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Top Market News: What Happened In Investing Today

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By SA Editor Mike Taylor, CFA :

Bitcoin Drops

(Bitcoin.org)

One of my favorite investing factoids is a simple mathematical law/quirk. It takes a smaller percentage drawdown to erase a larger percentage gain. A 200% gain is wiped out by a 66% loss. It doesn’t seem fair, but that’s math for you.

That rule is somewhat on display in Bitcoin , which after a meteoric rise took a ~20% tumble. As usual we turn to key Bitcoin news source Reddit to take a gauge of sentiment and analytical posture. Key insights follow:

From user stevev916 :

any moon voyage requires stable earth orbit, before engaging secondary boosters

ask any rocket scientist

Sounds cutely optimistic. Buy the dip, etc. Another link reads: ” US CONGRESS GOING FULL 1984 ON BITCOIN AND ASSETS. ” Among other proximate events: A recent Coinbase outage due to high trading volume . Exchanges breaking due to investor enthusiasm, that’s got to be on someone’s bubble checklist.

See also: Stocks sink at the open, weighed by techs . It’d be funny if the Nasdaq’s correlation with Bitcoin ramped up, as though the market thought that all tech companies were basically Bitcoin mining plays. I don’t think we’re there yet, not for every stock.

Nestle Candy Spinoff?

(Unwrapping value. Wikipedia )

Nestle ( NSRGY ) has announced it’s exploring options for its candy business. I’m sure an exit at a premium valuation is the ideal case, but is a spinoff possible?

Per the announcement, the confectionery business does about $900 million in sales. That seems like it might be in a spinoff ballpark. Mondelez ( MDLZ ) may not be a totally clean comp, but it’s a starting point. It has a 2.69 price to sales ratio, which would give NestCandy a $2.42 billion equity valuation. MDLZ’s EV/Sales ratio of 3.24 would suggest Nestle could load it up with some debt in the bargain.

The problem with candy companies is everyone loves them. Discounts are tough in that case. Still, I’ll have my eyes peeled. I’d lay a finger on Butterfinger.

Micro spinoffs would be even more fun. Runts, Inc. I’d want to own it.

See also: FDA pushes back food label rules reset

FinTwit Corner

See also Uncharted Terrain: Today’s Global Market Drivers on seekingalpha.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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