What could Facebook’s new feed, Donald Trump’s tweets and a cryptocurrency crackdown have to do with you and your investments? (Reading time 4:09 mins)
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. Facebook reorganises your news feed
In an attempt to “fix” Facebook, CEO Mark Zuckerbeg recently announced major changes to the news feed algorithm. The update will favour posts from family and friends, shifting attention away from brands and publishers to foster more “meaningful social interactions”.
The news feed shake-up will likely impact time spent on the platform and engagement levels in the short term – a by-product that’s spooked investors and driven the company’s share price down.
What does this mean if you’ve invested in technology companies?
As billions around the world become increasingly connected online, large technology companies face more questions about their role in society; Facebook aren’t the only ones feeling the heat.
Apple, Alphabet (Google’s parent company) and Twitter have also faced backlash concerning their influence on modern day society. Some of Apple’s shareholders are even pushing for a study into smartphone addiction and its impact on children.
A key risk in the medium-long term for investors is governments creating laws to restrict what these technology companies can do if they don’t start self-regulating.
However, we believe this risk is low because most large technology companies are able to sacrifice some short-term profits to implement changes that will deliver better social cohesion.
What does this mean if you’ve invested money with AtlasTrend?
One of our managed funds is invested in Facebook. While there are slight concerns around the short-term dip in advertising revenue a result of the news feed changes, we believe it’s the right move by Facebook in the long run.
It should increase the probability of people continuing to use the social network well into the next decade, particularly if the prevalence of “fake news” and other negative aspects of the social media platform can be reduced or eliminated altogether.
2. 2018: The year markets stop caring about Trump?
President Trump picked up precisely where he left off in 2017: telling North Korean leader Kim Jong Un he has a “much bigger & more powerful” nuclear button, trying to convince the public he’s “like, really smart”, and offending multiple countries by referring to them as “S#!@holes”.
The difference between now and then is markets don’t seem to be as phased by his inappropriate use of Twitter, or blatant disregard for facts, geopolitical issues and grammar.
What does this mean if you’re invested in the stock market?
Remember when Trump first got elected in November 2016? Investors worried that Trump’s unpredictable rhetoric would cause volatile share prices as the markets, which hate uncertainty, reacted to Trump’s every tweet.
After nearly a year in office, it seems the markets have gotten used to Trump’s unusual leadership style. Unless there are direct impacts on legislation (such as the recently passed US tax bill) or actual policy changes, Trump’s tweets appear to have little to impact on the stock market anymore.
What does this mean if you’ve invested money with AtlasTrend?
All AtlasTrend managed funds have material investments in large US listed shares.
We keep a very close watch on the political situation in the US and the potential impact on the stock market.
One key US political event this year is the 2018 midterm elections giving Democrats the opportunity to regain control of the US House or Senate, which could severely hamper Trump’s legislative power.
Trump (and his twitter account) will no doubt play a big role in this election. We will keep you updated on how this could impact your investments closer to the midterm election later in the year.
3. Governments are coming for cryptocurrencies
It’s been a volatile week for coin markets (when isn’t it?) as governments from multiple countries begin to indicate a regulatory crackdown may be approaching.
Indonesia, China and South Korea are being a lot more vocal about the risks and potential banning of cryptocurrency trading.
What does this mean if you’re invested in cryptocurrencies?
History tells us countries only go to war for a handful of reasons. If something materially impacts: a community’s safety (invasions), tax (American Revolution) or their money/trade system (Opium Wars).
It comes as no surprise governments are starting to crack down on cryptocurrencies, which have the potential to sidestep the existing money system. Controlling the supply of money, legislating what is legal tender and tracking where money is being used, are powers no government in the world will likely ever give up.
We believe government regulation of cryptocurrencies will continue to increase in 2018, which may negatively impact prices of Bitcoin and other cryptocurrencies.
What does this mean if you’ve invested money with AtlasTrend?
None of our managed funds can invest directly in cryptocurrencies. We are big fans of blockchain, the underlying technology of cryptocurrencies, but believe the widespread application of blockchain is more suited to areas where governments will support it rather than legislate against it.
These areas include using blockchain help secure and correctly share any confidential records e.g. personal medical information. It could also transform the way contracts work (e.g. a property sale) by significantly reducing paperwork through the use of “smart” contracts that track and record all stages of a transaction.
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