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Why This Small Cap Company Will Blow Past Computer Giants 2023-07-14 - Key Points The United States economy is going through a crucial pivot; smaller companies able to flexibly adjust to these changes will likely benefit. This industry is showing vital signs of expansionary activity. Identiv is the perceived winner within this industry, and its size allows it to take advantage of abrupt moves in the underlying drivers of its respective space. Previous flat performance may be on the verge of turning around, especially after management lands new deals to improve its customer value proposition. Markets reward the stock with richer valuation multiples, placing bullish expectations for future earnings; investors should too. 5 stocks we like better than Dell Technologies Small companies can pivot quicker and adjust to abrupt movements in the underlying economy, like changing gears and direction on a race car. Conversely, larger companies take more time and effort to pivot and adjust the comparative tanker or bulker ship. Now that the United States economy is pivoting due to the FED combating rampant inflation rates via orthodox tools like raising interest rates and decreasing liquidity across markets. Some industries are naturally bound to outperform during these adjustments, as others are also naturally set to underperform. Today investors have a chance to get a leg up on the next market move, positioning themselves before larger capital pools rotate with the market. When looking at the past seven months of United States ISM manufacturing and non-manufacturing PMI data, trends pointing to the industries set for a breakout become clear. The computer hardware industry has been flashing green lights across the board in the central readings within the report, such as New orders, production, and employment. Combining growth readings in these inputs, investors can assume that backlog orders are rising in the space, pushing the need for increased production and capacity for new employees. The key now becomes finding the perceived winner in the industry; for reasons that will become clear, Identiv NASDAQ: INVE is the prime choice for investors to consider a purchase. Understanding the Past Identiv's chart may look like something out of a recession nightmare, four years of flattish price action from 2016-2020, followed by an aggressive peak and a subsequent decline. Investors can look to Wall Street's definition of a 'Bear Market,' which points to a 20% price retracement from all-time - or recent - highs. In the case of Identiv, the stock reached a peak of $29 per share at the end of 2021, which would make the 'Bear Marker' price of $23.2 robust for investors to shoot for as a proximate target. Identiv analyst ratings are pointing in the right direction, as they have now assigned a consensus price target of $11 per share, translating to a 28% potential upside from today's prices. These initial ratings may lie conservative, perhaps awaiting new reasons to increase the sentiment and create a new potential ceiling. When looking at the financial performance in Identiv's financials, investors can understand why the sudden peak occurred in the stock price. The company's revenue proved to be on a stagnant path since 2016, hence the lack of price action, then grew more than 50% in 2020 along with earnings, fueling a stock rally as big as 480% to the 2021 peak. Today, revenue and gross profits return to their old ways, staying in a tight range for the past year, as measured by quarterly results. As management attempts to hang on to recently found momentum, new strategic moves are being laid out and rewarded by the market. With the latest quarterly results in the company pointing to some disappointing figures, posting a total loss of $0.13 per share when analysts expected only a $0.04 loss per share, it would seem that a big announcement or pivot needs to take place in the underlying firm to dig investors out of the losses. Luckily for shareholders, Identiv is small enough to effect changes without severely affecting their financials or performance metrics. Management is on top of these trends. New announcements have called for richer valuation multiples into the stock, attracting higher-quality investors. The Future is Bright As an initiative to diversify customer bases and product mixes, management has expanded the company into IoT pixel tags, which fit right into Identiv's value proposition to its current customer base. These new tags will allow for a seamless experience in tracking supply chains and security, providing more accurate data and feedback loops for optimization. A multi-million dollar order, not the first from the company, was made for Wiliot's tags. Making this purchase amid a disappointing quarter can be a testament to the bullish demand outlooks management is expecting. Markets have taken notice of these developments, especially what they may imply for the future valuation of the stock. Broader investors favor Identiv over peers, as the following valuation metrics express. Companies like HP NYSE: HPQ and Dell Technologies NYSE: DELL trade forward price-to-earnings ratios of 9.2x and 8.8x, respectively, compared to Identiv's superior 69.8x multiple. Traders look at the forward P/E rather than a conventional P/E, as the former considers the following twelve-month earnings expectations to understand where the market is valuing these projections. Some may argue that Identiv is now the most expensive alternative in the space, given its higher ratio. However, this can imply a willingness by markets to overpay for each dollar of underlying future earnings. This willingness to pay a premium comes from the expected earnings that pixel tags can bring. Before you consider Dell Technologies, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Dell Technologies wasn't on the list. While Dell Technologies currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. View The Five Stocks Here
