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Facebook’s Volatile Year in One Giant Chart

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Facebook's Volatile Year Explained in One Chart

Facebook’s Volatile Year in One Giant Chart

View the high resolution version of today’s graphic by clicking here.

Facebook has found itself in the headlines a lot in 2018, but not for reasons investors are likely to be excited about.

The tech giant battled privacy scandals, policy changes, and dwindling user engagement throughout the year, and in July the company made history with an overnight drop of $119 billion in market capitalization – the single largest drop in U.S. history.

We did today’s chart in conjunction with Extraordinary Future 2018, a tech conference featuring Cambridge Analytica whistleblower Christopher Wylie as a speaker on Sep 19-20 in Vancouver, BC, to show Facebook’s volatile year in perspective.

Here is a recap of some of the more major events that prompted volatility so far in 2018:

Zuckerberg Sells Shares

Facebook CEO Mark Zuckerberg drew attention in September 2017 when he announced plans to systematically sell off up to $12 billion in stock – nearly 50% of his personal stake.

It’s all part of a plan to transfer the bulk of his stake to the Chan-Zuckerberg Initiative. Zuckerberg and his wife Priscilla Chan founded the philanthropic company at the end of 2015 with the stated focus of “personalized learning, curing disease, connecting people and building strong communities.”

Zuckerberg started unloading stock with an initial sale of 1.14 million shares in February 2018 – the biggest insider sale of shares of any public company in the preceding three months. While analysts didn’t see any red flags for the sale at the time, the volume came when the share price needed all the stability it could get.

Facebook’s Privacy Scandal

On March 16, The Guardian and The New York Times published joint exposés reporting that 50 million Facebook user profiles were harvested by Cambridge Analytica without user knowledge. Later estimates pegged that number at closer to 87 million profiles.

Facebook soon found itself the focus of an investigation from the Federal Trade Commission, and published full-page ads in British and American newspapers to apologize for a “breach of trust”. As Facebook scrambled to regain user trust, share values dropped by 17.8% over the 10 days after the scandal broke.

In April, Zuckerberg appeared before Senate to answer tough questions about Facebook’s privacy policies. The CEO’s testimony restored some faith in the stock, and it gained some traction over the next three months, but the damage was already done.

Facebook’s History-Making Stock Drop

Facebook posted disappointing Q2 results on July 24, attributing their sluggish quarter to dropping user numbers and continued privacy challenges driven by General Data Protection Regulation (GDPR) deadlines.

The report triggered an overnight stock drop of 19% – the single biggest one-day value loss ($119 billion) in U.S. stock market history.

As a result of the rout, Zuckerberg’s personal fortune dropped by nearly $16 billion, an amount that exceeds the total market cap of companies like Dropbox or Snapchat.

Where to from here?

Is this the end for Facebook? The halo may have slipped from the social media golden child, but the company may not be in danger quite yet.

The company’s namesake social network is not the only sandbox it plays in, and the company’s diversity is just the thing that might keep Facebook afloat amidst changing social media sentiment.

Facebook’s purchases of Instagram and WhatsApp are paying off, as those platforms continue to grow steadily. Meanwhile, the investment in Oculus Go could be a game-changer for VR, bringing standalone virtual reality systems to the home market. Finally, Facebook is leveraging its main social network as a place to fine tune algorithms and pave the way for new developments in artificial intelligence and machine learning.

Despite Facebook’s challenges in the realm of social media this year, its expansion into other emerging technologies might help the company secure its future.

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Bitcoin

How Decentralized Finance Could Make Investing More Accessible

Under the current global financial system, billions of people do not have access to quality assets. Here’s how decentralized finance is changing that.

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Infographic: How Decentralized Finance Could Make Investing More Accessible

Did you know that a majority of the global population doesn’t have access to quality financial assets?

In advanced economies, we are lucky to have simple options to grow and protect our wealth. Banks are all over the place, markets are robust, and we can invest our money into assets like stocks or bonds at the drop of a hat.

In the United States, roughly 52% of people are invested in the stock market – but in a place like India, for example, this portion drops to a paltry 2%. How can we make it possible for people on the “outside” of the financial system to gain access?

Breaking Down Barriers

Today’s infographic comes to us from Abra, and it shows how decentralized finance could make investing a more universal phenomenon, especially for those that don’t have access to the modern financial system.

It lays out four key obstacles that prevent people in developing markets from investing in quality financial assets in the first place:

  1. The Geographic Lottery
    Where you live plays a massive role in determining your ability to build wealth. In advanced Western economies, the average person is much more likely to be invested in financial markets that can help compound wealth.
  2. Financial Literacy and Complexity
    Roughly 3.5 billion adults globally lack an understanding of basic financial concepts, which creates an impenetrable barrier to investing.
  3. Local Market Turmoil
    Even if a person is mentally prepared to invest, local market turmoil (hyperinflation, political crises, closed borders, etc.) can make it difficult to get access to stable assets.
  4. The Cost of Investing in Foreign Markets
    Foreign assets can be pricey. One share of Amazon is $1,800, which is realistically more money than many people around the world can afford.

