understand the Uber story a bit. I think what investors haven't seen.... they say: 'Oh, Lyft's trading at this let's just multiply by that, and you get Uber."

"And what they're missing is the autonomous technology division, which was just valued at $7.5 billion dollars two weeks ago, with a billion-dollar cash infusion, the equity stakes it has in the other ride-sharing companies around the world... as that comes out I think you'll see some recovery."

Prior to the market open on Friday, Business Insider noted that the timing for Uber offering was extremely unfortunate, and it can be argued that performance was dragged down by wider market turbulence.

Speaking to the Financial Times, Uber CEO Dara Khosrowshahi gave a similar analysis, saying: "One day isn't going to measure our success... You can't control the week in which you went public. We had a situation with the president and China that created a lot of volatility and uncertainty."

According to Business Insider's Troy Wolverton, the IPO "wasn't calamitous, it was a disappointment. And its effects could linger long after the closing bell sounded on its first day of trading."

Read Business Insider's full Uber IPO coverage here.

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NOW WATCH: Watch Google's I/O 2019 event in 7 minutes

A Wall Street CIO who oversees $235 billion explains how millennial investors are different from their parents — and reveals what that could mean for the future

Sat, 05/11/2019 - 12:18am

  • Omar Aguilar, the chief investment officer for equities and multi-asset strategies at Charles Schwab, told Business Insider how baby boomers and millennials differ in their approaches to investing.
  • Aguilar is responsible for $235 billion in assets at Schwab, and he spends a lot of time examining the attitudes and biases of investors to help them make good decision.
  • Visit Business Insider's homepage for more stories.

The concept of FOMO, or "fear of missing out," is mostly associated with millennials who Instagram their avocado toast at brunch. But investment pro Omar Aguilar says it best describes another group: baby boomer investors.

Aguilar is the chief investment officer for equities and multi-asset strategies at Charles Schwab Investment Management, where he's responsible for $235 billion in assets. And one of the key parts of his job is understanding the needs and psychology of different groups of investors.

He told Business Insider that those groups often fall along generational lines, and he evaluates them using investing and trading data, public surveys and other sources. That helps him watch out for harmful tendencies and biases and helps him tailor his approach to different clients.

"You cannot take the same approach across all generations," he told Business Insider. "There's a lot of stuff that we do to try to connect the dots."

Millennials — who are in their 20s and 30s — are now the largest generation in the US, and they're often associated with the deaths of numerous trends and industries. But Aguilar says they're also a financially smart group overall.

"Millennials tend to be more conservative in nature despite their young age," he said. "They tend to be more concerned about market volatility and they tend to be bigger savers."

Read more: A business manager for Hollywood celebrities and billionaires explains why fake meat is the next big investing trend for the ultrarich

That could leave them in a good position for retirement decades from now, but Aguilar notes that there's a downside: Because they're cautious and hold on to bad experiences, millennials are reluctant to get back into the market after turbulent times like the downturn at the end of 2018.

That means many of them could have missed out on this year's market rally. Aguilar said their parents' generation probably doesn't have that problem.

"Boomers, by contrast, are competitive and get over things very quickly," he said. "By now, they've forgotten about it and they're ready to go back in." 

If it sounds like both groups were shaped by their experiences, Aguilar agrees. He says the early careers of many millennials began around the time of the Great Recession and sluggish growth that followed, leading them to be cautious with the savings they have. Boomers have benefited from several stretches of huge economic or market growth.

"If you look at the S&P performance from the time that the average baby boomer was in high school through the time they were in the process of retirement … it is amazing," he said.

That's encouraged boomers in general to take chances on the market. And where millennials might be slow moving and deliberate, Aguilar says the market success boomers have enjoyed has made them willing to take some huge risks that can fail dramatically.

"The baby boom generation tends to be caught in the mix of a lot of the asset bubbles," he said. "Fear of missing out is a very typical pitfall of being in that generation."

As for the Schwab CIO himself? He falls in the middle. While many members of Generation X are going through notable financial struggles, he shows some possible pride in his cohort as he describes how well they stick to their plans. 

"Generation X is a generation that tends to be incredibly disciplined for investing," he said. "They're almost like the perfect client."

SEE ALSO: A top-rated wealth manager for pro athletes reveals the mistakes newly minted millionaires often make — and explains how he helps them avoid those pitfalls

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NOW WATCH: The Karlmann King is a $2 million enormous ultra-luxury SUV built upon a Ford F-550

In its return to the Bellagio, Scaramucci's SALT conference shuns hedge funds for political pros

Sat, 05/11/2019 - 12:13am

  • The 10th edition of Anthony Scaramucci's SALT conference brought nearly 2,000 people to Las Vegas' Bellagio hotel this week and diverted from its prior focus on just hedge funds.
  • Politicians, not hedge fund managers, were the big-name speakers, and the investing community in attendance was geared more toward the buzziest topics of the day, like so-called opportunity zones, cannabis, and crypto.
  • For more stories like this, visit Business Insider's homepage.

