(San Francisco)

Facebook had an absolutely historic plunge last week, losing $120 bn of market cap in an afternoon. It has not fared so well since either, as many of its tech brethren have also seen big losses (like Twitter and Netflix). There are also mounting fears about a fundamentally darker future given the scandals and controversies it has become involved in. All that said, the stock still looks like a buying opportunity, at least according to some Wall Street analysts. The key to playing the company is not to wait for signs of margins and revenue stability. “Many investors prefer to wait for the appearance of margin stability … We understand this, but stocks tend to bottom and recover well ahead of margins and trade at much higher multiples when they do”, says a stock analyst.

FINSUM: Investors really need to contextualize this loss. Revenue growth rates came in 1% below expectations, leading to a massive loss. We think there is a good buying opportunity here.

New York)

Fidelity made history this week by introducing the first zero fee funds, which will track very broad self-indexed markets. Fidelity’s move is somewhat of a ploy, and definitely a demonstration of scale, as the company has many ways to profit from a customer once it has them in the door. But don’t be fooled, as fees aren’t everything. In fact, there are significant differences in performance even between index trackers of the same benchmark, like the S&P 500, and the differences between them can add up to a whole lot more than the difference in fees. For instance, Schwab and Vanguard already have broad index trackers at 3 and 6 basis points of fees, so hardly a big difference to zero, especially if their performance is better.

FINSUM: “Zero” definitely changes things, but once you are in the sub-15 bp fee category, performance is going to make a bigger difference than fees.

(Portland)

Retail and consumer stocks have been all over the map over the last couple of years. With digital disruption happening across the industry and consumer tastes changing, it is a hard space to figure out. However, an old stalwart looks like a good pick right now—Nike. The company has had its ups and downs over the last few years as it popularity ebbed, but it is back in a big way with a new distribution model of going direct-to-consumer. Morgan Stanley sums up the company this way, saying it is “positioned to take share in the high-growth, global activewear market as well as increase profitability, which should make it one of the highest growth consumer names and one of the few to benefit from the shift to e-commerce”.

FINSUM: We have been saying for over a year that Nike would prove to be a good bet. It had a couple years of competing poorly with Adidas and Under Armor, but it seems to be back with a bang.

(New York)

Boom looks ready to turn to bust in the real estate market. While those paying attention will already know that commercial real estate looks past its peak, and residential real estate has just started to show signs of weakness, what US investors may not realize is that the phenomenon is global, and that fact is more important than ever. Because of the rise of the global wealthy and their transient lifestyles, global real estate markets have become more correlated, and that means additional bad news for US home prices. All across the world, from London, to Sydney, to Beijing, to New York, urban home prices are weakening as inventories rise and the sector switches from a seller’s to a buyer’s market.

FINSUM: The real estate market used to be less correlated, but the huge boom in urban real estate over the last decade means that all areas will probably come down together too. To recap, US home purchases have been falling at the same time as inventories have finally begun rising. It seems like a rough period is coming.

(Boston)

The moment that many asset managers have been dreading has finally arrived. Fidelity announced yesterday that it was slashing prices on many of its funds, and crucially, offering two new index mutual funds with no fees and no minimums. Thus, the Rubicon has finally been crossed—the first broad index funds with zero fees, and no minimums. Many top asset management stocks fell considerably on the news. Remember that asset managers can still make money on funds with zero fees—through stock lending—but they need considerable scale to make that money meaningful.

FINSUM: It was only a matter of time before this happened. We expect Vanguard will follow suit quite soon, as will BlackRock, as lower fees have been by far the biggest selling point in the market for years.