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Goldman Sachs studied a century of history to nail down the 5 biggest triggers of recessions — and concluded that 2 pose risks we've never seen before

Sun, 01/05/2020 - 6:05am  |  Clusterstock

  • Two of the five triggers of all US recessions over the past century pose new dangers to the US economy, according new research from Goldman Sachs economists. 
  • They ultimately concluded that while the odds a so-called soft landing are better than widely thought, new risks could crop up.
  • Click here for more BI Prime stories

Investors placed the longest economic expansion in history on death watch last summer when recession fears ran rampant. 

Although their concerns have receded and the stock market has rallied forcefully into a new year, recession remains a top concern

There's some good news amid the gloom. Since World War II, the length of time the economy has spent in a recession has been shrinking, Goldman Sachs data shows.

The fact that we're still experiencing a record-long expansion is proof that the economy has become more durable. Also, the Federal Reserve's emergency support after the financial crisis persists to this day and is keeping both financial markets and economic data in good shape. 

To explain this resilience even further, Goldman economists dug into the past century of recessions to unearth the most common catalysts.

Their analysis turned up five major factors which can be split up as follows: the first three have lost their potency over time and do not pose any imminent threat. However, there are brand new risks embedded in the final two. 

Here they are, complete with Goldman's assessment of the ongoing threat level: 

1. Industrial shocks and inventory imbalances

The manufacturing sector's risk to the economy has diminished since the 1980s. Thanks to improvements in technology and smarter forecasting techniques, manufacturers have become better at forestalling shocks to their output. 

In addition, the manufacturing sector now contributes far less to economic growth than services, which adds about two-thirds. 

2. Oil price shocks

The US first sunk into a recession on account of an oil spike in 1973.

But since then, price fluctuations have been having a diminishing impact on how the economy fares. The shale boom of the 2010s was partly responsible for this cushioning, as investment in the infrastructure used to extract and refine oil offset the hit to consumption that came about because of higher prices.

3. Aggressive rate hikes  

The Fed has historically hastened recessions by hiking interest rates too quickly in the face of inflation.

"The most important structural change is the improvement in monetary policy that has flattened the Phillips curve and firmly anchored inflation expectations on the Fed's 2% target," said Jan Hatzius, Goldman's chief economist, in a note. 

This means the Fed can show more restraint even when inflation pressures are bubbling.

4. Financial imbalances and asset price crashes

The combo of excessive subprime lending and a housing bubble proved lethal and led to the Great Recession. 

Despite the clean-up efforts of banks and regulators after the recession, financial risk remains "an important threat in principle," according to Hatzius. 

He cited two rising trends to back up this assertion. First, the share of gross domestic product that is derived from financial assets is near historic highs; in other words, the financial sector matters a lot more to the economy. Secondly, there is a higher correlation between US and other developed-market stock returns, meaning that the domestic market is more sensitive to foreign shocks.

Hatzius sees the risks stemming from these two trends as lying dormant for now — but they will be new when they arise.

5. Fiscal tightening 

Herein lies the second and final source of new risks on Hatzius' radar: optimum decisions on tax policy and government spending — which make up fiscal policy — could be jeopardized because Washington is "plagued by dysfunction." 

Hatzius added: "This dysfunction has created new economic risks arising from events such as shutdowns and debt ceiling fights that can have substantial effects on financial conditions and growth."

The hyper partisanship exists at a time of soaring government deficits. The implication is that even if the right fiscal policy is implemented, it may prove to be less effective at averting a recession.

SEE ALSO: JPMorgan's equity chief told us why ESG investing is 'a bubble in the making' — and explained how to avoid the reckoning when it bursts

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6 things most people don't think to shop for that could save a lot of money

Sat, 01/04/2020 - 2:27pm  |  Clusterstock

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.

  • Everyone comparison shops for phones and plane tickets and cars — but what about savings accounts, investment accounts, and financial planners?
  • A little comparison shopping for important products and services could save you significant cash in the long run.
  • Use a free tool to find extra money you could be losing to investment fees or find the right financial planner to help trim your budget and maximize your returns.  
  • Read more personal finance coverage. 

From investment account fees to college costs, we're always looking for ways to save. 

But, saving doesn't always mean cutting corners. Sometimes, all you need to do is shop around. Here are six things to shop for that could ultimately save you a lot of money. 

1. A higher interest rate on your savings account

If you're keeping the bulk of your money in a checking account or a traditional savings account that doesn't earn much interest, you might be missing out on savings. Shopping around for a high-yield savings account could help your savings grow faster. 

These accounts aren't much different from the traditional savings account, but they do earn more interest, meaning you save more money in the long run. Easy to set up and simple to use, they can earn up to 20 times more interest than a typical savings account. 

2. An investment account with lower fees

Investment accounts, including your retirement account, might be charging fees you didn't even know about. While they might be small, even less than 1%, they could really add up over time.

There are a few ways to see if your investment accounts are charging you fees, and how much they are. Personal Capital's online retirement analyzer tool is incredibly easy — it can show you exactly what you're paying in fees, and how much that could add up to in the future. Online tool Blooom can shine a light on your 401(k) fees and recommend lower-fee alternatives. Both tools are completely free, although you have the option to sign up for paid services as well.

You might just be able to put some of those fees back into your pocket. Business Insider writer Eric Rosenberg saved about $300 per year in fees on his accounts by running them through Personal Capital. Over time, that could add up to an extra $50,000 in his account, assuming they hold a steady 10% return for 30 years.

3. Life insurance

Shopping for life can save you money in two ways: You can lock in a low monthly premium for term life insurance now that lasts the life of your policy and you can save your family a significant amount of money if you die during that term.

As Kelly McClure writes for Business Insider, life insurance saved her money on covering her father's funeral costs, settling the financial worries and allowing her to save money for other financial goals. "I found that the insurance payout would not only cover the complete cost of his burial, but would also provide me with a remainder that I later used to buy my first home," she writes.

And Samantha Chavarria writes for Business Insider that her father passing away without life insurance made it harder. "Having to beg and crowdsource in order to bury my dad added a layer of tension I wasn't expecting," she writes. 

Life insurance does a lot more than just pay for funerals. And, the younger you are when you get life insurance, the lower your monthly premium — and with term insurance, that premium is fixed, so it will remain the same for your entire term.

4. A good financial planner

Finding a good fee-only financial planner can be a great way to get objective money advice, set financial goals, and make them happen. 

"An adviser or financial planner is providing the accountability that a lot of us need, whether its spending less, or investing," Kaya Ladejobi, a New York City-based financial planner, tells Business Insider. "Then, there's the coaching and the objectivity that comes with it," she adds. "They can help you do a better job with the resources you have." 

In addition to the accountability factor, they can also help you see ways to grow your money. "If you're thinking about it in the power of compounding, one action that you take with your financial planner can turn into hundreds, thousands, or even millions of dollars in your lifetime," says Ladejobi.

SmartAsset's free tool can help find a financial planner near you »

5. Car insurance

If you've never shopped around for car insurance, you might be paying more than you need to for coverage. 

Every car insurance company looks at personal factors about you differently, from your driving history to your credit score. By getting quotes from several companies, you can make sure you're getting the best coverage possible, and not paying any more than necessary. 

/* Business Insider / Auto Insurance Content Pages */ var MediaAlphaExchange = {    "data": {       "zip": "auto"    },    "placement_id": "RxLRBKtcQejwbKRhebUT0f87Cp5b7w",    "sub_1": "shop-insurance-advisers-savings-accounts-save-money",    "type": "ad_unit",    "ua_class": "auto",    "version": 17 }; 6. Disability insurance

Even for someone who's young and healthy, disability insurance is necessary for anyone who relies on an earned income to live. After a health scare and multiple surgeries, writer Zina Kumok decided to make the jump to get a long-term disability policy.

"The policy costs $21.59 a month and will pay out $3,000 a month in benefits. This will cover all the major essentials, including my mortgage, car payment, groceries, utilities, car insurance, and gas," she writes for Business Insider. Having disability insurance could prevent debt and save money long-term.

While disability insurance is often offered through an employer, it's possible to get a policy even if it isn't, or if you're self-employed. There are two main types, long-term and short-term, and which policy you need is up to you and your budget. 

Shop for disability insurance at Policygenius »

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NOW WATCH: A 45-year-long study discovered trends in successful hyper-intelligent children

Online lender Earnest offers low-interest personal loans, and looks at more than just your credit score when you apply

Sat, 01/04/2020 - 10:48am  |  Clusterstock

One thing that's certain about adult life is that it's expensive. Paying rent, insurance, food, transportation, technology, and more all add up fast. That's not including the big life stuff, like weddings, funerals, moving, and home improvements. 

Given the cost of managing everything in your life, let's face it, sometimes you just need extra money. You need extra money and maybe you can't wait to save and need it now. So what are you to do? 

A flexible and low-cost option (compared, for example, to credit cards) is taking out a personal loan. Unlike student loans for school or an auto loan for a car, personal loans can be used for personal reasons. 

If you need money for debt consolidation, medical bills, starting a small business, moving, etc., a personal loan can help bridge the funding gap. One lender that offers personal loans is Earnest. 

About Earnest

Earnest is an online lender that is best known for its student loan refinancing product. But the company offers personal loans as well. 

Personal loans are unsecured loans that are paid back on a fixed repayment term, with fixed monthly payments. Unsecured means that you don't have any collateral, like a home or car, to back the loan. 

As it turns out, Earnest recently revamped its personal loan offerings to make them even more borrower-friendly. 

According to the company's website, "Taking all our learnings from the last five years and the hundreds of thousands of applications that we have received, in 2019 we are refining our personal loans to create an even better way to borrow." 

The company announced lower fixed rates starting at 5.99% APR, and said it has streamlined the application process as well as the time it takes for a decision to be made. 

Interest rates, fees, etc. 

Earnest offers competitive rates compared to other online lenders. Earnest's fixed personal loan interest rates start at 5.99% APR, and the highest interest rate is 17.24% APR. 

Apply for an Earnest personal loan today and see if you qualify for a low interest rate »

Compare that to Avant, which has an APR range of 9.95% to 35.99% for personal loans and charges an administrative fee of up to 4.75%. 

The interest rate you get approved for on an Earnest personal loan will depend on your credit as well as your repayment term. 

From the chart above, you can see the lowest rate for a hypothetical $10,000 loan is reserved for the shortest repayment term of three years. On the other hand, the highest rate is for the longest repayment term of five years. 

Your interest rate affects the total cost of the loan, so being able to score a low rate and pay off your debt in a matter of years can result in major cost savings. 

There are no fees associated with Earnest personal loans and you can borrow between $5,000 to $75,000. Compare that to Avant, which allows borrowers to get loans between $2,000 to $35,000. 

If you need more money, Earnest is a good option. On the other hand, if you don't need that much, Avant might be the better option — Earnest requires borrowers to take a minimum of $5,000.

Pros and cons 

Before applying for a personal loan with Earnest, consider the pros and cons first. As noted above, Earnest offers lower rates than some of its counterparts in the personal loan marketplace. But what really sets it apart is that it reviews more than just your FICO credit score, unlike most lenders. 

Earnest takes a more comprehensive approach, reviewing things like your education, savings, and earning potential. That way, they're looking at the whole you and not just a three-digit number that's supposed to inform your whole financial history. Having a fuller picture of your financial life and financial history, Earnest can offer you the best rate for your situation. 

You'll also receive a decision within five to 10 days, according to the Earnest website. After accepting the terms of the loan, you'll get the money within one to two business days. 

Additionally, Earnest claims that you'll always have access to a person if you're in need of help. If you've ever searched a website looking for a phone number or desperately wanted help from someone to walk you through a problem, this is a perk. 

One of the cons of using Earnest is that there is a $5,000 minimum, so if you just need $2,000 to fix your car, it's a no-go. 

Also, if you need the money really fast, the five to 10 day turnaround can be tough. For example, Wells Fargo says you could receive a decision on a personal loan in a couple of minutes, depending on certain factors. 

How to apply for an Earnest personal loan

If you go to the Earnest website, a few clicks will get you a quote in two minutes.

You'll then need to input some personal information, such as your full name, address, annual income, as well as your Social Security Number. 

After that, you can see the rate you're approved for. If approved and you think the rate is competitive, you can move forward with the application to get an Earnest personal loan. 

According to the fine print on Earnest's website, "When you apply for a loan, we will ask for your name, address, date of birth, and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents."

Once you receive a decision within the five to 10 day timeframe, you should expect your funds within one to two days. When you have the funds, you can use them as you please for debt consolidation, home improvements, car repair, etc. 

After that, you'll want to manage your monthly payments that will be based on your repayment term. You want to pay back your personal loan and keep your credit in shape. 

A personal loan can help you get the money you need but it can also be a slippery slope that leads to even more debt. Make sure getting a personal loan makes sense for your financial situation and all other options are exhausted before taking out a personal loan. 

A personal loan can help you pay off high-interest credit card debt faster. Apply for an Earnest personal loan today »

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I opened a high-yield savings account with Ally, and loved the high interest and low fees so much I quickly opened another

Sat, 01/04/2020 - 10:45am  |  Clusterstock

  • Ally Bank offers consistently above-average interest rates on its saving accounts, along with no minimum balance and no recurring fees.
  • You can open more than one savings account at Ally, which is great for planning for goals and long-term savings needs. I opened two: one for my emergency fund, and another for my property taxes.
  • I even told my sister to open one, and she called me the next month, thrilled to see the interest deposited in her account.
  • See Business Insider's picks for the best high-yield savings accounts »

For most of my savings and investments, I'm a big fan of keeping things simple. Fewer accounts means less to monitor, less to worry about, and less to check up on during financial reviews. The one place where I add extra accounts on purpose is savings.