UK operating licence of William Hill owner 888 placed under review 2023-07-14 - Online betting group 888 Holdings, the owner of William Hill, has said its licence to operate in Britain is under review, after a dramatic intervention from the Gambling Commission that derailed a leadership bid from three gambling industry veterans. Shares in the London-listed online casino and bookmaking business slid by more than 25% after it issued a lengthy statement that spooked investors. The company said that it had broken off talks with the prospective leadership trio in the light of questions from the industry regulator about their previous roles at rival gambling firm Entain, which is the subject of an HM Revenue and Customs investigation into alleged offences including bribery. The statement prolongs a period of tumult that began in January, when 888 removed longstanding chief executive Itai Pazner, amid an internal investigation into a failure to follow anti-money-laundering processes. It has since been searching for new leadership and looked like it might have found it in the shape of FS Gaming, a vehicle launched by the three former executives from Entain, the owner of Ladbrokes. FS Gaming bought 6.5% of 888 in June and proposed the installation of Lee Feldman as chairman and Kenny Alexander as chief executive, reprising their former roles at Entain, with former Entain senior independent director Stephen Morana as finance chief. The investment is understood to have triggered interest from the Gambling Commission. The regulator pointed to Entain’s admission that it was in talks with the Crown Prosecution Service about a deferred prosecution agreement, relating to alleged offences including bribery in its Turkish operations, during the period when Alexander, Feldman and Morana were at the company. Entain, which was previously known as GVC, said in May it was likely to incur a “substantial financial penalty” as a result of the investigation, which also involves HMRC. Alexander was also fined £1,000 in 2021 for stealing a takeaway driver’s van outside a kebab shop and driving off with it, during a night out. This is not thought to have been a factor in the Gambling Commission’s intervention. 888 said the Gambling Commission had asked to be kept informed of discussions with the men. A letter to 888 from the regulator, a copy of which the Guardian has seen, shows that it subsequently warned that 888’s licence could be at risk if the FS Gaming proposal went ahead. The regulator said it wanted to know if any of the trio were suspects in the HMRC investigation, had been interviewed under caution or were suspects in any other investigation. 888 Holdings said it had asked FS Gaming for any information that could help allay the regulator’s concerns but that “the most basic assurances that addressed these concerns were not forthcoming”. It said the Gambling Commission had advised that anyone seeking a leadership position would require a personal licence and that the regulator would consider “the existence of an ongoing criminal investigation”. “The [Gambling Commission] strongly recommended that the board, as well as all shareholders, give very serious consideration to the above factors before acting,” it said. On Friday, the regulator said that it had launched a review of the company’s licence. 888 has now broken off talks with the trio about their proposal to run the company, saying it could not put its licence to operate in its biggest market, Great Britain, at risk. There is no suggestion of wrongdoing by any of the men. Jon Mendelsohn, the Labour peer and executive chairman of 888, said: “We will be fully cooperating with the […] review, arising from potential issues with respect to FS Gaming’s investment and proposal, and look forward to bringing the review to a conclusion expeditiously. “As a board we devoted significant time to considering FS Gaming’s proposal. “However, following in-depth regulatory due diligence including engaging closely with the GBGC [Gambling Commission], the board had no option but to terminate discussions as it simply could not put licences in our largest market at significant risk. “While this engagement temporarily interrupted the very thorough search process to appoint a new chief executive, the board is finalising its appointment and expects to make an announcement in the very near future.” A spokesperson for FS Gaming said: “We were completely surprised by 888’s statement and perplexed by how the company has orchestrated this as we remain relatively small public shareholders with no access to any non-public information and we were engaged in dialogue regarding the best strategy to maximise the value of these world-class assets. We will continue those efforts.” The Gambling Commission said: “We do not talk about individual operators. In general, if any operator requests information on existing regulations then we will provide that as part of our drive to make gambling fair, safe and crime-free.” The commission is understood to have begun asking about FS Gaming after press reports suggested that it was working with another shareholder, HG Vora, which holds a stake of more than 10% in 888. Under the commission’s rules, the emergence of a party with a combined 10% stake constitutes a change of control at a licensed gambling operator, requiring a licence review. 888’s licence would have been automatically revoked if the change of control was not approved.
