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The 3 Insurance Mistakes That Cost Landlords the Most (According to a Guy Who’s Seen Thousands of Claims)
A conversation with Darren Nix, founder and CEO of Steadily
Most real estate investors think about insurance exactly twice: when they close on a property and when something breaks. The first time, they shop for the cheapest policy that closes the deal. The second time, they find out what their policy actually covers.
Darren Nix has watched this play out thousands of times. He’s the founder and CEO of Steadily, the landlord insurance platform built specifically for real estate investors, and his company processes claims across every flavor of rental property in the country: long-term, short-term, vacant, mid-renovation, and everything in between.
So I asked him three questions about what landlords get wrong, when they should reshop for insurance, and what’s actually showing up in claims. His answers should be on every investor’s whiteboard.
1. The Cheap Policy That Becomes the Most Expensive Policy You’ve Ever Owned
Q: What’s the most expensive insurance mistake you see new landlords make? The kind of thing that seems fine until there’s a claim and suddenly they’re out tens of thousands?
“Carrying low liability limits like $300K… when somebody gets injured on the property, $300K is barely even enough to cover the attorney fees, let alone a settlement or judgment. Raising liability limits to $500K or $1millon isn’t very expensive, and the extra cost can be offset by a higher deductible. Higher max limits paired with higher deductibles can deliver a lot more coverage for the same price.”
Translation: The cheapest part of your policy to fix is the part most likely to ruin you.
Any of these events triggers a liability claim, and once attorneys are involved, $300K disappears before the case even gets to mediation:
- A guest slips on an icy walkway.
- A contractor’s crew member doesn’t fully fix a safety device.
- A tenant’s kid finds the pool.
The investors who get burned are the ones who had insurance and assumed the limits would hold.
The fix Darren describes is the kind of move that costs almost nothing on paper and pays for itself the one time you need it. Trade some protection against the small claim you can probably absorb for protection against the catastrophic claim you can’t. That trade is almost always worth making.
Your move
Pull out your current policy and find the liability limit. If it’s $300K, get quotes for $500K and $1 million. The math will surprise you.
2. The Re-Shop Window Most Landlords Sleep Through
Q: Landlord policy, STR policy, builder’s risk, vacant home: Coverage needs change as a portfolio evolves. What’s the moment most landlords should reshop their insurance, but don’t?
“My rule of thumb is to reshop every three years, by default. I’ll also reshop if something significant has changed about my property, such as it’s going to be vacant for more than a month, converting to a short-term rental, or undergoing renovations. The reason is I want to make sure I’m going to be covered for the full value of the property in the new situation, for whatever might happen.”
This is the answer most landlords don’t want to hear because it sounds like work. But it’s also what quietly separates investors who get paid out from those who get denied.
Insurance is a snapshot policy. The carrier writes it based on the property’s condition on the day you bought the coverage. The minute the property changes (for example, a long-term tenant moves out, you start a renovation, you list it on Airbnb, or you leave it empty between leases for six weeks), the policy you have is now insuring a different building than the one you actually own.
Some carriers will deny the claim outright. Others will pay out at the lower coverage tier. Either way, you find out at the worst possible moment.
The three-year default is the right cadence even when nothing changes, because the market shifts under you. Premiums move. New carriers enter your market. Your replacement cost goes up. Setting a recurring three-year calendar reminder is the smallest possible action with the biggest possible downside protection.
Your move
If your current policy is more than three years old, reshop it this month. If you’ve made any of the changes Darren listed (vacancy, STR conversion, or renovation), reshop it this week.
3. The 30% Claim Category Nobody Plans For
Q: You’ve seen thousands of claims come through. What’s one type of damage or loss that’s way more common than landlords expect, and one that’s way rarer than the internet would have them believe?
“That’s easy: water damage. Insurance typically covers sudden events like a burst pipe, but not mold removal after months of a seeping toilet ring or a leaking washing machine drain. Water damage is about 30% of most insured losses, and that doesn’t include the ‘uninsured’ losses due to water. The good news is that water damage is easily mitigated by more frequent walkthrough inspections—there are usually signs.
The type of loss that’s exaggerated is theft. It happens, but not as often as people think.”
Three out of every 10 claims is the number that should make every landlord pay attention.
What Darren is referring to is the gap between sudden and gradual water damage. A pipe bursts at 2 a.m.? That’s a covered claim. A slow leak under a sink that’s been seeping for four months, rotted out the subfloor, and grew mold inside the wall? That’s almost never covered, and the remediation bill routinely runs $10,000 to $40,000.