I have a few different savings accounts for different goals, like an emergency fund and saving for property taxes and insurance. I decided the best place for my multiple accounts was Ally, the online bank known for its high-yield savings. Here's why.

Ally's savings accounts are high-interest and no-fee

The big brick and mortar banks with locations around the US are popular for the ability to walk into a bank and speak with someone in person, but that doesn't mean they are the best places to keep your money. Traditional banks are notorious for high fees, low interest rates, and poor customer service.

The first benefit you may notice at Ally Bank is that its accounts don't charge any recurring fees and there are no minimum balances or activity requirements to avoid fees. You'll only run into fees for less-common activities like returned deposited items, overdrafts, and outgoing wire transfers.

Ally's interest rates always tend to rank among the best in the US. While its rates have trended downward over the last year or so, that's the case with nearly all banks during a declining interest rate period. Blame the Federal Reserve and Washington politicians for rate declines right now — not the bank.

The FDIC says the current average savings account interest rate is 0.09% nationwide. The current rate at Ally, 1.60% as of January 3, is nearly 18 times the national average. On a $1,000 balance, you would earn less than a dollar in a year at 0.09%. At 1.60%, you would bring in $16.12. That's not enough to get rich, but it's a lot more than you get with a typical account.

I liked my first account so much I opened a second

I like Ally Bank savings accounts so much that one isn't enough for me. I have two of them! Each is used for a unique purpose and a different part of my financial plan.

My first Ally high-yield savings account is for emergency fund savings. Experts suggest you should keep at least three to six months of expenses as a minimum savings cushion, and I keep a big chunk of mine at Ally. With FDIC insurance, a good interest rate, and no fees, my cash can sit there with no worries, just in case I ever need to cover an unexpected home or auto repair or to make up for an unexpected loss of income.

My second Ally savings account is dedicated just to housing costs. I don't use an escrow account with my mortgage, so I have to pay property taxes and insurance on my own. That adds up to about $13,000 per year for my California home.

I move $250 every Friday from my checking to my Ally savings account to cover these costs. This adds up to the roughly $13,000 I need for the three big payments — two for property taxes and one for insurance. I can just grab the cash from savings instead of worrying about getting enough together in my checking account to pay $4,000 to $5,000 all at once. And I earn interest along the way.

The wrong bank can be a costly mistake

My sister kept her savings at one of the biggest banks in the US through college and medical school, but after a chat with me, she decided to open her own Ally savings account, too. She called me the next month excited to see about $20 in interest deposited into her account. That was about 20 times more than she got before.

Over the course of a year, that was the difference in about $240 in interest versus less than $15. That's enough for a plane ticket, a budget weekend getaway, a few very nice meals, or just more savings in case you ever need them. There's nothing wrong with keeping a little more cash on hand than you think you need.

With financial accounts, the status quo is always the easiest choice. But just letting things sit in the bank account you set up with your parents when you were a kid is likely not the best option for your money.

It's worth taking a little more time to make sure your money is in the right place and create accounts that line up with your needs. I'm so glad I have these two accounts up and running.

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NOW WATCH: 5 things about the NFL that football fans may not know

How to consolidate credit card debt to streamline your payments and lower your interest rate

Sat, 01/04/2020 - 10:34am  |  Clusterstock

  • Consolidating credit card debt means taking out one new loan to replace multiple loans, and consolidate them into a single monthly payment that's preferably at a lower interest rate than the original loans.
  • Two of the most popular options to consolidate credit card debt are transferring the debt to a balance transfer credit card or taking out a personal loan.
  • A balance transfer card can be a good idea if the transfer fee is worth it, and if you know you'll be able to pay all or most of your debt before the introductory APR expires.
  • A personal loan could be a better choice if you need more time to pay, and if you can get a lower interest rate than you currently have on your debt.
  • Note that consolidating your credit card debt doesn't mean you're debt-free. You're taking out a new debt to replace your old ones, and you're still responsible for paying it back.
  • Read more personal finance coverage.

When you have credit card debt on multiple cards, from more than one lender, it can feel like a scramble to keep up with your payments every month.

Credit card consolidation can be an option to reduce the stress of multiple loans. Debt consolidation is the process of combining your debts from multiple lenders into a single loan, typically at a lower interest rate. Essentially, you ask a lender — sometimes a credit card, sometimes a bank — to buy out your multiple loans, and you agree to pay back the lender according to its terms.

The primary benefit to debt consolidation is that after consolidating, you only have one payment to make each month instead of tracking down the information for a handful of lenders. Plus, you might be able to consolidate your debt for a lower interest rate than the original loans (or at least some of them) and ultimately save more on interest payments over time.

How to consolidate credit card debt 1. Know the numbers

If you want to consolidate credit card debt, you need to know the numbers. How much credit card debt do you actually have? How many credit cards have a balance? Make a list of your balances, your interest rates, and your lenders.

2. Review your options

There are various options you can pursue for credit card consolidation, but the two most popular options are: 

Open a balance transfer card

A balance transfer card allows borrowers to transfer their balances onto a new credit card, typically with a 0% interest rate for an introductory period of time. If you're able to pay off your debt within the promotional period at a 0% interest rate, you have the potential to save a lot of money on interest.

It's important to note that many balance transfer cards have balance transfer fees between 3% and 5%. Before transferring a balance, calculate how much you'll spend on the fee and make sure it's worth it. You'll also want to read the fine print to know exactly how long the promotional period lasts, and have a strategy to pay it all or most of your debt during this time. 

Take out a personal loan

Another option for credit card consolidation is to take out a personal loan. You can get a personal loan at a local credit union or financial institution as well as online. Personal loans can be a good credit card consolidation solution as it may offer a lower interest rate than your credit cards.

The caveat here is that you must have good credit to score a better rate. Read the terms and conditions and understand what fees may be involved when taking out a personal loan. 

Look at the APR, repayment term, monthly payment, promotional period and the terms and conditions. Reviewing these side-by-side can help you decide which option will be a better fit for you. 

How much would you pay for a personal loan? Find out with these options from our partners:

3. Apply for credit card consolidation 

Once you've decided on a credit card consolidation option, it's time to apply. If you're going with the balance transfer card route, apply directly with the credit card company. You'll need to provide your personal info and provide info about the credit cards you're consolidating. Take note of the promotional period and what the new APR will be once the promotional rate is over. 

If you're going the personal loan route, scout lenders in your community and online through a loan comparison site like Credible. Make sure you can get approved for a loan that is enough to cover your debt and that you score a lower interest rate. You'll need to provide your personal information as well as your financial info. 

For both credit card consolidation options, your credit will come into play and determine your approval as well as your interest rate. You want to make sure that credit card consolidation can save you money and make payments more manageable. 

4. Address the root cause of your debt

When you're stuck in debt and managing various loans, it's overwhelming. Credit card consolidation can seem like a great solution to your problem. While credit card consolidation can help streamline your payments and potentially save you money on interest, if you're not careful it can lead to more debt. 

The fact is you're taking out another credit card or loan. If you don't have a strategy to pay it back, you'll just end up in more debt. The best strategy to pay back your loans is up you to, but some people have taken on side hustles to generate more money to put towards debt, made a point of paying more than the minimum on their monthly payments, used free websites and apps to keep track of their progress, and instituted the debt avalanche or debt snowball strategies.

5. Pay down the new loan 

When all of your loans are paid off, it's time to pay down the new loan. You'll want to make payments on your current loans until the balance transfer comes through or until the personal loan pays off all of your current debts. 

Then, it's time to conquer your balance transfer credit card or personal loan. Make payments each month and if possible, pay more than the minimum. If you have a balance transfer card, know the promotional period and work to pay off your balance before the period ends. 

Related coverage from How to Do Everything: Money

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Traders just piled the most money since 2016 into a popular emerging-markets fund — and it's a wager that Trump's phase-one trade deal will boost those stocks

Sat, 01/04/2020 - 9:05am  |  Clusterstock

  • Traders piled in to a popular emerging markets fund on Thursday as they bet on the phase-one trade deal boosting the sector's stocks, Bloomberg reported.
  • Investors added $979 million into BlackRock's iShares MSCI Emerging Markets exchange-traded fund on January 2, the largest one-day inflow for the ETF since 2016.
  • The influx arrived just hours before news broke that a US airstrike killed a top Iranian general and ratcheted up tensions between the two countries.
  • Emerging-markets firms are particularly exposed to trade war developments, as the nations they operate in often have less policy leverage to counteract tariff escalations.
  • Watch EEM trade live here.

Traders rushed into a popular emerging markets fund on Thursday, betting that the upcoming US-China trade agreement will boost the sector's stocks, Bloomberg reported.

Investors piled $979 million into BlackRock's iShares MSCI Emerging Markets exchange-traded fund on January 2, the biggest one-day inflow for the ETF since 2016, according to Bloomberg data. 

The addition arrived just hours before news broke that a US airstrike ordered by President Trump killed a top Iranian general and ratcheted up tensions between the two nations. The assassination dragged global stocks lower and boosted safe-haven assets like gold as traders fled market volatility.

The ETF, which trades under the ticker EEM, fell as much as 1.8% Friday. The fund surged about 2.1% on Thursday, pushed higher by the record investor interest.

Traders are encouraged that the preliminary deal will remove trade-war hurdles for emerging market stocks. Trump recently announced that the deal would be signed at the White House on January 15 and that he would later travel to Beijing to discuss a follow-up agreement.

"Confidence is growing," Mohit Bajaj, director of ETFs for WallachBeth Capital, told Bloomberg. "We are seeing optimism in China from trade deal anticipation."

Investors fled emerging-market stocks throughout the second half of 2019, as trade war escalations promised to roil the sector and accusations of currency manipulation in China brought new stakes to the conflict. Developing nations with less leverage in trade negotiations were particularly exposed to the trade war, and emerging-market equities typically surged when news of a trade agreement broke.

"If you also look at times when it feels that trade may be resolved, or trade issues may be improved, you notice how sharply emerging markets rally," Rashmi Gupta, a money manager at JPMorgan Chase Bank in New York, told Markets Insider in June.

The ETF traded at $44.99 as of 3:35 p.m. ET Friday.

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

'Likely just the beginning': Here's what 6 experts are saying about what Trump's deadly Iran strike means for already shaken markets

Trump's tariffs are driving job losses and production cost hikes, the Fed says

In 2019, activists and stock-pickers were hot — but Ray Dalio made a rare stumble and short-sellers got crushed

Join the conversation about this story »

NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

A DevOps startup from Paris called raised $34 million to 'clone' and test apps. Here's the pitch deck that hooked investors.

Sat, 01/04/2020 - 9:00am  |  Clusterstock

  • The startup creates software that helps developers "clone" applications, allowing them to test the application they're building before they release their code. 
  • is now focused on targeting enterprise customers that need to manage large fleets of websites and have the goal of hitting $100 million in revenue in the next three years.
  • Business Insider obtained the pitch deck used to raise its series C round of $34 million and for sales presentations, although it has been modified to remove confidential information.
  • Click here to read more stories from BI Prime

When first launched in Paris in 2015, the team dove into two years of research and development, heads-down in its vision of cloning applications. 

The team believed that cloning applications can help developers easily test the applications and modify features without messing up the original code. Once it's ready, they can then release their code. 

"It basically took us two years to get there. It took us two years to be able to do that cloning at scale," co-founder and CEO Fred Plais told Business Insider. "It was very successful because we were able to do it in less than 30 seconds."

Since then, this tool has proven its worth with developers, Plais says. As sales ramped up and the business grew quickly, the company decided to fundraise. It raised its most recent round in 2018, when announced that May that it closed a series C round of $34 million – three years after its product first launched. 

Today, the has about 170 people, and it's used by customers like Johnson & Johnson, Mercedes-Benz, and the gaming startup Unity. In total, it has raised $46.87 million.

"It's actually incredibly powerful because you can really see what you're doing," Plais said. "It's a strong product that was built on something very original. No one had that cloning ability. That was unique."

Business Insider obtained the pitch deck that used to raise its series C, although it was amended to remove confidential information. It has also been used for sales presentations. 

One important reason his company was able to raise money was because of the team, Plais says. Also, when presenting this pitch deck, Plais says that VCs thought the company had "a compelling story and a compelling business."

"We have a team that was very complimentary," Plais said. "We have business people, technical people, and the experience of working together as well. This is something VCs love to see. Founders get along well together. These are really the ingredients VCs look for. They would be looking for the right team and the proof points of a product market fit."

Since raising the funding, Plais says the company has refined its strategy on who is a good fit for its product. Over the years, it has started focusing on targeting enterprise companies that may need to manage several websites at once. For example, consumer goods companies may need to manage multiple websites for multiple brands. 

"What has become obvious for us is we are very much a product that starts with developers and is very useful at scale for enterprise companies," Plais said. "That was not something that was completely obvious in the first years of the company. The bigger the team, the more applications they manage, the more benefits they get out of that form."

Over the past five years, Plais says has managed to become credible among enterprise customers. In the next three years, it has the goal of hitting $100 million in revenue. 

"We are recruiting some large accounts," Plais said. "That's the thing we're most proud about."

