• Skip to main content

Vertex Markets

A.I. Powered Business Networking

  • KNOWLEDGE CENTER
  • FAQ’S
  • A.I. COMMUNITY BENEFITS
  • SOLUTIONS
  • CONTACT US
  • REGISTRATION
  • LOG IN
  • Start Your Loan Process

Archives for January 2021

Short-Sellers vs GameStop Buyers

January 28, 2021 by Channelchek Leave a Comment

investment research_Gamestop

The Polarized Opinions Surrounding the GameStop Short Squeeze

Gamestop (GME) short-sellers have been handed a lesson in taking on a short position without a plan. At least that’s one way to look at what’s being called the most painful short-squeeze in history. But there are many ways to look at the GME short; it is as polarizing as so many other events we’ve seen in the past 24 months. Events where people line up to choose sides. This includes unaffected people, including those that still can’t explain a “short stock position” yet are vehemently arguing for or against the activities that lead to the GameStop short-squeeze.

Most of the short positions are hedge funds and other institutional investors. Those buying GameStop now at what is considered excessive prices are viewed as newbies treating the stock market as a game. The headlines, quotes, and reporting below are from various media outlets, print, TV, online video channels, bloggers, vloggers, and a few social media posts. There is a good deal of emotion surrounding this historic event, including those who cheer it and those looking to the regulators asking them to make sure this can’t happen again.

If you’re well versed in going long and short stock, skip over the next two paragraphs (show them to your less informed friends).

What is Shorting a Stock?

When an investor buys a stock, the potential for upside, in theory, is unlimited. If the price keeps rising, the cash it can put in their pocket increases as well. Speculators that expect a decline in the value of a company’s shares sell stocks they don’t own (short sale) to buy it back later at a lower price. This is known as covering their shorts. The potential for gain is finite in that it can only be as much as the initial trade’s sale price.  Conversely, if the price goes up after they sold a stock in expectation of covering at a lower price, their potential for loss is as infinite as if they owned it and it kept rising.

Disciplined traders with well-defined stop-losses don’t have greater risk, whether long or short. Stock market participants that are willing to let their shorts move far against them because they are “sure” the stock will go down and that they will reap the rewards could suffer if they hold too long.  If faced with further price increases, they have this difficult question, “do I close out my position, take the loss and redeploy my resources someplace else, with less than I started, or do I continue to hold the short position despite my original misjudgment?”

Davey vs. Goliath

The shorting activity that had taken root by Monday (Jan. 25) had grown tremendously Tuesday in after-hours trading after Elon Musk took to Reddit fueling dramatic price moves (Musk’s company TSLA was a popular short by hedge funds last year). The message posted on the subreddit board (wallstreetbets) suggested support for the buyers; he later amplified the message on Twitter

Many news outlets first reported the GameStop stock activity as a Davey vs. Goliath story. U.S. News and World Report spread a widely distributed Associated Press article titled “Smaller Investors Face Down Hedge Funds, as GameStop Soars”  The article published on Monday held the view that “A head-scratching David and Goliath story is playing out on Wall Street over the stock price of a money-losing video game retailer.”  One Bloomberg article characterized the short-sellers as not motivated by greed, but instead “…engaged in an anger-driven uprising against the establishment.” The Bloomberg headline read: “GameStop is Rage Against the Financial Machine.

Political commentator Dan Bongino who is a large investor in the social media platform Parler, even had something to contribute. Parler’s fate is uncertain in their battle against Amazon and Apple, among others.  Bongino put his own spin on what’s happening. In his daily podcast, The Dan Bongino Show (Episode 1444), Dan described it as “Wall Street elites in meltdown mode.” He took glee in the coordination and tactics used by the masses in what he labeled “A war of attrition between the elites and the great unwashed.”