LAS VEGAS — Missing from Anthony Scaramucci's SALT conference speaker list this year were the hedge fund titans who have headlined the conference in the past, like the billionaires Steve Cohen and Bill Ackman.

Marc Lasry, the Avenue Capital founder, was a late scratch from the agenda, as he chose to watch the NBA team he owns, the Milwaukee Bucks, instead of flying to Las Vegas. And of the 23 featured speakers at the conference this week, fewer than half are current investors.

The Las Vegas conference this year, its 10th edition, instead expanded beyond its hedge fund roots, vacillating between panels on buzzy topics like cannabis, so-called opportunity zones, and crypto, and talks from former confidants of President Donald Trump, like Chris Christie, John Kelly, and Jeff Sessions.

The shift away from hedge fund headliners comes as the industry is struggling with performance issues. Even as funds gained an average of 5.4% in the first quarter, nearly $15 billion left the industry in the period, according to eVestment.

See more: Billionaire real-estate investor Sam Zell says now is 'the time to accumulate capital' for future real-estate buys as a glut approaches

Held at the sprawling Bellagio resort and casino, with extensive security — replete with bomb-sniffing dogs — sectioning off the conference from the slot machines, the blowout brought together an eclectic mix of politicos, advisers, hedge fund managers, and cannabis-producing CEOs in the return from its one-year hiatus. Last year, Scaramucci, briefly a White House communications director under Trump, didn't hold the conference as a Chinese conglomerate was in talks (that later collapsed) to buy his firm, SkyBridge Capital.

A partisan nonpartisan event

SALT describes itself as nonpartisan, but the conference featured a heavy tilt toward Scaramucci's former employer.

While the Obama administration alums Susan Rice and Valerie Jarrett made appearances, the loudest panelists were Trump supporters like Christie, while conservative media figures like Charlie Kirk could be seen doing live shots on one of several balconies overlooking poolside cabanas.

The biggest talks at the end of both days were with Kelly, Trump's former chief of staff, and Nikki Haley, the former UN ambassador. Even on the smaller stage, Trump-connected people like David Bossie, Stephen Moore, and Corey Lewandowski made appearances.

A midday conversation among Christie, Sessions, and MSNBC's Stephanie Ruhle was standing room only.

Still, the biggest cheers were not for either party but general anger at both sides — sentiments expressed by Sam Zell and former Countrywide Financial CEO Angelo Mozilo, who implored people to call their representatives to get politicians working for them.

Stays in Vegas

But despite the lack of hedge fund star power, the conference had the second-highest attendance in its history, with nearly 2,000 attendees.

One longtime attendee from a fund said it had gotten harder for investors to persuade compliance to let them come to Vegas for conferences, opening the door for more people from cannabis, bitcoin, and technology to fill the void.

David Bahnsen, a wealth adviser who said he had been to nearly every SALT conference, said it was easily the youngest crowd he had seen, something he attributed to the shift in focus to the buzziest investment topics of the day.

When you attend SALT, one longtime attendee said, you're there for more than just catching up with investors.

"You go to see famous people walking around, and they nailed it," this person said, mentioning that he had just bumped into Mark Cuban taking a selfie with a couple of fans.

You can meet investors at any conference, this person said, but the chance to rub shoulders with celebrities is what makes SALT big.

But with hedge funds' margins shrinking, it can be a hard pitch to get the OK to come to a conference in a Vegas casino rather than one at a Dallas convention center, another attendee said.

"You never know who is going to wake up the next morning here," this person said on a balcony overlooking one of the Bellagio's many pools.

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NOW WATCH: The legendary economist who predicted the housing crisis says the US will win the trade war

The woman who rang Uber's IPO bell is Austin Geidt, whose life is the stuff of Valley legend (UBER)

Sat, 05/11/2019 - 12:13am

  • Uber went public on Friday in one of the largest initial public offerings in history.
  • There was some controversy over who got to ring the bell.
  • In the end, the honor didn't go to the current CEO or the former one. It went to a woman named Austin Geidt, Uber's fourth employee.
  • Her life is the stuff of Silicon Valley legend.

Uber went public on Friday in one of the largest initial public offerings in history.

Travis Kalanick, its founder, former CEO, board member, and largest shareholder, who was forced out a couple of years ago, was told he couldn't stand on the New York Stock Exchange opening bell dais, much less ring it. (He was there on the floor in the crowd with his dad though and was greeted with applause when he walked in.)

But Uber's current CEO, Dara Khosrowshahi, didn't ring the bell either.

That honor went to Austin Geidt, Uber's fourth employee.

Her career story is the stuff of Silicon Valley legend.

In 2010, she saw some tweets about a startup looking for an intern. That startup was Uber.

