Amazon Innovation, Soros Joins Crypto Rollercoaster, Property Prices Fall

Kent Kwan

Check out our key takeaways from Amazon’s Innovation Day, plus catch up on other notable things that happened around the world this week, and what it all means for you and your investments.

1. Amazon Innovation Day

A couple AtlasTrenders attended Amazon’s first ‘Innovation Day’ in Sydney earlier this week.

It was an opportunity to look into Amazon’s innovation-driven, customer-obsessed culture, and its grand plans for the Australian market after launching here four months ago.

What were the key takeaways?

The team got to find out how Amazon manages to drive value for customers and shareholders and discovered it all starts with the following culture code:

  • “Always Day 1”: means always retaining a start-up culture, despite its behemoth size and global reach.
  • “Working backward”: Amazon’s product development process starts with the customer. They work backward from who the customer is, and what they need – then generate ideas and focus on the best solution to meets those needs.
  • “Make long-term decisions”: Amazon’s decision-making horizon is seven years. This allows it to think big, and build products its competitors wouldn’t consider due to shorter timelines. Amazon accepts this long-term view often leads to being misunderstood by the market.

Amazon also revealed big plans to bring more of its products into Australia, and continue to expand globally – leveraging the success it has built to date elsewhere in the world.

We continue to believe Amazon’s laser focus on customers will continue to drive the business forward. This type of culture means the company can keep innovating to help customers, which is what ultimately delivers long-term shareholder returns.

While it sounds pretty straightforward, not many large companies adopt this level of customer centricity.

After all, how many companies can say they have “Who is the customer?”, and “What is the customer problem or opportunity” written on the back of their staff security passes?

2. Billionaire George Soros gets on the crypto bandwagon

The $26 billion family office of George Soros, the billionaire investor who called crypto a “bubble” just a few months ago, reportedly plans to trade cryptocurrencies.

Soros was one of the investors responsible for ‘breaking’ the Bank of England in 1992 – earning him a reputation as the world’s leading currency speculator.

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

Crypto investors might interpret the news as a sign of traditional investors finally embracing cryptocurrencies, somewhat legitimising it as an asset class.

We’re not so sure. Initial Bloomberg reports suggest only the macro investing arm of Soros’ family office has received internal approval to trade cryptocurrencies.

Macro investing tends to involve short-term trades based on global macroeconomic factors, rather than a long-term view of what is being traded.

This could mean betting for, or perhaps even against, the value of cryptocurrencies.

We continue to classify cryptocurrencies as a speculative investment until governments regulate how cryptocurrencies can be integrated into traditional currency systems.

Whether this is likely to take place is anyone’s guess.

In the absence of proper regulation, cryptocurrencies can’t function as legitimate currencies.

3. Australian property prices fall

AMP’s Chief Economist Shane Oliver is predicting Sydney and Melbourne house prices to fall 5% this year, with further declines expected the following year.

Despite the concerning figures, Dr. Oliver believes a much bigger, 20% crash is unlikely.

What does this mean if you’re invested in residential property?

No matter which way you look at it, property prices are quite high by historical standards – particularly in cities like Sydney and Melbourne.

Although a 5% house price fall might not sound like very much, the impact is amplified for investors who have borrowed to buy.

For example, an investor who currently has 75% debt against a residential investment would see the value of their equity fall by 20% with a 5% house price fall.

On the flip side, some parts of the country like Perth have already seen property prices decline significantly.

We agree with Dr. Oliver’s prediction that it might be close to the bottom.

AtlasTrend’s managed funds do not invest directly in any Australian residential property.

However, they are exposed to real estate companies which support a long-term trend our funds are built around.

For example, the Big Data Big Fund invests in a real estate investment trust (REIT) that commercially benefits from the growing demand for data centres – driven by the exponential growth of big data and cloud services.

For more market news and insights, visit our blog.


About this contributor

Kent Kwan

Kent Kwan

Co-Founder, AtlasTrend

Kent Kwan is a co-founder of AtlasTrend. He was formerly a Chief Investment Officer of an ASX listed company and prior to that was an international equities fund manager with JPMorgan.

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