Diversify or lose. Invest or lose: what are we risking? Invest or lose
Can you share the investment? ideas/tools for this year that will beat refinance/deposit rates? :)What a beginner should absolutely not do when investing
We need to start with banal truths. There is never a need to invest borrowed funds in the stock market. Experienced investors use borrowed funds from the broker, trading with leverage. But for beginners, trading with borrowed funds, using leverage, or shorting shares (selling shares that are not available) should not be done. Just as you should not purchase investment life insurance from banks (an investment product and insurance separately are much more profitable) or structured products. We bypass trust management (as a last resort, you can consider mutual funds, but this must be done competently). Also, never put your eggs in one basket, trying to ensure that no matter how the market behaves, you have profitable instruments in your portfolio.
Which investment instruments to choose
From my point of view, a deposit is one of the worst investment instruments. It is better to keep funds that may be needed in the near future on it. But you can make the most money on the stock exchange when everyone around you is shouting “everything is lost,” as was the case, for example, in 2008 and 2014. Therefore, the idea of keeping dollars on deposit in a reliable bank is also quite good, even if it will not be possible to beat inflation for some time.
Of course, Eurobonds of very reliable Russian companies with an annual rate of 5% or more seem more attractive than deposits, but entry into this market for a small retail client starts from a couple of hundred thousand euros. There are, of course, mutual investment funds (MUIFs), but their commissions are too high. The costs of purchasing exchange-traded ETFs are much lower, but only ETFs from FinEx are traded on the Moscow Exchange. I can’t say anything bad about Phoenix, but I can’t vouch for this company either. In any case, I would not risk investing more than 1/3 in the Finex ETF.
On the stock exchange you can buy federal loan bonds (OFZ), which bring a return no worse than a deposit. Of course, a deposit in a reliable bank, and even in the amount of up to 1.4 million rubles, is a more reliable investment. Bonds may still fall in value. But a huge advantage of OFZs is that OFZs can be purchased at in order to receive a deduction for the 1st type in the amount of 52 thousand rubles when depositing an amount of 400 thousand rubles for the year. At the same time, it will not be possible to close an IIS and withdraw money from it for 3 years (with the loss of a tax deduction, you can close it earlier), and every year you can add 400 thousand rubles.
Stocks in the long term usually bring more than investments in bonds, deposits or gold. For long-term investing, the second type of deduction on IIS becomes more interesting, when the amount of growth is not taxed. This type of deduction is also interesting because you can annually add 1 million rubles per year to your account. It is important to pay attention to the fact that some For brokers, dividends from IIS can be received not only in IIS, but also in a bank account.
Buying shares is worth it for the long term. In this case, it can be useful to disconnect from the news background and not read various analysts. Our news is very heavily manipulated, so even publications in reputable publications need to be treated critically, trying to understand who might benefit from it. And just whipping up pessimism can become a very good friend if you find the strength to think soberly and resist the crowd. In fact, the most difficult thing in trading on the stock exchange is not choosing securities at all, but working with your emotions.
How to understand which stocks to buy/sell
Other sites also provide dividend forecasts. But of course, there are errors, including in forecasts. And some companies may refuse to pay dividends altogether, as was recently the case with Megafon.
If a beginner sees a 16-17% yield on Bashneft preferred shares, then he may be tempted to buy these shares with 100% of his cash. And this, of course, will be a mistake. Of course, before purchasing any stock, it is advisable to study the financial statements, which companies traded on the Moscow Exchange must post on the Interfax Information Disclosure Server. Of course, it is advisable to assess the dynamics of changes in various parameters, including revenue, operating profit, net profit and debt. It doesn’t hurt to read the charter to understand how the company calculates dividends and in what cases.
Of course, many people do not have the opportunity to study all this. You shouldn’t trust the recommendations of brokers, because... it is beneficial for the broker to receive commissions from trading volume, plus the broker can sell / buy securities, as opposed to his own recommendations for clients. At the moment, several investment communities on the social network VKontakte allow you to evaluate many companies for free:
From paid analytics you can look at Elvis Marlamov.
In any case, you still need to think with your own head, but such communities allow you to pay attention to some companies, as well as evaluate exactly how experienced investors act. Moreover, many of them will not give recommendations, or after some time they will offer paid services.
In general, I am not a fan of holding 100% of dividend stories. If a company distributes a large share of profits as dividends, then it is obvious that it is not investing much in development. As a result, there may never be a multiple increase in the value of the shares themselves. And if a company refuses to pay dividends (as was the case, for example, with NKNK), the value of the share may decrease significantly.
I also don't really like buying dividend stories when the company may be at the top of a cycle. For example, Severstal pays very decent dividends of about 3% per quarter. But in 2013-2014, a Severstal share cost 200-300 rubles, and now it’s about 1,000 rubles. If the value of the metal has reached its peak, then following the fall in its value we will see a fall in quotes and dividends.
