Investment Archives - Small Business Insider

What does the decline of iconic retailers mean for early-stage investing?

Posted on May 7, 2021 Written by Administrator

We’ve recently seem the demise of several iconic high-street retailers. Something that would once have seemed completely unimaginable.

For example, Debenhams with its two hundred plus years of history, and the younger Top Shop, often described as the jewel of the high street, both found they could no longer compete and fell into administration.

Evidenced by the calls to save the high street, it is well recognised that the way we shop has forever changed. We’re shopping online while in bed, at work and for 20% of us– from the bathroom.[i]

But, what does that mean for early-stage investing?

It’s easy to write this off as consumer behaviour that has nothing to do with investing. However, that would be short sighted.

Purchasing decisions begin online

Whether you’re a B2B buyer or a consumer, the buying process begins with online research. A Google study confirmed that 92% of people begin their buying journey online. That leaves only 8% wholly reliant on other means to investigate purchasing decisions.

Do angel investors fall into the missing 8%?

A PWC study found that 98% of them use the internet daily^[ii] and for up to three hours. Beyond this, a second study by Accenture Consulting^[iii] confirmed 83% use digital for financial services. Both of these studies are several years old, and it is reasonable to assume that the use rates of digital have increased since then.

So, if you’re a network promoting investment opportunities and you’re not using the online channel, you are missing out on a key phase of the investors’ journey.

Forget customer loyalty

Networks which don’t offer the convenience of an online channel to their investors may believe that it doesn’t matter; your investors have been with you for years and are loyal.

Another look at retail proves that there is no such thing as customer loyalty.

The loyal customer base that Debenhams and Top Shop built up, slowly trickled away as new digital-first players came in and offered a better, more tailored experience.

It’s easy to blame the pandemic. But the truth is that Covid-19 was but the last nail in the coffin for these iconic retailers. Both were struggling before Jan 2020. The reason: they weren’t giving their customers what they wanted.

Generations grew up, times changed, new savvier players like Asos, came into the market – and their once-loyal customers left.

Customers are only loyal for as long as it suits them. If something better comes along, they will move on.

What we’re seeing in the early-stage investment market is a number of new digital-first investment clubs like the Envestors Private Investment Club, Angels Den, or Chorus. These next-generation investment networks are the Asos of the investment space. They understand that investors want always-on, self-service access to deals and they are ready to deliver.

Building relationships on shared interests, experiences and data

The retail giant Amazon, for example, knows more about its customers than they’d probably be comfortable with. They collect data from every interaction, and use it alongside trend data from other customers, in order to help users make buying decisions.

Can angel networks say the same thing?

Do you really know what your investors are interested in without taking advantage of all the options digital has to offer?

Investment networks are reliant on face-to-face interaction and personal relationships. Now, relationships are crucial to early-stage investing. But data can be used to empower your existing relationships.

With online platforms you can collect data on investor interests – both those they state explicitly and those you can infer based on their online behaviour. This data, at both the individual and macro level, can be invaluable to you in catering to their needs.

Another application is in deal selection. With data on which deals are getting the most engagement you can start to look for similar deals to bring to your investors.

A changing market

The early-stage investment space is a traditional one – for now. But as we saw in the retail example, traditions can be supplanted as quickly as a Prime delivery.

Many factors drive an industry to change. In the case of early-stage investing it will be the core players in the market. That is the investors and the companies raising finance. They are getting more and more used to a digital first experience and the investment clubs that serve them need to stay one step ahead of their needs. When this doesn’t happen, heritage organisations fall, and new giants emerge.

Needs have undoubtedly changed. We are at a point where people expect an always-on, personalised service. They like to be empowered to do their own research and to drive their own agenda and without a digital offering they have to wait. Today, no one expects to wait.

Traditional networks need to take action or find themselves falling behind their newer rivals who have digital offering catering to the needs of today’s investors.

ABOUT THE AUTHOR

Chantelle Arneaud is from Envestors. Envestors’ digital investment platform brings together entrepreneurs and investors across geographies, communities and sectors – creating the single marketplace for early stage investment in the UK.

