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We must regulate newer forms of investing at the very earliest – Mint



In an answer to a question recently raised in the Rajya Sabha, the government said that it had no idea about the “the number of cryptocurrency exchanges operational in the country and the number of investors linked to the same,” because it doesn’t collect this information. Industry estimates put the number of crypto investors at around 15 million.

In comparison, as of May, the total number of demat accounts for share trading in India stood at close to 60 million. Demat accounts have been around for close to a quarter of a century. Clearly, the number of crypto investors in India has risen by leaps and bounds.

This is helped by the fact that crypto exchanges are financed by a huge amount of venture capital investment, allowing them to massively advertise the ease with which such investment can be carried out digitally. The Tokyo Olympics coverage, the World Test Cricket Championship and the India-England Test Series, which is currently underway, have had a large number of such advertisements.

While almost all these advertisements talk about the ease of investment and the fact that money could be made sitting at home, none of them do enough to explain the financial risk involved. Their disclaimers, if any, are either in extremely small fonts barely visible to the human eye or scarcely audible in a two-second sound bite at the end of their advertisements.

Cryptocurrency prices move up and down rapidly, making them a very risky form of investing. When an investor makes money, it might seem very easy, but that money can be lost as quickly as it has been made. Cryptocurrency ads don’t do much to explain this risk.

And not just cryptocurrencies, the rise of the digital medium has thrown up all kinds of other investment opportunities. Retail investors can now trade foreign exchange at home. Those who understand foreign exchange would know that the value of currencies moves very little against that of others on any given day. The only way an investor can drive up returns is by leveraging the investment. While leverage pushes up returns, it can also lead to bigger losses if the trade goes against the investor. Such intricacies are unknown to retail investors who are jumping on to such new vehicles for the first time.

Further, money can be made online by playing card games like rummy as well. In fact, many such online card games are advertised by out-of-work film and TV actors. Then there are many websites which operate on the borderline of being games of skill or chance (and thus gambling platforms). Many cricketers advertise such games.

There is also the case of stock market influencers who recommend specific stocks and initial public offers (IPOs) on their YouTube channels. They have deals signed up with stock brokerages, in some cases even with brokerages that claim not to advertise, and aren’t always clear about whether the influence they exercise is paid for by an advertiser. In fact, if such influencers were to declare upfront that they are being paid to make a specific recommendation, their business model would probably collapse.

The point here is that the rise of cheap smartphone-enabled internet access, combined with the work-from- home dynamic of the covid pandemic, has led to a massive increase in what could be categorized as new forms of investing, especially at the retail level. It has also led to an increase in the financial risk that these investors are taking on. This wouldn’t have been a problem if investors knew what they are getting into, but most don’t.

As Richard Thaler and Cass Sunstein write in Nudge: The Final Edition: “Much of the time, more money can be made by catering to human frailties than by helping people to avoid them…Markets provide strong incentives for firms to cater to the demands of consumers, and firms will compete to meet those demands, whether or not those demands represent the wisest choices.” This is precisely what companies offering these newer forms of investing are doing.

Typically, one would expect them to self-regulate and offer adequate disclosures while advertising, thereby putting out messages the appropriate way. But as many financial crises over the years tell us, self-regulation and the financial services industry rarely go together. This is why financial services remain heavily regulated.

When it comes to these newer forms of investing, Indian regulators like the Reserve Bank of India and Securities and Exchange Board of India have clearly been caught napping. One reason for this is the fact that these newer forms are primarily in the digital domain, which operates 24/7, and hence policing it is difficult.

Given that the first generation of kids who have been using smartphones for at least a decade are now turning into adults, and knowing their facility with technology, they will be more inclined to invest in these newer options than go the traditional way. Hence, it’s important that Indian regulators start putting rules in place, starting with an insistence on adequate disclosure of risk when such firms advertise.

At least the cryptocurrency bill is reportedly ready and awaiting the Union cabinet’s approval.

Vivek Kaul is the author of ‘Bad Money’.

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Optimove raises $75M growth investment to manage customer-led journeys at scale – TechCrunch



When businesses can connect more personally with their customers, those customers in turn are more loyal. However, as consumer behavior changes, especially as it did over the past 18 months, it is more difficult to establish that connection amid all of the messages put in front of them.

Optimove, specializing in customer relationship management marketing, wants to help brands “delight” their customers and keep them coming back. The company, with bases in Tel Aviv, New York and London, raised a $75 million growth investment led by Summit Partners.

Pini Yakuel, founder and CEO of Optimove, Image Credits: Optimove

The SaaS company was founded in 2012 by CEO Pini Yakuel to connect customers with brands and to apply artificial intelligence to customer data to orchestrate the right message to the right customer at the right time, and do it at scale, Yakuel told TechCrunch.