In addition, the market does not value stocks with high levels of capital expenditure. It would seem that Gazprom pays more than 5% of dividends, is building a bunch of gas pipelines, with the completion of which cash flows, as well as profits, can significantly increase. But the market does not believe that construction will end. And of course, investors factor into the share price the level of kickbacks during construction.
If you have capital, it makes a lot of sense to take a closer look at Western markets. Companies there may appear overvalued and dividends low compared to the Russian market, but it is important to consider real returns minus inflation, as well as the likelihood of ruble devaluation.
And of course, it will be useful to read asset-allocation by Sergei Spirin to learn about what asset allocation and portfolio rebalancing are. Of course, you won’t receive specific advice on which stocks, bonds, precious metals,... to buy, but you will be able to form a portfolio to suit your goals and objectives, and also avoid some mistakes.
My investment portfolio
My portfolio consists of 100% stocks:
- iDonskZR p
- JSC AFK Sistema OJSC, issue 05
- JSC "Lenzoloto" OJSC, issue 02
- JSC "MMK" PJSC, issue 03
- JSC "Moscow Exchange" PJSC, issue 01
- JSC "PROTEK" OJSC, issue 02
- JSC "Raspadskaya" OJSC, issue 04
- AP "Nizhnekamskneftekhim" (NKNK) OJSC, issue 02
- AP "ANK "Bashneft" PJSC, issue 01
- AP "Mechel" OJSC, issue 01
- AP "Saratov Oil Refinery" PJSC, issue 01
- AP Lenenergo
- Shares of United Company Rusal Plc
- GDR En+ Group ORD SHS REG S
- JSC "Polyus" PJSC, issue 01
- JSC "IDGC of Center and Volga Region" OJSC, issue 01
- JSC IDGC of Volga PJSC, issue 01
I had experience investing in mutual funds of Uralsib Management Company, Sberbank UA Management Company (Troika-Dialog), Alliance-Rosno Management Company, Kit-Finance Management Company, Alfa-Capital Management Company. Mutual funds have so many disadvantages that a separate article could be written about this. But I no longer have any desire to invest in them, because... management costs eat up a decent percentage of profits, but managers almost never manage to outperform the market. The only exception is, perhaps, rental real estate funds, but only from reliable management companies.
The famous American billionaire Warren Buffett of course recommends that beginners invest through exchange-traded ETFs, which outperform most managers in long-term investing, also due to extremely low costs.
What specific securities can a beginner buy?
For a beginner, I would recommend investing 1/3 of the funds in a dollar deposit, 1/3 in OFZ, and another third in dividend stories, namely: AP Saratov Oil Refinery, AP Lenenergo, AFK Sistema, AP Bashneft in equal shares. And then we will deal in more detail with the companies represented on the stock exchange, reducing the share of OFZ and foreign currency deposits during declines, investing in such stories as Rusal, Raspadskaya, Mechel, Polyus, Novatek, RusHydro, Moscow Exchange, Yandex, FSK, Kamaz, NKHP, VSMPO-Avisma, PhosAgro, Enel, GazpromNeft, Aeroflot, LSR, Mostotrest, Magnit, ...
But of course, the greatest profitability can be obtained by purchasing shares at a time of crisis, when everyone around is screaming that everything is lost. Other options for obtaining multiple growth are extremely rare.
p.s. If you need a guaranteed return higher than the deposit and/or refinancing rate, then this is certainly not about shares. With long-term investing, shares actually showed historically higher results (unlike deposits, which often do not even outpace inflation). But high returns in the past do not guarantee the same in the future.
Basic principles of PFP: invest or lose 60 rubles. per day = 1800 rub. per month, 20% per annum 1 year 23.700 5 years – 183.150 10 years – 676.950 20 years – 5.597.400 25 years – 15.273.510
When to start investing? Masha started investing 6,000 rubles a month for 7 years, then stopped Olya started investing after 7 years at the same rate of 6,000 rubles a month and did this for 30 years Name Amount, rub Sub-Capital Masha 504,000 12% per year 28,467,600 Olya 2,160,000 12% per year 21,179,490
Investment tools 1200 +735% MICEX index +24% per year 900 +525% real estate +20% per year 600 +230% gold +12% per year invested 100 rubles +161% deposit 0 2001 2002 2004 2006 2007 2008 2009 2010 +10% per year +12% US$ 300 +1.1% per year -71% Under the pillow -13% per year
Law of the market vs Laws of psychology Expected income from investments Risk (fear) Income (greed) Wants: low risk, high income high risk, high income Gets: low risk, low income High risk, low income Risk of losing part of the investment
Framing effect + 5000 added to your current well-being OPTION “A” 40% save 5000 60% lose everything OPTION “B” Save 2000 with 100% probability YOUR CHOICE? OPTION “C” 40% save 5000 rub. 60% lose everything OPTION “D” Lose 3000 with 100% probability YOUR CHOICE? Survey results: Option “A” – 16% Option “B” – 84% Option “C” – 69% Option “D” – 31%
Investment goal Initial amount Regular investments Goal RUB 10,000. per month 2013 100,000 rub. 2023 RUB 3,000 Regular income 30,000 rubles. per month
Investment plan modeling Beginning. amount: 100,000 rub. Regularly: 10,000 rub. per month for 10 years Goal: 3 million rubles. after 10 years Required return: 20% - 12%
Creating an investment portfolio Determine a personal comfortable level of “risk” in exchange for potential “return” adjusted depending on the ability to take risks 5 Aggressive 4 Dynamic 3 Rational 2 Cautious 1 Conservative Questionnaire Create an investment portfolio that takes into account the level of risk and the necessary profitability to achieve life goals defined in financial terms
Diversification and asset distribution reduce investment risks - Gazprom Sberbank MTS Lukoil ... - Shares Bonds Goods Real Estate Cash
Investment result Investment = 300,000 rub. Portfolio: stocks, bonds, gold in equal shares Average portfolio return ~ 19.5% per annum
Precious Metals Unlike traditional assets, precious metals do not lose value depending on the economic or political situation. v In bars Precious metals: v In coins v In unallocated metal accounts (OMA) GOLD SILVER Over three years, the price has increased by 107.73%. 77.38%. PLATINUM Over three years, the price has increased by 25.58%. PALLADIUM Over three years, the price has increased by 99.82%.