The thing nobody talks about is how easy this is to prevent. Almost every gradual water leak leaves a trail before it becomes a disaster:
- A warped baseboard
- A discolored ceiling tile
- A slightly soft spot in the floor
- A faint musty smell
Property managers who do quarterly walkthroughs catch them. Owners who only see the property once a year don’t.
The flip side is theft. Investors imagine they need elaborate security systems and inventoried personal property coverage because they’ve seen scary headlines. Darren’s data says the actual claim rate doesn’t match the anxiety. Don’t ignore theft, but don’t over-insure against it either.
Your move
Add a quarterly inspection to your property management workflow. Check under every sink, around every toilet base, behind the washing machine, and at every ceiling below an upstairs bathroom. The 15 minutes per property is the cheapest insurance you’ll ever buy.
The One-Line Takeaway From All Three Answers
The cheapest insurance fixes are almost always the highest-impact ones: Raise your liability limit. Reshop every three years. Walk your properties.
None of those require more money, but all three require more attention. That’s the spread Darren’s seen across thousands of claims, and it’s what most landlords leave on the table.
Did you know that a BiggerPockets Pro membership comes with over $5,000 in potential annual savings through Pro Perks, including discounts on property management, banking, renovation supplies, and investor loans and insurance. Become a Pro today!
3 Things to Know About Social Security If You’re Retiring in 2027
If you’re planning to retire in 2027, you may be getting increasingly excited about wrapping up your career. At the same time, you may be getting increasingly anxious about the financial side of things.
After all, it’s not easy to go from earning a steady paycheck to having to rely on a combination of savings and Social Security. It’s important to understand the role those benefits might play in your retirement. With that in mind, here are three key things about Social Security that must be on your radar at this stage of the game.
Image source: Getty Images.
1. How much income your benefits will likely replace
Retirees are often told to aim to replace 70% to 80% of their former income to live comfortably. You don’t necessarily need to replace 100% of what you used to earn, since you won’t have to save for retirement while you’re in retirement. But that 70% to 80% range is a pretty good benchmark if you want to mostly uphold the standard of living you’re used to.
Social Security, meanwhile, will replace about 40% of your pre-retirement wages if you earn an average salary. If you’re a higher earner, though, those benefits might replace a smaller percentage of your former wages.
Knowing that could help you determine if you’ve saved enough for retirement, or if you’ll need to boost your IRA or 401(k) before you wrap up your career. It might also help you decide if there are certain expenses you may need to rethink once you’re no longer earning a paycheck — for example, keeping your current home versus downsizing.
2. What happens if you file early versus on time versus late
While your monthly Social Security benefits are calculated based on your personal earnings history, your filing age plays a role in how much money you get each month. If you file at full retirement age, which is 67 if you were born in 1960 or later, you’ll get your Social Security checks based on your wage record without a reduction.
That said, you can claim Social Security at any point once you turn 62. Filing that early compared to waiting for full retirement age will reduce your monthly checks by about 30%. But the option is on the table if you want to exercise it.
In some cases, claiming Social Security early can be smart, such as if you have health issues and don’t expect a long lifespan. In that case, starting those checks early could lead to a larger lifetime Social Security benefit.
There’s also the option to delay Social Security past full retirement age for larger checks. Each year you wait, until you turn 70, boosts those benefits by 8%. Waiting on Social Security could make sense if you aren’t confident you’ve saved enough for retirement, and you have strong health and a family history of longevity.
3. How cost-of-living adjustments hold up
Social Security benefits are eligible for an annual cost-of-living adjustment, or COLA. But those COLAs don’t necessarily do a good job of helping retirees keep up with inflation, due to a flaw in how they’re calculated.
If you want to maintain your buying power in retirement, it’s best to have ample income outside of Social Security. In fact, it’s important to invest in assets that can outpace inflation and/or pay you income steadily.
Before you retire and claim Social Security, assess your portfolio. Make sure a portion of it is invested for growth so you don’t fall behind as costs rise through the years.
If you’re expecting to retire next year, now’s the time to learn more about how Social Security works. Understanding how much income your benefits might replace, when to file, and how COLAs work could help you prepare for the financial side of retirement more thoroughly.
[CA] California Coast Credit Union $150 Checking Bonus, Direct Deposit Required
![[CA] California Coast Credit Union $150 Checking Bonus, Direct Deposit Required](https://globalinvestmentstrategy.com/wp-content/uploads/2026/06/cal-coast-credit-union-200-768x536.png "[CA] California Coast Credit Union $150 Checking Bonus, Direct Deposit Required")
Offer at a glance
- Maximum bonus amount: $150
- Availability: Must live or work in San Diego or Riverside County. Might be available in more areas.
