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GSR Capital to Invest in tZERO at $1.5 Billion Valuation

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  • Up to $270 million in tZERO equity (at $1.5 billion post-money valuation)
  • $30 million purchase of tZERO Security Tokens from Overstock.com
  • Up to $104.55 million in shares of parent company Overstock.com common stock

SALT LAKE CITY, Aug. 09, 2018 (GLOBE NEWSWIRE) — Overstock.com, Inc. (NASDAQ:OSTK) and t0.com, Inc. (“tZERO”), announce that the companies have both signed term sheets with GSR Capital, a Hong Kong based private equity firm, to invest up to $374.55 million in exchange for common equity in blockchain subsidiary tZERO and common equity in Overstock.com. Overstock and GSR Capital have also entered into a purchase agreement pursuant to which GSR Capital will purchase $30 million in tZERO Security Tokens from Overstock.

As part of the term sheet agreement, GSR Capital will purchase up to 3.1 million shares of OSTK common stock at a five percent discount to the closing share price on August 1, 2018. GSR Capital will also invest up to $270 million for up to 18% of tZERO’s equity at a valuation of $1.5 billion (post-money). Additionally, pursuant to a purchase agreement, GSR Capital will purchase from Overstock $30 million in tZERO Security Tokens. These tZERO Security Tokens were purchased by Overstock during the recently-closed tZERO Security Token Offering in a non-cash transaction in which Overstock forgave $30 million in tZERO intra-company debt. GSR’s Security Token purchase agreement replaces the GSR letter of intent previously announced on June 29, 2018.

The equity transactions are subject to definitive documentation and other customary closing conditions. They also provide GSR Capital with certain rights to allocate a portion of the investments to third-party designees.

“We are honored to have GSR Capital as a strategic investor,” said tZERO CEO Saum Noursalehi. “The tokenization of securities has the potential to disrupt global capital markets responsible for moving hundreds of trillions of dollars. Together with our partners, we will globalize our blockchain-based platform, bringing more efficiency, liquidity, and trust to capital markets.”

“GSR Capital has the prescience to understand the disruptive power of blockchain capital markets,” said Patrick M. Byrne, founder and Chairman of tZERO, and founder and CEO of parent company Overstock.com. “They are aligned with our vision for the future of capital markets built upon the speed, trust, and security of the blockchain. And most importantly, they think big, and want to help us scale this vision globally as quickly as possible.”

“GSR Capital is very excited to partner with tZERO in its effort to expand the global footprint for blockchain-enabled asset trading including stocks, bonds, commodities, etc. We have a long-term view on how we want to scale this platform on a global basis,” said GSR Capital’s Chairman and founder, Sonny Wu.

About Overstock.com

Overstock.com, IncCommon Shares (NASDAQ:OSTK) / Series A Preferred (Medici Ventures’ tZERO platform: OSTKP) / Series B Preferred (OTCQX:OSTBP) is an online retailer based in Salt Lake City, Utah that sells a broad range of products at low prices, including furnituredécorrugsbedding, and home improvement. In addition to home goods, Overstock.com offers a variety of products including jewelry, electronics, apparel, and more, as well as a marketplace providing customers access to hundreds of thousands of products from third-party sellers. Additional stores include Pet Adoptions and Worldstock.com dedicated to selling artisan-crafted products from around the world. Forbes ranked Overstock in its list of the Top 100 Most Trustworthy Companies in 2014. Overstock regularly posts information about the company and other related matters under Investor Relations on its website, http://www.overstock.com.

About tZERO

t0.com, Inc. (“tZERO”) is a majority owned subsidiary of Overstock.com, focusing on the development and commercialization of financial technology (FinTech) based on cryptographically-secured, decentralized ledgers – more commonly known as blockchain technologies. Since its inception, tZERO has pioneered the effort to bring greater efficiency and transparency to capital markets through the integration of blockchain technology.

About GSR Capital

GSR was founded in 2004 by Sonny Wu and Richard Lim. Today, “GSR Ventures”, “GSR United Capital” and “GSR Capital” are three independent yet complementary teams set up by the partners in 2016 with the aim of sector leadership and going global with unique investment strategies and resources. GSR Capital has offices in Beijing, Hong Kong and the USA.

O, Overstock.com, O.com, Club O, Main Street Revolution, and Worldstock are registered trademarks of Overstock.com, Inc. O.biz and Space Shift are also trademarks of Overstock.com, Inc. Other service marks, trademarks and trade names which may be referred to herein are the property of their respective owners.

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include all statements other than statements of historical fact. Additional information regarding factors that could materially affect results and the accuracy of the forward-looking statements contained herein may be found in the Company’s Form 10-Q for the quarter ended March 31, 2018, which was filed with the SEC on May 8, 2018, and any subsequent filings with the SEC.