Part of the polarizing is the natural conflict between generations.  Older generations don’t always cede control as quickly as younger generations may want. In contrast, younger generations find their own methods and rules for acting in an adult world. This GME story is being reported in that way by some. A Reddit moderator of wallstreetbets titled a post, “How’d you guys manage to win so big it made these old guys drown in their tears?” It is a lengthy post that ends in this way:

“…That fuzzy sensation you are feeling is called RESPECT, and it is well earned. Wall Street no longer dismisses your presence anymore. The smart ones know that you guys do things differently and will adapt in ways to accommodate you and how you as the next generation want things done. You should all be proud of yourselves.

Your time is now.

On behalf of the Mod team,

Make that money and be the change you want to see.”

Market Manipulators to be Dealt With

The articles and support of the “small guy” flexing their collective muscles are giving way to stories describing the dangers of coordinated trading. The SEC, Nasdaq, U.S. Treasury Secretary Yellen, and even online brokerage firms discussed actions they would take.

In an opinion piece published by MarketWatch on Wednesday (Jan. 27), Jeremy C. Owens wrote, “Reddit’s WallStreetBets is really the same old story — a concerted effort of market manipulators who will get rich and surely destroy some unwitting participants in the process.”

Stock Broker TD Ameritrade blocked some trades on Wednesday in GME according to a notification received by some clients. The SEC said late Wednesday that it is monitoring the “volatility in the options and equities markets” and “working with our fellow regulators to assess the situation,” according to The Wall Street Journal.

Regulators were urged in recent weeks by “tipsters” to review statements made on message boards and social media to determine whether there was fraud in plain sight. The Biden Administration’s economic team is “monitoring the situation,” White House Press Secretary Jen Psaki told reporters Wednesday afternoon regarding GameStops activity. The Securities and Exchange Commission (SEC) also released a statement Wednesday evening saying they are “aware of and actively monitoring the on-going market volatility in the options and equities markets.”

Gamestop chart

Movement in GME vs. S&P 500 since January 1, 2021

Nasdaq’s CEO Adena Friedman told CNBC Thursday they actively monitor social media chatter and will halt stock trading if the content it sees matches with “unusual activity in stocks.” Bloomberg reported that Wells Fargo had banned its advisors from making stock recommendations on GameStop.  

“The Internet” Weighs In

It was clear that many social media posters were also piling on — not by buying GME, but by posting memes. To be sure, many of them were not involved in the stock market but had to quickly learn in order to understand the buzz going on around them.

GME
Gamestop_trading

hese Tweets are just a small sampling found on only one social media platform. The number of comments, retweets, and “Likes” measure in the hundreds of thousands.

Take-Away

Interactive Brokers Chief Strategist Steve Sosnick referred to short sellers, in general, as a “curious bunch” who profit through “courage and careful research.” But as the Reddit/GME battle continues, he warned, “many” could quickly “find themselves swamped.”  Sosnick also commented that no one can withstand an investor “tsunami.” He seems to be more than aware of the skills required.

Whether or not you’re involved in Gamestop, you can use what is happening to professional money managers as a lesson and a reminder not to let losses get too far away from you. Unexpected events occur, pandemics, contango, disasters, accounting fraud, legislative changes, and competition. There is also the dreaded “tape bomb” where someone of prominence says something unexpected that unravels your reason for holding the position in the first place. Part of being in any position is having an exit plan. The reason for the exit plan is to know what to do when you were “more sober” neither cheering your gains or agonizing over losses.

It’s also a reminder of how power shifts in the market. It is only recently individuals enjoy free trades, true equity research, increased communication, and screening software. Throw in a few stimulus checks, and perhaps some power has shifted away from Wall Street for now.

Suggested Reading:

Is Robinhood Violating the Fiduciary Conduct Standard in Massachusetts?

How Good are Experts at Predicting the Market?

Why is Bitcoin Plummeting?

 

Sources:

SEC Statement Ongoing Market Volatility

AMC GME Stock Market card

GameStop Short Interest Float

Reddit WallStreetBets – How’d You Guys Manage to Win so Big?