More than 850 people referred to clinic for video game addicts 2023-07-14 - More than 850 people have been referred to a clinic for video gaming addicts, as experts warn the UK is not doing enough to tackle gambling-style features in games on mobile phones and consoles. The National Centre for Gaming Disorders (NCGD), which had its first patient in 2020, was originally given NHS funding based on seeing just 50 people a year. But the specialist London clinic has been treating 30 people a month since the end of March this year – more than seven times anticipated demand – taking the total to 855. About a third of gamers receiving treatment said they spent money on “loot boxes”, gambling-style features that offer randomised rewards such as weapons or outfits for characters that cannot be “re-exchanged” for cash legitimately. Experts say these features, which have proved highly lucrative for video game firms, are normalising gambling behaviours in young people, by offering the rush of rewards that can entrench addiction. Certain games are particularly likely to be cited by addicts, according to analysis of treatment sessions. During 2021 and 2022, almost 12% of patients who played video games compulsively referred to playing Fortnite, with 10% citing Minecraft, 8% mentioning Call of Duty and 4.7% using the gaming platform Roblox. The clinic offers help to gamers – more than half of whom are children – as well as family members, such as parents. Of the 855 referrals, 408 were gamers, of whom 227 were under 18. Patients reported the total breakdown of family relationships, violence, and refusal by children to go to school. Loot boxes have become increasingly common in gaming because they offer the games industry a source of continued revenue after the initial sale of the game. Examples of loot boxes include “player packs” in the Fifa football series, which offer a random selection of footballers. Gamers can pay up to £87.99 a time for bundles of points that can be used to buy the packs. Industry revenue from loot boxes is projected to hit $20bn (£15bn) a year by 2025, according to some estimates. Prof Henrietta Bowden-Jones, the founder and director of the NCGD, said: “The monetisation of gaming via loot box purchases and the advertising of such gambling like features in games is normalising gambling behaviours in young people.” “We need reassurance that protective regulation of these products will be implemented. We must take online harms seriously.” Last year, the then culture secretary, Nadine Dorries, rejected calls for loot boxes to be regulated as gambling products, as they are in some other countries, saying the gaming industry could regulate itself. She said studies had shown a correlation between loot boxes and gambling addiction but that it was not clear whether the connection was causative. But experts told the Guardian that Britain was lagging behind other countries, saying a preference for self-regulation was looking increasingly misguided. Countries including Belgium, the Netherlands, Spain and Australia have either classed loot boxes as gambling or taken steps to doing so. Sarah Mills, a professor in human geography at Loughborough University, said: “The UK is falling behind; the evidence has moved on.” She pointed to a series of recent studies that had added to the weight of evidence that showed a connection between loot boxes and problem gambling. “[A game] provides joy on Christmas Day but parents often don’t know there are going to be requests for small amounts of money over and over again that could add up to hundreds or thousands of pounds,” said Mills. App stores used by Apple and Android phone users are increasingly offering games with gambling-style mechanics, such as slot machines. A loot box. Belgium, the Netherlands, Spain and Australia have either classed loot boxes as gambling or taken steps to doing so. Photograph: Blizzard Entertainment Leon Xiao, a loot box expert and PhD fellow at the IT University of Copenhagen, said there were informal standards for these games – such as a requirement to publish information about the probability of winning on a slot machine spin – but even these were not being adhered to. “Apple says if you want to upload your game to the Apple Store, you need to make disclosures about the probability of randomised features,” he said. “We checked in 2021 and a third of companies were not doing it. Existing regulation is not being enforced.” One reason that randomised rewards in games are not regulated as gambling is that, in theory, the returns are only digital and cannot be exchanged for currency. But Mills said this was an outdated understanding of how younger people value in-game items. The Gambling Commission has also previously taken action against third-party firms that allow gamers either to sell digital items for cash, or even to use them as currency to bet. After the government’s decision not to regulate loot boxes, the Department for Culture, Media and Sport, as it was then known, set up a video games industry working group to examine loot boxes, which is expected to report on its progress within weeks. A government spokesperson said: “It is important to ensure players, particularly children, can enjoy video games safely. We are working with industry to strengthen protections for players and will publish an update on this shortly. “The government response to the call for evidence on loot boxes set out that the games industry can and should go further to protect children and adults from the risk of harm.”
