Check out this week’s stories about Elon Musk’s SEC battle, Alexa-enabled appliances, and Australia’s declining house prices. What does it all mean for investors? (3:10 min read)
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1. Elon Musk’s face off against the SEC
Elon Musk and Tesla reached a settlement with the US Securities and Exchange Commission (SEC) over charges relating to Musk’s recent tweets about taking Tesla private.
As part of the settlement, Musk is banned from serving as chairman for three years and will personally pay a US$20 million fine, in addition to Tesla’s fine of the same value.
What does it mean if you’re invested in Tesla?
The US$20 million payment is just a rounding error for both Musk and Tesla. We don’t believe this will change the course Musk has set for Tesla.
Importantly, he’s retained his role as CEO. As for the new chairman, they will no doubt have a difficult time trying to temper Musk’s sometimes unpredictable behaviour.
However, Tesla shareholders shouldn’t forget it’s Musk’s unpredictability that has led Tesla to become a global posterchild for electric vehicles.
What does it mean if you’re invested with AtlasTrend?
AtlasTrend’s managed funds are not currently invested in Tesla.
While Tesla is a potential investment for the Clean Disruption Fund, we are currently monitoring the situation with Tesla – particularly how the company is trying to resolve Model 3 production issues.
The Clean Disruption Fund is currently invested in another electric vehicle and battery company called BYD.
2. Alexa’s smart home takeover
Amazon has connected Alexa (its voice recognition system) with a number of new items we all use at home; including a microwave, clock and various other gadgets.
For example, you can put a potato into Amazon’s US$60 Alexa enabled microwave, say cook one potato and it will do the rest.
What does this mean if you’re invested in Amazon?
Since voice is set to become the next big tech battleground, Amazon is trying to get as many Alexa devices into homes as possible at an affordable price.
This encourages more consumers to become part of the Alexa ecosystem, which should boost purchases via Amazon.
Investors should be pleased the company has created an online shopping ecosystem via Alexa – it could rival what iOS has done for Apple, and what Android has done for Google in the smartphone world.
What does this mean if you’re invested with AtlasTrend?
AtlasTrend’s managed funds are invested in Amazon shares.
While the company has grown tremendously over the past few years, it continues to invest billions of dollars into research and innovation.
We believe this is a key advantage because the company is and will continue to fundamentally change the way people shop globally.
3. House prices continue to fall
It has been bad news again for house prices in many parts of Australia.
Recent figures show Sydney and Melbourne house prices are down 6.1% and 3.4% respectively for the 12 months to September 2018.
What does this mean if you invest in Australian residential property?
We believe there might be some more bumps along the road for Australian residential property investors.
House prices are generally linked to the availability of credit – how easy it is to borrow money to buy a house.
Banks have already started cracking down on lending, with some announcing a complete ban on lending to people intending to purchase property via their self managed super fund.
The fallout from the royal commission may add to this, potentially driving banks to fully verify the income and expense of borrowers, and further reducing the availability of credit.
What does this mean if you’re invested with AtlasTrend?
AtlasTrend managed funds do not invest directly in Australian residential property.
What appears to be an accelerating downturn in the property market is an important lesson for all investors: there is no such thing as an investment that will not drop in value on some occasions, including houses.
Whether you are invested in property or shares, it’s always wise to take a long term investment approach. This helps ride out, or even take advantage of, the ups and downs of the investment cycle.
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