GameStop Jumps on Elon Musk Tweet

Frenzied GameStop Surge

Rage Against the Financial Machine

GameStop WallStreetBets

Investors Face Down Hedge Funds

GameStop Reuters

Nasdaq Monitors Social Media

investment research_Gamestop

Filed Under: Finance, Investing, New & Trends, Slider, Technology

Boost Your Online Sales in 2021

January 25, 2021 by Peter Spoleti / Vertex Markets Inc. Leave a Comment

11 Ecommerce Trends to Increase Your Online Sales in 2021

Curious about where the eCommerce industry is heading and which eCommerce trends are driving online sales in 2021?

The Covid-19 pandemic has wreaked havoc on many industries, from restaurants to entertainment, but not eCommerce. In fact, online retail shops have been one of the few businesses to benefit as a result of Covid-19 and stay-at-home orders. 

Online sales had been increasing steadily for some time, but following COVID-19, the industry has blown up. American online shoppers are expected to have spent a whopping $709.78 billion on eCommerce in 2020, representing 14.5% of total retail sales. Just in the third quarter of 2020 alone, there was a 57% year-over-year increase in U.S. online revenue. 

Many online shoppers in 2020 were first-time digital buyers, representing a shift in consumer behavior towards eCommerce that is likely to remain even as Covid-19 subsides.

As an eCommerce business, 2021 offers enormous potential to grow your digital presence, convert your audience, and boost sales. 

eCommerce trends for boosting online sales in 2021

If you’re looking to ramp up your eCommerce sales this year, look no further. You’ll want to consider ways your online store can implement the following eCommerce trends, stay competitive, and continue growing.

1. Augmented Reality Creating Realistic Shopping Experience remotely. 

One of the biggest hurdles to online shopping is being unable to view the product in a real-life setting. Sometimes, even a close-up perspective can help customers make a final decision about in-home products, like carpets or mirrors. 

Augmented Reality (AR) solves this problem by helping shoppers visualize better. 

Consumers can use AR technology to envision how a product would look like in a real-life, personalized setting—whether it’s themselves wearing a piece of clothing or a furniture item in their living room. The end result is a customizable and interactive shopping experience that encourages sales. 

Plenty of eCommerce retailers are already making use of AR to engage consumers and boost sales. ABI Research forecasts that by 2022, AR will be responsible for 3% of worldwide e-commerce revenue, or a whopping US $122 billion in revenue. 

2. Omnichannel Selling Will Reach Customers Everywhere

Now more than ever, eCommerce sites need to make use of multi channel platforms to reach more customers and generate sales. 

One way to do this is by ensuring your eCommerce store is compatible with mobile devices, tablets, laptops, and more. It also helps to take advantage of multiple social media platforms— especially Instagram, TikTok, Facebook, and Pinterest. You may also want to explore partnering with a giant online retailer, like Amazon or Etsy. 

The more exposure you have, the broader and more powerful your reach. It may seem like a lot to manage, but omnichannel selling is expected to become easier and more accessible to online retail stores throughout 2021. 

As your eCommerce store grows, continue identifying new channels relevant to your customer base and integrate them into your selling strategy.

3. Potentially new Exposure with Voice Search

Millions of U.S. households use smart speakers like Amazon’s Alexa, Google Assistant, and Microsoft’s Cortana on a daily basis. People can play music, check the weather, ask questions, and even shop for products with a voice command. 

As smart speakers continue to grow in popularity, consumers will also make more online purchases through voice command. 

It’s important for eCommerce businesses to consider integrating their online store with today’s popular smart speakers. For example, many Amazon retailers have been able to successfully make online sales through Alexa. 

Be sure to stay on the cutting edge by optimizing your website to be a solution for voice searches related to your product through SEO.

4. AI Will Become a More Common eCommerce Trend

Artificial Intelligence (AI) will revolutionize nearly every industry in the coming years, and eCommerce is no different. Online retailers can use AI to optimize customer data, manage inventory, automate tasks, offer customer support, enhance marketing efforts, and more. 

AI can also assist with product recommendations and shopping guidance—helping online stores provide a personalized experience to consumers and boost sales. 