Here's the pitch deck used to help raise $34 million in its most recent round:

SEE ALSO: 47 enterprise startups to bet your career on in 2020

Hedge funds are making most of their money by piling into no-brainer wins like Apple and Amazon — and that's fueling investor fears about crowded trades

Sat, 01/04/2020 - 8:54am  |  Clusterstock

  • There are fewer public companies to invest in, and hedge funds have been desperate to match the surging markets, forcing many managers into the same trades and stocks. 
  • In the 2010s, the stock that generated the most alpha for hedge funds was Apple, according to Novus, a portfolio-analytics company. Other well-known tech names like Amazon, Facebook, Netflix, and Microsoft were among the top 10. 
  • Investors increasingly list crowding as a concern and are fearful of paying top-quartile fees for returns that match the rest of the industry's. 
  • Click here for more BI Prime stories.

The hedge-fund trades of lore — like George Soros' big bet against the pound or John Paulson's wager against US housing  — were moves that no one saw coming and examples of the cunning instinct of an expert of the markets. 

These days, though, the stock-market moves making the most money for hedge funds are ones that don't require a Wharton degree or years of experience deciphering balance sheets.

Apple has been the stock that has generated the most alpha for hedge funds in five of the past 10 years, including 2019, according to Novus, a portfolio-analytics company.

Amazon was the stock that produced the most alpha for managers in 2015 and also the third-best stock pick for the decade by hedge funds. The top pick was Apple, and Facebook, Netflix, and Microsoft were among the top 10.

It's not just that these companies grew rapidly over the past 10 years, benefiting all shareholders. Hedge funds lost their touch in finding little-known companies set to explode, according to Novus data.

On average, funds lost money on trades in companies with market caps below $2 billion over the past decade.

"We can see that stock-picking success has a relatively proportionate relationship to market cap," a Novus blog post says.

Hedge funds, which ended the decade with another year of outflows and big-name closures, have struggled to beat the surging market for years now, and while the industry's high fees steadily tick down, they're still expensive compared with cheap index funds.

Just to keep pace, hedge funds have piled into some of the biggest names in technology, canceling out their advantages over one another.

JPMorgan's survey of more than 200 institutional investors from last year found that half of the respondents listed crowding as their primary concern, with 82% blaming "limited opportunities" for the industry's recent underperformance. 

The limited-opportunity set is struggling to expand. The private markets are flush with cash — including from some of the same hedge funds that are struggling to break free in the public markets — and unicorns with no plan for turning a profit anytime soon are not interested in putting up with the scrutiny that weighed on shares of Uber and Lyft and derailed WeWork's initial public offering entirely. 

Hedge funds that have been riding the momentum trades in tech and telecommunications for years are exposed to a market reversion or a quick unwinding of trades by quants that slams the sector.

September had big-name managers like Coatue, Lone Pine, and Winton Group losing big in a matter of days because of a drop in momentum stocks. 

Still, one discretionary manager told Business Insider, "you see performance-chasing in places that have been successful" because people both like the companies and need to keep investors happy. Warren Buffett even increased his stake in Apple in the third quarter of 2019. 

"I just wonder whether everyone stays the course or people get scared out of some of these more consensus positions," the manager told Business Insider. 

Still, the days of uncovering a small gem of a company trading for less than what it is worth — a value investing technique that money managers have ridden to riches for decades — may not last for much longer.

Stephen Mandel Jr.'s Lone Pine Capital told investors that "structural changes in the economy" brought on by technology might make some companies appear like a good investment, even when their time has passed. 

"The backward-looking nature of factor investing thus overstates the value of 'value.' Past is not prologue," the letter reads. The firm said it took advantage of the momentum slide in September to buy more of a favorite name: Netflix. 

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Making sense of the fractional trading craze; Goldman Sachs is hiring for an alts storefront; robo-advisers are in a tricky spot

Sat, 01/04/2020 - 8:28am  |  Clusterstock


Hello readers — Happy New Year! 

Fractional trading is something we'll be hearing a lot about in 2020. After this fall's broker wars, $0 commissions for stocks and ETFs are pretty much a given, and fractional shares have emerged as the next battleground. Robinhood is planning to roll it out, Charles Schwab is reported to be thinking about it, and even lending app MoneyLion is looking to jump in

Rebecca Ungarino and Dan DeFrancesco wanted to learn why firms in the fiercely competitive discount broker space are suddenly making a lot of noise about "democratizing" trading by letting investors buy slices of shares (there's also a lot of pizza-related marketing going on), and it turns out there's much more to the story. Read more about how the new wave of fractional trading will work, and what's in it for the brokerages.

Casey Sullivan wrote last month about how Hollywood private-equity mogul Bill McGlashan is fighting charges in the college admissions scandal, and wanted to learn more about John Hueston — the lawyer defending the ex-TPG exec. Casey talked with Hueston's colleagues and friends about how the one-time Enron prosecutor turned into a must-have fixer for the rich and powerful.

Dakin Campbell learned that Goldman Sachs plans to add people to a 30-person team helping clients better understand — and put money into — a suite of alternative investments managed by the bank. Investor demand for alternatives like private equity and real estate has surged, and managing those kinds of investments happens to be a business that Goldman is looking to grow. But until now, Goldman was lacking a dedicated team to help clients navigate all the strategies it had on offer. 

We also had a pair of stories that show how buzzy startup robo-advisers are starting to find themselves in a tricky spot. Dan talked to Jason Gurandiano, global head of fintech investment banking at RBC, about the IPO and M&A prospects for standalone robos. While they're sitting pretty on VC cash, that has made them fiercely independent when they may be better served by joining forces— and they could be too richly valued versus the assets they have actually amassed for a strategic buyer or public investors to be interested. 

Robo startup SigFig has inked some big deals white-labeling technology for wealth giants including UBS and Wells Fargo. But, as Rebecca reported, it had recently cut about 10% of its workforce and seen departures in top roles including its head of wealth management. And this week, we reported that another senior leader has left — marking at least the third to exit since August.

More long reads below, including the hot and not hedge funds of 2019, and a deep dive on how Ally Bank is embracing fintech partnerships over the build-it-yourself approach. 

Have a great weekend, 


SoftBank is all over the biggest real-estate tech funding rounds 

2019 was the biggest year for real-estate technology funding yet.

Oyo Hotels is one of four companies on the top-10 list as a result of a SoftBank funding round. It is joined by CompassOpendoor and WeWork; each of the four companies representing one of the major categories on the list.

Expectations for continued funding growth in the broad space are high. As we wrote in October, when CB Insights counted a record $24.6 billion in funding through the third quarter of this year, it also predicted category winners would begin to break out in 2020, and that the number of funding rounds and the sizes of deals would continue to increase.

But the biggest dollars have, so far, avoided the cutting-edge of real estate technology in construction and AI. 


In 2019, activists and stock pickers were hot — but Ray Dalio made a rare stumble and short sellers got crushed

Big names closed shop. Billions were pulled out of the industry. Fees continued to drop. 

But 2019 wasn't all bad for hedge-fund managers.  Once embattled stock pickers like Bill Ackman and David Einhorn had bounce-back years, with Ackman posting record returns.

Activists like Third Point, Elliott, and Starboard Value saw big campaigns go their way. And Steve Cohen's first full year of trading after his ban from regulators beat several rivals — and the billionaire is set to buy his favorite baseball team. That said, there were funds that slipped and stumbled.


Ally's head of strategy explains why one of the oldest digital banks is embracing fintech partnerships instead of building its own tech

We spoke to Dinesh Chopra, Ally's head of strategy, about his outlook on M&A, partnering with other fintechs, and the Ally's venture investing. In April, Ally announced it had teamed up with mortgage startup Ally's venture arm also invested in Better's Series C fundraising round.

A bank can expand its product lineup in a few ways. It can build in-house, buy a company that has already built that product, or partner with a fintech. "We as a company wrestle with that decision on a day-to-day basis," Chopra said. 


Hedge funds are making most of their money by crowding into no-brainer wins like Apple and Amazon — and it's another reason for investors to question hefty fees

The hedge-fund trades of lore — like George Soros' big bet against the pound or John Paulson's wager against US housing  — were moves that no one saw coming and examples of the cunning instinct of an expert of the markets. 

These days, though, the stock-market moves making the most money for hedge funds are ones that don't require a Wharton degree or years of experience deciphering balance sheets.

Apple has been the stock that has generated the most alpha for hedge funds in five of the past 10 years. Amazon was the stock that produced the most alpha for managers in 2015 and also the third-best stock pick for the decade by hedge funds. 

But it's not just that these companies grew rapidly over the past 10 years, benefiting all shareholders. Hedge funds have meanwhile lost their touch in finding little-known companies set to explode.


Join the conversation about this story »

NOW WATCH: WeWork went from a $47 billion valuation to a failed IPO. Here's how the company makes money.

Neobanks like Chime are attracting billions in VC cash, but unlike most retail banks they don't do any lending. Here's how they've built a business on referrals and debit card swipes.

Sat, 01/04/2020 - 8:00am  |  Clusterstock

  • The traditional banking business model is pretty simple. Banks take in deposits, then lend that money out and charge interest. They make money on the 'spread,' or, the difference between the deposit and loan rates, as well as non-interest income like overdraft fees. 
  • There's a new cohort of buzzy digital-only neobanks that's raking in billions from VCs, but they're not lending.
  • Instead of earning interest rate spreads, neobanks rely on interchange fees earned from debit card transactions for revenue.
  • Chime also earns a modest percent of revenue from referring customers to other fintechs like SoftBank-backed renters insurance startup Lemonade and fellow DST Global portfolio company Root Insurance.
  • Chime is exploring lending-like products, launching a free overdraft program called SpotMe, and offering two-day advances on direct deposit paychecks.
  • Click here for more BI Prime stories.

The traditional banking business model is pretty simple.

Banks take in deposits from customers and pay them interest. Then, they lend that money out to other customers, charging interest. Traditional banks make money on the spread, or, the difference between the deposit and loan rates.

But upstart digital banks like Chime, N26, and Varo—which are attracting billions in VC cash— for now only play on the deposit side of the balance sheet, offering checking and savings accounts.

And these neobanks are attracting waves of VC cash. By the third quarter last year, neobank funding totaled $3 billion, surpassing 2018's record $2.3 billion, according to CB Insights.

Chime, founded in San Francisco in 2013, is the most highly-valued US neobank. Its investors include Access Technology Ventures (Adyen, Ant Financial, Square), Menlo Ventures (Betterment, BlueVine), and DST Global (Robinhood, Root Insurance.)

Chime isn't profitable, but its CEO Chris Britt told Forbes that it could be — if it reduced its marketing spend.

In December, Chime's valuation quadrupled to $5.8 billion following its massive $500 million Series F. The round was the largest single equity investment in the neobanking space, a record previously held by Brazil's Nu Bank, according to CB Insights.

Neobanks are growing fast

Since they're not lending, neobanks rely on other sources of revenue. Interchange fees, for example, are paid by merchants to the banks for processing debit card transactions.

To grow interchange fee revenue, neobanks need customers to use their debit cards as much as possible. So their business models are focused on scaling their customer bases, and then ensuring customer stickiness.

To become the primary bank for their customers, the neobanks have deployed products — like access to wages two days early and no-fee overdrafts — specifically for customers who use the accounts for direct deposits

And their customer bases are growing. In September last year, Chime announced it surpassed the 5 million account milestone. Germany's N26, founded in 2015, announced it has more than 3.5 million customers as of last June.

That said, the number of open accounts is not necessarily the same as the number of active deposit customers, so pinning down exact customer numbers is tricky. In some cases, one customer who opens both a checking and savings account could be counted with two open FDIC-insured accounts.

Since the neobanks are private companies, they are not subject to the same disclosures as public retail banks. Ten-year-old Ally, one of the US's largest digital-only banks which went public in 2014, reported 1.9 million retail deposit customers in third-quarter earnings last year.

Chime makes money when its customers spend money

Chime earns the vast majority of its revenue from interchange paid to Chime by Visa, a Chime spokesperson told Business Insider in emailed comments. 

So every time one of Chime's customers makes a purchase with their debit card, the bank earns a fee. 

Chime also earns a "modest percent of revenue" from referring customers to other fintechs like SoftBank-backed renters insurance startup Lemonade and fellow DST Global portfolio company Root Insurance, the spokesperson said.

While the bank doesn't currently offer direct lending products, Chime has been vocal about its ambitions to enter the credit side of the balance sheet. But the timelines are unclear.

In March of 2018, Chime's CEO Chris Britt told Bankrate that it would launch lending products within the year.

"Our initial efforts in the area have been focused on the short term lending segment, and more specifically, the overdraft fee epidemic facing our country," the Chime spokesperson said.

Chime launched a new product called SpotMe in September, where customers who direct deposit at least $500 per month are able to overdraft their accounts up to $100. 

There is no interest applied to the overdrafts, which are repaid to Chime from the next payroll direct deposit. Users are offered the option to leave a tip to "pay it forward."

"While we've publicly announced our intention to launch other credit and lending products, we'll focus next on helping our members improve their credit scores and will announce a new service in this area in the first half of 2020," the Chime spokesperson said.

VC cash flowing in

In addition to free overdrafts and getting your paycheck a couple days early, there are other features of these digital-only neobanks attracting customers. 

Across the board, they have leaned into fee transparency, and largely moved toward eliminating things like minimum balance and account maintenance fees. 

Incumbent retail players like JPMorgan and Bank of America both charge $35 for every overdraft, and $12 in monthly maintenance fees. 

According to Chime's website, the only fee it charges is $2.50 for out-of-network ATM withdrawals. N26 doesn't charge overdraft, maintenance, nor foreign transaction fees.

Digital-only players, who behave more like legacy retail banks, are competing on rates

While neobanks are winning customers with these no-fee checking accounts, other digital-only players like Ally and Goldman's Marcus, which offer both deposits and loans, are luring customers with rates.