The economy was still rocky in the aftermath of the 2008-09 financial collapse. Jobs — even internships — were hard to get, and her résumé was "blank," she told the audience at Fortune's Most Powerful Women Next Gen Summit in 2015, when she was 30 years old.

Read more: Here's who's getting rich on Uber's massive IPO

She reached out to Uber's CEO at the time, Ryan Graves, who told her to put together a presentation about herself. Having struck out so many times, she went all in, loading her slide deck with humor and pleading with him to give her a shot.

And she became employee No. 4. As an intern, she did everything from cold-calling prospective drivers to handling support calls.

Within five years, Uber was everywhere, one of the most important new companies the Valley produced. And she was one of the company's most powerful executives. She ran the team that expanded Uber into new international markets. Her role at the company has since grown to include head of operations at Uber's self-driving-car unit, the Advanced Technologies Group.

Even four years ago, when Uber raised another $2.1 billion and hit a valuation of $62.5 billion, her stock options had made her a very wealthy woman.

Because she's not a named officer, the company doesn't have to reveal how much stock she owns, so we don't know how many millions she made on Uber's massive IPO.

But it was a surprisingly painful journey to get here, she has revealed.

When she was 19 and in college, she had a drug problem, she said.

"I had a drug addiction. I got sober. I'm 10 years sober," she said in 2015. "I was in a really dark place."

She said that "it was a moment of stepping back with my family" and realizing "I don't like who I am — I just kind of physically, spiritually, emotionally was just really sick."

She went to rehab, but it really took her a few years to heal. She left school during that time and returned, sober and 25, to graduate.

But she "was so insecure about feeling behind," she said, adding, "I was a sober, 25-year-old senior, which was a very different experience."

It seems as if a high-pressure job at a Silicon Valley startup, especially one as watched as Uber, would be a dangerous amount of stress for someone newly healed from addiction.

But the opposite is true, Geidt said. Though she loves the job and the company — "I live and breathe Uber," she said — the rehab experience keeps her grounded and gave her management skills.

It taught her to be honest and direct, to turn feelings of being overwhelmed into small, manageable steps, to have a "sense of humility" rather than "feeling self-important," she said.

But ultimately, it keeps her focused on the important stuff in life.

"I'm so proud of the work my team has done at Uber and of the work I've done at Uber. But it's not the proudest thing I've done, right? I'm more proud of being sober," she said. "I just have perspective."

Here's the full interview from 2015:

SEE ALSO: We took a real résumé from a laid-off tech worker and turned it into something fantastic

DON'T MISS: How Uber CEO Travis Kalanick helped save his girlfriend's life

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Sure, Uber didn't leave any money on the table, but its IPO was nothing to celebrate and it could haunt the company and its execs for years to come (UBER)

Fri, 05/10/2019 - 8:42pm

Uber's debut on the public markets wasn't exactly a disaster. But it sure was embarrassing.

Worse yet for the company and its executives, the IPO and its aftermath could prove costly in more ways than one.

The app-based taxi service went public Thursday night at $45 a share, which was near the low end of its expected range. The pricing gave the company an initial valuation of $75.5 billion — well below the $120 billion figure investment bankers were bandying about last fall.

That was bad enough. But things got worse when Uber's stock hit the New York Stock Exchange on Friday. Its shares opened below their IPO price and stayed down all down day. They ended their first session of trading off $3.43, or nearly 8%, to close at $41.57.

It was an inauspicious beginning to one of the most highly anticipated IPOs in years.

Read this: Uber chose the worst possible week to have its IPO, and the bad timing will cost it billions

As disappointing as it might have been, you can't exactly call the offering a failure. After all, through the IPO, Uber raised $8.6 billion. For a company that's been losing money hand over fist for years — and is likely to do so for years to come — those new funds are likely more than welcome.

And as much as the drop in Uber's share price Friday may have given the company a black eye from a public-relations perspective, it suggested that the company milked its IPO for all it was worth and more. The institutional investors who purchased Uber shares on Thursday ended up paying more for the stock than everyday investors thought they were worth. That's Uber's gain — and the institutional investors' loss.

Uber raised less money that expected

Still, the celebrations at Uber's San Francisco headquarters are likely going to be a bit more muted than might have been expected six months or so ago when that $120 billion valuation figure was being floated.

Part of the reason for that is the IPO raised significantly less money than the company could have under previous expectations. Given the 180 million shares Uber sold in the offering, it could have raised $12.8 billion if it actually had gone out with a $120 billion valuation. That would have put an extra $4.2 billion in its coffers. For a company that burned through more than $2 billion in cash from its operations and capital investments in each of the last two years, that's an extra two years of life.

Even if it had just priced its IPO at $50 a share, which was the top of the range it forecast last month, the company would have raised $900 million more than its IPO actually brought in. Again, thinking in terms of its cash burn, that's almost an extra half year of life.

But the IPO was disappointing and costly to more than just the company itself. For more than three years, Uber has been selling its stock in private offerings to investors including Softbank and Didi Chuxing for $48.77 a share. Those investments were all underwater at the IPO price and were even further below after the first day of trading.

