It took a few months, but my new home state of Florida is now catching the hell of COVID-19.
I'm doing my best to stay indoors, avoid crowds, and adapt to the new normal of e-commerce.
I haven't been able to do much else.
Sports are shut down, there are no new movies, and I can't join a local softball league.
I am grateful that I'm not one of the 20 million people who are out of work.
But I'm hyper-aware that we're in the early stages of what could be a nasty recession.
Still, I look around and see that all the news is not horrible.
We have seen technological innovation accelerate, and this impact will change lives and finances for the better long after the virus has faded into history.
Nowhere is this truer than in banking and personal finance.
And with the markets facing another sell-off, I want to prime you for an opportunity to make some money playing one of the most important tech trends of the decade...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Stay at Home
For months, fewer Americans have visited an actual bank branch or brokerage office to talk about their money and investments.
It has all been done online or over our mobile devices.
Even the Grandpas who swore they'd never use mobile banking are using mobile banking.
Once they try it and seen how easy and convenient the digital world can be, the weekly trips to the bank could end up being a thing of the past.
Plus, no one's using cash for anything. It's all electronic payments.
There have even been some discussions between bankers and regulators about the lack of need for physical money in an all-digital world.
Banks have taken notice of how well the system has worked without branches. Which could work out nicely for them, since leasing and operating branches is a large expense for a bank.
Just think of all the money they can save if they closed them and let the machines do the work.
Banks have indeed noticed. In fact, U.S. Bancorp (NYSE: USB) plans to close between 10% and 15% of its branches permanently.
Citizens Financial Group (NYSE: CFG) executives have said that the pandemic showed it that it needed to accelerate its bank branch closure program.
And when it came to Paycheck Protection Plan loans, the more tech-savvy banks processed an enormous amount of loan applications and funded them much quicker than the larger, more traditional banks could even attempt.
Cross River Bank of Fort Lee, N.J., is one of the most technically savvy banks in the country.
Working with fintech companies like Intuit Inc. (NASDAQ: INTU) and Kabbage, Cross River was able to process more than $4.7 billion in PPP loans.
That's pretty impressive given that the bank only has $2.7 billion in total assets.
Only JPMorgan Chase & Co. (NYSE: JPM), Bank of America Corp. (NYSE: BAC), and Wells Fargo & Co. (NYSE: WFC) processed more loans than this small New Jersey bank. Cross River succeeded because it used fintech applications and services to speed up the process and get the job done.
Now, let's be honest here. Most Americans don't know who the Comptroller of the Currency is or what the job title consists of because that's not someone too many Americans ever think or speak about on a day-to-day basis.
You see, the Comptroller of the Currency is responsible for making sure that national banks and federal savings associations operate in a safe and sound manner, provide fair access to financial services, treat customers fairly, and comply with applicable laws and regulations.
It has really been a somewhat tedious job for decades. But not under the new guy.
Taking the position as acting Comptroller back in April, Brian Brooks is now the official new Comptroller. His previous job, however, was not as a banker.
He was general counsel at the cryptocurrency exchange Coinbase.
His first action, once he took office, was to announce plans to offer new types of charters to incorporate fintech lenders and payments companies into the banking fold.
Mr. Brooks wants first fintech comptroller to be his legacy.
His drive to achieve that moniker is going to be fantastic for fintech-savvy banks and fintech providers. It will also be fantastic for those companies' stock prices.
When fintech first started to develop as an industry after the credit crisis, most thought there would be a battle between banks and fintech. Both bankers and innovators have figured out that they can make more money if they find ways to work together.
Fintech has made investors quite a bit of money over the last decade. Don't think you missed the train, however. Fintech is just getting started, and banks are coming along for the ride.
The Long of It
Remember who was second in processing PPP loans?
JPMorgan is the most technologically focused of the big banks, and that's one of the biggest reasons that it's the largest bank in the country. CEO Jamie Dimon is determined to keep that technology lead.
Early next year, the bank will open a fintech campus for over 1,000 employees in Palo Alto. So instead of having big Wall Street firms and banks as his neighbors (as is the case in the financial districts around the country), JPMorgan's new neighbors are Facebook Inc. (NASDAQ: FB) and Alphabet Inc. (NASDAQ: GOOGL).
Dimon has no intention of losing his technology lead in banking.
Furthermore, he intends to take tech giants like Apple Inc. (NASDAQ: AAPL) and Google, that are trying to get into the financial services business, head to head. He's certainly been paying payment and technology companies plenty and is prepared to pay even more to keep up with all the competition.
JPMorgan is going to be a leading bank for a long time to come.
The bank is well-run, well-capitalized, and the savings from automation and branch closures in the years ahead will make them more profitable than ever.
The long-term trade for fintech is just to buy JPMorgan at 10.9 times earnings.
Enjoy the 3.73% dividend that will most likely be raised frequently during the years you own the bank. I would just plan on owning it forever.
If - or better to say when - we get another crash, just plan on buying more.
And you don't have to pay over $100 for JPMorgan in the coming weeks. Just use dollar-cost averaging and layer into the position as you build your position.
The Short of It
To say that shares of PayPal Holdings Inc. (NASDAQ: PYPL) have good momentum is like saying Tom Brady has had a pretty good career.
The stock has climbed off the March lows and has now climbed by about 80% in the past few months.
It's probably not over.
All of the moving averages are moving higher, and the stock just broke above a 52-week high.
You can bet that PayPal remains a must-own stock and attracts enormous buying from institutions and retail investors alike, so plan on buying the August $190 calls for $4.25 or less. The risk here is that the stock could run out of momentum. But the reality is that we'll likely see some continued buying into this stock and many other fintech companies as the economy continues to shift toward greater adoption of e-commerce due to COVID-19.
You're looking for a double-digit gain - with a move on this contract to about $5 or more.
If the stock pulls back, you can assess the downturn and impact on the contract. With the company reporting earnings on July 22, it would be a good time to potentially exit the position ahead of time while sentiment continues to rise.
And in the meantime, don't forget to check out my colleague Tom Gentile's instant-cash opportunity...
You see, Tom just dropped a brand-new way to see INSTANT CASH to the tune of $14,288 in his account, courtesy of Microsoft.
The catch? To start, he didn't buy or short Microsoft. He simply exploited a unique opportunity that exists in the markets right now. See it for yourself right here...
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.