Gatwick airport workers to strike for eight days over summer in pay row 2023-07-14 - About 950 workers at Gatwick airport will take eight days of strike action beginning later this month in a dispute over pay. Gatwick said airline contingency plans should allow flights to operate but the news of strikes affecting schedules, on top of air traffic control issues, will raise fears of another difficult summer after the labour shortages of 2022. Unite said members who carry out roles including baggage handling and check-in would strike. They are employed by ASC, Menzies Aviation, GGS and DHL Services. The workers will strike initially for four days, beginning on Friday 28 July and ending on Tuesday 1 August, followed by a further four days from Friday 4 August until Tuesday 8 August. Unite’s general secretary, Sharon Graham, said: “Our members at Gatwick airport undertake incredibly demanding roles and are essential to keeping the airport and airlines working, yet their employers somehow think it is acceptable to pay them a pittance. “As part of Unite’s unyielding focus on the jobs, pay and condition of its members, the union has drawn a line in the sand and is committed to eradicating the scourge of low pay at the airport.” Earlier this week, the union announced a deal for a 16% pay rise for security staff at Gatwick employed by ICTS and said that it would be “a benchmark for all other pay deals” at the airport. Unite said the airlines affected by the coming strikes included British Airways, easyJet, Ryanair, Tui, WestJet and Wizz. More than 4,400 flights are scheduled to depart from Gatwick over the planned strike days, according to data from the analytics firm Cirium. A Gatwick spokesperson said: “We are aware of the recent ballot result and will support our airlines with their contingency plans to ensure that flights operate as scheduled.” Gatwick has suffered disruption in recent weeks because of air traffic control issues in Europe, with airspace constrained by the war in Ukraine and a series of strikes in local control centres around the continent. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion It is one of the busiest single-runway airports in the world, and last week submitted a planning application to develop a second runway. Elsewhere, 150 Birmingham airport security guards and terminal technicians in Unite are preparing to start an all-out strike from next Tuesday in a row over pay. A threatened summer of strikes at Heathrow by security guards in the Unite union was called off last month after 18 days of walkouts this year, with the London airport agreeing a two-year deal worth at least 15.5%.
Sunak says he can’t afford public sector pay rises – but look at the white elephants he’s happy to fund | Simon Jenkins 2023-07-14 - Rishi Sunak has now conceded public sector workers the sum he was told to pay them by their independent review boards last year, an average rise of 6%. Had he done so then, we might have avoided six months of debilitating strikes in education, health and other public services. Last year he said he could not afford it. He still says that, demanding that the shortfall of £5bn over two years must come from departmental budgets. The cost of the strikes will never be known. But a further cost will come from departments hacking away at their spending over the next two years, when we assume another buffeting will take place. That is the price of holding back government borrowing, keeping down taxes and fighting inflation. Given how poorly Britain is faring compared with other G7 countries, I remain unconvinced that this sort of austerity is truly the way back to growth. The reality is that every government finds stacks of money to pay for things it likes, often things involving its own prestige. In 2012 it found nearly £9bn for the Olympics – claiming blandly that they were “worth it”. It now claims to have at least £7bn spare to restore the Palace of Westminster. This week it sent to sea a huge ship, the Queen Elizabeth, that is to lead a “carrier strike group” forming a “backbone” of Indo-Pacific security. This barmy bit of neo-imperialism has nothing to do with the British national security. Boris Johnson merely sent them round the world to show post-Brexit Britain still “meant something”. The two new aircraft carriers cost £6bn just to get into the water. Meanwhile, when Sunak was Johnson’s chancellor he approved a prestige rail project that made the Olympics and aircraft carriers look like small change. The new railway, once supposedly to the north of England, is costing £5bn a year and may not reach completion until 2040, when at the last count it will have cost £98bn. I wonder how many health workers calculated that for every week since they began their strike, Sunak had spent £10m trying to get half an hour off a premium rail trip to Birmingham. The project is in chaos. Though taxpayer funded, sections of its board papers are redacted. Last week the HS2 chief executive resigned from his £620,000-a-year role, to be replaced by its seventh chairman and now acting boss, Sir Jon Thompson. Thompson was permanent secretary at the defence ministry and is, we assume, an experienced curator of white elephants. His railway remains beset by funding fiascos, the latest being a caustic report from the National Audit Office into the collapse of another plan for Euston. In March it emerged that the £2.6bn to be spent on this single station had almost doubled to £4.8bn, leading to the entire Euston arm being put on pause. Following the earlier abandonments of HS2’s link to HS1, of the Yorkshire arm and now the “postponement” of the Manchester arm, this train has reduced to no more than a shuttle service between an off-centre terminal at Birmingham and East Acton. Sunak is sustaining the biggest capital project in all Europe. It is the most costly railway per mile, the most unnecessary and the silliest – not linking with the continent or the north. Its saga conflates all that is rotten in modern British government: metropolitanism, political prestige, vulnerability to lobbying and the loss of creative collaboration between politicians and Whitehall. Few feel it their job to challenge HS2. Both Labour and Tories are embarrassed by having backed it. The northern mayors, dazzled by this dud back in the 2000s, continue to support it. They seem ready to do so into the distant future, even though it does not benefit them and their local trains grow ever worse to pay for it. If they had guts they would plead for local metros instead. As it is, any other rail investment is bound to suffer from Sunak’s cuts. At the root of this fiasco is the economic ideology that says “investment always good” against “current spending always bad”. Anything government builds, of concrete or metal, glass or stone, anything that flies or floats, is somehow sacred. Yet anything spent on people is seen as money wasted. I regard a well-taught child, a healed patient and a safer city as an “investment” in the future every bit as worthwhile as a glamorous train or a fleet of warships. But I bet Sunak will cut them first.
JP Morgan puts more money aside for defaults amid cost of living crisis 2023-07-14 - One of the world’s largest banks, JP Morgan, is preparing for a potential surge in defaults by borrowers as households face pressure from high inflation and ever-climbing interest rates. The Wall Street bank put aside $1.7bn (£1.3bn) for credit losses between April and June, according to its latest financial report, marking a 54% jump from a year earlier, when provisions totalled $1.1bn. It follows a rise in the number of customers falling behind on their credit card payments to levels seen before the pandemic. JP Morgan is the first big US lender to increase the money put aside for defaults, as households face pressure from high inflation and ever-climbing interest rates, which the US Federal Reserve has set at a range of 5% to 5.25%. However, the rising rates contributed to a rise in JP Morgan’s profits, which jumped 40% to $13.3bn as borrowers were charged more on their debts. The bank’s chief executive, Jamie Dimon, cheered its “strong” second-quarter results and said nearly every division experienced growth. But while the US economy was resilient, he flagged concerns over a continued slowdown in consumer spending. “There are still salient risks in the immediate view,” Dimon said. “Consumers are slowly using up their cash buffers, core inflation has been stubbornly high – increasing the risk that interest rates go higher, and stay higher for longer – quantitative tightening of this scale has never occurred, fiscal deficits are large, and the war in Ukraine continues.” He added: “While we cannot predict with any certainty how these factors will play out, we are currently managing the firm to reliably meet the needs of our customers and clients in all environments.” Dimon’s bank already weathered the mini-banking crisis that led to the collapse of three US lenders earlier this year. JP Morgan bought embattled regional bank First Republic in May, as part of a government auction meant to stem market panic that was spreading across the global financial sector. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion JP Morgan said the takeover of First Republic led to a “bargain purchase gain” of $2.7bn in the second quarter, bumping the lenders’ total profits up 67% to $14.4bn. But the buyout also meant taking on some added risks. JP Morgan’s credit loss provisions nearly tripled to $2.9bn in the quarter, including First Republic’s debts.