- Direct deposit required: No
- Additional requirements: See below
- Hard/soft pull: Mixed DP
- ChexSystems: Unknown
- Credit card funding: Can fund using a credit card (Can fund a total of $5,100. $3,000 for this account and $2,100 into the savings account that is also required).
- Monthly fees: $3.75, not avoidable
- Early account termination fee: Unknown
- Household limit: None listed
- Expiration date: None listed
The Offer
Direct link to offer
- California Coast Credit Union is offering a $150 bonus when you open a new Extra Value checking account. Bonus is broken down as follows:
- Use promo code RESET and earn $100 when you open account and do the following within 60 days
- with Identity Theft Protection
- Enroll in eStatements
- maintain at least $50 in checking account
- set up at least one of the following: a) direct deposit; b) Online or Mobile Banking; c) Online Bill Pay
- Use your debit card 10 times each month for the first three months and earn $50
- Refer a friend or family member and earn $50 for each new member
- Use promo code RESET and earn $100 when you open account and do the following within 60 days
The Fine Print
- This promotion is available for a limited time and may be changed or discontinued at any time without notice.
- Use promo code: “Reset” at account opening.
- Offers cannot be combined. Cal Coast Credit Union employees are not eligible.
- New members must be at least 13 years old to qualify.
- Members ages 13-15 must have a parent or legal guardian as a joint owner on the account. Must meet membership and account eligibility requirements.
- A one-time $5 membership fee may apply
- All incentive bonus payments will be paid to the savings account within 120 days after qualifications are met.
- All incentive bonuses are considered interest, subject to tax, and will be reported on IRS Form 1099-INT.
To receive the $100 new member incentive bonus: you must within 60 days of opening your membership complete the following: 1) open an Extra Value Checking account; 2) enroll in eStatements; 3) maintain at least $50 in checking account; 4) set up at least one of the following: a) direct deposit; b) Online or Mobile Banking; c) Online Bill Pay. - To receive the $50 debit card bonus: Use your Cal Coast Debit Mastercard 10 times per month for the first 3 months (or 30 times within 90 days of account opening).
- To receive the $50 referral bonus: Eligible members can earn a $50 bonus through the Cal Coast Member Referral program. To qualify for the $50 referral bonus, the referring member must be an existing, active Cal Coast Credit Union member in good standing. The referred member must be a new member to Cal Coast Credit Union, open a separate membership account which includes payment of a one-time $5 membership fee, and meet the membership and account eligibility requirements. Bonus limits: a) $50 max referral bonus per referred member, b) $500 max total referral
- Additional Member Referral Program Terms: Referring members must be 18 years old to participate in the Coast into Cash referral program.
- Referred members who are 13 to 15 years old require a parent or guardian to be a joint owner on the account. Referrals are subject to verification.
- All related individuals may no longer qualify for this promotion and may not receive all or a portion of the bonus if, in Cal Coast Credit Union’s sole discretion, they are linked to an unqualified referral or misuse of the program. Learn more at calcoastcu.org/refer.
- All bank account bonuses are treated as income/interest and as such you have to pay taxes on them
Avoiding Fees
Monthly Fees
Identity theft protection costs $3.75 per month but is waived for the first two months. I don’t think Extra Value checking has any monthly fees apart from the identity theft protection?
Early Account Termination Fee
I wasn’t able to find a fee schedule so I’m unsure if there is any early account termination fee or not.
Our Verdict
Cal Coast has frequent high yield CDs that you can open. You can find and share referrals links in this linked post, please do not share them in the comments below. Strange to advertise this as a $200 bonus when $50 is from referring somebody and you can refer up to 10 people. We will add this to our list of the best bank account bonuses.
Hat tip to reader Woody
Useful posts regarding bank bonuses:
- A Beginners Guide To Bank Account Bonuses
- Bank Account Quick Reference Table (Spreadsheet) (very useful for sorting bonuses by different parameters)
- PSA: Don’t Call The Bank
- Introduction To ChexSystems
- Banks & Credit Unions That Are ChexSystems Inquiry Sensitive
- What Banks & Credit Unions Do/Don’t Pull ChexSystems?
