What lessons from the global financial crisis, Warren Buffett’s annual letter to investors and Kylie Jenner’s tweet means for you and your investment? (Reading time 3:29 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. 10 years ago, this bubble started bursting

This week is the start of March 2018. It is officially 10 years since March 2008 which marked the beginning of a huge bubble bursting. This would eventually threaten major financial systems around the world and lead to deep recessions for many countries.

Let’s revisit some of the key lessons from those events.

What does this mean if you were invested in the stock markets in March 2008?

It was a very volatile time. Concerns were growing fast about the US subprime mortgage and house price bubble. A growing number of borrowers were defaulting on their mortgages and US bank Bearn Sterns became the first major bank to be rescued by regulators.

Over the subsequent 12 months, house prices collapsed, and financial risk spread around the world. Many financial institutions failed and the global financial system nearly ground to a halt. As a result, the US stock markets dropped more than 50% over the 12 month period to March 2009.

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

AtlasTrend wasn’t around back in 2008 but the key members of the AtlasTrend investment team were. Working in the global financial centres of London and Hong Kong, they had a first- hand view of the causes and impact of this unprecedented crisis.

Lots of key lessons were learnt, which the team still apply today when investing for AtlasTrend. The most important lessons? Don’t try to make easy money investing in bubbles or shares that don’t have a reasonable valuation basis.

Most long term investors we knew pulled through fine after the financial crisis and eventually recovered their losses but short term speculative investors didn’t share the same fate.


 2. The world’s most famous investment letter

Investors around the world eagerly awaited the release of Berkshire Hathaway’s famous annual letter penned by Warren Buffett. Being regarded as one of the world’s most successful investors, his annual letter often provides some excellent insights on how to invest.

What does this mean if you are invested in the stock markets?

There is one particular insight in Buffett’s annual letter which is an excellent learning for any stock market investor.

He says:

“…I view the marketable common stocks that Berkshire owns as interest in businesses, not as ticker symbols to be bought or sold based on their chart patterns, the target prices of analysts or the opinions of media pundits”.

We believe he means don’t buy listed shares to trade based on short term movements. Only invest in listed shares if you’re willing to see it as a long term investment in their business.

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

At the time of writing, AtlasTrend’s managed funds are not invested in Berkshire Hathaway. Being a conglomerate, it doesn’t quite fit within our trend based investment style. However, Berkshire Hathaway is a great example of what a long term approach to investing can achieve. From 1965 to 2017, Berkshire’s market value per share increased by 20.9% p.a.  equal to a total gain of 2,404,748%.


 3. Who hates Snapchat?

Celebrity Kylie Jenner tweeted:

“sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad”.

Not long after, the media started blaming her tweet for a sharp drop in Snap’s stock price.

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

It has been a rollercoaster year for Snap shareholders. After a strong start following its IPO, the share price traded below the IPO price for much of the second half of 2017.

Though recent financial results have been better than expected, the company is highly loss making. We believe the recent fall in Snap’s stock price has been caused by increasing negative user feedback to Snapchat app changes rather than just a tweet from Kylie Jenner.

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

AtlasTrend’s managed funds are not invested in Snap. Just prior to Snap’s IPO, we provided our thoughts on why Snap isn’t a good long-term investment.

Much of it covered concerns around Snap’s user growth, competitive position versus other social media platforms and how it could become profitable. We believe a lot those concerns from a year ago still remain valid.


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About Kent Kwan

Kent Kwan is a Co-Founder of AtlasTrend, an investment platform that makes it easy for anyone to learn and invest in trends impacting our world. Kent has over 17 years experience in financial markets including as Chief Investment Officer at Arowana International Limited, and roles at JP Morgan and Macquarie.