Sure, there were plenty of investors who got into Uber at earlier dates who made plenty of money off the IPO. And late-stage venture investors generally expect much more limited returns than early-stage ones. But they almost certainly expected to see some immediate return when the company went public, rather than to see their investments be officially in the red.

The IPO likely disappointed insiders and early investors

The IPO was also likely personally frustrating for CEO Dara Khosrowshahi, because he has tens of millions dollars in compensation that are on the line. The company awarded him 1.75 million stock options last year that he'll only get if the company is either acquired for $120 billion or sees its market capitalization hit that amount and stay at it for 90 consecutive days. Uber's even farther from that target now than it was last night.

Some of Uber's investors and insiders are likely going to be disappointed in the IPO for another reason. The stock the company sold in its public offering all came from Uber's own coffers, it didn't include any shares held by insiders or early investors.

Instead, insiders and early investors who wanted to sell shares as part of the offering did so by dedicating them to Uber's overallotment pile, which solely consisted of their shares. The overallotment pile is the group of shares that the bankers underwriting an offering have an option to buy from the company at the IPO price if they feel there's enough demand for them or to stabilize a company's share price after the offering.

But, as Bloomberg's Matt Levine laid out, the bankers don't have to purchase those shares from the company, even if they've already committed to selling the same number to institutional investors. Instead, they can just go out and purchase the requisite number of shares on the open market if it makes financial sense to do so.

With Uber's shares trading below their IPO price, that looks like it will be the case with the company's overallotment. Uber's bankers can buy the shares they need on the open market for less money than they'd pay for those in the overallotment pile. Assuming they do that, Uber's insiders and investors are out of luck. Worse for them, they won't be seeing a financial benefit from Uber going public for another six months, because they've all signed lock-up agreements that bar them from selling their shares outside of those they dedicated to the overallotment for that period of time.

Of course, it's hard to feel too sorry for those insiders and early investors. Many of those who planned to sell are going to eventually see huge windfalls even if they can't sell right away.

Uber could see a talent drain

The same isn't necessarily true for the majority of Uber's rank-and-file employees. The company has gone from about 3,500 employees in August 2015 to more than 22,000 at the end of last year. For many of those employees, a significant portion of their compensation comes in the form of stock or options to purchase shares.

Uber granted 5.5 million options last year and 2.9 million the year before that. It handed out 64.7 million restricted shares last year and 41.2 million in 2017.

Many of those options and shares are now in danger of being underwater. The options Uber handed out in 2017 have an average strike price of $41.39, meaning that at the close of regular trading Friday each one was in the money by only 18 cents. The restricted shares it handed out that year each had a grant value of $40.75, meaning their barely worth more than when employees received them.

Employees are in better shape with the shares and options they got last year. The options have an average strike price of $33.45, while the restricted shares had a grant value of $36.73 per share. Still, Uber's stock wouldn't have to fall a whole lot for those too to be underwater.

In Silicon Valley, many workers who join startups consciously and often enthusiastically accept options and shares in lieu of higher salary. The bet is that their stock-based compensation will be worth much more than a cash salary — and will potentially make them very rich — when their companies go public.

But if Uber's IPO price is any indication, its employees aren't going to see anywhere near the kind of jackpot many were likely expecting when they signed on.

That could be more than just a disappointment for Uber workers. It could be a big problem for the company. Employees who don't see the payoff they were expecting are likely to be more willing to consider offers from other companies. Uber could well see a big talent drain if it can't get its stock price heading in the right direction.

So while Uber's IPO wasn't calamitous, it was a disappointment. And its effects could linger long after the closing bell sounded on its first day of trading.

SEE ALSO: 3 reasons why Uber had such a 'weird' and terrible IPO, according to a portfolio manager who wouldn't buy the stock

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3 reasons why Uber had such a 'weird' and terrible IPO, according to a portfolio manager who wouldn't buy the stock (UBER)

Fri, 05/10/2019 - 6:00pm

  • After all the hype, Uber is now a publicly traded company with a market cap, at day's end, at $69.7 billion.
  • That's still a eye-popping number. But a far cry from the lofty $120 billion valuation that the board wanted CEO Dara Khosrowshahi to deliver.
  • The IPO wasn't just a dud, it was a weird dud.
  • One portfolio manager tells Business Insider what scared him off of buying the stock.

After all the hype, Uber is now a publicly traded company with market value, at day's end, of $69.7 billion.

That's still an eye-popping number. For comparison, Ford, which brought in three times the revenue and is profitable, is worth $41 billion. But it's a far cry from the lofty $120 billion valuation that the board wanted CEO Dara Khosrowshahi to deliver.

And the IPO wasn't just a dud, it was a weird dud.

"I've never seen anything like it," says longtime portfolio manager, Dan Morgan, a senior portfolio manager for Synovus with $700 million of assets under his management. Morgan has been trading and analyzing tech stocks since the 1980s.