- How To Use Our Direct Deposit Page For Bank Bonuses Page
- Common Bank Bonus Misconceptions + Why You Should Give Them A Go
- How Many Bank Accounts Can I Safely Open Within A Year For Bank Bonus Purposes?
- Affiliate Links & Bank Bonuses – We Won’t Be Using Them
- Complete List Of Ways To Close Bank Accounts At Each Bank
- Banks That Allow/Don’t Allow Out Of State Checking Applications
- Bank Bonus Posting Times
7 Steps to Small Business Marketing Success
Catch the Full Episode
Overview
Most small business owners are not failing at marketing because they lack effort. They are failing because they lack a foundation. In this solo episode of the Duct Tape Marketing Podcast, John Jantsch breaks down the second step in his seven-part framework for small business marketing success: diagnosing and solving the “random acts of marketing” problem that keeps businesses busy but stuck.
John walks through the three core elements of a Strategy First approach: defining your ideal client, identifying your true differentiator, and crafting a clear core message. He then ties it all together with the Marketing Hourglass, Duct Tape Marketing’s model for the full customer journey. This episode is built for small business owners, consultants, and marketers who feel like they are doing everything but seeing none of it add up.
Whether you are chasing every new tactic, working with vendors who all have different plans, or generating leads that never convert, this episode gives you a practical framework to stop guessing and start building a marketing system that works.
Key Takeaways
- Random acts of marketing are not a budget or effort problem. They are a foundation problem rooted in the absence of a clear strategy.
- Strategy must come before tactics. Every tactic should connect back to a central plan the business actually owns.
- An ideal client profile is not just demographics. It is defined by the specific problem you are uniquely suited to solve, the attitude of the client, and the profitability of the relationship.
- Niching down is less about picking an industry and more about owning the problem you solve better than anyone else.
- Differentiators like “quality,” “service,” and “experience” are not differentiators. They are claims anyone can make. Real differentiation lives in the voice of your actual customers.
- Customer reviews, Reddit threads, and organic feedback are underused goldmines for discovering how customers actually describe the problem you solve.
- A core message is one sentence: customer language, clear, different, and credible. It is not a tagline and it is not a list of services.
- The Marketing Hourglass maps seven customer behaviors: know, like, trust, try, buy, repeat, and refer. All seven require intentional activation.
- Post-purchase experience matters as much as acquisition. Turning customers into advocates is a planned marketing activity, not an accident.
- The companion workbook for this series is available at dtm.world/sevensteps and is designed to turn this framework into action.
Great Moments
[00:01] Introduction to the seven-step series and what to expect from Episode 2
[02:23] Reframing random acts of marketing as a systems problem, not a character flaw
[03:10] The Strategy First philosophy and why it has anchored 30+ years of work
[04:00] Breaking down the ideal client profile: beyond demographics to the problem you solve
[06:58] How to find your real differentiator in the voice of the customer
[08:00] What a core message actually is (and what it is not)
[09:21] Introducing the Marketing Hourglass and the seven buyer behaviors
[11:00] Your homework: define your ideal client, the problem you solve, and your core message
Memorable Quotes
“Strategy needs to come before tactics. That’s really been the basis of my body of work.”
“We’re doing a lot of things, but it’s not adding up. Every vendor has a different plan; they’re all executing the way they want to execute rather than around a cohesive plan that the business is directing.”
“Quality, service, experience: those aren’t differentiators. Even if it’s not true, it’s pretty easy for somebody to claim.”
“A core message is not about here’s what we do. It says: this is who we serve, this is the problem we solve for them, and this is how we solve it.”
“After they become a customer, what are we going to do to surprise and delight them and turn them into advocates? Those are intentional marketing activities.”
World Cup likely boosted blowout U.S., Canada jobs numbers
Strong hiring in leisure and hospitality helped fuel a surge in hiring in the U.S. and Canada last month as the two nations geared up to host the FIFA World Cup starting next week.
What Is Federal Work-Study and How Much Does It Pay for College?
Work study is a form of financial aid that can allow you to earn money on campus to pay for your college expenses. However, we like to call work study “fake aid”, because it’s not that helpful to actually pay for college expenses – and you’ll see why below.
Working part-time during your college career is a great way to cover your living expenses, avoid some amount of student loan debt, and gain skills as an undergraduate.
One way to keep a part-time job during your undergraduate, graduate, or professional school career is through the Federal Work-Study program. The Federal Work-Study program provides part-time jobs to students demonstrating financial need.
The income from Federal Work-Study jobs is taxable, but is exempt from Social Security taxes (known as FICA). Here’s what you need to know about the Federal Work-Study program.