Envestors partners with accelerators, incubators and angel networks to provide a white-label platform empowering them to promote deals, engage investors and connect to other networks.

Founded in 2004, Envestors has helped more than 200 high growth businesses raise more than £100m through its own private investment club.

Envestors is authorised and regulated by the Financial Conduct Authority.

Web: https://www.envestors.co.uk/

LinkedIn: https://www.linkedin.com/company/envestors-llp/

Twitter: @EnvestorsLondon

[i] https://kinsta.com/blog/ecommerce-statistics/

[ii] https://www.pwc.com/sg/en/publications/assets/wealth-20-sink-or-swim-gx.pdf

[iii] https://www.accenture.com/t20150703T033306__w__/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_17/Accenture-High-Net-Worth-Investors-Gen-D-Europe.pdf

Why the era of passive investing is waning

Posted on October 15, 2020 Written by Administrator

When discussing Fintech with bankers in the City of London it is not unusual to hear them say: “Normal folk should not be trading.” This fits a narrative that has become widely accepted: ‘normal’ people are simply not up to making money by investing. They should play safe by putting their funds into a so-called robo-advisor like Wealthify or Nutmeg which will put their hard-earned cash into index-tracking passive investment funds.

This type of investing is often referred to as ‘black box’ investing is a very bad idea. Black box investing involves a computer using complicated formulas to achieve returns in the desired way. However, because an investor may not understand the model (and may not be able to do so), it can lead to unforeseen problems that the investor is unable to react to or even mitigate against. This investment approach also goes against the Fintech trends that are beginning to unfold. It looks backwards to a time when investing was for the elite. However, this is no longer the case.

How can the everyday, non-professional investor get the most out of the markets? Here are some thoughts:

Robo-advisors

Robo-advisors are a class of financial advisers. They provide financial advice or investment management online with moderate to minimal intervention from a human being. They provide digital financial advice based on mathematical rules or algorithms only. Robo-advisors, despite their automated nature, still charge a management fee, often as much as 1% of your funds. That’s £500 on a £50,000 portfolio, per year.

But that’s not all. The ‘passive-investing is great’ mantra has been sung repeatedly over the past 10 years. And it’s worked – as all the markets have been going up. Everyone’s a genius in a bull market. But this won’t go on forever. Remember Michael Burry? The ultra-nerd Hedge Fund manager in “The Big Short” had predicted the Subprime Mortgage crisis that led to the financial crisis of 2008/09. He is now warning that Index Funds are the next massive bubble.

Action step:

With just a little bit of research, anyone can create their own long-term, low-cost multi-asset fund held via a platform, with total costs of below 0.5%. Explore platforms like eToro or IG Index to either buy an index fund that holds a range of stocks directly or create your own.

In order to spread your risk, pick a range of stocks from different industries and decide what percentage of your portfolio you want to allocate. If that percentage becomes higher or lower over time, you can buy or sell respectively to balance it out. Do it once per month and save on the fees of robo-advisors.

The trend-of-the-day

When the dotcom Bubble of 2000 collapsed, it took the market over 17 years to recover. Who had been left holding worthless stocks? Mostly the retail investors who had been lured into buying the ‘trend-of-the-day’. The trend-of-the-day today is passive investing into index funds.

For too long, normal people have been pushed into seemingly ‘risk-free’ investments that end up destroying their financial wealth in a crisis but which lack the potential for huge gains.

Action step:

A modern-day investor does not have to run complex strategies to beat the ‘trend of the day’. I personally keep most of my funds in safe, liquid assets but I have about 20% of my portfolio invested in high-risk high-reward assets, like certain tech stocks or cryptocurrencies. This is called a ‘Barbell strategy’ and has become better known in the mainstream thanks to famous author, professor and trader Nassib Taleb, author of ‘Black Swan’.

Most of us panic if our funds are sitting in cash on a 0.1% rate savings account. But having the majority of your money in cash, gold or bonds, means that you are well protected from risk. And you can buy when everyone else is panic-selling during a market crash because you have cash available. The famous mantra “buy when there is blood on the streets” has allowed many famous investors, such as Warren Buffet, to build a top-class stock portfolio at a great price.