In order to stay ahead of competitors, it’s recommended online retailers begin implementing AI features sooner rather than later. Marketing, customer service, and workflow automation are a good place to start. 

5. Personalization Adds a Powerful Punch

Over half of U.S. shoppers surveyed by Bazaar voice and Research Now agreed that personalization is critical. Online retailers and marketers have taken notice—making personalization one of the biggest eCommerce trends to watch out for in 2021 and beyond. 

Online stores can use the customer data they’ve collected to provide individualized experiences. This can include tailored email notifications, relevant shopping discounts, saving past purchases, and one-on-one product recommendations. 

As one of the most important eCommerce trends, personalization not only contributes to a better shopping experience, but also has powerful effects on sales. One study estimates that personalization can contribute to a 25% increase in revenue. 

6. Chatbot can Help improve the Customer Experience

Chatbots enhance the customer experience by combining the very best of automation and personalization. 

Shoppers can use chatbots to ask questions and receive recommendations, all the while feeling as if they’re receiving one-on-one personal attention. Many chatbots are designed to resemble human conversations and engage users. 

Chatbots improve the shopping experience and are also a cost-effective solution for helping online retailers manage customer service. For these reasons, chatbots are becoming an increasing popular eCommerce trend. 

7. Payment Methods Make Shopping Flexible

Shoppers are expecting greater variety when it comes to both brick and mortar stores and eCommerce sites alike. 

Mobile payments have especially come to the forefront in recent years, no doubt from the rise of Apple Pay, Samsung Pay, and Google Pay. One 2019 estimate predicts that by the end of 2021, 73% of all eCommerce sales will be from mobile payments. 

E-wallets are another major eCommerce trend for 2021. Amazon Pay and Paypal store important customer information to allow for a seamless, quick checkout process – all the while reducing barriers to sales. 

Make sure your eCommerce site is mobile friendly and to incorporate as many new payment methods as you can. This will ensure a smooth checkout process and better conversion. 

8. Sustainability and Brand Values Position You For Success

Conscious consumerism is one of several eCommerce trends making the biggest impact in 2021. According to the Harvard business review, 65% of consumers want to shop from purpose-driven brands.

Brand values can be a variety of different things, but one value that’s becoming increasingly mainstream is environmentalism. 

eCommerce sites that take some of the following environmental steps could be in a better position to resonate with audiences:

  • Reduce wasteful packaging
  • Incorporate biodegradable packaging
  • Work with fair-trade organizations
  • Source locally
  • Find other ways to reduce their carbon footprint

Be sure to consider your consumer base and demographics as you build out brand value incentives and objectives.

9. Video, a great tool to Attract, Engage and Convert

If a picture can tell a thousand words, then the potential for video is infinite. Videos are an ideal way for eCommerce brands to relate their message, educate consumers, and capture an audience’s attention. They are also an especially powerful tool among Millennials and Gen Z. 

Expect to see more videos pop up in unexpected places throughout 2021. Aside from social media platforms, videos will also be increasingly incorporated onto eCommerce sites— including homepages, product pages, and more. 

Consider ways your eCommerce business can develop video content for multi-channel purposes and stay ahead of the competition. 

You can also leverage the power of social media on your website by integrating social videos on landing pages.

10. Drop shipping is Becoming a More Important eCommerce Trend

Drop shipping allows eCommerce stores to purchase products directly from a manufacturer, who then ships it to the customer. This way, online retailers never have to store inventory or handle products directly. Instead, you can drive revenue based purely on your brand’s reach and marketing.

Drop shipping has been a popular eCommerce business model for some time—with its global market size valued at about $149.4 billion in 2020. In 2021, drop shipping is one of several eCommerce trends expected to grow even larger. 

Drop shipping offers plenty of potential as a lucrative eCommerce business. Now that Alibaba has opened up new avenues for dropshipping sales, there are more opportunities than ever before. 