“It’s easier when you are creating three or five customer journeys a month, but when you really scale and want to do thousands, there is not an easy way to do that,” he added. “We do that with AI orchestrators that govern all of the messages. Now you can define the message and the marketer will have all of the data and be able to get feedback and analysis of what the customer segment looks like.”

As the global multichannel marketing market is expected to reach $28 billion by 2027, Yakuel said it will be an advantage to know who a brand’s customers are and how to target them. Optimove’s analysis of the data provides insights on how to achieve and attribute measurable improvement in such areas as churn, conversion, reactivation and lifetime value for each customer and campaign.

Prior to this investment, Optimove was bootstrapped for the first four years until raising $20 million. Yakuel said the company hasn’t used the money yet — it has been profitable so far. He considers the round to be Summit Partners, which is buying out the company’s earlier investors, as making a bigger commitment to the company.

“It is a transition and phase into a new era,” he added. “It felt like the right time for us given the specific climate of fundraising. We also want to do some M&A and build out our platform, but that all has to be done seamlessly. To use us today, a business may also have to use three or four other solutions and stitch them together. If we can own some of those capabilities, we can be better partners.”

In addition to M&A, the company plans to double its staff of 300 over the next two years and invest in technology, R&D and engineering to serve its 500 brand customers, including BetMGM, Papa John’s and Staples.

In the past year, the company saw an increase of 40% annual recurring revenue, and it sends more than 23 billion optimized messages via email, mobile, ad platforms and other channels, to over 3 billion customers annually. Next up for the company, Yakuel expects the next milestone to be an initial public offering in three years.

In addition to the funding, the company said Summit Partners’ head of Europe, Han Sikkens, and managing director, Steffan Peyer, are joining its board of directors.

Peyer said Summit invests in companies that are focused on marketing technology and are out to understand the customer journey, especially as that has become more important during the global pandemic. During this time, the cost of acquiring new customers has risen and this is where Optimove is most beneficial — enabling engagement with existing user bases, he added.

“What they have done is build a sophisticated customer data platform, with a sophisticated analytics orchestration engine, predicated on understanding and review the behavior of the customer and targeting micro segment campaigns to ensure the engagement level is good, and if there are other products that could be sold to a particular customer,” Peyer said. “Their modeling has a strong backend infrastructure to process data at scale and leverage that information in real time.”

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Here’s How Old School Investing May Just Protect Your Retirement – Forbes



It seems fewer people want to talk about managing investment portfolios today. In fact, for many, “investing” means determining which mutual funds you should pick.

But mutual funds aren’t monolithic entities. They consist of investment portfolios of individual securities. It therefore makes sense for you to understand how these portfolios work.

Perhaps the most effective way to achieve this is by going back to the basics. You might remember the phrase “old time hockey,” (you know, like Eddie Shore). Well, there’s such a thing as “old school investing,” (like Ben Graham).

Ben Graham, called the Father of Value Investing, co-authored the seminal book Securities Analysis with David Dodd in 1934. This book is considered a “must read” if you dream of becoming a stock analyst and manage portfolios of all kinds (including mutual fund portfolios).

Of course, you’d probably find Graham’s The Intelligent Investor more approachable. This book was first published in 1949, but revised several times, the last being published in 1973, three years before Graham’s death. It’s here in Chapter 4 that Graham writes “We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with the consequent inverse range of between 75% and 25% in bonds.”

This simple asset allocation rule echoes the standard understanding of the benefits of diversification.

“Putting money in stocks, bonds, and other asset classes is called diversification,” says Stuart Robertson, CEO of ShareBuilder 401k in Seattle. “Diversifying across asset classes can offer assistance as one asset class may perform well while another suffers in differing economic environments. Stocks have had years when returns increased greater than 20%, and periods where they have declined 20% or more. Those are big swings. Think about 2020. The stock market tumbled over 33% by March, only to quickly rebound and have strong returns by December. That was a wild roller coaster. In March of 2020, you might have felt like you lost a lot of money, and then a year later, you might be pretty happy. Just know that stocks are likely to go up and down at a much greater percentage than bonds and cash.”

That Graham suggests you have a significant portion of your portfolio in bonds or similar instruments therefore means one thing and one thing only.

“‘Stable value investments’ provide just that: Stability,” says Ian Grove of RG Advisors Inc in Napa, California. “Keeping a balanced portfolio would most of the time include debt or fixed income securities to shield the investor’s portfolio from unexpected market events.” 

This dampening of volatility is especially important as you approach and extend into your retirement years. You don’t have the luxury of time to make up from a sudden downturn.