Advanced trading tools

In normal times robo-advisors give you average annual returns. But when all hell breaks loose, as it inevitably will, sooner or later, I would not want to be sitting in an index fund when everybody is trying exit through the door simultaneously.

Those who went ‘through the door’ before others won’t be the ones suffering. The smart Hedge Fund manager who long ago secured his investment position by buying insurance or setting up stop losses that will sell down his holdings in the event of a crash is able to react to market changes quickly. John Paulson, the famous investor, posted profits of over $2bn during the 2008 Financial Crisis.

Action step:

Small time amateur investors tend to avoid anything more complex than simply buying and selling. By doing so they miss out on major market opportunities. A simple ‘Put’ option can act as an insurance that allows the trader to sell a certain financial asset at a predetermined price: perfect when you want to protect yourself against a market crash.

Moreover, automated trading rules allow hobby investors to trade like professionals with algorithms. Platforms like Coinrule give normal people the tools to build strategies that protect against losses and help to catch market opportunities. By designing and then automating the strategy you don’t need to sit in front of the computer all day or constantly watch the markets. Innovation is starting to provide access to the markets for more and more people. And the professionals are hating it.

Do-It-Yourself Traders need to keep learning

Trading and investing are tough to do. There is no doubt about that. For someone with less time and experience it certainly makes sense to act conservatively in the markets. However, that does not mean that regular people are too dumb to learn to make their own investment decisions. Today, professional traders can make money whether markets are up or down. Non-professionals can do the same.

There is no good reason why today’s markets must remain esoteric to those outside the industry. Behind scary, technical language are actually some simple concepts. Don’t listen to the bankers-in-suits claiming that ‘this is not for regular people’ but only for the ‘Masters of the Universe’.

Most of the problems holding normal people back are related to access. Access to the right trading instruments, the right knowledge and the necessary experience. If you just put your money into a passive fund, you never learn and are forever victim to whatever crisis may hit the market.

Action step:

Read and study the markets. Books like “The Intelligent Investor” by Benjamin Graham, “What I Learned Losing a Million Dollars” by Paul and Moynihan and many others provide great introductions to the topic. Tools like TradingView make chart reading accessible for everyone. Free resources and communities allow normal people to get up to speed and learn quicker than ever. Other new entrants into this sphere are beginning to offer products that allow non-professionals to trade on easy-to-use platforms with a wide range of assets available. The days when you needed to navigate complex, confusing interfaces are truly over.

Make up your own mind

Platforms like Robinhood, Revolut or Freetrade have been making an impact in the retail online investing market by offering a smooth user experience, modern interfaces and great accessibility. But when it comes to financial inclusion they don’t go far enough. Famously, Robinhood sells on its user’s trading orders to be executed by high-frequency trading firms like Virtu or Citadel Securities. This puts these firms in a position to place their own trades in such a way that regular people will often end up overpaying. This is a win for the trading firms, but most definitely a loss for you.

On the other hand, despite years of talking about the ‘end’ of cryptocurrencies and the ‘scams’ in the market, everyday people are trading these products more than ever. The need for a market that, at least has the potential for full transparency, fast learning and large opportunities, is there. And it is being made a reality by new tech.

Action step:

Spend time doing your own research and learn to make your own judgements. Just because a new platform is hyped or a market is attacked in mainstream perception does not make it more or less right. Use the platforms and tools that offer full transparency, have the ethics in place that you value and are accessible for normal people.

And finally

Of course, trading and investing involves risk. Rather than ignoring this fact take time to learn about trading and also take personal responsibility for your finances. It looks like normal people are starting to buy into this vision in ever larger numbers. And, I for one, think that’s wonderful.

ABOUT THE AUTHOR

Oleg Giberstein is co-founder of Coinrule, a beginner-friendly and safe trading platform enabling you to automate your crypto investments across multiple platforms, helping you protect your funds and catch the next great market opportunity.

Coinrule gives investors, from beginner to pro, access to algorithmic trading without having to learn a single line of code.