In other words, there are billions of people globally that can’t take advantage of some of the most effective wealth-building tactics.

This is just one flaw in the current financial system, a paradigm that has created massive amounts of wealth but only for a specific and well-connected group of people.

Enter Decentralized Finance

Could decentralized finance be the alternative to open up access to financial markets?

By combining apps with blockchain technology – specifically through public blockchains such as Bitcoin or Ethereum – decentralized finance makes it possible to get around some of the barriers that are created by more traditional systems.

Here are some of the innovations that are making this possible:

Smart contracts could automate transactions and remove intermediaries, making investing cheaper, faster, and more accessible.

Fractional investing could allow partial or shared ownership of financial assets by using tokenization. This would make expensive stocks like Amazon ($1,800 per share) available to a much wider segment of the population.

Location independent investing is possible through smartphones. This would make it possible for people in remote parts of the developing world to invest, even without access to nearby financial institutions or local markets.

Like the internet with knowledge, decentralized finance could reshape the world by making financial access universal. Who’s ready?

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Economy

How Macro Trends Shape the Market’s Future

From climate change to aging populations, macro trends are changing the future. Here’s how to use them to your advantage.

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It’s hard to say for certain what the future holds.

Without the luxury of a crystal ball, investors must find opportunities by analyzing the market. There’s just one problem: the 24/7 news cycle is enough to make anyone’s head spin.

Where should an investor focus their attention, when almost every new venture is forecast to be the next big thing?

The Powerful Influence of Macro Trends

Today’s infographic comes to us from U.S. Global Investors, and it highlights how analyzing macro trends can serve as a key investment tool.

U.S. Global Macro Trends

Two Main Investment Approaches

When selecting stocks, many investors fall into one of two camps:

1. Top-down Investing

  1. Analyze macroeconomic trends.
  2. Identify specific sectors and regions.
  3. Choose individual stocks based on company fundamentals.

Considering the aging Chinese population, a top-down investor may choose to invest in Chinese healthcare stocks.

2. Bottom-up Investing

  1. Complete in-depth company analyses.
  2. Select a stock that is outperforming others in its sector.

A bottom-up investor could analyze Home Depot and choose to invest if it had strong performance relative to Lowe’s.

These approaches can be used separately, or even combined together. Zooming out allows investors to identify the big picture opportunities. Then, a bottom-up approach can find the companies that best capitalize on each trend.

What is a Macro Trend?

A macro trend is a long-term directional shift that affects a large population, often on a global scale. For example, climate change is affecting industries in both positive and negative ways. While “green” industries have seen increased support, ski resorts are projected to have 50% shorter winter seasons by 2050.

There are a couple of main ways to identify macro trends:

  1. Government policy
    Government policies are a precursor to change, shaping macro trends and creating opportunities. For instance, Obama’s Recovery Act fueled growth in renewable energy with a $90 billion investment.
  2. Economic cycles
    The cyclical nature of the economy means that investors can also use history to identify macro trends. Consider fiscal and monetary policy, which is implemented in response to economic data:

    • Expanding economy
      The central bank raises rates and the government reduces fiscal stimulus. As a result, inflation is moderated.
      • Contracting economy
        The central bank lowers rates and the government increases fiscal stimulus. As a result, growth is stimulated.

Discovering Long-Term Value

Macro trends are a key tool for discovering long-term market opportunities. They are beneficial because they are:

  • Unbiased and data-driven
  • Not swayed by daily headlines
  • Tend to avoid riskier, niche industries
  • Can be diversified by sectors and regions

There are currently many macro trends at play. For example, Trump’s sweeping tax reform and deregulation boosted the U.S. economy, lifting GDP growth to a 13-year high of over 3% in 2018 Q3.

However, not everyone’s a winner. America’s reduced taxes have made Canada less competitive. It’s estimated that 4.9% of Canada’s GDP is at risk due to ripple effects from U.S. tax reform. What’s more, regulators worry that the bank deregulations might put the financial system at risk.

The proposals under consideration… weaken the buffers that are core to the resilience of our system.

— Lael Brainard, Member of the Board of Governors of the Federal Reserve

So, how do investors distill this wealth of information into a future of wealth?

Spotting the Next Wave

In today’s hyper-connected world, it’s easy to get lost in data overload. Thinking big picture allows investors to focus on trends that:

  • Have a long-term outlook
  • Affect a large population
  • Create a clearer vision of the future

Then, an investor can target the most promising regions and sectors. When used effectively, this approach enables investors to ride the next big wave that will shape markets.

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