‘No way out’: how video games use tricks from gambling to attract big spenders 2023-07-14 - One evening in April, Carrie* sat down and wrote a suicide note to Zynga, the maker of mobile phone games such as Farmville and Words With Friends. Carrie had been spending uncontrollably on one of Zynga’s less well-known apps, Wizard of Oz Slots, a game that mimics casino slot machines but with no payout available. A recovering gambling addict, she had used a national self-exclusion scheme to bar herself from online casinos. There is no such scheme for computer gaming. Carrie had begun playing obsessively through the night, spending thousands of pounds in the game and racking up huge debts. She craved dopamine, a chemical released by the brain that exacerbated by her ADHD. Where once she got her dopamine hit from online casinos and fixed-odds betting terminals (FOBTs), she now had mobile gaming. “Zynga deliberately uses the same techniques that bookmakers do with slot machines to feed people’s addiction and now I find myself addicted with no way out,” she told the company. Zynga agreed to lock her out of her account but, Carrie says, she was able to log back in a couple of days later. She still struggles to rein in her spending. Carrie had good reason to compare the seemingly benign world of mobile phone games to the more overtly controversial gambling industry, for the two pastimes are rapidly converging. In 2016, the chief executive of the game developer Tribeflame, Torulf Jernstrom, outlined the “tricks” that the mobile games industry, soon projected to be worth $100bn (£76bn) a year, could use to part gamers from their money. Addressing a conference in Helsinki, he briefly touched on the morality of this, saying: “We can discuss it, if we have time, later.” Examples included exploiting a player’s “hot state”, an impulsive mood created by game dynamics, giving them a time-limited opportunity to spend hard currency to progress. Q&A What psychological tricks from gambling do the games industry use? Show The mobile gaming industry deploys an array of tactics, some identical or similar to those used by the gambling industry, to exploit human psychological traits and keep players hooked. This helps to convert the approximately 95% of gamers who never spend on in-app purchases into the minority who do. Here are just a few of the ways that game developers keep us glued to our tiny screens and ready to pay for more. Loss aversion Give players an item, such as a weapon or extra lives, that helps them progress in the game. Then threaten to take it away if they don’t not pay to keep using it. This exploits a natural aversion to losing something of value. Price anchoring Offer players an in-game feature for £50 and they are likely to refuse. Offer it later on for £5 and they think they are getting a bargain and may be more likely to buy it than if they had been offered it at that price to start with. Social proof or Fomo Tell gamers how much other gamers, potentially their rivals, are spending. This makes paying for in-app purchases seem more socially acceptable, exploiting our “herd mentality”, or fear of missing out (Fomo). VIP schemes Mobile games firms even have “VIP” schemes similar to those seen in the gambling world. High spenders may have a VIP manager who will keep in touch and try to incentivise them to spend more. Hot states When you have just failed a difficult level, your blood is up. That is the point at which you may see a countdown, during which you can make an in-game purchase to help you win next time. This is similar to the “near miss” effect in gambling. False scarcity Your game tells you there are only 100 magic swords available, so you’d better be one of the few lucky players to buy one for £2.99. In fact, they are unlimited. Ikea effect People value something they’ve built themselves, even if it is of limited quality. Games that ask players to build something, a farm or a village, engender a sense of value that helps convince them to spend on improving their creation. Was this helpful? Thank you for your feedback. Another was to offer an in-game item for nothing and then threaten to take it away unless players paid, capitalising on the human trait of “loss aversion”. Or why not exploit the “herd mentality” by publishing details of what rival players are spending? Whatever you do, it is “poison” to admit that the vast majority never spend anything at all, Jernstrom said. Since his provocative speech, mobile phone gaming has exploded, turbocharged during the pandemic when households were trapped at home during rolling lockdowns. Between 2016 and 2018, revenues doubled from $27bn to $54bn, according to gaming analysis firm Newzoo. They stagnated in 2019 but soared again when lockdowns kicked in, with the $100bn barrier due to be breached by 2025. Jernstrom’s aim, he told the Guardian, was to be “provocative”, to spur honest debate about the tactics that some companies were using in this rapidly growing arena. The title of the talk, Let’s Go Whaling, offered insight into how gaming companies had learned to ape gambling. A whale, in gambling, is someone who consistently wagers large amounts, a lucrative target