Coinrule is both educational and gamified helping deliver financial inclusion for all by giving everyone the tools to compete in a new world of trading.

https://coinrule.io/

https://www.linkedin.com/company/coinrule

https://www.facebook.com/CoinruleHQ/

Tweets by CoinRuleHQ

https://www.instagram.com/coinrulehq

https://www.seedrs.com/coinrule/coming-soon

Want to build a watch collection – here’s how to make the best start

Posted on January 28, 2020 Written by Administrator

The idea of building a watch collection is an exciting proposition with the range of models, brands, prices and finance options available in the market today. There are, of course, the ‘household’ big name and hundreds of interesting independent watch brands. No matter what you decide to collect, one thing’s for sure, you are going to discover lots of nice watches.

So, where do you start? My first piece of advice is to try not to be influenced by others and hype – this is your collection, and it’s all about you.

What next?

The fact that you are reading this article already tells me that you have a keen interest or already own some watches and that you love watches. So, we are off to a good start.

Like you, I am a watch collector. I am also the owner of an independent travel watch brand called CuleM Watches. I have collected watches since I was a boy and I believe that I will continue to grow my collection throughout my life. Currently, I have around 30 watches in my collection ranging from a Seiko chronograph that I purchased 30 years ago, a Jaeger LeCoultre world timer (a gift from my Dad), and a collection of my own CuleM creations that embrace my love of travelling, watches and the world.

Each watch is individual. And I love every one of them. It’s not about the price, or the brand image, or what my friends have – it’s about the fact, that for me, each watch is a beautiful work of art, and each one has its own story. I remember when I bought it, where I was, and what attracted me to it. I remember the person who gave it to me, or who was with me when I made the purchase. So, choose watches that speak to you, that will hold your memories, and that look beautiful (whatever that means to you).

If you have a particular interest in certain items or activities, start looking for watches that match what you love. For example, if you love diving, look for diving watches that are water resistant to a certain depth, and can be used for scuba diving. If you love travelling, look at dual time watches like a GMT or world timer that you can use on your travels and read the time in two or more zones. Having a connection to a watch is important when building a collection because you will not only take pleasure in looking at it, but it will always remind you of your passion.

Aside from your personal interests, it is also important to consider your style when building a collection of watches. In my case, I am generally smartly dressed and like to wear an elegant dress watch on a leather strap. Therefore, I prefer to have more watches in this style in my collection. For some people who are more casual, they might prefer larger and more rugged watches like a diving watch or chronograph on a metal bracelet. So, think about how and when you’ll be wearing them and choose watches that will suit your lifestyle and your wardrobe.

For some collectors that I have met over the years, variety is the spice of life; they aim to have many different pieces in their collection with different functions like a date, GMT, chronograph, annual calendar, alarm, world timer, etc. I understand this type of collector and I used to collect watches like this. However, these days I tend to wear the watches that I connect to the most – which, in my case, is travel watches.

If I were to start collecting watches again, I would be more individualistic in my approach and buy beautiful watches that I love to look at and connect with on a personal level. It’s not just about the watch for me. It’s about the connection and wanting to be constantly inspired by the timepiece I see on my wrist.

Think about when you are getting dressed for the day and you are choosing which watch you want to wear, choose the one that you love and ignites your passions, and makes you feel at your best. Those are the kinds of watches you want in your collection.

There are four main types of watches in terms of the mechanics: automatic (also called self-winding); manual winding; quartz; and smart watches.

The last decade saw the rise of the smart watch, dominated by Apple. These watches don’t tend to hold their value like other watches as they are out of date very quickly. They aren’t built to last, there isn’t much of a second-hand market – often, if you decide to sell, you’ll just get the recycling value for the watch – and, for what you get, they can be expensive. However, if tech is your thing, (and remember this collection is YOUR collection) then there are some interesting watches to collect.

Quartz watches are battery powered and go tick, tick, tick. They are easily recognizable, and we’ve all had them. Quartz watches are generally cheaper than automatic or manual winding watches, but in my view, they are not designed with the intention to last a lifetime. They are more of a moment-in-time watch – but they are ideal for lower budgets. The main advantage with a Quartz watch is that you never need to wind it, but many collectors avoid them as they aren’t considered to be high-end or luxury and so don’t hold their value as well.