Media Contact:

pr@overstock.com

Investor Contact:

ir@overstock.com

SOURCE: Overstock.com, Inc.

GSR Capital to Invest in tZERO at $1.5 Billion Valuation

Source: Overstock.com, Inc.

Referenced Stocks: OSTBPOSTK

Thought Leaders

Reinventing Wealth Management: How Technology is Shaping The Way We Manage Investments

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Reinventing Wealth Management: How Technology is Shaping The Way We Manage Investments

Traditionally, wealth management has been a human-based professional service that provides financial and investment advice to clients of high-net-worth and ultra-net-worth category. Since the wealth management industry is made lucrative due to its one set fee charged to clients; despite the implementation of innovative technology, investment advice is largely still available to the wealthy and closed off to others. However, assets available to the well-off are becoming more accessible to non-wealthy clients, too.

Wealth management meets technology 

The entire financial services industry has been shaken by the technological revolution, which in turn, has shaped the world. Wealth management in 2020 is no exception to this trend. Fintech has reinvented the landscape of investment management by incorporating Big Data, Artificial Intelligence and machine learning to optimise portfolios, mitigate risks and evaluate investment opportunities.

Fintech companies have become adaptive and attentive to the needs of the new generation of investors. Millennials demand, on the whole, easy, precise and flexible access to information on all aspects of their lives. It’s been found that affluent millennials are becoming increasingly comfortable using technology to manage their money. Mobile apps, Robo-advisers and AI tools provide a greater degree of control than traditional financial management methods.

Technology in action: Managing investments with intelligence 

The emergence of fintech has revolutionised, improved and automated the delivery of financial services. Global investments in financial technology businesses have surpassed $100 billion over the past decade.

Reinventing Wealth Management: How Technology is Shaping The Way We Manage Investments

Robo-advisers 

The proliferation of artificial intelligence has transformed the way financial advisors interact with their clients. The industry has long since been anticipating the disruption of the financial advisor model. The 80s and 90s gave way to online trading and the 21st century brings us Robo-advisers – i.e. the computer-generated investment platform that provide augmented, algorithm-driven financial planning services with little human input. Global assets under management by Robo-investors as of 2020 were nearly $1.1 trillion – and are expected to grow at an annual rate of 25.6% (Statista).

Typically, a Robo-adviser collects financial data from individuals through some form of survey and uses the information to offer advice and automatically invest client assets. The best of these automated services offer easy account setups, goal planning, portfolio management, security features, and of course, low fees.

Wealth management apps 

Mobile portfolio management apps can provide information and the necessary tools to manage your investments from workplace pensions to ISA’s and personal capital. Many apps can sync with your existing accounts – completely free.

ARQ, for example, uses AI to connect investments and generate data to provide users with actionable insights into how their portfolios are performing. They’re dedicated to transparency by providing scores on what’s actually considered to be a good annual performance and whether the fees their users are paying are too high. Unbiased analytics display a number of metrics to show the value of investments relative to others.

Reinventing Wealth Management: How Technology is Shaping The Way We Manage Investments

Wealthsimple, founded in 2017, offers an unambiguous three-tier investment strategy depending on a user’s ‘risk profile’- conservative, balanced or growth. The premise behind Wealthsimple is to invest your money across the entire stock market; as opposed to a sole company’s stock, to induce a long-term practical investment strategy.

Setting up your Wealthsimple account on the app is simple. Fill in the form, select your risk and add the amount you’d like to invest. The algorithm processes your data and you’ll be presented with a portfolio and personalised dashboard illustrating how stocks are performing in real-time.

For the more visual investor, Personal Capital is an app that lets you track your budget and investments by displaying graphs by asset class or investment account – making them easy to read, track and manage your portfolio. The interface is incredibly intuitive and the visuals reactive on laptop, tablet, desktop and mobile.

Reinventing Wealth Management: How Technology is Shaping The Way We Manage Investments

Whilst there is more to say about the budgeting functions of other apps, Personal Capital serves primarily as a financial aggregator – bringing together all of your accounts on a single platform. The tool starts by determining your risk tolerance, goals and timeframe and generates a portfolio by investing across multiple asset classes for diversification. It should be said that the high fees of 0.89% are offset by Personal Capitals close-to-human investment management service.

Wealth management firms embrace technology 

The wealth management firms who actively embrace financial technology tools – whilst maintaining their human input in helping investors navigate the increasingly complex financial infrastructure – have been found to be more likely to grow.

45% of wealth managers said that financial information from technology and data analysis using AI help them refine the advice they give to clients (PwC). 36% agreed that their clients will be able to see their investments clearly with AI.