"It came out on the preliminary [offer] below the $45 [initial price], that was weird," he told Business Insider.

Read: The woman who rang Uber's IPO bell is Austin Geidt, whose life is the stuff of Valley legend

It was also weird to watch the day's pre-market bids for the stock, each one below the $45/share mark, the price the bankers had set for the stock the night before.

Any institutional investor who bought the stock at the IPO price after Uber's roadshow was under water the second the market opened. 

The day reminded him of another horrible IPO experience: Facebook's, where the NASDAQ suffered technical glitches, the stock eventually popped then ended the day below the IPO price, and stayed low for months. (Facebook's stock price has done well in the years that followed.)

Ultimately, Morgan decided to pass on investing in Uber, just as he has passed on Lyft. At least for now. 

"We're struggling with rideshare models," he explained. Like Lyft, he's turned off by Uber's core financials. "Investors are still struggling with investing in another ride share company that's not profitable."

He's not buying the argument from management and sell-side analysts that Uber is another Amazon or Salesforce or Workday. The message there is that the stock will zoom to unimaginable heights.

"This is a new kind of business. This isn't an enterprise business, it's a consumer app business. It's not dictated by IT spending," he says of those comparisons, referring to Amazon's profitable cloud business in particular.

Ride sharing, as well as Uber Eats food delivery, is a business of "convenience." he says. And only time will tell if Uber's customers will remain loyal.

Scary indicators

Morgan found at least three scary indicators in Uber's financials, too, that turned him off, he wrote in a research note.

1. Cost of revenue. "Many investors are concerned about rising costs associated with booking fees shared with contractors ("Cost of Revenue" on the income statement)," he wrote. That was one of Uber's largest expenses. "This expense will be difficult to reduce as sales rise as contractors may require higher fees as the demand for more drivers (to fuel growth) increases!"

2. Rising long-term debt. "Looks like Uber is adding LT debt at a pretty good clip," Morgan wrote, noting that long-term debt went from $1.423 billion in 2015 (unaudited) to $6.869 billion in 2018.

"That's an increase of $5.446 billion over the course of four years." Uber raised $8.1 billion from the IPO but Morgan fears that at the rate it's burning money that may not be enough. "Uber will be forced to add more debt once cash from the IPO runs out!" he warns. 

3. No profits in sight. Uber priced its shares to look like a steal next to Lyft. Lyft is trading at about 11-times sales ($2.2 billion fiscal year 2018 revenue). With FY2018 sales of $11.4 billion, Uber was priced at about 6.6x - 7.7X sales. But investors weren't biting. "So even after Uber reduced its IPO value the valuation appears too rich."

Plus, it's just plain wrong-headed to believe that investors don't care about profits just because this is a tech company. Video conferencing company Zoom Technologies was profitable and Zoom "soared after its IPO," he points out.

"We struggle with companies that aren't profitable. At least show me a road to profitability," he says.

All this said, Morgan isn't kissing off Uber, or Lyft, forever. If over the next few weeks or months, the stock drops low enough and management explains its plans better, he'll be eager to buy.

"We're waiting for a Facebook situation," where the stock dropped in six months making it a good buy, he said.

Read: Here's who's getting rich on Uber's massive IPO

SEE ALSO: THE TAKEDOWN OF TRAVIS KALANICK: The untold story of Uber's infighting, backstabbing, and multimillion-dollar exit packages

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Uber wipes out $655 million of investor wealth in its opening day (UBER)

Fri, 05/10/2019 - 5:53pm

  • Uber opened for trading as a public company Friday at $42 a share, a drop of 6.7% from its initial-public-offering price of $45.
  • Shares finished the day at $41.57 apiece, leaving investors who got in at the IPO price with a cumulative loss of $655 million.
  • Thursday night's pricing gave the ride-hailing company an initial market cap of $75.5 billion.
  • Uber's IPO was the US's third-largest on record.
  • Visit Markets Insider's homepage for more stories.

Uber had a rude awakening in its first day as a publicly traded company. 

Shares opened for trading Friday on the New York Stock Exchange at $42 apiece, down from the $45 where they priced on Thursday evening. They finished the day at $41.70.

By Friday's close, Uber's market cap had fallen to $69.7 billion. Its 191 million share sale means that investors who got in at the IPO price saw a cumulative loss of $655 million. 

At $45 a share, Uber had an initial market cap of $75.5 billion — well below the $120 billion valuation that Wall Street banks were floating in October. 

Still, the San Francisco-based company's valuation ranked among the largest US debuts on record, trailing only Alibaba's $169 billion debut in September 2014 and Facebook's $81 billion debut in May 2012, according to a Dealogic analysis.