Capital protection: What could pose a threat? Ø Negative stock market dynamics for us Ø Errors in capital management MARKET RISKS Ø Lack of loss limitation Ø Changes in the tax regime (increase in personal income tax, introduction of a progressive scale) Ø Confiscation Ø Divorce Ø Problems with transfer (inheritance) NON-MARKET RISKS
The probability of receiving a profit increases over time Investment horizon 1 month 1 year 2 years 3 years 5 years 7 years Probability of receiving a positive return 63.37% 65.97% 69.90% 72.18% 91.76% 98.00% Probability of receiving positive return on investment for more than 5 years - more than 90%!
Rebalancing the investment portfolio helps to “sell at a high price.” The correct reaction to an increase in the price of an asset... ... is the sale of a certain amount of this asset. The correct reaction to a fall in the price of an asset... ... is the purchase of an additional amount of this asset.
Risk control through the use of structured products A pre-prepared “packaged” strategy in which the parameters of risk and profitability are immediately known, as well as the conditions under which they can be executed. *As an example, the test yield on a structured product with partial protection is shown. Underlying asset: RTS index, type: growth, capital protection: 95%, period: July 1, 2010 – March 30, 2011. The past performance of structured products with partial capital protection does not determine future returns. The maximum possible loss could be 5% of the amount invested.
Investment life insurance – protection against non-market risks + Pre-determined level of capital preservation: 100% / 95% / 80% Control over the disposal of capital in the future Testamentary function Investor From the claims of creditors and 3 of their persons; Insurance policy Policy cost = Capital 2 3 Tax protection (full and partial): Personal income tax benefit; No tax on inheritance transfer; High degree of asset protection: Assets (money) Beneficiaries 1 + guaranteed% (0, 2 – 2% per annum); + investment income (from 12 -25% per annum); + Low management costs Assets in the insurance policy are not liable for the debts of the policy holder, are not confiscated, seized and do not participate in the division of property of spouses Assets (money) Management company Reinsurer Munich Re Swiss Re Lloyds Guarantee of return of all assets
I am often asked why some people are rich and others are poor. There are quite obvious reasons. People who become rich usually receive better education, work in higher-paying professions, rise in their careers, spend money wisely and are able to save it. But after all this there is one more big difference. The fact is that rich people know how to become richer, but poor people do not.
Data on rich and poor
Recently I found data that clearly confirms the well-known expression that in the modern world the rich are getting richer and the poor are getting poorer. Here's a graph that shows that from 1980 to 2012 in the United States, the real income of the top 10% of people in the country increased by 78%, while the income of the other 90% decreased by 6%. Moreover, the richer people were, the more their income increased. Thus, the income of the richest (top 0.01%) increased by 658% (that is, 7.6 times).
Source data: topincomes.g-mond.parisschoolofeconomics.eu
How to become richer?
What's the secret here? How did the rich get richer? One explanation is the disproportionate growth in corporate earnings. Recently, we have observed very low growth rates of gross domestic product (GDP) in almost all countries of the world. The growth of wages in the world is also very small (especially in developed countries) and barely covers inflation. But global corporations constantly report rapidly growing incomes and huge reserves of cash in their accounts. So, rich people participate in these corporate profits, but poor people do not.
Look at the chart of the S&P500 index (this index includes the stocks of the 500 largest US companies) for the same time period from 1980 to 2012. 
You can see that US stocks are up 1,437%. Look at the curves of the first graph and the curve of the second graph. You will see that they are similar. All periods of rising and falling stocks coincide with periods of rising and falling incomes of the richest people in the United States. Rich people invest in stocks, poor people don't. Therefore, the rich become richer and the poor become poorer.