Digital-only banks like Ally and Goldman's Marcus both offer high-yield savings accounts. Unlike legacy retail banks, these players are unburdened by the costs of maintaining brick-and-mortar branches. Similar to retail banks, they offer loans.

Ally currently offers 1.6%, Goldman's digital-only Marcus offers 1.7%—all well above the national average savings rate of 0.09%, according to the FDIC.

Both Ally and Marcus are chartered banks, meaning they are regulated like any other retail brick-and-mortar bank. Neobanks like Chime and N26 don't have bank charters, but instead rely on partner banks like Bancorp and Green Dot to provide core banking processes and FDIC insurance.

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Real estate experts say Wall Street will keep ditching New York for cheaper cities, and think the open-office craze has played itself out

Sat, 01/04/2020 - 7:06am  |  Clusterstock

  • Business Insider has been polling experts to find out what big changes are in store for Wall Street in the coming decade. You can read their 26 biggest predictions here
  • After many companies have moved toward open offices, the next decade could bring back more private space – though roomy private offices for every mid-level executive may be a thing of the past. 
  • Companies will continue moving outside of expensive cities like New York to places like Phoenix, Tampa, and Nashville. And markets like Provo and Indianapolis could be next.
  • Financial institutions will add amenities that look more like tech companies' offices, like cafeterias and coffee shops with baristas, but don't expect barber shops in most offices. 
  • Tech will take center stage: Mobile apps will replace office badges and physical keys, and entering a building could trigger actions floors away, like coffee brewing. 
  • Click here for more BI Prime stories.

The Wall Street office of the future will likely be seamless: every phone will ping a security sensor automatically when employees walk through the door, eliminating the need for pesky office badges.

That same sensor will send a person's profile to the front desk, so security staff can greet employees by their first names. Walking into the building triggers a sequence of changes floors away, so by the time employees get off the elevator, their standard coffee order is ready for pickup, their sitting/standing desks are at the right height, and the blinds are appropriately drawn for the time of day. 

Business Insider has been polling experts to find out what big changes are in store for Wall Street in the coming decade, including the office of the future. You can read their 26 biggest predictions here

Four real estate leaders said finance has largely lagged other industries in implementing forward-thinking offices.

The next decade will see finance playing catch-up, implementing technology and designs that make employees more productive and attract talent, instead of just saving money by eliminating cubicles. But many of these offices won't be in big cities like New York and San Francisco, as companies add locations in cities that are cheaper both for their bottom lines and their employees. 

"We've seen a lot of disruption to date, but I don't think it even holds a candle to the disruption we'll see over the next decade," said Julie Whelan, CBRE's head of occupier research for the Americas. 

Open office 2.0

Goldman Sachs CEO David Solomon told employees in December that the firm's senior leaders will soon leave their stuffy private offices and sit in an open floorplan. Finance has joined most other industries in moving toward open offices, much to the chagrin of employees who chafe at the loss of privacy and space they say they've earned.

Experts said some financial groups, like private equity firms, may retain their private offices as the larger industry has moved toward open seating. But now, finance is seeing the pendulum swing back toward some modicum of privacy. 

"There's going to be some give-back of private office space, whether it's to senior employees or employees who deal with a heightened level of security. We're going to be looking at what the true business demand is as opposed to the trend of 'we need to get more dense simply because it's good business,'" said Tyler Kethcart, JLL's head of business development for experience management.

Lisa Picard, the CEO of Blackstone's office platform EQ Office, said in the future, "built-in quiet zones" will become the norm, to help ease the auditory overload in open offices. 

"Today, the open work environment has played itself out – meaning organizations that used it for reinforcement of culture and fostering collaboration with moments of concentration saw value," Picard said. "Those organizations that used this as a way to save money on real estate experienced backlash; just observe those open offices of silent people wearing headphones in front of their screens. The key is to have spatial flexibility." 

Companies that eliminated private offices and cubicles are adding more breakout spaces, both for individuals and groups. Landlords are increasingly offering such space as an amenity alongside cafeterias and gyms. JLL, for example, runs Chicago's largest amenity space in the Aon Tower, with a café, games, conference rooms, and more on the 70th floor. Business Insider took photos of the space in May

Those spaces will be increasingly necessary as the number of employees per desk jumps when companies add more bodies to floors.

Todd Burns, JLL's head of project and development services, said he's seeing ratios increase to as many as four employees per desk in some financial institutions' divisions, up from one desk for every one employee. And those desks look different: Burns said finance is increasingly adopting the sit-stand desks common at tech companies. 

"My belief is the financial institutions are generally 5-7 years behind everybody else," he said. In a decade, "offices will look more like tech firms but have the security of the bank." 

Modeled on tech and enabled by tech

Finance offices' move toward looking like tech companies will include more amenities like cafeterias and cafés with baristas. 

"And not only a cafeteria, but in that cafeteria you may have options to bring food home because it's made for you that evening, or dry cleaning or concierge services," said CBRE's Whelan. "We're creating workplaces that make people feel good and that are helping to make their lives easier by relieving outside pressures."

Both amenities and basic building operations will rely more heavily on technology. There's been an explosion of investment into real estate tech, called proptech, and real estate is starting to implement this new wave of products. 

"You can't move in your life without engaging with technology," Whelan said. "But it seems when we walk through the doors of an office building, it all shuts down. Getting access to WiFi sometimes when you're a guest in an organization can be really difficult. The idea is we should be creating the same interactions and the ease of our workday with technology in the office just like we do out of the office."

Building-specific apps will become standard in the next decade. They'll show local retailers and events; employees at other companies in the building; conference room scheduling; and what other colleagues are in the office. Whelan said facial recognition will also become common, both for security and for directions: You could walk up to a screen that will tell you when and where your next meeting is, with directions to navigate a byzantine office layout. 

Outside the New York bubble

Both to keep costs low and to tap new labor pools, financial institutions have already signaled plans to expand into cheaper markets well outside of New York and San Francisco: PIMCO is hiring for a 200-person office in Austin; BlackRock is building an 1,000-person office in Atlanta; AllianceBernstein is moving much of its New York office to Nashville.

Similarly, JLL's Burns said he talked to a client this month with space in Washington, DC that's thinking about a move.

"They're a financial institution saying, 'we could do that in Milwaukee just as easily.' I think you'll see more of this move from city centers," he said. 

Hot markets for JLL's financial clients include Charlotte and Houston. Whelan said CBRE has seen a lot of interest from finance in what real estate calls secondary markets – Phoenix, Tampa, Nashville – and she expects that interest to accelerate. 

"There will be some tertiary markets that start to pop up. We looked at markets we'd consider next-generation where you'd need to be a pioneer from a financial services perspective, like Utah – not Salt Lake City, but going out to Provo; Boise, Idaho; Raleigh Durham; Indianapolis," Whelan said. "Those are markets we'll start to hear more about from a financial services perspective that are more overshadowed by the secondary markets now." 

SEE ALSO: Venture funds have poured $24.6 billion into proptech so far this year — and there's likely more to come

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Warren Buffett's World Book business became his 'most difficult problem.' Here's why.

Sat, 01/04/2020 - 6:30am  |  Clusterstock

  • One of Warren Buffett's favorite businesses became his "most difficult problem" less than a decade after he bought it.
  • The Berkshire Hathaway CEO acquired World Book in 1986, trumpeting its market dominance, positive ratings, competitive pricing, and his personal connection to its encyclopedias.
  • However, online learning tools and digital encyclopedias such as Microsoft's Encarta soon decimated the business.
  • "Berkshire's most difficult problem is World Book," Buffett told investors in 1996. "It is not the business it was five years ago."
  • View Business Insider's homepage for more stories.

One of Warren Buffett's favorite businesses became his "most difficult problem" less than a decade after he bought it.

The billionaire investor and Berkshire Hathaway CEO acquired World Book, a print publisher of encyclopedias, as part of Scott Fetzer in 1986. "It sells more sets in the US than its four biggest competitors combined,"Buffett told shareholders in his annual letter, adding that its competitive pricing and positive ratings made it a quality purchase.

Another draw was the personal connection to its flagship product felt by Buffett and his partner, Charlie Munger.

"Charlie and I have a particular interest in the World Book operation because we regard its encyclopedia as something special," Buffett wrote. "I've been a fan (and user) for 25 years, and now have grandchildren consulting the sets just as my children did."

Buffett trumpeted World Book's success over the next few years. Its encyclopedia sales surged 45% between 1982 and 1986, he said in his 1986 letter, adding that its books are "extraordinarily well-edited and priced" and "a bargain for youngster and adult alike."

A year later, Buffett touted the "most dramatically revised edition since 1962" with 10,000 more color photos, 6,000 revised articles, and 840 new contributors. He included World Book in Berkshire's "Sainted Seven" businesses along with See's Candies and Nebraska Furniture Mart in his 1988 letter, and counted it in a "divine assemblage" of companies in his 1989 letter.

However, World Book's success proved shortlived. Its annual pre-tax earnings peaked at about $32 million in 1990, seesawed for a few years, then plunged below $9 million in 1995 — two years after Microsoft launched Encarta, its digital encyclopedia.

"Berkshire's most difficult problem is World Book, which operates in an industry beset by increasingly tough competition from CD-ROM and on-line offerings," Buffett said in his 1995 letter. "Our sales and earnings trends have gone in the wrong direction."

The so-called Oracle of Omaha remained hopeful for a comeback as World Book slashed overheads, revamped its distribution, and invested in electronic offerings. However, unit volumes fell again in 1996 and the publisher "did not find it easy," Buffett told his shareholders.

"It is not the business it was five years ago," Buffett said at Berkshire's annual meeting in 1996. "And I don't think it will be the business that it was five years ago, because the world is changed in some ways on that."

Encyclopedias even fell out of favor at Berkshire's annual shareholder meetings. Sales of World Books and related products at the event slumped from around $75,000 in 1997 to a little over $16,000 in 1999.

World Book might be Buffett's "quickest mistake" ever, Daniel Pecaut told ThinkAdvisor last year. The investment boss of Pecaut & Co, who has attended Berkshire's yearly meeting for more than three decades, said Encarta and other digital rivals "just destroyed the business."

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A Wall Street expert lays out the exact scenario that could cause the stock market's next big meltdown

Sat, 01/04/2020 - 6:05am  |  Clusterstock

  • Jim Paulsen, chief investment strategist at Leuthold Group, thinks a metric once "left for dead" could put an end to the decade-plus bull market.
  • He points to the unemployment rate, accommodative global central bank policies, and an expected weakening of the US dollar to bolster his thesis.
  • Paulsen is not alone in his views either. Tony DeSpirito, the chief investment officer for fundamental US active equities at BlackRock, and Chris Brightman, the chief investment officer at Research Affiliates, have expressed similar concerns.
  • Click here for more BI Prime stories.

After the S&P 500 posted a total return of 31% in 2019, investors are entering 2020 bright-eyed and bushy-tailed. In fact, in the last decade, stocks have only experienced one down year on a total return basis: negative 4.38% in 2018. Not exactly earth-shattering.

But just because the market has been on a tear since emerging from the Financial Crisis doesn't mean money managers aren't well aware of the risks afoot.

Jim Paulsen, chief investment strategist at Leuthold Group, thinks a metric that was once "left for dead" has the power to uproot the stampeding bull. He's referring to inflation, for which he says a sharp increase would threaten the nearly 11-year rally.

"It is my belief that US inflation has only paused and will eventually rise enough to end this economic recovery and bull market," Paulsen penned in a recent client note. "Consequently, the biggest financial risk, and perhaps the biggest potential surprise in 2020, could be an inflation rate that recovers much more quickly and aggressively than expected."

Inflation impacts stock returns in a multitude of ways. But historically speaking, stocks tend to produce below-average returns in periods of high inflation.

Companies experience an increase in cost of goods sold while higher interest rates — induced by the Federal Reserve in order to combat inflation's harmful effects — swell expenses. As a result, investors generally become less optimistic over a company's ability to increase its profits enough to offset the expansion in costs. It doesn't help that rate hikes also decrease the appeal of stocks versus bonds.

That combination doesn't bode well for equities — and Paulsen isn't alone in his worries.

Others have expressed concerns

Tony DeSpirito — the chief investment officer for fundamental US active equities at BlackRock — and Chris Brightman — the chief investment officer at Research Affiliates — recently sounded the alarm on this exceptionally low period of inflation, referring to the phenomenon as "the hidden risk longer term" and not "normal." 

Although conventional measures of inflation depict stable pricing pressure within the economy, Paulsen notes that less popular measures indicate that a resurgence may be in order.

"The Cleveland Federal Reserve's 'Trimmed Consumer Price Index' — a measure of consumer inflation that attempts to remove volatile items which may distort the true inflation picture — continued to rise during 2019 and is currently at its highest level since early 2012," he said. "Similarly, the median consumer price inflation rate (a central tendency of inflation) recently rose to its highest level since 2008!"

In order for Paulsen's bull market-ending prognostication to come true, stocks would need to take more than a 20% peak-to-trough dive — the threshold that defines a bear market.

That said, although Paulsen is clearly aware of the risks a surprise uptick in inflation would bestow on equities, he doesn't think it will "meaningfully hurt the stock market or produce a recession in 2020."

In short, investors are safe for the time being. 

"Every economic recovery in the post-war era has ended only after a period of overheat problems, and this recovery will likely end in a similar way," he said.

He continued: "With the unemployment rate at 3.5%, investor inflation expectations rising since October, with full-on global policy easing, an expectation of a weak U.S. dollar this year (which could intensify inflation pressures), and a global recovery on the horizon, U.S. inflation—widely left for dead—could quickly emerge and become a primary focus."