The lowered pricing came in the face of its rival Lyft's stunning decline on the public market since debuting in late March. Lyft shares plunged to a record low earlier this week after its first quarterly report as a public company fell flat with investors. On Friday, Lyft shares were down as much as 8% ahead of Uber's debut

Friday's IPO brought together the cofounders Garrett Camp and Travis Kalanick as well as Ryan Graves, the company's first CEO. Kalanick entered the trading floor with his father, and they were greeted with an "enormous applause," according to the New York Times tech reporter Mike Isaac.

Just ahead of Uber's debut came nationwide strikes by both Uber and Lyft drivers, attempting to raise awareness about low pay and working conditions. The strikes highlighted the regulatory risk both ride-hailing companies face in various markets in the US and, for Uber, around the world.

Uber's IPO also comes at a delicate moment for the stock market, which has remained near record highs even with volatility picking up amid an escalation in trade tensions between the US and China.

A volatile market isn't ideal for IPOs, as it shakes investor confidence and creates an uncertain environment during an important phase for newly minted shares.

Some initial public offerings were delayed earlier this year over the partial US government shutdown and a historically dismal fourth quarter.

Now read more Uber coverage from Markets Insider and Business Insider:

Morgan Stanley, Goldman Sachs, and all 27 other banks working on Uber's mega-IPO

Uber may owe another $128 million to Google for awards related to Uber vs. Waymo

Uber and Lyft drivers explain why they are striking

Join the conversation about this story »

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Actress Olivia Munn made a savvy Uber investment in 2011 but was roasted for a now deleted tweet about it people called 'tone deaf' (UBER)

Fri, 05/10/2019 - 5:02pm

  • The actress Olivia Munn tweeted on Friday that she had invested in Uber in 2011, when it had just $1.8 million in net revenue.
  • "To see how much it's grown has been truly remarkable," she wrote.
  • But many people criticized Munn's tweet, particularly in the wake of the Uber drivers' strike. She later deleted the tweet after the backlash.
  • "We get it, you're rich," one person wrote.
  • Visit Business Insider's homepage for more stories.

The Hollywood star Olivia Munn — famous for stints on "The Daily Show" and "The Newsroom," as well as movies like "X-Men: Apocalypse" and "Magic Mike" — made a savvy investment in Uber in 2011, the actress revealed in a tweet on Friday.

But her tweet, which patted both Uber and herself on the back on its initial-public-offering day, rubbed many people the wrong way, as evidenced by the scorching replies to it. She deleted the tweet later on Friday after the backlash.

"In 2011 I invested in UBER when it had only about 7,000 cars in just a few cities and 1.8 mil in net revenue," Munn wrote in the now deleted tweet. "To see how much it's grown has been truly remarkable. Excited to see all the places @Uber will take us in the future." 

"We get it, you're rich," one person replied. Multiple people called the tweet "tone deaf."

"You really should read up on their hostile work environment, shady business practices & the fact that one of their main 'innovations' is taking a traditional middle class job and turning it into poverty wages," another person replied. On Wednesday, drivers for both Uber and Lyft (which had its IPO earlier this year), engaged in protests and strikes, demanding higher wages, Business Insider's Graham Rapier reported.

In a similar vein, one commenter responded to Munn's reference that Uber had 7,000 in 2011 by saying, "Uber has zero cars. They all belong to the drivers!"

Others were baffled by Munn's inclusion of a picture of the Fearless Girl statue in front of an Uber banner:

"You are abusing the message of that statue," one person wrote. Throughout Uber's existence, it has been the subject of at least 49 scandals, as chronicled by Business Insider's Kate Taylor and Benjamin Goggin. Those have included multiple allegations of sexual harassment.

While some of those who replied to Munn's tweet appeared supportive — one tweeted, "No more DUI's!" — the vast majority reacted negatively.

Still, there can be no doubt that Munn's investment was a financially prudent one. In 2011, Uber was valued at $60 million. Uber debuted as a public company with an initial market cap of $75.5 billion (though it's down a bit since then).

SEE ALSO: Uber and Lyft drivers explain why they are striking

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This Silicon Valley founder went from being 'really broke' to starting a VC fund that's invested $5 million in 100 companies

Fri, 05/10/2019 - 4:45pm

Following is a transcript of the video.

If you were anything but a straight, white man you were honestly not even getting into the room.

I'm Arlan Hamilton, and I'm the founder and managing partner of Backstage Capital.

Backstage Capital has invested $5 million in 100 companies

Backstage Capital is a boutique venture fund that invests in underrepresented founders, and that means that we put $25,000 to $100,000 to work into companies that are startups, mostly tech enabled, across the country. We are different in that we invest in the underrepresented and the underestimated, whereas in most of venture capital, less than 10% of all venture capital funding goes to the very people that we invest in.

Being underrepresented myself has helped me relate to the founders that I'm investing in. It helps me understand part of their journey, you can't understand them all, but as a woman, as a person of color, as an LGBT person, it really helps relate to the founder and to know the different pain points, and the different resources that they may need that's slightly different than what someone else might need.