11. An Increased Focus on Boosting Conversion Rates

The key to growing your eCommerce sales in 2021 is by focusing on maximizing your conversion rate. The average conversion rate for most online shoppers in the United States hovers around 3%. 

Not every consumer that comes to your website will end up purchasing a product. The goal of optimizing for conversions is to drive this number up. You can do this by tweaking things on your website, such as the design, layout, copy, and more. Adding a new product explainer video could be the change you’ve been looking for!

As mentioned, investing in videos, omnichannel marketing, enhancing personalization, and introducing AI are some of the ways you can boost your conversion and drive more online retail sales in 2021. 

How to Capitalize on eCommerce Trends in 2021

How can your eCommerce business gain an edge? Start by investing into your online store so that it’s in line with the latest eCommerce trends of 2021. Investing in your eCommerce business now ensures you’re ahead of the competition when it matters most. 

Whether you plan on introducing more video content, working with a chatbot to improve customer relations, increase sustainability, or even incorporate more payment methods—you’re going to need more cash to foot the bill.

National Business Capital & Services helps eCommerce businesses obtain financing solutions to empower them to boost their online sales. 

Whether it’s a business line of credit or a loan for your eCommerce store, our expert Business Financing Advisors can help you get the funds you need to take your online store to the next level. 

Applying takes less than a minute—get started now!

Related Posts:

Identity Resolution, Identifying Customers across Multiple Devices & Touchpoints.

Generating Leads with Email Drip Campaings

Small Business Financing Options

Filed Under: B2B, Business Development, Digital Marketing, Slider, Technology, Work From Home

Why is Bitcoin Plummeting?

January 25, 2021 by Paul Hoffman / Managing Editor Leave a Comment

investment research_Gamestop

Is the Bitcoin FOMO Trade Unwinding?

Bitcoin has been getting crushed. Cryptocurrency traders are now asking, is Bitcoin a buy? Should we sell Bitcoin? Will the new White House usher in more stringent rules? Will the fear of higher taxes drive up the popularity of cryptocurrency, and will crypto benefit from weaker global currencies?

Where We Are

The post-election momentum that helped Bitcoin shoot to the $41,962.26 peak on January 7th has given way over the past two weeks to a 24% decrease, including yesterday’s 9% plummet.

Bitcoin, digital currency

Twelve Months of Bitcoin on a Percentage Basis

The recent decline has not retraced even half the gains experienced since November. Still, traders are watching with poised trigger fingers as Bitcoin tends to trade on technical factors — a drop through perceived support levels may confirm a further march downward.

Catalysts

Former Fed Chair Janet Yellen, who is expected to head the U.S. Treasury Department, responded about cryptocurrencies when questioned at the Senate confirmation hearings on Tuesday, January 19th. Senator Hassan (N.H.) asked her about “the potential for terrorists and criminals to use cryptocurrency to finance their activities.” The former Fed Chair and macroeconomics professor responded that the U.S. should be aware of emerging tools for terrorist financing, “…we need to make sure that our methods for dealing with these matters, with tech terrorist financing, change along with changing technology, cryptocurrencies are a particular concern.” Yellen further defined her concern by saying, “I think many [cryptocurrencies] are used, at least in a transaction sense, mainly for illicit financing, and I think we really need to examine ways in which we can curtail their use and make sure that anti-money laundering [avoidance] doesn’t occur through those channels,”

The presumptive future cabinet member is well known by cryptocurrency followers for her distaste for Bitcoin. Many still have an incident etched in their memory of Yellen being photobombed by a man holding a “Buy Bitcoin” sign while she was speaking against it on Capitol Hill in 2017. 

 

Fed Chair Yellen Quotes:

December 2017: “It is not a stable store of value and it doesn’t constitute legal tender. It is a highly speculative asset.”

October 2018: “I will just say outright I am not a fan, and let me tell you why. I know there are hundreds of cryptocurrencies and maybe something is coming down the line that is more appealing but I think first of all, very few transactions [that] are actually handled by bitcoin, and many of those do take place on bitcoin are illegal, illicit transactions.”

