by Andrew Dines
Director & Chartered Financial Planner
Life can travel at an incredible pace for an investor. In the mere blink of an eye, Portuguese footballer Cristiano Ronaldo reportedly managed to wipe off $4 billion from Coca-Cola’s market value by removing two bottles of the world’s most famous fizzy drink and replacing them with a bottle of water.
These figures were later hotly disputed, with reports that the share price was down by this much before this happened, but the initial reaction comes as no surprise when you look at Ronaldo’s figures more closely. He is, after all, a colossal man with a colossal presence. His net worth is $500 million, he has over 550 million social media fanatics and is the first person in history to reach 300 million followers on social media.
Having this many followers in the digital age means that he potentially holds all the cards. A sneeze is enough to send tremors through the stock market - or persuade people that’s possible. But even before Ronaldo’s public snub, there have always been earthquakes that have caused havoc with share prices: the Vietnam War, the 2008 financial crisis, Ebola, Covid-19… the list goes on.
And what do they all have in common? Apart from causing grief and affecting bank balances, they’ve been totally random. Nobody predicted the pandemic and foresaw the lockdown, the panic and the crippled economy that came with it.
Elon Musk sent out a tweet at the start of June suggesting that he’s fallen out of love with cryptocurrency. Bitcoin’s value dropped by 3.6%. Who could have predicted that? Then of course there was Ronaldo’s drama with Coca-Cola, bringing us back to full loop.
The harsh reality is there will always be something that will come along and give the stock market a shake. Whether it’s in the form of a world-class footballer, a tech luminary or a virus, somebody or something will gatecrash the dinner party.
Nobody likes uninvited guests but it’s how to deal with them that matters, and this is where financial planners come into play.
Yes, life is unpredictable but we can still protect your wealth.
Financial planning is just as much about protecting wealth as it is about building it. With or without the pandemic, we prepare for the unexpected through rigorous and strategic planning.
We diversify our client portfolios and make prudent yet calculated investments based on our clients’ personal and financial aspirations. Even when working with investors comfortable with a higher level of risk, we’ll still strap lifebelts on the strategy to keep it afloat when something as cataclysmic as the pandemic occurs.
Build wealth and mitigate risk - one cannot exist without the other at AAB Wealth. But should you only focus on one, or fly blind with a tenuous strategy, or god forbid not have a strategy at all, that’s when things can go wrong.
We just have to turn our attention towards the crypto realm for a strong example. Since cryptocurrency made it onto the mainstream, Bitcoin fandom has been just as pervasive as the pandemic.
On the surface, cryptocurrency seems like a world of opportunity that promises phenomenal ROIs and unprecedented wealth-building opportunities. Undeniably, there are people who’ve made a fortune with cryptocurrency, but they’re few and far between.
You only have to dig a little deeper to discover that crypto investments are susceptible to extreme volatility. Nobody wants to sail through a storm, but if you had to, you’d rather it was on a ship and not raft. As Elon Musk demonstrated, all it takes is a tweet to swat crypto prices.
The fluctuation of crypto prices promises an emotional rollercoaster for any investor. Put it this way, would you be able to sleep at night if your investments plummeted by 35%? That’s what happened to Bitcoin in May, on the back of a regulatory crackdown by China and concerns about its environmental impact.
The reality is that cryptocurrency offers unrealistic returns from unrealistic expectations. Outside of this realm, we have over 120 years’ worth of data to analyse about the stock market, recessions, booms and inflations. We can identify trends and pinpoint patterns to make prudent financial decisions.
But since cryptocurrency is a new phenomenon, we have no such data to play with, making it impossible to create a reliable strategy that will help our clients reach their personal goals.
Our objective is to help everyone achieve their personal aspirations, which is why we’ll continue to create strategies that are built on data and cold hard facts that guarantee the best chance of success and protection.