SEE ALSO: Mark Minervini crushed markets with a 33,554% return over 5 years. Here are the select books out of the 4,000 in his library he says most fueled his success.

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

Tim Cook's personal security and travel expenses surged in 2019 as Trump's trade war with China threatened to gash Apple's profit (AAPL)

Fri, 01/03/2020 - 7:17pm  |  Clusterstock

  • Apple may have spent less on lobbying than its Silicon Valley peers, but the costs of doing business amid a raging trade war with China seem to be partly reflected in the company boss's executive compensation. 
  • Apple CEO Tim Cook's security and air travel costs surged more than double in 2019, according to the company's latest proxy statement.
  • This may be due to Cook's many visits to Washington this year: the famously-diplomatic company CEO is said to have forged close ties with President Donald Trump and his family, in a bid to dodge the punishing tariffs that the administration has placed on products manufactured in China, Apple's manufacturing hub.
  • View Business Insider's homepage for more stories

Apple may have spent less on lobbying than tech industry peers like Google and Facebook, but the costs of doing business amid a raging trade war with China are still apparent in the company head's executive compensation. 

Apple CEO Tim Cook's salary has remained relatively flat over the past three years, according to the company's latest proxy statement. But compensation for his security and air travel expenses have surged explosively over the past year. 

Air travel costs climbed 239% in value over the past year, costing the company $315,311. And costs for Cook's private security also rose 104% to $457,083.  

The surge in costs incurred to Apple may partly be due to Cook's private attempts to advocate for the company in Washington DC. As of this summer, Apple's CEO has met with President Donald Trump at least five times in a bid to hold the president's ear amid a raging trade war with China.

Trump's 18-month trade war with China stems from a 2016 campaign promise to revitalize the manufacturing sector in the US by making companies like Apple start "building their damn computers and things in this country instead of other countries." Over the past 18 months, escalating tariffs imposed on Chinese-manufactured goods have threatened Apple's most lucrative products, like the iPhone and Apple Watch. 

But Cook, dialing up a charm offensive, has forged close ties with both President Trump and his family amid the trade war, the Wall Street Journal's Tripp Mickle reported in October. The president has previously said Cook is the only tech executive to have a direct line to the White House, allowing him to convey his own point of view in often-tense situations.

Cook and Trump both toured Apple's Austin plant in November. Apple announced plans to build a new billion-dollar campus in Austin, while the president said he would look into whether the tech giant should be exempt from tariffs on Chinese imports. 

SEE ALSO: THE TECH COLD WAR— Everything that's happened in the new China-US tech conflict involving Google, Huawei, Apple, and Trump

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Apple CEO Tim Cook made $11.6 million in the company's last fiscal year — 200 times more than its median employee (AAPL)

Fri, 01/03/2020 - 6:49pm  |  Clusterstock

  • Apple CEO Tim Cook's brought in $11.6 million in the company's 2019 fiscal year.
  • Cook's compensation included $3 million in salary and more than $7.6 million in incentive-based pay.
  • Cook made 200 times more than the median Apple employee, who earned $57,596.
  • Apple disclosed Cook's compensation package in a proxy statement Friday.
  • Visit Business Insider's homepage for more stories. 

Apple CEO Tim Cook brought in just shy of $11.6 million in total compensation during the company's 2019 fiscal year, Apple said in its annual proxy statement Friday.

That hefty pay package is about 200 times more than the median Apple employee earned in compensation during the same time period, the company noted. According to Apple, the median compensation among its global workforce of more than 130,000 full time employees and of its staff of part-time employees was $57,596 during the 2019 fiscal year.

Cook's compensation package included a $3 million base salary, roughly $7.6 million in incentive pay, and the nearly $800,000 that it cost Apple to provide security and private air travel for Cook.

The wide gulf between Cook's pay and that of the median employee is similar to other highly-compensated tech CEOs. Microsoft CEO Satya Nadella made roughly 248 times more than the median employee during the company's fiscal 2019 year. 

Apple's workforce includes the engineers and designers that work in its $5 billion headquarters, as well as tens of thousands of retail employees that work at its retail stores around the world. Apple said the median employee compensation figures included base salaries. bonuses, commissions and the fair value of equity awards.

While Apple's stock surged roughly 89 percent in the 2019 calendar year, the stock was actually down 2% during the period of the company's fiscal 2019 year.

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A former Sequoia Capital partner has won an extortion case against his former mistress after a 3-year court battle

Fri, 01/03/2020 - 5:54pm  |  Clusterstock

One of Silicon Valley's more explosive lawsuits that ended the career of a former partner at Sequoia Capital is winding down with the venture capitalist emerging victorious and vindicated.

Michael Goguen won a 3-year legal battle against his former mistress Amber Laurel Baptiste in California Superior Court, Bloomberg's Lizette Chapman reported on Friday. The judge in the case ruled in Goguen's favor and found Baptiste, a former exotic dancer, committed fraud and extortion when she threatened to go public with accusations that he had given her a sexually transmitted infection, according to Bloomberg. Baptiste, who was not present for the 3-day trial that wrapped on Dec. 20, has until Jan. 10 to appeal. As part of the ruling, Baptiste was ordered to pay back $10.25 million that Goguen had given her as a portion of a rumored $40 million "hush money payment" he had promised.

The lawsuit has powered the Silicon Valley rumor mill since 2016, and its effects have followed Goguen to his new home in Whitefish, Montana, he told Bloomberg. He said he struggled to raise funds for his new venture firm because limited partners were conscious of attracting negative press by working with him.

The initial lawsuit filed by Baptiste was graphic enough to turn away even the least risk averse investors from working with Goguen, even 3 years later. Baptiste accused Goguen of "sexually, physically, and emotionally" abusing her for more than 13 years and then refusing to pay her the $40 million agreed-upon settlement in full. The initial filing claimed Baptiste had been a "victim of human trafficking" since she was 15 years old, and that Goguen met her at a Dallas strip club in 2001 and promised to help her "escape from the human traffickers" if "she would have sex with him." Baptiste claims that Goguen raped and abused her for many years, including an alleged incident where she was left "bleeding and alone on the floor of a hotel room in a foreign country." The signed contract for payment came when Baptiste initially threatened to sue Goguen in 2014, according to a previous Business Insider report.

Goguen did not return Business Insider's request for comment. He told Bloomberg that the ruling caps off a time in his life where his colleagues treated him "like a leper" and he's become "jaded."  Baptiste could not immediately be reached for comment by Business Insider, but Bloomberg reported that she has previously said Goguen was using his "wealth and power to overwhelm" her. 

Goguen was considered one of the leading investors at Sequoia Capital, having overseen several highly lucrative IPOs and exits from his networking and cybersecurity investments over his 20-year career. The initial lawsuit filed in 2016 came just as the #MeToo movement was gaining traction among the upper echelons of all businesses, and Goguen was quickly dismissed as the lawsuit played out.

SEE ALSO: The legendary Andreessen Horowitz partner who worked on its Facebook and Airbnb deals shares his best advice for entrepreneurs trying to strike it big in Silicon Valley

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The 19 billion-dollar startups to watch that are revolutionizing healthcare in 2020

Fri, 01/03/2020 - 5:47pm  |  Clusterstock

2020 is gearing up to be a pivotal year for healthcare and biotech startups.

In 2019, a handful of health startups went public with valuations above $1 billion, placing them in unicorn territory.

Next year is shaping up to be an even more prolific year, with reports that companies like One Medical could go public by the first quarter of 2020. 

While companies like Tempus and Ginkgo Bioworks and health-insurance startups such as Clover Health and Bright Health added to their war chests, others, like 23andMe and Butterfly Network, maintained their unicorn status without taking on additional funding, according to data provided by PitchBook.

This article was published on December 31, 2019, and has been updated.

Rani Therapeutics - $1 billion

The biotech startup Rani Therapeutics is taking on a problem that has eluded companies for decades — finding a way to turn injectable drugs into pills for people living with chronic conditions. The approach has the potential to upend billion-dollar markets for drugs such as insulin and treatments, like Humira, for autoimmune conditions.  

The San Jose, California, company raised $53 million in February from Alphabet's venture-investment arm GV. To date, Rani has raised $142 million.

Clover Health - $1.2 billion

Clover Health sells Medicare Advantage health-insurance plans. When people in the US turn 65, they can choose to be part of traditional Medicare or Medicare Advantage, which is operated through private insurers like Clover and often provides additional healthcare benefits. The hope for San Francisco-based Clover and other technology-based health insurers is to use data to improve patients' health.

Clover lost $26.5 million in the first nine months of 2019, according to state insurance filings reviewed by Business Insider.

The 2019 loss was deeper than the company's net loss of $18.7 million over the same period in 2018. Clover had 42,087 Medicare Advantage members at the end of the third quarter, up from 31,902 at the end of the third quarter in 2018.

It's been a big year for Clover. In March, the company said it was laying off 25% of its workforce, or about 140 employees, as part of a restructuring. That came on the heels of Clover raising $500 million in January, bringing the total funds the company has raised to $925 million.

Its most recent valuation was $1.2 billion, according to PitchBook data from before the $500 million round.

Read more: We just got a look at the latest financials for health startups like Bright and Oscar. They reveal the challenges facing the insurers as they keep growing their footprints.

Rakuten Medical - $1.2 billion

Headquartered in San Diego, Rakuten Medical develops precision-targeted cancer therapies designed to treat solid tumors. 

The biotech is led by the Japanese billionaire Hiroshi Mikitani, who is also founder and CEO of the large Japanese e-commerce firm Rakuten. Mikitani said he was inspired to fund the cancer research after his father was diagnosed with pancreatic cancer in 2012.

Rakuten Medical has raised about $471 million, according to PitchBook. Both Mikitani and Rakuten have invested in Rakuten Medical.

Lyell - $1.2 billion

The San Francisco biotech company is focused on treating cancer with cell therapies. Lyell's goal is to develop cell-based immunotherapies for cancer, with a focus on CAR-Ts and solid tumors.

Earlier this year, the company raised $179 million in Series B venture funding from Foresite Capital Management, Arch Venture Partners, and Altitude Life Science Ventures. The company has raised a total of $358 million, according to PitchBook. 


Butterfly Network - $1.3 billion

Butterfly Network, a company that developed an iPhone-based ultrasound device, wants to make the technology more accessible to doctors and healthcare workers so they can make more precise diagnoses on the move. 

The device, called Butterfly iQ, plugs into the iPhone and isn't much bigger than the phone itself. It's been approved by the Food and Drug Administration for use in imaging the abdomen, bladder, and heart. 

In September 2018, Butterfly raised $250 million from investors such as Fidelity, Fosun Pharma, and the Bill and Melinda Gates Foundation. In total, the company's raised $370 million. 

One Medical - $1.5 billion

The primary-care startup One Medical could be the first unicorn on the list to go public in 2020. 

One Medical filed for an IPO on January 3. The filing reveals the money-losing startup has about 397,000 members. JPMorgan and Morgan Stanley are leading the offering.

When One Medical opened for business in San Francisco in 2007, its goal was to upend the way people got medical care by making it easy and convenient to see a doctor. The company charges a $200 annual fee and bills your insurance.

Read more: I became a member of One Medical, a primary-care practice that charges a $200 annual fee and has plans to double over the next two years. Here's what it was like.

After a big infusion of capital in 2018, it's expecting to double the number of medical clinics it operates over the next two years.

The company raised $220 million in funding in a 2018 round led by The Carlyle Group. In total, the company's raised $408 million and has a private valuation of $1.5 billion, according to PitchBook. 

HeartFlow - $1.6 billion

HeartFlow is trying to make the process of finding blockages in the heart a lot less invasive. Using imaging from a CT scan, HeartFlow builds a 3D model that pinpoints the blockages associated with coronary-artery disease, a heart condition that affects millions of Americans and is the leading cause of death in the US

HeartFlow is based in Redwood City, California, and reached unicorn status in 2018 after raising $240 million. In total, the company has raised $532 million

Zocdoc - $1.8 billion

Zocdoc helps patients book doctors' appointments and check in for them — everything from primary care to dental to optometry appointments.

Users can search based on procedures, conditions, and even a particular doctor they might want to book an appointment with.

In 2019, the company changed the way it pays its doctors in some states, moving from a subscription model to one that charges a per-booking fee. Some doctors haven't been happy about the switch.

Zocdoc, which is based in New York, most recently raised $130 million in a Series D round in August 2015, bringing its total raised to $223 million. The company's last reported valuation is from 2015, according to PitchBook.

Devoted Health - $1.8 billion

Devoted Health wants to reinvent how we care for aging Americans.

The company started selling Medicare Advantage plans in parts of Florida for 2019.

The company's plans might look a bit different from traditional insurance in that Devoted plans to do more than pay for visits to doctors and hospitals. It's also hiring nurses and other employees directed at keeping seniors healthier and out of the hospital.

Devoted was founded in 2017 by brothers Ed and Todd Park. Before Devoted, Todd Park cofounded the health IT company Athenahealth and served as the chief technology officer of the US during the Obama administration. Ed Park, who serves as Devoted's CEO, was formerly the chief technology officer and later chief operating officer at Athenahealth.

In October 2018, the Waltham, Massachusetts-based company raised $300 million in a Series B round led by Andreessen Horowitz, bringing its total funding to $369 million.

Read more: We got a look at the slide deck that buzzy startup Devoted Health used to hit a $1.8 billion valuation before it signed up any customers

Bright Health - $2.2 billion

Bright Health provides health plans for people under the Affordable Care Act and to seniors in Medicare Advantage.