The rich got even richer in 2013
Here's what happened in 2013. The total capital of the 300 richest people on the planet increased by $524 billion, amounting to $3.7 trillion. That's an increase of 16% in US dollars! How did they do it? Obviously, they did not keep the money under their pillows or in bank deposits. They simply invested in stocks, and 2013 was the best year in the last five years for the global stock market. The world's equities together (as reflected in the MSCI World Index) rose 24% in 2013. US stocks (as reflected in the S&P500 index) gained 32% (their biggest gain since 1997). Shares of European companies (Stoxx Europe 600 index) rose by 17%.
The chairman of the board of directors of Microsoft, Bill Gates, increased his capital more than others in 2013. His capital increased by $15.8 billion to $78.5 billion. This is a growth of 25% per year. How did he do it? Yes, it’s very simple - Bill Gates owns more than 420 million shares of Microsoft, and they have risen in price by 35% over the year. Plus Bill Gates received a 3% dividend on his shares. This is how a rich man became even richer. At the same time, Bill clearly did not overwork in 2013 - his money simply made money, even while he was sleeping or doing charity work.
Do you think that everything is wrong in Russia? You are wrong. The most successful billionaire of 2013 in Russia was the co-owner of the Magnit retail chain, Sergei Galitsky. His fortune increased by $5.3 billion in 2013 and is now valued at $13.8 billion. This is an increase of 62%! How did this happen? Sergei Galitsky owns 38.67% of the shares of Magnit, and these shares grew by 55% in 2013.
Why do the rich invest in stocks and the poor not?
Rich people have many differences from poor people, but three differences are the most important.
The rich plan ahead
Rich people know how to plan for the long term. They know that it is impossible to earn a lot of money “here and now”, that this takes time. The poor don't want to wait. They plan their lives only a week or a month in advance, do not think about the future and... remain poor.
The rich are willing to wait
Rich people believe in delayed gratification. They don't strive to get everything right now, they are willing to wait. They are willing to invest their small income today in order to receive much greater income in the future. Buy stocks to get high returns in a few years - that's what rich people do. They know how to wait. The poor need everything at once, so they don’t buy shares. Instead, they eat, drink and be merry (as much as their income allows) today. And they remain poor.
The rich use compound interest to their advantage.
Rich people use the power of compound interest to become even richer. Shares pay dividends. What do the rich spend it on? That's right, with these dividends they again buy shares, which will again bring dividends. This is exactly how compound interest works. This is how the rich get richer over time. What do the poor do? They not only do not buy shares, but also take out loans for their pleasures (eat, drink and have fun), and then pay interest and penalties to the bank. This is how the poor become even poorer.
Now you know how to become richer. Take cues from other rich people. Share in corporate profits. Invest in these corporations by purchasing them
The famous bet between American biologist Paul Ehrlich and economist Julian Simon in 1980 was based on a long-standing dispute. Simon argued that in the long term, human creativity would allow for ever-improving standards of living and that, in essence, the Earth's resources were limitless. Ehrlich, who was pessimistic about the consequences of overpopulation of the planet, bet on the limited natural resources - and lost: over 10 years, prices for the set of metals he chose for the bet decreased due to scientific and technological progress.
Now, on the threshold of the next long-term economic cycle, humanity is awaiting a new powerful impetus for development thanks to the synergy of achievements in the field of electronics, telecommunications, space and biotechnologies, and alternative energy sources. The industries of the so-called new economy are formed by companies with a high proportion of intangible, human capital - the very creativity in which Simon believed.
Text: Elena Lomova
Affordable investments: how has life changed?
The new economy also means an unprecedented level of accessibility to participation in collective investments in the crowdfunding format: anyone with a plastic card and Internet access can support a startup they like with a couple of dollars. Kickstarter, perhaps the most famous crowdfunding project, states its mission as “Helping creative projects become reality.”
The creators of Kickstarter claim that they do not intend to ever go public or sell their brainchild, and their philosophy deserves attention to understand what the new economy breathes. The business model of the project is simple, effective and scalable: it is a commission for intermediary in collecting investments for startups according to strictly defined open regulations. Kickstarter is registered in New York as a non-profit public benefit corporation (Public Benefit Corporation), as are the New York Metropolitan Transportation Authority and the Port Authority of New York and New Jersey. With this, as well as a number of voluntary certifications and social donations, Kickstarter makes it clear that social benefit is a priority for the company.
There are quite a lot of resources inviting startups to host a project in order to attract the attention of investors. Among the Russian portals we can name StartTrack under the auspices of the Internet Initiatives Development Fund (IIDF), as well as the “Startups” section on vc.ru. At the same time, according to Rusbase, over the past 20 years, professional investors have concluded no more than 3.5 thousand deals in the Russian venture capital market. It is much more interesting to look at the Western market, where non-professional investors are widely allowed to participate in projects. For example, the database of startups AngelList (angel.co) has collected 3.5 million projects since 2010, among which traditionally most are IT companies, second place is taken by consumer goods, third by B2B products and services, fourth and fifth places by media and finances accordingly. In all of these startups, new technologies do not so much create new business models as they expand existing capabilities. The areas of note where there are the most private investors and interested observers are healthcare, clean technology and education. What is their interest based on?