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What Is the Work-Study Program?
The Federal Work-Study program is a form of Federal financial aid for college in the United States. Under the work-study program, eligible students can earn income in “work-study”-specific jobs.
The amount of “work-study” aid you’re eligible for will be listed in your financial aid award letter. There’s no minimum or maximum amount of “work-study” that you’ll see in your financial aid letter.
The exact amount will depend on your school’s work-study program. Usually, the eligible amount is anywhere from $2,000 to $5,000 per year.
However, you’re not guaranteed to get the full amount of money listed in the award letter. Instead, you must earn the money through part-time work. And because of this, you cannot necessarily count on the money, and you won’t have the money to pay for college before school starts and when mandatory expenses are due.
Most work-study jobs tend to be on-campus positions like working at the library circulation desk, doing custodial services, or working in a food service position. However, depending on your school’s program, work-study could include any number of part-time jobs including roles with public service organizations, or working in organizations related to your field of study.
The money from a work-study job generally “feels” more like money from any other job. Usually, the school or your employer will send you a check every two weeks (or once a month) based on the number of hours you worked. Cover an extra shift? You’ll see a bigger paycheck.
Alert: Some colleges have become notorious for awarding more work study positions than they have available. This means that students won’t even have a chance to earn work study aid.
Who Is Eligible for a Work-Study Job?
To be eligible for a work-study job, you must fill out the Free Application for Federal Student Aid (FAFSA). After you complete the application, you’ll receive a letter explaining the types of aid you’re eligible for. In many cases, students with financial need will see a line item for “work-study.”
But having a work-study award doesn’t guarantee that you’ll get a work-study job. You must apply for a work-study job and actually do the work associated with it.
Plus, you need to typically apply for the FAFSA early to be eligible. Make sure you’re on top of your state’s FAFSA deadlines and apply early!
There is always a handful of highly coveted work-study positions where you’re essentially paid to do your schoolwork or surf the internet. However, that type of job isn’t easy to come by in the work-study world. For the most part, the jobs are hard work.
How Much Does a Work-Study Job Pay?
The amount you earn from a work-study job tends to be on par with what anyone would earn for similar work. Depending on where you live in the country, the job could pay as little as $7.25 per hour (the current Federal minimum wage) to $22 per hour or more in tight labor markets or in states with higher minimum wage.
For a lower-stress, part-time job, work-study pay tends to be decent. However, it won’t make you rich. And, you won’t see big raises from being a high performer.
Because the hourly rates from work-study jobs clock in at “fine,” I encourage college students to consider whether they can supplement their work-study income by applying for scholarships or finding higher-paying work such as performing music in an ensemble, offering private lessons, car-detailing, or reffing sports. Even sporadic income from these sources can make the difference between putting car insurance payments on a credit card and staying solvent in college.
How Is Work-Study Income Paid
A lot of families don’t realize that work-study jobs issue a paycheck to the student just like a normal job. The work-study income doesn’t have to be paid to the college, and it is NOT paid directly. Instead, the student will simply be issued a paycheck every two weeks.
The student can the opt to use the funds to pay down any school expenses, or they can use the funds however they want – from food and fun, to anything else.
With this in mind, families that are counting on work-study aid to offset college costs may want to think twice. Realize that all the money may not actually be used to pay for college.
Is Income from My Work-Study Job Taxable?
Income from work-study jobs is taxable. However, you will avoid the 7.3% FICA taxes which are normally removed for Social Security and Medicare coverage.
If you’re a relatively low earner, you should expect to see most of your income in your work-study paycheck. Enjoy that full paycheck now, because in a few years, you’ll hopefully be paying lots of taxes (thanks to your high earnings rate).
Should I Take a Work-Study Job or Try a Different Part-Time Job?
If you’re eligible for work-study, I would urge you to find the best work-study job that you can. Use “best” to mean whatever you want it to mean. In college, I took a lower-paying job that allowed me to complete homework during my office hours. This meant I had plenty of time for cross-country and track, and even an occasional side hustle.
I had a friend who worked at a local Boys & Girls Clubs of America location which led directly to an internship and a continued career in the non-profit sector.
Most of the time, income from work-study jobs is fairly steady. You can expect to work about the same number of hours week in and week out. In general, most college students should easily handle their studies and a work-study job.
The downside of work-study jobs is the cap on earnings. If you’re motivated to earn money, you are likely to find better opportunities outside of the work-study program.