B2B platform Cred, embraces AI to change the way financial institutions acquire and engage clients in investment advisory. The Barclay-based company helps financial institutions increase conversion rates, engagement and Assets Under Management. Wealth management firms using Cred’s data platform helps them utilise their client data to build relationships and offer the right financial products at the right time – increasing efficiencies for the firm and individual clients.

AdviceRobo is a software developed to assist wealth managers by providing predictive risk services using AI to generate behavioural data.

Reinventing Wealth Management: How Technology is Shaping The Way We Manage Investments

They help financial institutions by providing psychographic credit scores measuring financial attitudes, motivations and behaviour of people through online interviews. Detailed reports give wealth managers deeper insight into their client’s financial health – allowing them to optimise their client’s portfolios.

The accumulation of Big Data means that the pool of client information available to wealth managers is constantly increasing – meaning there is always room for optimising advice.

Morgan Stanley Online allows client accounts to be accessed via CRM which can be seamlessly fed into multiple financial planning software – which can be viewed by advisors and clients alike.

Technology has warmly welcomed the evaluation of ‘what-if’ scenarios. High net worth individuals can easily use Morgan Stanley Online to see the direct impact of or feasibility of spending – without consultation. A user’s spending and investment decisions are connected to their advisor – who will be alerted when a client is making an inquiry.

8 out of 10 wealth management executives have regarded technology as a significant factor in gaining market share (Deloitte). The future of investment management is largely reliant on the development of technology. Innovations in fintech have freed advisors from mundane tasks so they can spend more time providing specific insights based on individual customers.

Technology clearly has a role to play in the communication processes between clients and advisers, the way investors manage and track their portfolios, as well as the way data, is both collected and used. All of which continues to shape the way we manage investments.

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Forex

New Restrictions Hurt GBP Forex Market as US Pledges More Aid

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New Restrictions Hurt GBP Forex Market as US Pledges More Aid
  • GBP Had Started Stronger on Positive Rates News
  • Mixed Opinions From US as Powell Pledges Support
  • Markets Continue to Struggle With Second Wave Fears

The Pound has struggled to catch a positive break again today as the UK announce new restrictions to curb the spread of COVID-19. The GBP forex market has struggled for some time to break back to anything high of $1.30 against the Dollar. There were mixed messages too in the US with differing approaches supported the Fed Hierarchy. Meanwhile, markets opened higher, but remain weighed down by fears of a returning coronavirus.

Pound Bounces Back to Tough Position

There was an early boost on Tuesday for Sterling. The currency had originally jumped on comments from the Bank of England Governor Andrew Bailey which dispelled the thought of negative interest rates which many fear have been under consideration. This boost in the forex market was short lived though. The Pound was sent back in the opposite direction by an announcement from leader Boris Johnson that new restrictions will be imposed.

Those forex trading the market remain poised to hear exactly what these new restrictions will be. The exact details are currently being laid out by Johnson, but they are to include increased penalties for non-wearing of masks, and the closure of hospitality venues from 10pm. These changes are being made at what the PM referred to as a “perilous turning point”, and are sure to further rock the currency and economy which has seen a host of troubles lately.

Not All Agree as Powell Pledges Continued Support

Chief of the Federal Reserve Jerome Powell backed up his previous stance strongly on Tuesday in comments to the House Financial Services Committee. He said the Fed “remains committed” to the long-term support of the economy, and will use all their available tools to do so. He noted that although the economy had started to pick up, the road ahead remains vastly uncertain. His tone was one which did not rule out more support, noting that the Fed will continue its support for “as long as needed”.

This sentiment was not echoed by everyone though. There was a different view from Federal Reserve Bank of St. Louis President James Bullard. He is of the opinion, along with several others, that the economy now has enough momentum to get back on its feet even without further economic stimulus.

Markets Open Cautiously Again

US markets have endured a very tough September so far. This challenge only intensified on Monday with another large scale sell-off. The Dow Jones suffered its worst day of the month, while the S&P 500 shed more than 1% en-route to a fourth consecutive losing day.

Forex brokers were not alone in feeling a slight return to form on Tuesday. The major indices climbed a little higher on the opening bell, hopes being held that the slump is over. The next moves though will be largely driven by the news on coronavirus cases, and any further financial aid.

 

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Stocks

How to Make Money in Stocks

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How to Make Money in Stocks

While there isn’t a magic formula for making money in the stock market, there are few ways to put the odds in your favor. The key is to be realistic about your level of knowledge and the time you have available to devote to investing.

Passive investing

The simplest way to make money in the stock market is by investing passively with ETFs. This will allow you to earn the same return as an index of the stocks of the largest listed companies.