Crypto is Not the Treasury’s Biggest Target

Crypto advocates claim Bitcoin is a superior currency because it is not prone to government-induced inflation. Their position has gained a level of credence over the past 12 months as central banks increased the money in circulation at record rates against the backdrop of lockdowns. The U.S. dollar has been falling relative to gold, the Euro, and the Yen.

However, cryptocurrency is not a high priority for Yellen. At the Senate hearing, she said her initial focus would be helping workers and businesses that have been hurt by the pandemic. Issues like unfair trade between the U.S. and China took a higher priority.  So while crypto holders and traders should pay attention to Yellen’s distaste for the electronic currency, there are no expected immediate plans to place controls on it. More positive is that another Biden appointee, the SEC Commissioner Gary Gensler, has taught cryptocurrency classes at MIT and is expected to advocate for its usage.

Take-Away

For quite some time, Bitcoin and other currencies were rewarding those that remained bullish on them. Through much of last year, there was an acceleration in interest in owning cryptos. As with other markets during the past nine months, the fear of missing out (FOMO) contributed to its dramatic rise.  Will fear step in and create the snowball effect now on the downside? As long as the regulatory climate is murkier, the enthusiasm and direction is more likely take a pause.

Sources:

Bitcoin Price Shoots Past 20,000

Janet Yellen Says Cryptocurrencies are a Concern

Janet Yellen, Bitcoin (Coindesk)

Photo: “Bitcoin Sign Guy” , 2017

market research

Filed Under: Banking, Finance, Investing, New & Trends, Technology

Tax Credit Expanded for More Business Relief

January 20, 2021 by Michels & Hanley CPAs LLP Leave a Comment

Business Relief, Tax Credit
Employee Retention Tax Credit Expanded for More Business Relief

1.13.21 | Client Alert

The Employee Retention Credit (ERC), which was originally included in the CARES Act
(original law) passed in March 2020, provided a refundable payroll tax credit of 50% for up to
$10,000 in qualifying wages per employee paid by an eligible employer whose business had
been financially impacted by COVID-19. However, this credit was not available to businesses
that had borrowed under the Paycheck Protection Program (PPP).

The Consolidated Appropriations Act (new law), signed into law on December 27, 2020, makes the following significant changes pertaining to the ERC:

The new law makes the original ERC available to the borrowers of the PPP loan retroactively to March 13, 2020. However, there are no changes to the eligibility requirements or computational aspects of the credit for qualified wages paid after March 12,2020 and before January 1, 2021.  The Act also extends and modifies the eligibility requirements and computational aspects of the credit for qualified wages paid from January 1, 2021 through June 30, 2021, at which time this credit is set to expire.

The outline below highlights the contrast between the original and the new law and explains how your business can take advantage of this valuable tax incentive for 2020 and 2021.

Covered Period

Original law – Applicable to qualified wages paid after March 12, 2020 and before Jan 1, 2021.

New law – Applicable to qualified wages paid after March 12, 2020 and before July 1, 2021
with some changes to the eligibility and credit computation to wages paid from January 1, 2021 to June 30, 2021 only

Eligibility Requirements

Original law – Under the CARES Act, the ERC is available only if the business falls into one of the following two categories:

The employer’s business was fully or partially suspended by government order due to COVID-19 during the calendar quarter, in which case only the wages paid during the full or partial shutdown period qualify for the credit;

or

The employer’s gross receipts dropped below 50% of the comparable quarter in 2019. Once the employer’s gross receipts rise above 80% of a comparable quarter in 2019, they no longer qualify for the credit after the end of that quarter.

New law – Under the Consolidated Appropriations Act, the extended ERC is available only if the businesses fall into one of the following two categories during the first two quarters of 2021:

The employer’s business was fully or partially suspended by government order due to COVID-19 during the calendar quarter, in which case only the wages paid during the full or partial shutdown period qualify for the credit;

or

The employer’s gross receipts dropped below 80% of the comparable quarter in 2019.  Alternatively, businesses have the option to meet this requirement only for 2021 by comparing the immediately preceding quarter to the same quarter in 2019.