On the road to entrepreneurship

I grew up in Dallas, Texas with my mom and my brother, Alfred, my mother, Earline. I didn't go to college. I'm a very curious person and I tend to try to learn as much as I can from all sources. It just didn't fit for me, and so I went out and I sought mentorship and other resources in different ways. The life experience that I got and the way that I had to hack my way through things has given me an edge.

When I was a kid I wanted to work in live music as someone on a tour, and actually ended up doing that for quite a long time as an adult. But I never wanted to be a venture capitalist. When I was around 21, I found this really cool Norwegian pop-punk band online. And I wanted to see them play live, so I got in touch with them and asked them if I could book a tour for them so I could see them play. So I booked a tour for them around the country, became their tour manager. A lot happened in between. I ended up taking that information, that knowledge and experience, and working on arena-sized tours for people like Jason Derulo and Toni Braxton.

From the music industry to Silicon Valley

I had been working on these great tours, and I was having the time of my life. It's not a very stable career though, so I was looking at other types of jobs. I was still on the road. I was getting really great at my job I think. And I realized I had been an entrepreneur my whole life, and so the thought crossed my mind about starting my own company, starting my own tech company. And once I did more research about how that worked, I wanted to go all in. But there was not really anyone there for me to reach out to who could understand me as a person, and if they were there I just couldn't find them. That's when I learned that if you were anything but a straight, white man you were honestly not even getting into the room.

Getting the first "yes"

A few years ago I didn't know what a venture capitalist was, but once I learned more about it and understood that the type of capital that venture capitalists put into companies was used for innovation. I knew that the women and people of color and LGBT founders that I knew, and those that I had seen needed to be part of this, and they were being left out at the time. And so it made all the sense in the world to me that that capital needed to go to them, and over time I told people, I wrote about it, I knocked on doors, but no one was really listening to me. So I decided to start a fund on my own and bring to light a lot of these companies that had already been there, had already been gaining traction, but just needed a little bit more of a push when it came to capital.

When I was just starting I had no money, I had no personal money. I was also like really broke and half of the time that I was raising for the first three years, I didn't have a place to live. So I was like bouncing around from different family member's couches, or friend's couches. In some cases less than that. And so my average week would be focusing on that, making sure I was okay, and the other part would be reaching out to a countless number of investors in Silicon Valley that I, and elsewhere, that I would research and learn about, and then try to talk to them on an individual basis.

It took about three years of constantly asking and going around and talking to people, mostly full time, before I got my first "yes." So it took three years to get the first $25,000.

Looking ahead

In five to 10 years I hope that Backstage Capital is obsolete because we are no longer needed. And that people of color and women are not considered underrepresented in tech. I personally hope that I'm still working with founders at the earliest stages. That's where I get most of my energy from and where I'm most excited. And that hopefully I've had some impact.

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PayPal already lost $37 million on the Uber investment it just made as part of the IPO (UBER, PYPL)

Fri, 05/10/2019 - 4:35pm

  • PayPal's $500 million investment in Uber is worth just $462.7 million hours after it was made.
  • PayPal's investment was made concurrent with Uber's initial public offering, which priced at $45 per share last night.
  • In its first day of trading, Uber opened at $42 per share and ultimately closed below that at $41.64 on Friday afternoon.
  • Visit Business Insider's homepage for more stories.

PayPal privately invested $500 million in Uber concurrent with the ride-hailing company's record-breaking initial public offering. Now, four hours after the first trade, PayPal's investment is already in the red.

At market's close on Friday, Uber was worth $41.64 per share, giving PayPal's lot a value of $462.7 million.

PayPal lost $37 million in value in a matter of hours.

Ultimately, how Uber performs over the long term is what matters for PayPal's finances. In addition to the private placement, PayPal and Uber extended their partnership. The companies said in Uber's prospectus that they "intend to explore future commercial payment collaborations, including the development of our digital wallet."

Read more: Salesforce is quietly investing $100 million in Zoom ahead of its big IPO — here are its 5 biggest investments in public companies

But PayPal's investment struggles highlight just how much money is at stake in Uber's IPO, which raised $8.1 billion for the cash-burning company.

At Uber's IPO price of $45 per share, PayPal's $500 million investment garnered the payments company about 11 million shares. But Uber's first trade was just $42 per share, making the shares less valuable right out of the gate.

While there are no guarantees in an IPO, it's uncommon these days for tech companies to open below their IPO price.

Uber's biggest competitor, Lyft, has suffered greatly on the public markets since it started trading on March 28. But even Lyft's first trade of $87.24 was far above its $72 per share IPO price.

Despite PayPal's losses, some recent corporate private placements have already seen major returns.

Salesforce bought $100 million worth of shares of the video-conference company Zoom at the time of its IPO in April. That $100 million investment is now worth almost $221 million.