Experts and analysts identify several key supertrends of the new economy, based on which business will grow significantly in the coming decades, even if the market as a whole stagnates or falls. These include the aging of the population around the world, changing consumer patterns among today's youth, growing incomes and consumption volumes of Asian residents, as well as new challenges in the field of security of people, companies and states. Let's take a closer look at these supertrends.
Silver economy
According to Credit Suisse, about ¾ of healthcare spending goes to the needs of older people - this is a serious and also growing market: the number of people over 65 years of age will only increase due to the demographic aging of the population and by 2050 will reach about 2 billion people, predicts UN. This sustainable trend will form a potentially huge market for healthcare and other services that meet the needs of older people: the entertainment and leisure industry, educational and social projects - all that is called the “silver economy”.
For example, AngelList provides the following statistics on the growth of startups in the field of elderly care:
Of course, many of the startups are high-risk, but among them there are projects that have also undergone independent industry expertise and have been highly assessed. For example, an application for older people, Care at Hand, which allows, based on regular surveys of the patient in the intervals between visits to the doctor, to predict the risk of deterioration in health for a period of up to 4 months. Studies have shown that using this app leads to a 39.6% reduction in hospital readmissions and significant cost savings for patients. It is no coincidence that Care at Hand, founded in 2011, was acquired in mid-2016 by Mindoula Health after two rounds of investment (USD 550 thousand in 2012 and USD 800 thousand in 2013). The app is still the most popular app in the Elder Care section of AngelList. The market for home care services for the elderly holds great potential. In the USA, experts estimate it at USD 80-100 billion per year; tens of thousands of contract workers are employed in this area. Investors who do not risk entering the healthcare venture market can consider stable global companies with businesses in the medical field, actively investing in startups and, most importantly, having the competencies to select the most promising developments. Pfizer (Pfizer Venture Investments), which showed growth of one and a half times over 5 years, and Johnson & Johnson (Johnson & Johnson Development Corporation), which almost doubled over the same period, have their own venture divisions.
Personal health monitoring tools—all kinds of physical activity trackers, diary apps, and corresponding data interpreters—are also popular among millennials—people under 35—who are interested in a healthy lifestyle. This significantly expands the target audience of such applications.
Millennials are welcome everywhere
In addition to gadgets and health monitoring applications, game consoles and related technologies and devices are extremely popular among millennials.
Xsolla
“ It is widely known that in the last few years, games as an industry on a global scale have shown steady, but not explosive growth - having reached the psychological threshold of one hundred billion dollars in annual turnover several years ago, games continue to slowly grow by several additional billions per year. This dynamic is remarkable in at least two ways. Firstly, games and the technologies surrounding them are practically immune to external negative phenomena (“black swans” in Nassim Taleb’s terminology) - unlike, say, the global film industry, which will most likely show a decline at the end of 2017. Secondly, and this is the other side of the coin, games are obviously waiting for a big technological breakthrough - the reserves for development and growth on existing technologies seem to have long been exhausted. The situation presents investors with several potential opportunities.
First: the cost of developing and publishing a game is growing much faster than the market size. This already means that hundreds of studios around the world need solutions that are as unified as possible, easy to use and easily adaptable to the specifics of local markets, related to optimizing payment options, attracting and retaining users, increasing the number of paying users and their average bill (the last two item - for free-to-play games). Second: Moore's law, according to which processor performance doubles every two years, has not had a major impact on games as such for a dozen years. Nevertheless, near-game technologies are in an acute phase of searching for the next big thing: 3D TVs have not become a breakthrough, about motion control (motion capture technology using a camera, implemented in Kinect controllers for Xbox, PlayStation Move, etc. - editor's note) everyone has already forgotten, nothing is clear about virtual reality yet (but players, developers, and investors are already feeling tired of it), but augmented reality (AR, augmented reality - editor’s note) could be a big breakthrough. — one and a half billion dollars invested in AR technology Magic Leap, and the latest solutions from Apple (AR games for new iPhones) and Microsoft (AR platform Hololens) allow us to think that investments in AR can pay off many times over in the short term.„
The market's interest in the video game industry is reflected by the confidently growing quotes of the PureFunds Video Game Tech ETF:
Millennials are no strangers to conspicuous consumption: according to Bain&Co., spending on personal luxury goods in 2017 will grow by 6% to EUR 262 billion (USD 308 billion), excluding currency effects, with 85% of this growth coming from consumers under 35 years. Millennials made up 55% of Gucci's customers in Q3 2017. Dolce and Gabbana has also focused on millennial buyers in recent years, conducting an active advertising campaign on the social network Instagram. “The question has arisen whether millennials can become as important to the luxury market as baby boomers,” says the author of the Bain&Co study. Claudia D'Arpizio1 - We've seen brands reinvent themselves to cater to this generation, but what's been surprising is the magnitude of the response."