Over the last hundred years, the stock market has consistently outperformed other asset classes like bonds, real estate, and precious metals. At the same time, most investment funds have underperformed broad stock market indexes. When we talk about a broad stock market index, we are referring to indexes like the S&P500 which include the most valuable listed companies in a market.

So, investing in an ETF that tracks a market index means you earn the same return as the index so you are already ahead of most actively managed funds. It also means you are invested in the asset class that has consistently outperformed over the long term. Even relatively modest returns can compound substantially over a long enough period. ETFs are also much cheaper to own than almost any other type of financial product.

Improving the performance of a market ETF is possible but requires you to take a little more risk. One way to improve the performance of an ETF portfolio is by adding funds that track the faster-growing sectors like technology and consumer discretionary companies.

Buy and hold investing

The term passive investing is usually used to refer to investing in ETFs or index funds. Passive investing also implies holding the funds for a long time, without making any changes. Buy and hold investing is very similar.

Before passive investing emerged, the term buy and hold investing was used to refer to buying individual stocks and then holding them indefinitely. To a large extent, this is how Warren Buffet has made money, though there is a little more to what he does.

It’s more difficult to measure the effectiveness of buy and hold investing because its success or failure obviously depends on the stocks that are selected. But there is a big advantage to this strategy. Investors often sabotage their own performance by buying and selling stocks and trying to time the market. In many cases they would earn more by simply buying and holding stocks, assuming they don’t start out with terrible stock picks. The solution is to own quite a few different stocks and to stick to stocks with good business models, competitive advantage, and strong leadership.

Advanced ways to make money in the stock market

Passive investing is by no means the only way to make money from stocks or the best way. There are a lot of more complex methods, but they do require more time and knowledge, and typically more risk. Here are some of the most common methods of investing (and in some cases trading).

Mutual funds and actively managed ETFs

While the majority of actively managed funds – both ETFs ad mutual funds – don’t outperform the market when costs are taken into account, some do. A lot of very successful investors move money between different funds to try to beat the market. This does require a lot of research though.

The temptation is to chase performance by investing in the funds that have performed well in the recent past. This often backfires though, and investors end up buying high and selling low. The trick is to find the funds that are likely to perform well in the future, regardless of past performance.

Value investing

A value investor buys a stock if they believe the price a share is trading at is substantially below its intrinsic value. This is the value of the company’s assets divided by the number of shares it has issued and also represents the liquidation value of the company.

Buying a share below its value gives you a margin of safety, and you may be able to make a profit without the company growing at all.

So, you have a limited downside, with a large potential upside if the share price recovers. Value investing requires a very good understanding of company accounts and financial statements.

Growth investing

Growth investing is all about profit growth and the potential for profit growth. For a company to increase its profits, it must either grow sales, or it must expand its profit margin. Sales growth is easiest when the entire market for its product is growing – otherwise, the company must increase its market share. Margin growth often results from the effect of economies of scale, as fixed costs grow at a slower rate than sales.

The challenge for investors is the price of growth stocks usually reflects a certain amount of future growth. If growth disappoints in the future, the share price may appear excessively expensive and fall. Nevertheless, growth investing has been remarkably successful over the last two decades, particularly in the tech sector, which includes companies like Apple, Amazon, and Facebook. The other sector with good growth companies is the consumer discretionary sector, with the likes of Starbucks and Nike.

Dividend investing

If you are more interested in building an income stream than in capital growth, dividend investing is another option. Companies pay dividends to distribute earnings to their shareholders. The companies that pay dividends tend to be more mature and to have good profit margins.

There’s often a temptation to buy the stocks with the highest dividend yields. But the most important factor is actually the sustainability of the dividend. If a company can’t keep dividend payments up, the share price will probably collapse, and you’ll lose a lot more than your dividend. The best dividend stocks are those that can easily afford to keep raising their dividends.

Short selling

Yes, you can make money when stock prices fall. You can do this by short selling which involves borrowing shares (for which you pay a fee) and selling them. When the share price falls, you can then buy the shares back and return them to the lender.

Shorting stocks is an advanced strategy and needs to be approached with caution. If too many traders’ short stock, there’s a high likely hood of the price being ‘squeezed’ higher. Remember that for a short position, the potential loss is unlimited.

Pairs trading

Short selling allows long and short positions to be combined. This means you can buy a stock you expect to perform well, and short sell a stock you expect to underperform. The advantage of this strategy is that the position is hedged against a general market correction.

Conclusion

Each of the investing approaches listed here requires a different level of knowledge, skill, risk appetite, time, and patience. Finding the right approach means finding an investment style that fits your level of knowledge, personality, schedule, and financial situation. Passive investing is the best place to start.

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