Qualified Wages and Number of Employees Threshold

For purposes of calculating the ERC, qualified wages are based on the monthly average number of employees in 2019.

Original law – Under the original law, if the employer had 100 or fewer “full time equivalent” (FTE) employees on average in 2019, the credit is based on wages paid to all employees, regardless of whether they worked or not. If the employees were paid for full-time work, the employer still receives the credit.

For employers with more than 100 FTE employees on average in 2019, the original law only allowed the credit for wages paid to employees who did not work during the calendar quarter.

New law – Effective January 1, 2021, the new law increases the FTE threshold to 500 employees and allows employers with 500 or fewer FTE employees to The ERC for employers with more than 500 FTE employees will continue to be limited to wages
paid to employees who did not work during the first two quarters of 2021.claim the credit based on wages paid to all employees, whether they provided services or not.

Credit Amount for Qualified Wages Paid after March 12,2020 and before January 1, 2021

Original law – The original law set the maximum amount of wages that can qualify for the credit at $10,000 per employee (including qualified health plan costs) for wages paid after March 12,2020 and before January 1, 2021. The credit is 50% of such qualified wages; therefore, an eligible employer can claim up to $5,000 per employee in payroll tax credits for entire 2020 covered period.

New law – The new law does not change any computational or eligibility aspects of the credit for wages paid in 2020 but simply opens the doors for borrowers of PPP loans to look back at 2020 and determine if they have any opportunity to claim the ERC. It is important to remember, however, that an employer cannot claim the ERC for ages paid with forgiven PPP funds, as it would amount to double dipping, which is prohibited.

Credit Amount for qualified wages paid from January 1, 2021 to June 30, 2021

Under the new law, the maximum amount of wages that can qualify for the credit is $10,000 per employee per quarter (including allocable group healthcare costs). The credit is increased from 50% to 70% of such qualified wages, and accordingly an eligible employer can claim up to a maximum of $7,000 per employee in payroll tax credit per quarter – for a total of $14,000 per employee through the first two quarters of 2021. Advance Credit Payments.

Effective January 1, 2021, employers with 500 or fewer employees can claim an advance payment of the credit of up to 70% of average quarterly wages in the corresponding quarter in 2019. Any excess advance received will have to be reconciled to the actual and repaid back to the Treasury.

Key Takeaways

As the new law opens the doors for PPP loan borrowers to look back at 2020; businesses that did not (or could not) take advantage of the ERC in 2020 should review their payroll costs for 2020 and determine any qualified wages under the original law that are in excess of the wages included in PPP loan forgiveness.Likewise, affiliated businesses that previously could not claim the ERC due to a PPP loan obtained by another affiliate under common control can now consider claiming the credit if they otherwise meet all eligibility requirements. 

It appears that the healthcare costs paid for furloughed employees would qualify for this credit
even though there are no accompanying wages associated with such healthcare costs.

Employers can also consider paying out bonuses during the first two quarters of 2021 to maximize the credit allowed under the new law’s maximum credit limit.

Unlike year-end tax credits, the ERC can be taken immediately and bring timely financial relief to your business when it needs it the most. For more information on determining your eligibility, calculating maximum credit and claiming the ERC for your business, contact your Michels & Hanley service partner.

 

 

 

 

 

 

 

 

 

Filed Under: Business Tax Info, Covid-19, Finance, New & Trends, Slider, Taxes

Where Could Investors Profit When the Economy Fully Opens?

January 12, 2021 by Channelchek Leave a Comment

investment research_Gamestop

Is the Post-Pandemic Recovery Move into Small-Cap Stocks?

The Russell 1000 Index, a subset of the Russell 3000 Index, represents the top 1000 companies by market capitalization in the United States. The public companies within the measure add about 92% of the total  market capitalization of the full 3000 largest corporations. The market cap of the Russell 2000 or the remaining small-cap companies is approximately 8%. The Russell 1000 large-cap index is not quoted as often as the S&P 500; however, the Russell 2000 is usually the favored benchmark when referring to small-cap stock performance.