It was founded in 2016 and has raised more than $1 billion after closing a $635 million round in December. A representative for the company declined to provide its updated valuation, though according to Pitchbook, the valuation is $2.2 billion.

Minneapolis-based Bright Health posted a net loss of $9.3 million for the first three quarters of 2019, a deeper net loss than the $4.2 million loss the company had over the same period in 2018. The company made $164.3 million in revenue and recorded $127.9 million in medical claims.

The startup covered 60,434 members as of September 30, mostly in ACA health plans for individuals and families.

The company said in July it would operate in parts of 12 states in 2020, about double its geographic footprint in 2019.

Read more: Bright Health just added $635 million to its war chest as the health startup plots a massive expansion

23andMe - $2.5 billion

In 2018, 23andMe, a company best known for its genetics tests designed to tell you information as varied as the amount of Neanderthal DNA you have and your health risks, gained a higher valuation after striking a $300 million deal with drugmaker GlaxoSmithKline.

The company, founded in 2006, has millions of customers and a number of partnerships with major pharmaceutical companies. With GSK, 23andMe has a 4-year-long development deal to use the data 23andMe has collected to discover and develop new medications. Using 23andMe's data, GSK is also working on an experimental drug to treat Parkinson's disease in patients with a particular mutation. 

To date, 23andMe has raised $792 million. 

Read more: The DNA-testing 'fad' is over, and one company just halted operations. The CEOs of Ancestry and 23andMe reveal how they're fighting back.

Tempus — $3.1 billion

Chicago-based Tempus got its start in 2015, and in the past four years, it has rocketed into unicorn territory.

The startup, which was founded by Groupon founder Eric Lefkofsky, hopes to help doctors use data to find better cancer treatments for patients, using both clinical data — information about which medications patients have taken and how they responded to them — and data it sequences in its lab based on the tumors and hereditary genetics of cancer patients.

Tempus raised $200 million in Series F venture funding from Novo Holdings, Revolution Group, and New Enterprise Associates in May. So far, the company has raised a total of $520 million. 

Oscar Health - $3.2 billion

New York-based health-insurance startup Oscar Health sells insurance in the individual exchanges set up by the Affordable Care Act and to small businesses. The company had 235,371 members as of September 30, slightly more than the company had in 2018.

It's planning to enter a new market in 2020, offering private Medicare Advantage plans to seniors.

Read more: $3.2 billion health-insurance startup Oscar Health just revealed plans to offer a new kind of coverage in 2 cities

In August, the company announced plans to sell Obamacare plans in 12 new markets in 2020, including in four new states.

Oscar has raised more than $1 billion from investors enticed by its promise of a new tech-driven approach to health insurance. In August 2018, it raised $375 million from Google's parent company, Alphabet, and said it would use the funds to bring its plans to more people, including in Medicare Advantage.

Read more: We just got a look at the latest financials for health startups like Bright and Oscar. They reveal the challenges facing the insurers as they keep growing their footprints.

Indigo Agriculture — $3.45 billion

Indigo Agriculture is harnessing plant microbiomes to try to make plants more likely to survive. Indigo does this by coating seeds with certain microbes, with hopes that the plants will better withstand poor soil conditions, drought, and insects.

The Boston-based company raised an undisclosed amount of venture funding from G Squared in March. In September 2018, the company raised $250 million from investors including Baillie Gifford, Investment Corporation of Dubai, and the Alaska Permanent Fund.

In total, the company has raised $620 million. It was valued at $3.45 billion as of December 2018, according to PitchBook.


Grail - $3.87 billion

Since it got its start in 2016, Grail has raised more than $1.75 billion from the likes of Jeff Bezos and Bill Gates, along with big names from the pharmaceutical, tech, and healthcare industries, including Johnson & Johnson Innovation, Arch Venture Partners, Amazon, Bristol-Myers Squibb, Celgene, and Merck.

The idea behind its cancer-screening test is to identify the tiny bits of cancer DNA that are hanging out in our blood but are undetectable. If companies like Grail are successful, they would be the first to pull off a cancer-detecting blood test that works proactively.

The concept is similar to liquid biopsy tests, which use blood samples to sequence genetic information in that blood to figure out how tumors are responding to a certain cancer therapy. In 2017, Grail acquired Cirina, a Hong Kong company that is also looking at early cancer detection.

Earlier this month, the company raised an additional $125 million out of a $250 million offering, according to a filing with the Securities and Exchange Commission. The company has started presenting data, including some on early-stage lung-cancer detection, and plans to return results from its early-stage cancer-detection test in 2020

Ginkgo - $4 billion

Ginkgo Bioworks is a startup that designs microbes to produce substances like fragrances and medications. The Boston-based company sends the programmed bugs to partner companies that put them to use.

In September, Ginkgo raised an additional $290 million. In total, the company has raised $719 million and a $350 million fund to invest in spinout companies that use its technology

Intarcia Therapeutics — $4.1 billion

Intarcia Therapeutics, a Gates Foundation-backed biotech, is developing implantable devices intended to treat conditions like Type 2 diabetes and prevent HIV.

In September 2018, the FDA put the Boston-based company's plans for its diabetes implant on hold, citing manufacturing concerns. The company resubmitted the implant for approval in September.

In March, the company raised $73 million of convertible debt funding from undisclosed investors. To date, the company's raised $2 billion. 

Roivant - $7 billion

Roivant Sciences is a company known for developing drugs that other pharmaceutical companies have abandoned.

The company was founded by CEO Vivek Ramaswamy, who's 34. Through its subsidiary companies, it identifies experimental drugs that other companies may have stopped developing for one reason or another that still have potential to get approved and go on the market.

So far, it has launched 17 subsidiary "-vant" companies, including a number that have gone public. Those include the neurodegenerative-disease-drug developer Axovant Sciences, the women's health company Myovant Sciences, and the urology company Urovant Sciences.

In December, the company entered a deal with Sumitomo Dainippon Pharma. Before that, the company had raised $200 million from investors a little more than a year after raising $1.1 billion in a monster round led by SoftBank's Vision Fund. The $200 million round valued the company at $7 billion. 


Samumed - $12.4 billion

Samumed is the highest-valued startup on this list.

The San Diego-based company has attracted a total of $764 million and a heady valuation thanks to a pipeline of what could be revolutionary treatments to regenerate hair, skin, bones, and joints.

The company's science hinges on something called progenitor stem cells. Samumed hopes to manipulate the pathway that makes these progenitor stem cells spring into action so that they don't cause conditions like hair loss or osteoarthritis. 

The company had previously raised funding from backers including high-net worth people and sovereign funds rather than venture capital. Samumed's chief business officer, Erich Horsley, said in May 2018 that the company could go public in the next three to four years.

Read more about Samumed's progress with these treatments.

The best rewards credit cards for earning travel points, cash back, and more

Fri, 01/03/2020 - 4:59pm  |  Clusterstock

Here are the best rewards credit cards available now:

Especially since the launch of the Chase Sapphire Reserve, rewards credit cards have exploded into a mainstream obsession. 

It's not hard to see why more people than ever are jumping into the once-obscure world of credit card rewards and bonuses. There's the lure of high sign-up bonuses and travel perks, not to mention the opportunity to use points for free flights, hotel stays, and even first-class tickets.

So what's the best move for someone seeking to boost their stash of credit card points, frequent flyer miles, or cash back? Here are some of the top credit cards currently available, based on sign-up bonuses, rewards earned on everyday spending, benefits, and overall value. 

Our expert panel for this guide

We consulted top credit card, finance, and travel experts to inform these picks and provide their advice on finding the best rewards card for your needs. You'll find the full text of our interviews with them at the bottom of this post.

Keep in mind that we're focusing on the rewards and perks that make these credit cards great options, not things like interest rates and late fees, which will far outweigh the value of any points or miles. It's important to practice financial discipline when using credit cards by paying your balances in full each month, making payments on time, and only spending what you can afford to pay back. 

Chase Freedom Unlimited Why you'll love it: Helps you earn points for normal purchases and get cash back with no annual fee

Sign-up bonus: $150 bonus (or 15,000 points) after you spend $500 on purchases in the first three months

Annual fee: $0

If you already have the Sapphire Reserve or Preferred and are saving your points for something, the Freedom Unlimited can give your balance a nice boost. While Chase markets the card as "cash back," it actually earns Ultimate Rewards points that you can redeem for cash (1 point = 1 cent).

When you have a premium card like one of the Sapphires or an Ink Business card, you can pool your points from the two cards. The Freedom Unlimited earns 1.5 points per dollar spent, so paired with a Sapphire Reserve, it's a great card to use for purchases that aren't made on travel expenses or dining.

Best of all, the card has no annual fee and often has an introductory 0% APR for the first 15 months on purchases and balance transfers. After that, there's a 16.49%-25.24% variable APR. If you have a major purchase ahead of you, that introductory offer can be useful.

The Chase Freedom Unlimited is a fantastic all-around card. However, to get the most value when it's time to spend your points, you need the Sapphire Reserve or Preferred card, too, so you can pool your points. Otherwise, points are only worth 1¢ each no matter how you use them and they can't be transferred to airline or hotel partners.

What the experts love: Flat cash-back rate makes it easy to earn rewards without keeping track of bonus categories, you can transfer your points to another Chase card to redeem them for travel at a higher rate, no annual fee

What the experts don't love: One point only equals 1 cent for cash back, to get a better value you'll need to pair it with a Sapphire card. "The 1.5% cash-back rate is the standard at this point, but other cards like the Citi Double Cash earn 2% on every purchase. If you're looking for a flat-rate card, earn the highest rate you can," says Rathner.

Click here to learn more about the Chase Freedom Unlimited. Read more about the Chase Freedom Unlimited: Chase Sapphire Reserve

Why you'll love it: Easy to earn rewards for travel and more, with a great sign-up bonus and 3x points on travel and dining

Sign-up bonus: 50,000 points after you spend $4,000 in the first three months

Annual fee: $450

With 3 Ultimate Rewards points per dollar spent on dining and any travel and 1 point per dollar on everything else, the Sapphire Reserve makes it easy to maximize your everyday spending, and it comes with a slew of perks. 

While there are a few different ways to use Chase points, there are usually two options to get the best value. First, your points are worth 50% more toward travel booked through Chase. Second, you can transfer points to a number of frequent flyer and hotel loyalty programs — typically, this gets you the most value for your points. Booking flights by transferring points to frequent flyer partners is generally more lucrative — that's usually how people use points to fly in first and business class — but it can be complicated because you have to decipher award charts, find availability, and work around complicated airline rules. 

Travel benefits include access to airport lounges through the Priority Pass network, trip delay coverage, purchase protection, a Global Entry or TSA PreCheck credit, and primary car rental insurance. However, while the airport lounge access can be great, most Priority Pass lounges are in international terminals, which isn't helpful when you're flying domestically. If you find lounge access crucial, you should consider the Amex Platinum, which offers superior lounge access within the US.

The Sapphire Reserve's annual fee is a hefty $450, but that's offset by a $300 travel credit each year, good for things like taxis, subway fare, parking, tolls, and flights.

There aren't many downsides to this card besides the upfront annual fee. Check out our guide to the best travel rewards credit cards for more options like the Sapphire Reserve.

What the experts love: Points are worth 1.5 cents each when redeemed for travel through Chase, 3x points on two very broad bonus categories (travel and dining) 

What the experts don't love: The high annual fee. "It's hard to wrap your head around a $450 annual fee. Unless you can fully use all the other perks this card offers, it will become expensive to carry this card for a long time," says NerdWallet's travel and credit cards expert, Sara Rathner.

Click here to learn more about the Chase Sapphire Reserve. Read more about the Chase Sapphire Reserve: The Platinum Card from American Express

Why you'll love it: Big welcome offer and lots of perks for travelers

Welcome offer: 60,000 points after you spend $5,000 in the first three months

Annual fee: $550

The Amex Platinum has a higher annual fee than the Sapphire Reserve, but also a longer list of benefits. The Platinum card is also one of the best options for paying for flights, because you'll earn 5x Membership Rewards points on airfare purchased directly with airlines.

Like Chase Ultimate Rewards points, American Express Membership Rewards points can be used to purchase travel, gift cards, or products directly through from the issuer, or they can be transferred to certain airline and hotel loyalty programs. The best value comes from that latter use. If you redeem points by using them to book travel through Amex, you'll get around 1 cent per point.

The Platinum Card includes access to the same lounges as the Sapphire Reserve, plus Delta Sky Clubs and the proprietary American Express Centurion Lounges. Amex Platinum cardholders also get exclusive access to major events and experiences, including once-in-a-lifetime "By Invitation Only" events.

Of course, $550 is a lot to pay out each year. Up to $200 in annual airline fee credits and up to $200 in annual Uber credits certainly help, but the airline credit can be difficult to use if you aren't checking bags or buying drinks on flights. 

The bonus spending categories on this card are less generous than on the Sapphire Reserve, meaning it can take longer to earn points unless you book a lot of flights. Even so, the card remains extremely valuable if you can make good use of the benefits. For example, in your first year with the card, you can get more than $2,000 in value.

What the experts love: Airport lounge access (especially to Amex Centurion Lounges — "They're pretty high end as far as airport lounges go!," says Rathner), access to high-end hotel benefits through Amex Fine Hotels & Resorts, 5x points on flights

What the experts don't love: High annual fee, some annual statement credits have significant limitations. "You have to choose one airline to apply the annual $200 statement to, which limits your flexibility," says Rathner. 