“For those with short time horizons, such as individuals reaching retirement age, having some more conservative options, such as stable funds, can offer protection from volatility while still providing some benefits over money market funds,” says Syed Nishat, Partner at Wall Street Alliance Group in New York City. “These funds can serve as a stabilizer within a portfolio, hedging against market volatility with minimal risk. While the yield isn’t as great as a higher risk fund, they do have higher rates of interest with little price fluctuation.”

There’s a bit more of a nuance to this than simply minimizing downside risk.

Washington, D.C based Steve Pilloff, professor of finance at George Mason University’s School of Business, explains, “Fixed income and stable value investments are an important component for a diversified portfolio. People often believe that the benefit of diversification is that it reduces risk, but this is only part of the picture. The true benefit of diversification is that it enables investors to maximize the risk-return trade-off. A portfolio with only stocks and a certain level of risk will have a lower expected return than a diversified portfolio with that same amount of risk.”

Still, there’s another advantage to splitting your portfolio into asset classes with complimentary risk profiles.

“Graham was trying to make the point that an investor’s biggest problem, or enemy, was psychology and themselves,” says Paul Swanson, Vice President, Retirement at Cuna Mutual Group in Madison, Wisconsin. “By keeping a portion out of the stock market, they may protect themselves, and their portfolios, from themselves.”

In this way, Graham anticipated what would eventually become known as “behavioral finance,” which is sort of a cross between finance and psychology. He was attempting to help non-professional (and maybe even professional) investors conquer their inner demons by forcing portfolios to keep a strict minimum of 25% in bonds. (He actually made it simpler by saying it’s easier to just have 50% in stocks and 50% in bonds.)

“Fixed income and stable value investments have typically played a key part in a diversified portfolio,” says Gaurav Sharma, CEO of Capitalize in New York City. “There’s a common sense reason for this. While the returns from these assets aren’t as high as equities over time, they are less ‘volatile’ and less likely to decline in bear markets. Investing legends like Graham appreciated that investing successfully is more about human psychology than anything else. Having a part of our portfolio that’s lower volatility helps cushion our losses and keep us psychologically fortified when markets fall, as they inevitably do from time to time. That means we’re more likely to stay the course than capitulate and sell our riskier investments when they decline. This is often the exact wrong time to sell.”

If you’ve heard of the concept of rebalancing, then you already know the real advantage of Graham’s advice. Brian Haney, Founder & Vice President of The Haney Company in Silver Spring, Maryland, says Graham’s flexible allocation guideline allows you “to have capital available to be opportunistic should the market present such an opportunity.”

In The Intelligent Investor, Graham explains it thusly: “According to tradition and sound reasoning for increasing the percentage of common stocks would be the appearance of the ‘bargain price’ levels created in a protracted bear market. Conversely, sound procedure would call for reducing the common-stock component below 50% when in the judgment of the investor the market level has become dangerously high.”

Now, it’s important to understand the following: Graham originally wrote this book nearly 75 years ago. He understood things change. Even his revisions update his advice. The basic sense of what he said was well grounded, but he was careful to suggest you need to pay attention and not follow anyone’s advice blindly. (You might wonder what his reaction might be to “robo-advice.”)

Old school investing continues to build on a strong foundation.

“Graham was likely referencing a hedge against equities in the event of a market downturn,” says Todd Scorzafava, Principal/Partner and Managing Director of Wealth Management at Eagle Rock Wealth Management in East Hanover, New Jersey, “but again, depending on goals, timeframes, comfortability and ongoing plans this will vary from person to person. The risk in a portfolio needs to be right in order for the investor to stay the course.”

It is therefore important that you take any “old” advice as a starting point, not as a definitive axiom.

 “While the logic underlying diversification remains sound, there’s one thing to keep in mind about fixed income investments today versus decades past: interest rates across the board have compressed significantly, so the returns offered by fixed income have come down in nominal terms,” says Sharma. “We may be on the verge of a collective rethink on what level of returns we can count on from fixed income, but the broader point about not being exclusively in stocks or risky assets is still a very important one to keep in mind.”

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Centurian jail for sale in Owen Sound offers spooky real estate investment – CTV News Barrie




A historic jail is for sale in Owen Sound.

The city has been trying to sell the 165-year-old jail since 2011.

This summer, it was listed again for $229,000, but a local realtor says while there’s a lot of potential hidden within the Centurian walls, it could be costly.

“The amount of money that could be spent in this building could be upwards of five to ten million dollars,” says Dave Park, realtor at Chestnut Park.

Money that would need to be spent to be approved by stakeholders and city staff. The city says they will be accepting offers until October 4 and making a formal decision about the building’s future on October 22.

For those wondering about paranormal activity, Park says there hasn’t been any ghost sightings.

“But certainly, just walking through the facility it allows you to think there could be ghosts here,” Park says.

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