Despite the S&P 500 garnering much of the media attention, in 2020 the Russell 1000 exceeded the more widely quoted large-cap index’s performance. The S&P only returned 16% while the Russell 1000 returned 21%, or 5% more to investors. After the pandemic-altered economy, large-cap stocks received most of the attention, seeming to rise almost daily beginning in late March.  But small-cap stocks also had fantastic performance in the final measure of the up, down, then up again year. With a 20% return, they only trailed the high performing Russell 1000 large-caps by 1%.  A large portion of this performance was achieved beginning in early September. This trend may be important to watch as we look for follow-through buying in 2021.

The almost equal performances of the Russell 1000 and Russell 2000 in 2020 (up 21% and 20%, respectively) doesn’t tell the full story of the double-digit swings in leadership between the two indexes as the economic cards were being reshuffled in response to COVID-19.

Equity Market Returns Large vs. Small and Full Year Vs. Fourth Quarter 2020

US Small-Caps Experience Late Year Surge After Lagging Most of 2020

A weak correlation existed between large and small stocks. Much of the difference during late 2020 is attributed to the market sentiment regarding the post-pandemic outlook for a US recovery. These sentiment shifts are reflected in the chart below. It dissects both the Russell 2000 and Russell 1000 index’s full-year performance into five phases. Each seems to represent a pivot point and reaction to a revised outlook.

After significantly lagging behind its large-cap brethren during both the March run-for-cover sell-off and the summer invest-your-check lockdown rally, the Russell 2000 has been a leader since early September. The index rocketed in Q4, significantly eclipsing the Russell 1000. The reported change in sentiment came as positive signs in vaccine testing and generous monetary and fiscal support made headlines. The merger and acquisition activity spike toward the end of the year also helped smaller stocks, which are often M&A targets.

Five distinct phases of 2020 performance (% change)

Source: FTSE Russell. Data as of December 31, 2020. Past performance is no guarantee of future results.

Does the Russell 2000 Have a Cyclical Advantage?

The US small-cap rally may have also enjoyed a tailwind from the “broadening of overall risk” rally in Q4, away from the high-flying tech outperformers in the Russell 1000 and into the stocks viewed as more sensitive to the economic cycle. These include energy and financials, which are 18% of the small-cap index, compared to 12% in the large-cap. There is also a heavy weighting in the Russell 2000 toward Life Sciences and Healthcare. These sectors outperformed by approximately 5%.

The difference in composition is evident in the following chart of the top 10 industry contributors to each of the two indices’ 2020 performance.

Top 10 industry contributors to returns (% of total)

Source: FTSE Russell. Data as of December 31, 2020. Past performance is no guarantee of future results.

Take-Away

Since early September, the upward comparative performance of the Russell 2000 is largely a result of the ongoing rotation away from defensive plays into other sectors of the economy. The weakening US dollar may also play a part as U.S. goods become more competitive with overseas producers.

Though uncertainty is always the rule as far as investment markets are concerned, the late-year trend has remained intact during the first week of 2021 and is well worth keeping an eye on.

Sources:

Investopedia Russell 1000

FTSE Russell Financial Data

Yahoo Finance (S&P) Data

 

Filed Under: Covid-19, Finance, Investing, Slider

  • Go to page 1
  • Go to page 2
  • Go to Next Page »
  • KNOWLEDGE CENTER
  • FAQ’S
  • A.I. COMMUNITY BENEFITS
  • SOLUTIONS
  • CONTACT US
  • REGISTRATION
  • LOG IN
  • Start Your Loan Process
Menu
  • KNOWLEDGE CENTER
  • FAQ’S
  • A.I. COMMUNITY BENEFITS
  • SOLUTIONS
  • CONTACT US
  • REGISTRATION
  • LOG IN
  • Start Your Loan Process
Copyright © 2023 Vertex Markets | Powered by Vertex Markets