The holy grail of watches is considered to be automatic and manual-winding watches that can be passed on from generation to generation. Both types of watch can be manually wound and automatic watches benefit from continuously winding themselves as you wear them. Both types of watches will also have a power reserve. For example, CuleM’s GMT watches all have an automatic movement and 42-hour reserve.

If you wear an automatic watch every day, you will probably not need to wind it. If you vary the watches you wear then you may need to wind it slightly when you put it on after a break – just to get the movement started. Manual winding watches do not have this automatic (self-winding) function and will need winding regularly.

When starting a collection, I would recommend buying an automatic watch that is Swiss made, which will potentially last a lifetime – making a great watch with which to start your collection.

Many argue that Swiss made watches are the gold standard and they are of course excellent, like almost anything Swiss-made. But, they do come at a higher price.

That said, Swiss made watches are a good place to start when building a collection because of the variety of brands, quality, prices and functionality. Other countries to look at include Germany and Japan, which both have some lovely, high quality brands. Then, of course, there are the much cheaper fashion watches that are often made in China. These can look great, and certainly won’t cost as much, but they don’t tend to last as long or hold their value as well.

A great place to start looking at watches is online and social media. Some brands are only currently available online, so you’ll get a much wider choice by looking there – and a wider range of prices too. Also, it is great to browse watch shops and attend watch events like Baselworld in Switzerland.

The great thing about events and shops is that you can generally try on the watch and see it on your wrist – how does it make you feel when you look wear it, what does it look like on you, how comfortable is it? All of these are important questions. Some watch shops can be a little intimidating; try not to let this put you off. However, if you do feel like this, I think it is best to leave and find another shop. After all, you are trying to discover what you like, you want to feel good, and I hope you are going to buy many watches to add to your collection in the future.

For watch brands that are only available online, like CuleM, you can download the Try on CuleM app and see how good the watch looks on your wrist. Follow your instinct with online purchases knowing that you can generally return the watch if you are not happy with it. Check the company’s returns policy first – before pressing the buy button.

As you progress in your watch collecting journey, you will probably want to dig deeper and get to know more about watches, the inspiration behind them, the story of the brand and its founder. To really connect with a brand, you may also want to know about their vision, and chat with the founder. This way you can get a real sense of the brand and know if it’s one you wish to follow and buy more watches from in the future.

Watch events like Baselworld in Switzerland, Hong Kong Watch and Clock Fair, Miami Watch and Wonders, and Dubai Watch Week are a great way to do this. There are also smaller local events which you can search for online. You can meet the people behind the brand, get to know them, and understand the vision for their future collections.

Most peer groups will see the same or similar watches around the dinner or meeting room table. Last summer I spent the day with friends, and all I could see on the majority of the wrists were one or two big name watch brands. If your watch is simply a status symbol, this may make sense, but if your watch is about expressing your individuality – then look for brands that speak to you, and not just the ones your peer group are wearing. A great, but little-known watch, can be a great talking point. So, lead the way. Collect what appeals to you. Choose the brands you like – whether they are well-known or a small independent. Remember, this collection is about you, not anyone else.

Summary

In short; be you. Think about what you are passionate about and your general style. Then, browse watches online, attend events and check out some shops. Follow your instincts and spend what you can afford. Set the trend, by leading not following. Enjoy the journey and happy collecting.

ABOUT THE AUTHOR

CuleM Watches is an independent watchmaker founded by watch collector and traveller Matthew Cule. CuleM ‘s World GMT collection of Swiss made dual time automatic watches celebrates the beauty of our amazing world and are designed for people who love to travel and collectors of exquisite timepieces. CuleM believes there is no experience more meaningful and amazing than travel – and no object more beautiful and meaningful than a watch, so each watch is a time capsule of memories of the places you have been and an inspiration for the destinations you wish to discover. Available from Goldsmiths and luxury retailers.

CuleM will have a stand at Baselworld this year showcasing The World GMT collection from 30th April to 5th May 2020.

Web: www.CuleMwatches.com

Instagram: @CuleMwatches

Facebook: https://www.facebook.com/culemwatchesgmt/

Twitter: @CuleMwatches

LinkedIn: https://www.linkedin.com/company/CuleMwatches/