Rich Asia
The same Bain&Co report. indicates that the bulk of buyers of brands such as Gucci and Louis Vuitton are residents of China, which accounted for 32% of the luxury goods market in 2017.
A few years ago, HSBC predicted a significant increase in consumption around the world due to the middle class, the size of which will increase by 3 billion people, or 40% of the planet's population, by the middle of this century. This means that the demand for goods and services will significantly increase in almost all sectors of the economy. Moreover, China will be one of the main drivers: by 2050, according to experts, more than 1.4 billion people will live in the Celestial Empire, and the average annual income of the country’s working population will change multiples - from USD 2.5 thousand to almost USD 18 thousand.
Luxury holdings are showing solid growth: in the last year alone, Kering shares have risen 88%,
Christian Dior - by 69%, LVMH - by 47%.
New economy - new technologies
Marketing Director at M.Video
“ The time for pure “Internet startups” is passing, but other interesting opportunities are opening up. Over the past few years, it has become obvious that it will not be possible to create a new Internet giant on the level of Facebook. There was also a wave of total “Uberization”, and the phrase “we are making Uber in the N sector” became almost an insult. What came to replace it? First, it is worth taking a closer look at the high technologies that lie beyond the Internet. These are biotechnology, medicine, energy, etc. The world is now experiencing a technological leap in which the creation of new technology has become less expensive. Next is artificial intelligence. An excellent topic for investment and great prospects in a variety of areas - from analytics to customer service. The obvious challenges are already visible here - artificial intelligence must be constantly trained if you want to leave it “face to face” with the client of your business. At the moment, the technologies for such training are not perfect and are not adapted to specific industries. Creating highly specialized intelligence, such as one that is knowledgeable about repair products or food, is a great investment opportunity. Any large retailer will be happy to buy ready-made artificial intelligence that understands the specifics of its segment. I can’t help but mention blockchain technology. At M.Video we launched a blockchain factoring project. As a result, the time required to confirm a factoring transaction has been reduced from several days to several hours. The use of blockchain technologies will only grow - both in B2B and B2C segments.„
Information technologies in the media also do not stand still: formats and methods of delivering content to consumers are changing. Brand new formats like NowThis, those short videos with a yellow frame, boast 2.5 billion video views per month (as of November 2017). At the same time, NowThis does not have its own news website - the distribution of videos is carried out exclusively through social networks, and ¾ of the audience is made up of people under 35 years old. However, due to the high competition in the media market, even innovative startups are forced to merge. In 2016, Discovery invested USD 100 million in the newly formed Group Nine Media holding, which brought together several news brands, including NowThis.
The holding remains a private company, of which Discovery directly owns 35%, as well as the right to obtain a controlling stake in the holding in the future. “The Eternal Bachelor” Buzzfeed in March 2017 once again announced the possibility of an IPO - now in 2018. While some are waiting for the BUZZ ticker to appear, others are worried about media innovation: Can a public news company flexibly adapt to new content distribution formats? Behind both Buzzfeed and one of the hottest IPOs of 2017, Snap, is NBCUniversal, a division of Comcast. According to Fortune, at the end of 2017, NBCUniversal had invested USD 400 million in Buzzfeed and USD 500 million in Snap. Comcast, which simultaneously develops the telecom and media sectors, achieved a doubling of its quotations in 5 years - from 2013 to 2017.
Companies with a long history also do not remain aloof from new technologies. The New York Times (shares have more than doubled in 5 years) is actively developing the VR (virtual reality - editor's note) direction, testing new formats for presenting information. The first known project of the New York Times is considered to be the 2012 material “Snow Fall,” which was freely available on the Internet. The Avalanche at Tunnel Creek" consists of several consecutive parts, dedicated to an avalanche in the Cascade Mountains of the USA and several skiers buried under the snow. In addition to photos and videos, the project used 3D models of mountains and interactive maps of the area, immersing the story in the atmosphere and creating an emotional effect of presence. In October 2016, the company launched The Daily 360 project, whose main goal is to make the viewer feel like a direct participant in the events taking place thanks to VR technology of panoramic images and videos. The New York Times, including through its innovations, regularly confirms its status as one of the flagships of the global media market.
The range of successful IT companies is quite wide, but you can consider the best in your investment portfolio using an ETF - for example, the Vanguard Information Technology Fund, which has doubled in five years, following the steadily growing MSCI ACWI Investable Net USD index:
Concern for protection
Information technology brings with it cybersecurity and privacy issues.