SEE ALSO: Uber chose the worst possible week to have its IPO, and the bad timing will cost it billions

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One word rescued the stock market from disaster on Friday

Fri, 05/10/2019 - 4:25pm

  • The S&P 500 and other US indices fell sharply early Friday after the US raised the tariffs on $200 billion worth of Chinese goods to 25% from 10%.
  • The stock market started rebounding after Treasury Secretary Steven Mnuchin said trade talks with China were "constructive."
  • The major averages all finished the day higher.
  • Visit Markets Insider's homepage for more stories.

All it took was one word to rescue the stock market from disaster: constructive.

And equities certainly needed saving after President Donald Trump said, ahead of the opening bell, that there was no need to rush trade talks with China. He added that soon another $325 billion worth of Chinese goods would be hit with fresh tariffs.

"Talks with China continue in a very congenial manner - there is absolutely no need to rush - as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products," Trump wrote in a series of tweets early Friday morning. "The process has begun to place additional Tariffs at 25% on the remaining 325 Billion Dollars."

The resulting barrage of early-morning selling pushed the benchmark S&P 500 down by as much as 1.6% before trade talks between the US and China ended for the day. 

That's when Treasury Secretary Steven Mnuchin said the magic word. "They were constructive discussions between both parties, that's all we're going to say," he told CNBC.

That sent the major averages off to the races, with the S&P 500 (+0.37%), the Dow Jones Industrial Average (+0.44%), and the Nasdaq (+0.08%) all eventually erasing their losses. The Dow reversed more than 450 points off its lows. 

While trade talks grabbed all of the early attention, it was the stock-market debut of Uber that garnered all of the attention later in the session. The ride-hailing company made its New York Stock Exchange debut at a price of $42 a share — 6.7% below the $45 where it priced on Thursday evening — before settling at $41.57. Rival Lyft fell more than 7%.  

Elsewhere, Nvidia shed 0.8% amid concerns China could retaliate against the US for its tariff increase. Chipmakers are particularly sensitive to Chinese demand. Rival AMD wiped out early losses and finished higher by more than 2.7%. 

And gaming giant Wynn Resorts lost more than 4.7% after Q1 revenue missed amid a slowdown in VIP gaming in Macau. 

Meanwhile, light selling in the Treasury market ran yields up by as much as 2 basis points. The benchmark 10-year yield was higher by 2.7 bps at 2.467%.

SEE ALSO: Trump's China tariffs could slam American shoppers with an extra $800 in costs a year

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Trump's negotiating team just gave China a trade-war deadline that could have widespread consequences for the US economy

Fri, 05/10/2019 - 4:11pm

  • The Trump administration reportedly doubled down on threats to significantly expand the trade war with China on Friday. 
  • US officials told their Chinese counterparts that steep tariffs would be slapped on all remaining Chinese imports if a trade deal wasn't reached within three to four weeks, according to Bloomberg.
  • The most recent round of negotiations underscores a high level of uncertainty around the timeline and enforceability of a potential deal that would end the trade war, which has lasted more than a year.
  • Visit Markets Insider's homepage for more stories

Trade negotiations between Washington and Beijing appeared to end with neither a deal nor a breakdown on Friday, casting another layer of uncertainty on the world's largest economies as further escalations loomed.

While recently renewed tensions failed to upend negotiations, the Trump administration doubled down on threats to significantly expand the trade war.

US officials told their Chinese counterparts that steep tariffs would be slapped on all remaining Chinese imports if a trade deal wasn't reached within three to four weeks, according to Bloomberg. President Donald Trump said earlier this week that the US had begun preparing those tariffs, which would raise the import prices of roughly $325 billion worth of products.

"The relationship between President Xi and myself remains a very strong one, and conversations into the future will continue," Trump said in a tweet after trade talks wrapped up. "In the meantime, the United States has imposed Tariffs on China, which may or may not be removed depending on what happens with respect to future negotiations!"

Just hours before Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer met with Vice Premier Liu He in Washington, the US had increased the tariff rate on $200 billion worth of Chinese products in a move meant to penalize Beijing for making reversals on past trade commitments.

That escalation came as a surprise to many American businesses and consumers who had thought an agreement might be reached this week. Brian Keare, the field chief information officer at Incorta, said it left companies with 72 hours notice on large-scale shipping decisions.

"Thousands of US companies are affected, and some had millions of dollars on the line," said Keare, who advises companies like Broadcom, Starbucks, and Apple. "You literally had to make split-second decisions about your logistics and supply chain if you wanted to make sound financial decisions."

The most recent round of negotiations underscores a high level of uncertainty around the timeline and enforceability of a potential deal that would end the trade war, which has lasted more than a year.

"I do think it will be a challenge for China to give in to the US demands in the current atmosphere, as China will not want to look weak on the world stage," said Simon Lester, a trade-policy analyst at the libertarian Cato Institute.

SEE ALSO: IT'S OFFICIAL: Trump ramps up tariffs on China, escalating the high-stakes trade war

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