Check out what’s happening in the world this week, plus what it means for you and your investments. (3:43 min read)

This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.

 

1. Bezos prefers rockets over e-commerce

Amazon founder and CEO Jeff Bezos recently revealed working on his space company (Blue Origin) is the “most important work” he’s doing.

Bezos is funding the venture by selling a billion dollars’ worth of his Amazon shares each year.

He also spoke of Blue Origin’s mission as “incredibly important for civilisation long-term”. 

What does this mean if you are invested in Amazon?

It’s rare for a CEO to openly admit their most important work doesn’t centre around the business they run day-to-day.

However, we believe Bezos’ admission offers a deeper insight into his mindset. His great passion is enabling space travel, and Amazon is the piggy bank that will fund it.

Anything to do with space travel is immensely expensive, even for a person of Bezos’ wealth.

Luckily for Amazon shareholders, Bezos will need to keep growing the value of Amazon to ultimately fund his big-budget extracurricular activities.

What does this mean if you’re invested money with AtlasTrend?

As active investors who hand-pick which companies are worthy of investment, we consider things like a CEO’s ultimate motive for running a business.

It can be part of the investment decision process because it’s important to know whether CEOs are in it for short-term personal gains, or long-term shareholder returns.

We prefer investing in companies with a long-term approach, and you can’t get much more long term than Bezos looking to use his Amazon wealth to make space travel more accessible for humanity.

 

2. Buffett & Gates’ influence on Bitcoin

Warren Buffett and Bill Gates asserted their disdain for Bitcoin and cryptocurrencies, adding to Buffett’s already long list of anti-crypto comments.

The public criticisms from both billionaires are even thought to have contributed to Bitcoin’s price drop the same day comments were made.

What does this mean if you’re invested in cryptocurrencies?

Both Buffett and Gates have been wrong before, but do you really want to bet against two of the wealthiest people in the world?

After all, they grew their wealth from scratch over many years being right about most things.

For those who are invested in crytocurrencies, Buffett offers perhaps the best advice:

“When you’re buying non-productive assets, all you’re counting on is the next person is going to pay you more because they’re even more excited about another next person coming along”.

Proceed with caution if the excitement and hype die down.

What does this mean if you’re invested money with AtlasTrend?

We don’t invest directly in crytocurrencies.

While we look at blockchain for its non-currency applications, we agree with Buffett and Gates on crytocurrencies not having productive value. Based on this,  the investment is pure speculation.

 

3. Buffett encourages share buybacks

Warren Buffett was at it again during his company’s recent annual shareholder meeting; this time the billionaire shared his desire for Apple’s share price to drop.

Some might interpret Buffett’s preference as slightly odd, given Berkshire Hathaway is a major Apple shareholder.

What does this mean if you’re invested in Apple?

Looking closer at Buffett’s comments, the reason he wants Apple’s share price to drop in the near term is because the tech giant plans to buy back its own stock.

The lower Apple’s share price is during the buyback, the more shares will be repurchased. Investors who don’t end up selling shares into the buyback own a greater proportion of Apple.

That is Buffett’s goal – to increase Berkshire Hathaway’s percentage shareholding in Apple without “laying out a dime”.

In the future, if Apple continues to grow earnings, he will have a greater share of those profits.

What does this mean if you’re invested money with AtlasTrend?

One of AtlasTrend’s managed funds is invested in Apple shares.

Our investment team believes returning cash to shareholders through a stock buyback is normally a better option than the payment of a cash dividend.

The payment of cash dividends tends to make shareholders and investors expect the same level of dividend or higher in future.

As dividends are paid out of net profit, a company must sustain the same level of profitability going forward in order to continue paying the higher dividend.

Reducing a cash dividend tends to be looked at unfavourably by the greater investment community, and may signal future weakness in operations.

  

For more about the types of managed funds AtlasTrend provides, click hereSign up for full details on what the Trends invest in, and access actionable investing insights. 

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About Kent Kwan

Kent Kwan is a Co-Founder of AtlasTrend, an online investment platform that makes it easy for anyone to learn and invest in trends transforming our world. Kent has over 15 years experience in financial markets including as Chief Investment Officer at Arowana International Limited, and roles at JP Morgan and Macquarie.