Click here to learn more about the Amex Platinum Card. Read more about the Amex Platinum: Chase Sapphire Preferred

Why you'll love it: Higher sign-up bonus and lower annual fee than the Sapphire Reserve, easy to rack up points

Sign-up bonus: 60,000 points after you spend $4,000 in the first three months

Annual fee: $95

The Reserve's older sibling, the Sapphire Preferred, offers a number of similar features and a higher sign-up bonus for a lower annual fee. The card earns 2x Ultimate Rewards points instead of the Reserve's 3x points on dining and travel, and 1 point per dollar on everything else.

Points are worth a lower 1.25 cents apiece on travel booked through Chase, but can still be transferred to frequent flyer and hotel loyalty programs. There's no annual travel credit, but there's still car rental primary coverage, as well as slightly less-generous trip delay coverage and purchase protection.

While the Sapphire Preferred was the all-around best card for a long time, the Sapphire Reserve has made it a harder choice. Although the Preferred has a lower annual fee and higher initial bonus, it earns fewer points on bonus spending categories than the Reserve, and the value of the points on travel booked through Chase is less.

Read more: Chase Sapphire Preferred vs. Reserve — which credit card is best for you?

The no-hassle travel credit on the Sapphire Reserve makes the annual fee on that card effectively $150 (accounting for the $300 you get back through the credit), so — depending on your spending habits — it can be worth paying more up front for the Sapphire Reserve

What the experts love: Good sign-up bonus, some of the benefits of the Sapphire Reserve at a lower price, travel perks like primary rental car insurance.

What the experts don't love: No annual travel credit, earns points more slowly than the Sapphire Reserve, no Global Entry or lounge access, which Rathner notes are "increasingly typical" credit card benefits. Summer Hull, director of travel at The Points Guy, also notes that the Preferred has been the same forever.

Click here to learn more about the Chase Sapphire Preferred. Read more about the Chase Sapphire Preferred: Capital One Venture Rewards Credit Card

Why you'll love it: Low annual fee, easy to earn miles for travel

Sign-up bonus: 50,000 miles after you spend $3,000 in the first three months

Annual fee: $0 the first year; then $95

Capital One's travel rewards program isn't necessarily as lucrative as what other banks offer. However, Capital One recently expanded the card's benefits, adding airline transfer partners, and launching transfer bonuses — such as a 20% bonus to Air France/KLM. While the transfer value isn't quite as good as with Chase or Amex, the flip side is that Capital One miles are easy to earn and easy to use — and thanks to a new partnership, you can earn them quickly.

The Venture Rewards card earns 2 miles per dollar on all purchases. Miles can be redeemed as a statement credit to "erase" travel purchases. For example, if you buy a $500 plane ticket, you can apply 50,000 miles to cancel out that charge. The annual fee of $95 is waived the first year.

Capital One added airline transfer partners in late 2018 — most are at a 2:1.5 ratio, and a few are 2:1 — meaning it's now possible to get outsized value from the card. This is especially the case when you consider that you can earn 10x Capital One miles on hotels, which translates to 5–7.5 airline miles per dollar, based on the transfer ratios.

What the experts love: Low annual fee, redemption flexibility with the Purchase Eraser function

Cons: Points transfer at a lower ratio than 1:1, and transfer partners aren't quite as strong as Chase's — as Rathner notes, "the only US carrier available is JetBlue and there are no hotel partners."

Click here to learn more about the Capital One Venture card. Read more about the Capital One Venture: American Express Gold Card Why you'll love it: Generous rewards on dining and groceries

Welcome offer: 35,000 points after you spend $4,000 in the first three months

Annual fee: $250

The Gold Card earns a massive 4x points at restaurants worldwide and on up to $25,000 per year at US supermarkets (and 1x point after that), 3x points on flights booked directly through the airline, 2x points on hotels booked and prepaid through Amex Travel, and 1 point per dollar on everything else.

Based on the fact that you can easily redeem Membership Rewards points for more than 1 cent of value each when you transfer them to frequent flyer partners, this is one of the highest-earning available cards for everything food-related.

The Gold Card offers up to $120 of dining credits per year, broken into chunks of $10 each month. Credits are good for purchases through food delivery services Seamless and GrubHub, and at The Cheesecake Factory, Ruth's Chris Steak House, or participating Shake Shack locations.

Additionally, the card offers up to a $100 airline fee credit each calendar year, which is good for things like checked bags, onboard food and drinks, seat reservations, seat upgrades, lounge day passes, and more.

The two credits — together worth $220 — are almost enough to offset the card's $250 annual fee even before factoring in the value of the rewards you'll earn.

What the experts love: Fantastic rewards on dining and groceries at US supermarkets, statement credits and benefits to offset the annual fee

Cons: Smaller welcome bonus, only 1 cent per point of value unless you transfer points to an airline. The Points Guy's Hull also notes that the card's annual airline fee credit is somewhat hard to use, while Rathner adds, "The $120 dining credit sounds like a lot, but it's actually up to $10 a month at select restaurants and food delivery apps. If you don't live near any of these restaurants or live in a city not served by those apps, this benefit is useless to you."

Click here to learn more about the Amex Gold card. Read more about the Amex Gold Card: Blue Cash Preferred

Why you'll love it: Earns cash back quickly at a great rate

Welcome offer: $250 statement credit after you spend $1,000 in the first three months

Annual fee: $95

If you're less excited about earning rewards points — which can be valuable, but also tricky to redeem — and want to stick with cash back, the Blue Cash Preferred is the best option, despite its $95 annual fee.

Read more: The best cash-back credit cards of 2019

Amex recently added 6% cash back on select US streaming services and 3% back on all transit. That's in addition to the existing categories of 6% cash back at US supermarkets on up to $6,000 in purchases per year (and 1% after that), 3% back at US gas stations, and 1% cash back on everything else.

As a bonus, the Blue Cash Preferred offers a 0% intro APR on purchases and balance transfers for the first 12 months, before switching to a variable 14.74-25.74% APR.

The Blue Cash Preferred comes with a handful of travel and purchase protections as well. Cash back comes in the form of a statement credit, so effectively you can use it to "erase" purchases.

If you want to earn cash back instead of points and miles, make sure to check out our guide to the best cash-back credit cards for more options.

What the experts love: Bonus cash back on useful categories, easy to earn enough cash back to offset the annual fee, introductory APR

What the experts don't love: The card has an annual fee, which Personal Finance Insider's credit cards editor Sarah Silbert notes is relatively rare for cash-back cards, and there's a cap on earning 6% back at US supermarkets each year. Rathner recommends switching to a different card for groceries once you hit the $6,000 mark. Summer Hull of The Points Guy sums it up this way: "Cash is good, points are better."

Click here to learn more about the Blue Cash Preferred. Read more about the Blue Cash Preferred card: Bank of America Premium Rewards Visa Credit Card Why you'll love it: It's a good card even if you don't have a lot of money with Bank of America, but if you qualify for the bank's Preferred Rewards program, it's even better.

Sign-up bonus: 50,000 points after you spend $3,000 in the first 90 days

Annual fee: $95

If you want a rewards card that offers bonus points without lots of hoops to jump through, the Premium Rewards card can be a great option. Not only does it earn 2x points on travel and dining and 1.5x points on all other purchases, but it also offers extra rewards to Bank of America customers who qualify for the Preferred Rewards program. 

The Bank of America Preferred Rewards program is for customers with an average three-month balance of at least $20,000 in qualifying Bank of America or Merrill investment accounts. There are three tiers — Gold, Platinum, and Platinum Honors — and depending on what tier you qualify for, you can get a 25% to 75% bonus on all points earning with the Premium Rewards card. So you'll get 1.875x to 2.62x points on non-bonus purchases, and 2.5x to 3.5x points on travel and dining purchases.

Beyond offering the potential to be very rewarding for Bank of America customers, the Premium Rewards card offers up to a $100 credit to cover the application fee for Global Entry or TSA PreCheck. You also get up to $100 in airline incidental fee credits each year, so if you take full advantage of these two benefits, you'll actually come out ahead compared to the $95 annual fee.

Click here to learn more about the Bank of America Premium Rewards card. Read more about the Bank of America Premium Rewards card: Frequently Asked Questions How did we choose the best rewards credit cards?

You'll notice that this page doesn't include every rewards credit card currently available to new applicants. That's on purpose — we evaluated the options on the market, utilizing the expertise of our Personal Finance Insider staff and the input of credit card, points and miles, and financial experts to narrow down the list to the very best options.

We define "very best options" as those that offer concrete value through benefits like annual statement credits and airport lounge access and through rewards such as bonus points on your everyday spending.

This list doesn't include our top picks for airline and hotel cards. You can learn more about those cards here:

And see our guide to the best travel rewards credit cards if you're specifically interested in earning travel rewards rather than cash back.

What credit card offers the best rewards?

If you don't want to overthink it, the Chase Sapphire Reserve (or the Chase Sapphire Preferred if you want a lower annual fee) is a safe bet. However, there is no easy answer if you want to optimize all of your spending, because all the types of points and miles have different values. We recommend using The Points Guy's valuations to get a sense of what the different currencies are worth. For example, one Chase Ultimate Rewards point is worth 2 cents, while one Delta miles is worth 1.2 cents. So when you look at how many points or miles a rewards credit card offers per dollar, remember that you need to take the value of those points or miles into account. 

What are the different types of rewards credit cards?

There are a few main types of rewards cards:

  • "Flexible" travel rewards credit cards —Most of the picks in this article fall under this category. These cards earn bank points, also called "flexible points," that can be redeemed for travel, either directly through the issuing bank's travel portal (like Amex Travel) or with travel partners. This type of rewards credit card is usually the most valuable because you have the most options for using your rewards. For example, Amex has more than 20 travel partners you can transfer points to, and Chase has 13. Examples of this type of card include the Chase Sapphire Preferred, the Amex Gold card, and the Capital One Venture Card.
  • Cash-back credit cards — Examples include the Blue Cash Preferred card. These cards don't earn points or miles; they earn you cash back on all your purchases. If you don't travel or your priority is to get money back, these are the cards for you.
  • Hotel or airline travel rewards credit cards — Examples include the Hilton Honors American Express Aspire Card. These are travel-focused credit cards that earn rewards with a specific hotel or airline loyalty program and offer benefits like credit toward elite status. For that reason, they make the most sense for travelers who are loyal to the given travel brand. 
Should I earn cash back or points?

It depends on what you want to do with your rewards. If you want to put money back in your bank account, a cash-back credit card will help you accomplish just that — and you usually won't have to pay a very high annual fee, if you have to pay one at all.

On the other hand, if you're hoping to earn rewards that you can redeem for travel, a card that earns points is more up your alley. Our picks for best points-earning rewards cards earn either Amex Membership Rewards points, Chase Ultimate Rewards points, or Capital One miles. You can transfer all three of these currencies to travel partners and redeem them for things like free flights. (Note that while Capital One calls its rewards currency "miles," they aren't miles with a given airline program.)

If you're willing to juggle multiple credit card accounts, there's value in having both cash-back and points-earning cards. If you prefer a single-card strategy, evaluate your goals and consider how much you're willing to pay in annual fees to make the best decision for your situation.

The experts' advice on choosing the best rewards card for you

We interviewed a certified financial planner along with top experts on credit cards and travel rewards about what makes a good rewards card and how to choose the best options for you.

Here's what they had to say when we interviewed them about finding the best card for you. (Some text may be lightly edited for clarity. Special thanks to Business Insider's Tanza Loudenback for interviewing the experts.)

Generally, what features make a rewards credit card good?

Sara Rathner, travel and credit cards expert at NerdWallet:

I look for three things when I consider a rewards card:

  • Does it earn more points or miles where I spend the most?
  • Can those points or miles be applied to rewards I'd actually want? (Like airlines I typically fly, hotels I want to stay at, etc.)
  • Is it easy to redeem points, or will I get lost in a maze of draconian rules, restrictions, and blackout dates?

I also weigh the annual fee, but a sign-up bonus and other perks tend to offset the fee for me.

Luis Rosa, certified financial planner

Generally, cards that offer a variety of reward options are best because they offer the card holder flexibility. Whether it's points, miles, or discounted offers with a particular airline or hotel brand, the more options available the better in order to help the card holder take full advantage of the rewards offering.

Summer Hull, travel director at The Points Guy:

Solid earning structure, built-in benefits that are useful and not duplicated on many other cards, annual fee that is easy to justify relative to the perks, and some unique offerings that would be hard to get elsewhere.

Sarah Silbert, credit cards editor at Personal Finance Insider:

A good rewards credit card earns points that are flexible, meaning you have lots of options for using them, like you do with Amex and Chase points. It also has bonus categories that give you the opportunity to earn rewards quickly, as well as (hopefully) a generous sign-up offer for new cardholders.

Beyond that, a good rewards card should offer you benefits that make it worth the annual fee (if there is one), such as statement credits that cover travel purchases and travel coverages like trip delay insurance.

How can someone identify whether a rewards credit card is good for them?

Sara Rathner, NerdWallet:

Look for a card that rewards you where you spend the most, with terms you can live with. A card that's trendy won't necessarily be the right card for you. It's a highly personal decision, and it's worth it to not overlook a less flashy card that may suit your needs really well.

Luis Rosa, CFP: 

To best identify if a rewards credit card is good for you, consider your lifestyle and spending habits. For example, do you have a preferred hotel brand or airline? Do you often travel abroad? Knowing the answer to these types of questions will help you narrow down your choices in order to best help you identify if a rewards credit card is good for you.

Summer Hull, The Points Guy:

It's really 99% math. If you can place value on the rewards you earn and the perks included, it gets easy to see if a particular card is a good match for your spending habits and rewards desires.