Head of the Center for Investments and Innovation Projects at Kaspersky Lab
“ The overall development of security technologies will be influenced by trends such as:
- increasing the local computing capabilities of wearable and compact devices, performed in isolation from the “cloud”;
- reducing the cost of communications and increasing the connectivity of all electronic and even electrical devices;
- an increase in the amount of accumulated data and the development of tools for their analysis, especially predictive ones;
- multi-agency: decentralization of decision-making in complex non-peer systems consisting of any dynamically changing number of agents - data carriers of different volumes and importance;
- context-sensitive systems that adapt to the behavior of third-party systems, people or societies
In the near future (2-5 years), technologies and products in the following security areas will see accelerated development:
- self-protection of data and its resistance to unauthorized changes, including through distributed registry technologies (blockchain);
- virtual and augmented reality, especially psychophysical;
- voice assistants;
- automated payments, for example, smart cars that independently pay for fuel at gas stations;
- sharing economy (sharing economy - editor's note), in particular, car rental;
- autopilots are still very far from the acceptable level of safety;
- social security (establishing the reliability of information and sources, the authenticity of photographs/videos/events in the physical world).
In general, the world around us will become smarter, its components - the notorious “Internet of Things” - will learn to interact better with each other, and the very concept of privacy will change greatly, especially for new generations.„
In the field of cyber protection, we note Check Point Software Technologies Ltd, which since 1993 has been providing comprehensive solutions for both businesses and individuals, including protection of mobile devices:
Returning to the dispute raised at the beginning of the article, we note that in most 10-year periods of the last century, Ehrlich would have won - prices for the set of metals he chose for the bet rose. However, the world has changed a lot and continues to change rapidly. Will the new economy solve the problems of humanity that scientists grimly described 40 years ago: the depletion of clean water, food and minerals due to population growth and the increasingly harmful methods of resource extraction? The new economy gives a choice of which future to live in, and this choice is up to investors, up to each of us.
"Investments. Professional look"
If you try to sort through investment objects, it turns out that the choice is not so great and is quite traditional: shares, real estate, gold, ready-made businesses, etc. Art is not always considered as an investment object. And completely in vain
If you try to sort through investment objects, it turns out that the choice is not so great and is quite traditional: shares, real estate, gold, ready-made businesses, etc. Art is not always considered as an investment object. And completely in vain. In terms of reliability, it looks no worse (or even better) than others. According to experts, the art market was one of the first to emerge from the global financial and economic crisis. And now, when many business sectors are in recession, sales of art assets are showing strong growth.
In Russia, according to data provided by the general director of the Art-Consulting company Denis Lukashin, prices for art and antiques are growing by an average of 12-15% per year, significantly exceeding official inflation rates (according to estimates of the Ministry of Economic Development of the Russian Federation for 2010 - about 8%). In the West, investments in art can bring about 11-13% per annum. “Works of art will always be a very valuable asset. Both connoisseurs and investors should hold on to it. In the post-crisis period, the art market will continue to be restructured: auctions will be more modest than during the boom, collectors will still prefer private transactions to open auctions, the best works will enjoy great success and bring impressive sums,” point out well-known consultants Michael Plummer And Jeff Rabin from Artvest Partners.
Before the crisis of 2009, the global art market developed cyclically. The income of the international art market, according to leading experts, reaches $22 billion annually. Moreover, in 1989-1990, when art sales reached a cyclical peak, income amounted to $43 billion. London and New York are considered the leading international art markets in terms of sales volumes.
Here is the opinion of an art market expert Georgy Putnikov:
- You can give money to some investment company. Before the crisis, some of them gave up to 35% per annum. If we compare what is better to invest money in - works of art or a mutual fund, then in 2009-2010. The results for investment funds were higher than for the arts. But if a new round of crisis begins next year, the stock market could collapse, and you will find yourself in a serious disadvantage. This is a common situation that also happens in the West. And in art you will be a priori in the black.
Abroad, the art investment market emerged in the mid-1960s. It is much easier for a Western investor than for a Russian one. Infrastructure elements such as expert institutes, insurance, consulting and analytical companies, and auction houses have long existed there. In London alone there are about forty auction houses.
The Western investor has numerous art profitability indices at his fingertips. For example, the internationally recognized New York Mei-Moses All Art Index, Milan Gabrius Art Index, Lyon Artprice, British-Swiss Zurich Art and Antiques Index, etc.
In addition to indexes, there are also databases: ArtNet, Art Sales Index, Artprice, etc. You have to pay for using the information (the cost of an annual subscription for full access to the databases ranges from $200 to $2,500). However, this is a price for professional analysis of the market, trends, and various comments that help investors navigate and choose the most attractive opportunities for investing their funds. The database user can see an image of the work of art itself, find out detailed information about its sales, origin and price. But the most important advantage of these indexes and databases is that the information presented on their sites would be almost impossible to collect on your own.
In addition to numerous analytical companies, such as the British Art Market Research, specialists from leading investment banks, such as Citigroup, Deutsche Bank, etc., as well as the auction houses themselves, including the world famous Christie’s and Sotheby’s, can advise those who want to invest their money in art objects.