Often, “middle-skill” jobs such as working in a call center, waiting tables, working as a licensed practical nurse (LPN) or emergency medic, tutoring, or tending a bar pay more than entry-level jobs. Particularly motivated students may earn even more by freelancing or starting a business.
For students without reliable transportation, an on-campus work-study job can provide a stable income without raising costs. However, if you’ve got a car, or you live in a city with solid public transit or safe biking options, a higher earning option may be better for you.
Bottom Line
Work-study jobs are a great way to earn money while attending school. But they aren’t your only option. If you’re eligible for work-study, take advantage of the opportunity to work, but keep your eyes out for earning opportunities that will allow you to earn more, learn more, or develop better skills.
Editor: Clint Proctor
Reviewed by: Robert Farrington
The post What Is Federal Work-Study and How Much Does It Pay for College? appeared first on The College Investor.
Markets face triple threat of Iran war reigniting, AI bubble popping, and Fed rates rising
Investors should buckle up for a bumpy ride as multiple risks have suddenly converged to test what looked like an unstoppable stock rally.
In just the last few days, the Iran war started heating up again, the AI boom showed signs of a bubble about to burst, and strong jobs data made rate hikes from the Federal Reserve more likely.
Add to that mix SpaceX’s upcoming IPO, which could draw so much demand that investors rushing to raise cash to buy shares could unleash a wave of selling that ripples through the stock market.
Futures tied to the Dow Jones industrial average fell 86 points, or 0.17%. S&P 500 futures were down 0.19%, and Nasdaq futures lost 0.16%.
U.S. oil futures rose 2.6% to $92.88 a barrel, while Brent crude climbed 2.8% to $95.67. Gold fell 0.5% to $4,342 per ounce.
The U.S. dollar was up 0.03% against the euro and up 0.02% against the yen. The yield on the 10-year Treasury was flat at 4.532%.
On Sunday, Iran launched missiles at Israel, marking the first such attack since a ceasefire was reached in early April. That came after Israel continued bombing Lebanon in defiance of Washington’s request days ago to stand down.
While talks to extend the ceasefire have stalled, President Donald Trump scrambled to avoid reigniting the war by distancing the U.S. from the Israeli attacks, which were in retaliation against Hezbollah missiles, and by telling Israeli Prime Minister Benjamin Netanyahu not to strike back at Iran.
Before the latest salvos, tensions in the Persian Gulf had already been escalating as the U.S. and Iran increasingly exchange fire, with both sides trying to establish their own shipping lanes in the Strait of Hormuz.
Despite the skirmishes, Wall Street assumed all-out war would not return, especially after a report said Trump would avoid going that route unless more U.S. troops were killed.
Tech selloff
On Friday, tech stocks led a market bloodbath after the Labor Department’s monthly jobs report showed employers added a net 172,000 jobs last month, nearly double Wall Street forecasts.
Prior months were also revised sharply higher, indicating the labor market was much more resilient than previously thought in the face of higher oil prices caused by the Iran war.
With the employment picture looking steadier, the Fed is expected to focus more on fighting inflation, which has exceeded the central bank’s 2% target for five years. Investors priced in a greater probability of tighter monetary policy, giving up on the prospect of additional rate cuts anytime soon.
But the stock market’s troubles began when chip designer Broadcom gave disappointing AI-related guidance late Wednesday in its quarterly earnings report. That sparked a selloff on Thursday that got further stoked by Friday’s strong jobs report.
The coming week will likely see even more volatility as fresh readings on consumer inflation on Wednesday and producer inflation on Thursday fuel additional Fed rate hike fears.
Also on Thursday, SpaceX will price its IPO, and shares will begin trading on Friday. While IPOs are often accompanied by volatility, Greg Boutle, head of U.S. equity derivative strategy at BNP Paribas, pointed out in a note that what’s different this time is the largest market cap ever seen in a U.S. IPO.
SpaceX plans to raise at least $75 billion by selling over 555 million shares at $135 a piece, valuing the company at more than $1.75 trillion. If underwriters exercise options for additional allotments to meet high demand, proceeds could grow to $85.7 billion.
“We think many of the standalone SpaceX flows might be digestible. The problem is that many of these flows are potentially same-way and additive,” Boutle explained. “With the SpaceX free float reported to be close to $75bn on IPO, it’s easy to see how $30bn of passive buying, a retail investor chase, and levered ETF and option flows collectively could quickly become challenging for the stock’s liquidity. If all are chasing to buy (or sell) at the same time, the risk of price dislocation becomes much greater.”