Sarah Silbert, Personal Finance Insider:

Look at the card's bonus categories and see if they align with where you spend your money. Also remember to check if a card has a foreign transaction fee before you take it abroad — many cash-back cards do charge this fee, so don't assume.

What should someone consider when selecting a rewards credit card?

Sara Rathner, NerdWallet:

Travel rewards cards are popular, but they're a better bet for consumers who travel often, especially if they travel internationally. If you stay close to home, a cash-back card may actually be more rewarding.

Also, consumers who currently have credit card debt should make paying that debt down their number-one priority, before looking for a rewards card. The interest you'd pay on your debt would wipe out the value of any rewards you'd earn. Consider a balance transfer card, which gives you a year or more to pay down your debt at 0% interest.

Luis Rosa, CFP:

Consider annual fees and foreign transaction fees. Some annual fees can be in the hundreds of dollars, so you want to make sure that the rewards you'll accumulate will offset the cost of having the card. Another thing to consider is whether or not you carry a balance. If you do carry a balance, you should also consider the interest that you'll be paying on that balance in order to ensure that it's not eating away at your rewards.

Summer Hull, The Points Guy:

Is the sign-up bonus juicy? Let's be real, big bonuses are better than small ones, so pounce when the bonus is big. But then look beyond at the earning rate, the annual perks and benefits such as statement credits and elite status.

Sarah Silbert, Personal Finance Insider:

Make sure you're doing your homework so you don't miss out on a higher sign-up bonus (do some searching online to see if higher offers are available). Many cards offer limited-time welcome offers that can score you thousands of extra bonus rewards compared to the standard offers.

Always make sure that you'll be able to use the rewards card responsibly, by paying off your statement each month and avoiding spending beyond your means.

So you know you want a rewards credit card, but not sure which one?

Our list of the best rewards credit cards can help narrow down your choices if you already know what you want. But what if you're not sure which type of credit card is best suited to your spending habits. 

If you're looking to maximize rewards on your everyday spending, look no further than the following credit cards. We'll break it down by spending category — from dining to gas to groceries.


With the average American spending $3,424 on dining between 2017 and 2018, this is a category most people will want to maximize. Luckily, lots of cards offer generous rewards on dining.

The Citi Prestige® Card offers the highest return on dining spending, with 5x points on these purchases. You may notice that some cards, like the Hilton cards below, offer more than 5x points — but keep in mind that the points multiplier is only half of the equation.

You also need to know how much each point is worth. We recommend using The Points Guy's valuations to get a sense of how many cents you'll get in value with different loyalty currencies. These valuations are based on all the different ways you can use a given type of points or miles, from redeeming them as statement credits to transferring them to a travel partner to book a flight.

Below, we'll rank the best credit cards for dining in order of highest to lowest return based on how many rewards you earn per dollar spent, and the value of those rewards based on TPG's estimations.

Credit cards with the best bonuses for dining

Based on the numbers, the Citi Prestige is the most rewarding card for dining purchases. But the Amex Gold card or the Chase Sapphire Reserve could be a better option for you if you prefer to earn Amex or Chase points. Citi ThankYou points can be transferred to 14 airline transfer partners including Cathay Pacific, JetBlue, and Virgin Atlantic, but Amex and Chase's loyalty programs partner with airlines and hotels that are arguably more useful for many US-based travelers, such as British Airways, Delta, and Marriott with Amex and Hyatt, United, and Southwest with Chase. In fact, The Points Guy values Citi points (1.7 cents per point) a bit lower than Amex and Chase points (2 cents each)


If you have a car, gas is a big spending category — and it's one that many cash-back cards pay out big rewards on.

  • American Express® Business Gold Card: 4 points per dollar spent at the two categories where you spend the most each month, including US gas stations, on up to $150,000 per calendar year, then 1 point per dollar (8% return on spending)
  • Citi Premier℠ Card: 3 points per dollar spent on travel, including gas stations (5.2% return on spending)
  • Costco Anywhere Visa: 4% gas stations on the first $7,000 spent per year, then 1% (4% return on spending)
  • Hilton Honors American Express Surpass Card: 6 points per dollar spent at US gas stations (3.6% return on spending)

Again, not all points are created equal, and whether 6 Hilton points is equivalent (or higher than) 4% cash back or 4 Membership Rewards points depends on how you redeem your rewards. Most people will be best off going with the Amex Business Gold card for gas rewards.

Thanks to a vast list of hotel and airline transfer partners, you can redeem Membership Rewards points for some incredible travel experiences. If you have a business-class trip to Europe in mind, Membership Rewards transfer partner All Nippon Airways (ANA) offers one of the best deals out there at 88,000 miles round-trip.

However, if you're saving up your Hilton points for a high-end resort in the Maldives, it could be worth channeling gas spending toward the Hilton Honors Surpass card.


With 4x points on the first $25,000 spent each year at US supermarkets, the Amex Gold card offers the most generous payout on grocery spending. Considering the average US household spends $4,445 on groceries per year, these limits shouldn't be problematic for most consumers.

Earning 6% cash back on the first $6,000 spent, the Blue Cash Preferred card is a good option if you prefer cash back to rewards points. When maxed out, the 6% back equates to $360 cash back, which is enough for most people to book at least a couple of hotel nights or a round-trip transcontinental flight.

Read more: What a year of grocery spending could earn you with 3 popular credit cards  

Flights and other travel
  • The Platinum Card from American Express: 5 points per dollar on flights booked directly with airlines or with, 5 Membership Rewards points on prepaid hotels booked on (10% return on spending)
  • Chase Sapphire Reserve: 3 points per dollar spent on travel (6% return on spending)
  • American Express Gold card: 3 points per dollar on flights booked directly with airlines or on (6% return on spending)
  • Citi Prestige: 5 points on air travel, 3 points on hotels and cruise lines (5.1%-8.5% return on spending)
  • Citi Premier card: 3 points on travel including gas stations (5.1% return on spending)
  • Uber Visa card: 3% cash back back on airfare, hotels and vacation home rentals
  • Costco Anywhere Visa: 3% cash back on travel worldwide

If you're looking for lots of rewards for flights, the Amex Platinum card is a great choice. The card earns 5x points on flights booked directly with airlines and one Prepaid hotel bookings made with American Express also earn 5 points. One reason I'd recommend this card over the Citi Prestige is that the Amex Platinum will soon gain valuable travel protections like trip delay insurance, while Citi has mostly done away with these on its cards. The Platinum card also has no foreign transaction fees, meaning you can use it to earn cash back abroad without paying a 3% fee.

While the American Express Platinum is a great option, not everyone will get enough value out of the 5x bonus categories to justify the $550 annual fee. The Chase Sapphire Reserve is a great alternative. While it earns a lower 3 points per dollar spent, this bonus applies to all travel purchases, not just flights. Plus, the card's $450 annual fee is largely offset by the $300 travel credit. Unlike American Express, Chase doesn't restrict its travel credit to a specific airline. The credit automatically applies to any purchases coded as travel. That's why the Chase Sapphire Reserve is such a popular card for earning and redeeming travel rewards.

All other spending
  • Chase Freedom Unlimited: 1.5% cash back on everything, can be combined with Chase Ultimate Rewards cards to boost your value (1.5%-3%)
  • Chase Freedom: 1% cash back, 5% rotating quarterly category bonuses for up to $1,500 in combined spending (requires activation), can be combined with Chase Ultimate Rewards cards to boost your value (1.5%-3%) (1%-10% return on spending)
  • Discover it® Miles: 1.5 miles per dollar spent, and Discover will match all your cash back at the end of the first year (3% return on spending)
  • Discover it® Cash Back: 1% cash back, 5% category bonuses when you activate (1-5% return on spending)
  • Citi® Double Cash Card: 1% when you make purchases, 1% as you pay (2%-3.4% return on spending)
  • Uber Visa card: 2% back on online purchases (1-2% return on spending)

Lots of cash-back credit cards offer at least 1.5% cash back on everything, which is a great benchmark to keep in mind on purchases that aren't eligible for bonus points. The Discover it Miles a great option for those looking for a no-annual-fee card with accelerated earning power. Cardholders earn 1.5 miles per dollar spent, which is equivalent to 1.5% cash back. Points are doubled the first year and can be redeemed for statement credits toward travel purchases or transferred to your bank account.

For those looking to maximize long-term earnings, the Chase Freedom Unlimited is another great option. It earns 1.5% cash back on everything. If you have an Ultimate Rewards-earning credit card like the Chase Sapphire Preferred Card or the Sapphire Reserve, you can convert your Freedom Unlimited cash back to Ultimate Rewards points. Essentially, you could earn 1.5 Ultimate Rewards points per dollar spent on everything, which equals a very solid 3% return on every dollar you spend.

If you want the flexibility of earning occasional category bonuses, the Chase Freedom and Discover it Cash Back are worth considering. Both cards earn 1% cash back along with 5% on select category bonuses. Bonus categories rotate every quarter and cardholders can earn 5% cash back on up to $1,500 worth of spending when they activate the bonus each quarter. Be sure to check the cash back bonus calendar for both Discover and Chase for a better idea of where you can expect to earn more points.

For a more straightforward option, the Citi Double Cash card is solid. Cardholders earn 1% cash back on purchases and another 1% when they pay off the card. Recently, Citi introduced cash back-to-ThankYou points conversions, making the Citi Double Cash card a great way to earn 2 ThankYou points on every dollar spent.

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Buzzy primary care startup One Medical just filed to go public

Fri, 01/03/2020 - 4:45pm  |  Clusterstock

Primary-care startup One Medical just filed to go public. 

On Friday, the company filed paperwork with the US Securities and Exchange Commission to go public, and plans to trade under the ticker "ONEM." The filing says that One Medical plans to raise $100 million, which is a placeholder amount and can change. It doesn't yet say at what price the company will sell shares.

When One Medical opened for business in San Francisco in 2007, its goal was to upend the way people got medical care by making it easy and convenient to see a doctor. The company charges a $200 annual fee and bills your insurance. One Medical had 397,000 members and operated in 77 locations as of September 30, the filing says.

The company's net losses deepened as membership climbed, the filing shows. From 2017 to 2018, losses widened from $31.7 million to $44.4 million. For the first nine months of 2019, One Medical's net loss was $34.2 million.

Read more: I became a member of One Medical, a primary-care practice that charges a $200 annual fee and has plans to double over the next two years. Here's what it was like.

In addition to appealing to consumers, over the past few years One Medical has been increasing its efforts to sign up employers to provide One Medical's services to their employees. According to the filing, it has signed up 6,000 enterprise clients.

In particular, the filing noted, its work with Google accounts for 10% of the company's 2018 net revenue, as well as 10% of the company's net revenue through the first nine months of 2019.

One Medical was founded by Tom Lee, who served as the company's CEO until 2017. Current CEO Amir Rubin
joined One Medical in 2017 after working as an executive at UnitedHealth Group's Optum division. Before that, he was the CEO of Stanford Health Care.

Lee, for his part, has founded a new healthcare startup called Galileo, which offers a mix of online and in-person care. The aim is to do a better job of taking care of sicker people in the government-funded healthcare programs Medicare and Medicaid. 

Read more: Meet the 8 companies changing how doctors get paid and building the future of medicine

After a big infusion of capital in 2018, One Medical is expecting to double the number of medical clinics it operates over the next two years.

The company raised $220 million in funding in a 2018 round led by The Carlyle Group. In total, the company's raised $408 million and has a private valuation of $1.5 billion, according to PitchBook. 

According to the company's IPO filing, One Medical's top investors going into the IPO include The Carlyle Group, which owns 26.8%, Benchmark Capital, which owns 13%, Oak Investment Partners, Lee, DAG Ventures, GV, JPMorgan, and Maverick Fund.

JPMorgan Chase and Morgan Stanley are leading the IPO.

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Analysts predict people will ditch restaurants and retreat into their homes in 2020, as the election looms and anxiety builds

Fri, 01/03/2020 - 4:19pm  |  Clusterstock

The 2020 elections are bad news for restaurants hoping to get more customers to visit. 

BTIG analyst Peter Saleh said in a note on Friday that he expects restaurant industry traffic to continue its negative trend in 2020. And, according to Saleh, the decline could be even steeper as people stay in to watch political debates and the summer Olympics. 

"As we saw the last time around in 2016, we believe these events could present a significant distraction from restaurant visits, which has negative implications for most of casual dining given their dependence on in-restaurant sales," Saleh said. "Additionally, we expect elevated media inflation this year from the presidential election, as candidates battle for voter attention on national television." 

Saleh said that he estimates traffic will be negatively impacted by an additional 100 to 150 basis points, as people "opt for their couch vs. a restaurant dining room."

Restaurant industry consultant Malcolm Knapp told Business Insider earlier this year that political anxiety is also feeding into the move toward eating at home. While the rise of delivery is typically portrayed as a desire for convenience, Knapp says that many people retreated into their homes following the recession to escape the worries of daily life. 

"Going out is a more precious thing than it was," Knapp said. "It's not a disappointment. It's a loss. And people get angry about loss." 

While declining traffic is a problem for many chains, BTIG's Saleh said casual dining chains such as Applebee's and TGI Fridays in particular are likely to be hit hardest.

Meanwhile, delivery-centric pizza chains including Domino's and Papa John's are set to benefit. Saleh also highlighted Chipotle as a top pick, thanks to menu innovation and digital sales growth. 

SEE ALSO: Apply here to attend IGNITION: Retail, an event focused on the future of retail, in New York City on January 14.

SEE ALSO: A perfect storm of anxiety and the death of the American dream are transforming chains like Applebee's and TGI Fridays

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