The global art market is divided into two main sectors - auction sales (their share is about 48%) and sales by art dealers (52%). As for auction houses, Sotheby’s and Christie’s are the long-time leaders: their share by value in total amounts to 27% of all auction sales in the world. They are followed by Bonhams (5%) and Phillips de Pury (6%). In total, the art market has about 5 thousand auction houses of different levels in the world. And if Sotheby’s and Christie’s belong to the auction houses of the first, highest, level, then the second level includes national leaders such as Bonhams, McDugall`s in the UK, Artcurial in France, Villa Grisebach in Germany, Kornfeld in Switzerland, etc.
Compared to the Western art market, in Russia everything is much more complicated. Our art market is truly just beginning to take shape. Even the experts themselves are in no hurry to call it reliable.
Firstly, because compared to the West, our infrastructure is not yet sufficiently developed. Secondly, because our market is still associated with many risks. The percentage of fakes is too high, both among Russian “antiques” and among the avant-garde.
Until recently, experts from the country’s largest museums were responsible for the examination of works of art in Russia. However, the museum is not responsible to the client who turned to it for expertise. And in the event of an expert error by the museum (even if it is recognized by the court), the client is unlikely to be able to return the money spent on the purchase of the painting.
Such an examination was based only on visual examination. No technical and technological examination using X-rays, spectral and chemical analysis of the paint layer, or infrared photography was carried out. Therefore, in the West, expert assessments made in Russia were treated with distrust.
However, today in Russia there are already large, permanently operating auction houses. And this is very important, since experts believe that it is the auction form of organizing the purchase and sale of art objects that is the most objective. After all, both the seller and the buyer at an auction are guided by the relationship between supply and demand. This makes it possible to understand the real value of a work of art put up for auction.
The dark past of peer review has also come to an end. In Russia there already exists an independent expert institute that examines and evaluates both modern works of art and antiques. Thanks to the technological laboratory and modern equipment, a comprehensive study of the object of art has become possible in accordance with Russian and international standards and requirements. So now there is no need to worry about the fate of expert opinions made in Russia.
Costs of an art investor
1. Commission for the work of a consultant and art dealer.
2. If you don’t have an official examination of authenticity (if you buy the work directly from the workshop), you will have to spend money on it.
3. Insurance costs.
4. Storage expenses. The most expensive pleasure is to place a piece of art in a special bank vault with a special temperature regime. It will be cheaper to rent an enlarged safe deposit box from the same bank. This option is suitable for modern canvases that do not require special maintenance conditions. If the size of the piece of art you purchased is small, then you can use a regular safe deposit box. This option is the cheapest for a collector.
5. If necessary, transportation and transport of the purchased work across the border. Plus a state duty for the right to export cultural property.
In the West, it is customary to insure art objects. This is especially true for those collectors who intend to sell the art they have purchased in the future. Any auction house or gallery will require insurance.
The issue of insurance of art objects in Russia has also been resolved. Today, several insurance companies are ready to insure a purchased painting or sculpture. To do this, the collector provides the insurance company with a scientific expert report, which confirms the authenticity and value of the insured work. After purchasing and insuring, the next step that an “art” investor should think about is storing the purchased work. It seems that problems are beginning to be resolved here too. In Moscow, storage services for paintings and other art objects are offered by banks that have specially equipped storage with a special temperature regime and humidity level.
But, most importantly, the state is concerned with training personnel in this matter. Thus, in 2009, the MBA curriculum began at the Moscow State University business school. Lomonosov, training art market experts. The book “Guide to Investing in the Art Market” (Alpina Publishing House) has appeared on the book market. And some investment companies and banks have already hired specialists in investing in art. Such a step was inevitable, Denis Lukashin is sure: “A qualified consultant will help you choose and make purchases, build an investment scheme depending on how you are ready to play - “long” or “short.” He will recommend several directions. Everything here is like in securities: there is a risky direction that provides greater profitability, there are stable directions, etc. All this can be divided into priority groups: painting, decorative and applied arts, graphics, sculpture. Consultants will ensure restoration and storage of the item, and will regularly inform about market changes and the value of this item.”
Tips for an art investor
Denis Lukashin, head of Art Consulting company
Not only painting is suitable for investment, but also anything you like - sculpture, decorative and applied arts, etc. But it is better to invest in something that is already successfully sold on the market. There are whole layers that are just appearing on the Russian market. This is Chinese art - objects made of jade. But there are very few precedent sales. When there are no sales, it is always a risk. Big profits are possible, but there is also a high chance of losing money. It is dangerous to try to venture into even more obscure territories. Photography is a rather complicated thing, because it is to some extent a circulation thing. When buying a photograph, you never know whether the negative has been destroyed or whether a dozen more such photographs will be printed. Accordingly, its cost depends on this. Numismatics or heraldry are specific markets; they are very small compared to painting. In principle, the things are interesting and not very expensive, because the range ranges from 1 thousand to 15-20 thousand dollars per coin.
