Check out what’s happening in the world this week, plus what it means for you and your investments. (3:46 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. World’s largest virtual power plant
Solar panels and batteries have been installed in 100 homes in South Australia, part of the first phase of a broader project with Tesla that will see 50,000 homes fitted with solar power. It is already resulting in cheaper electricity bills and when complete, Tesla says it will be the world’s largest virtual power station.
What does it mean if you’re invested in the stock market?
Tesla’s agreement with the South Australian government for this virtual power plant project is very innovative. Householders don’t pay have to pay costs upfront. They simply pay a reduced fee per unit of electricity used. Solar electricity generated is used by the household and any excess is fed back into the electricity grid for other users. That’s why it is a virtual power station.
If this model of electricity becomes more popular over the next decade, we believe it could dramatically change how electricity is generated, stored and used. Investors in traditional power generation, electricity transmission and fossil fuels should be particularly careful because widespread solar power generation might happen sooner than they think.
What does this mean if you’re invested with AtlasTrend?
AtlasTrend recently launched the Clean Disruption Fund which invests in companies that are helping the world become cleaner and greener. We believe technologies such as solar, wind and energy storage are set to disrupt the whole energy industry globally over the next decade. This will lead to new markets and significantly transform adjacent industries as well.
2. Should CEOs be paid tens of millions?
It is that time of the year again when the press focuses on how much the CEOs are paid. This year, it is the boss of Domino’s in the firing line. He has topped the table of Australia’s highest paid chief executives taking home a whopping $36.8 million.
What does it mean if you’re invested in the stock market?
Headline pay numbers in the tens of millions can be shocking, but it is important to look at the details. If it is only for a CEO’s performance in the last 12 months, then as a shareholder you might only be happy if the share price has also skyrocketed during that time. Watch out though for unnecessary short term risk taking if a company rewards a CEO millions for short term performance.
If the multi-million dollar pay is the culmination of achieving long term goals set over the past several years, that is probably more palatable. This type of pay structure encourages CEOs to deliver shareholder value over many years which is what long term investors should be looking for.
What does it mean if you’re invested with AtlasTrend?
We don’t hold a grudge against CEOs making very good money provided they are directly aligned with shareholders making money. We believe CEOs who are the founders of the business or have a founder’s mindset are usually the most aligned when paid a low annual salary and have a significant shareholding in the business.
A large shareholding encourages CEOs to make decisions in the long term interest of all shareholders rather than trying to maximise their own short term bonus. Good examples of this include the CEOs of Google, Facebook and Tesla who receive a $1 salary.
3. Amazon Prime Day
It was Amazon Prime Day during the week including the first Prime Day in Australia. During Prime Day, Amazon Prime members receive exclusive and very attractive discounts on multiple products. In the US, it even includes discounts at Amazon’s Whole Foods grocery stores.
What does this mean if you’re invested in Amazon?
Prime Day is a great way to track the importance of Amazon Prime membership for the company. Data from Coresight Research estimates shoppers will spend US$3.4 billion on Amazon during Prime Day, up 40% on last year’s Prime Day.
We wouldn’t be surprised if shoppers spent much more than forecast given Amazon now has over 100 million Prime members globally. We believe a significant part of Amazon’s ongoing success will be driven by Prime members. On average they spend more than twice the amount every year with Amazon compared to non-members.
What does this mean if you’re invested with AtlasTrend?
Some of AtlasTrend’s managed funds are invested in Amazon. Reports coming in suggest Amazon has sold millions of their own devices which seems credible given the deep discounts offered. We believe smart speakers like Amazon Alexa are the next battlefield for the technology giants. Amazon appears to be taking an aggressive approach by trying to roll out millions to Amazon customer homes at very low prices. If they succeed, the company will be even further integrated into their customers’ lives.
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