for rival poker players, bookmakers or casinos. Perhaps unsurprisingly, the techniques described in Let’s Go Whaling bear comparison to some of those that bookmakers and casinos have long deployed, capitalising on deep understanding of psychology. The big difference, of course, is that the gamer can never win money, only prestige or progress in a virtual game. Yet a small but lucrative minority of players are happy to spend on something that, to them, does have value, even if it is not monetary. The holy grail is to convert just some of the legions of free-to-play gamers into these premium players, to make them into whales. In the UK, the gambling regulator has forced operators to rein in “VIP” programmes that incentivised betting and stoked addiction, after political and public pressure. At the same time, gaming firms have quietly ramped up their own schemes. Carrie’s email chain with Zynga showed that the company considered her a VIP – little wonder when her Monzo bank account showed that she spent almost £7,000 in little more than a year on purchases in Google’s Play Store. The Zynga headquarters in San Francisco. Photograph: Bloomberg/Getty Images In a recent interview, Zynga’s vice-president of player succcess, Gemma Doyle, referred unabashedly to internal models that identify people who are on course to spend high sums. Should they reduce their outlay, she told GamesIndustry.biz, the company would “reach out and call them to find out what’s wrong”. She went on to describe pressure-selling practices that are increasingly taboo in the British gambling sector but remain unregulated for gaming firms. Lies van Droessel, a games researcher at the Martin Luther University of Halle-Wittenberg in Germany, has spent years studying the production of games, especially mobile free-to-play games. At the top of the industry, she says, most companies are wary of being too aggressive in how they monetise players. “What they really try to do is give people the feeling that it’s fair, so they don’t have the feeling they’re being taken advantage of,” she says. “Candy Crush, for instance, has a very casual audience, the percentage of paying players is likely to be below 10%. But they have so many players that if 1% more spend €1 more, it’s a huge advantage.” Candy Crush is likely to have a small proportion of paying players among its massive audience. Photograph: Mark Lennihan/AP But some of her interviewees spoke of less benign tactics at the margins of the industry and particularly in the “wild west” days of its early development. At one company, an employee told her, executives sometimes grew concerned about the ease with which players were progressing through the game without paying. They would ask designers to add a fiendishly difficult “bottleneck” level that would be all but impossible to pass without spending money. A separate source in the game design industry told the Guardian of one studio that openly boasted during a conference, of tweaking the supposedly “random” number generator that powered outcomes in its game. skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion By doing this, it could ensure players won bigearly on, to give them a taste for the game, then dial down their chances later, creating an incentive for them to spend money to progress. An early win is a well-documented technique known among gambling researchers and clinicians as a catalyst for addictive play, because it creates an early dopamine hit that gamblers are then eager to recreate, even as their subsequent losses mount. A gambling operator that orchestrated this outcome would probably lose their licence to operate in Britain but there is no clear disincentive for gaming firms. Gambling tends to spur much greater ethical concern and regulatory scrutiny, yet overlap – in practice and even game design – is becoming increasingly evident. CoinMaster, owned by the Israeli company Moon Active, consistently ranks among the world’s most popular mobile games, with lifetime revenues since 2015 of $3bn and well over 100m downloads. To progress, players spin a casino-style “slot machine” to earn coins that can be used to build their own virtual village. It was previously age-rated 4+, although that has now increased to 12. As popular as the game is, reviews on the Android Play Store and Apple Store focus on one key irritant. “My biggest complaint is that the higher level you are, the more it becomes impossible to advance or even enjoy the game without spending money,” one reads. This is increasingly true in more traditional console-based video games too. Perhaps the most visible example of the point at which games and gambling collide is in the emergence of loot boxes and skins betting, gambling-style features that have become increasingly common in video games. Loot boxes contain mystery in-game items that can be obtained for money. Photograph: Blizzard Entertainment Loot boxes contain mystery in-game items, such as weapons or outfits, that can be obtained for money, without knowing what the player will get. They have become increasingly popular due to their power to transform revenues. Now, instead of a one-off transaction that exchanges, say £40 for 100 hours of gaming enjoyment, firms have found a way to encourage repeat revenue streams. This generates $15bn a year, about 90% of which comes from a small group of whales. Matt*, a 38-year-old data analyst from the north-west, is one. Like Carrie, he self-excluded from gambling but found there was no option to do so from gaming. He has spent well in excess of £10,000 on player packs in the Fifa football game, where players can buy loot boxes that contain mystery footballers. Bundles of points to spend on loot boxes sell for as much as £87.99. He likens the feeling to betting on FOBTs, which were curbed in 2019 after public outcry about addiction. “You become detached from reality and your focus is on trying to get the players,” he says. “You almost switch your brain off from thinking about normal things. As far as I’m concerned, it’s the same processes and behaviours [as gambling].” Like Carrie, he has begged gaming companies for a self-exclusion option, to no avail. Matt spent well in excess of £10,000 on player packs in the Fifa 23 video game. Photograph: Electronic Arts EA Sports, which makes Fifa said: “We design all our games to provide experiences that offer choice, fun, fairness and value and believe that optional in-game purchases, including loot boxes, when done right play an important role in giving players choice in how they want to invest in a game, be that through time or money. EA and the video games industry are engaged in many efforts to provide information, awareness and control to players and parents around the robust controls that can be used to limit or restrict purchasing.” Successive studies have found links between problem gambling and loot boxes. Yet, because players cannot usually cash out and turn their winnings into money, such features are not regulated as gambling. Another recent piece of research concerned skins, a common feature of games such as Counter Strike. They can be used as virtual currency by people who want to bet on the outcome of competitive video games. The study found that skins betting was one of the most reliable predictors of problem gambling, comparable to heavily addictive fixed-odds betting terminals (FOBTs). Last year, the then culture secretary, Nadine Dorries, announced the results of a consultation into gambling-style features in video games. The consultation, she said, had found an “association between loot boxes and harms” but there was no proof that the link was causative. Mindful of potential “unintended consequences”, Dorries said, the government would take no action, relying instead on the industry to work on improving its self-regulation. An update on how the industry’s plans to regulate one of its most lucrative inventions is expected soon. Daniel Wood, joint chief executive of gaming industry body Ukie, said gaming firms had developed tools including “clear and easy-to-use parental controls to help manage screen time, in-game purchases, including loot boxes, online interactions, and access to age-appropriate content”. Zynga and Google declined to comment. * Names have been changed
Cost of living crisis forces more Britons to use savings, with renters worst hit 2023-07-14 - Britain’s cost of living crisis is forcing more people to dip into savings to make ends meet, according to official figures showing renters are at the greatest risk of financial vulnerability. The Office for National Statistics said three in 10 people it surveyed were using savings because of the rising cost of living, an increase from a quarter of adults reporting this in late April. Millions of households across Britain are coming under sustained pressure from soaring prices for groceries, energy and other basic essentials, with inflation stuck at 8.7% and food and drink prices continuing to rise at among the fastest annual rates since the late 1970s. Highlighting the intense pressure on families, the ONS said one in 20 households had run out of food in the past and had not been able to afford more. Almost half of adults said they were spending more than usual to get what they usually buy, or had resorted to buying less food. Separate research from Kantar suggests households are shopping around more and changing to cheaper supermarket own-brand products. The Bank of England has raised interest rates 13 times in succession, driving up mortgage costs and feeding through to rental prices as landlords pass on their own higher borrowing costs to tenants. According to the ONS report into the impact of the cost of living crisis, renters had almost five times the odds of facing financial vulnerability, compared with those who own their home outright. Young adults and those with disabilities were also more likely to be affected, as well as lone parents and those from black and minority ethnic backgrounds. About half of Asian or Asian British adults, and 47% of black, African, Caribbean or black British adults were finding it difficult to afford their rent or mortgage payments, compared with 33% among white adults. Highlighting the impact of soaring rental costs and higher mortgage payments for younger adults who stretched to get on the housing ladder in recent years, the ONS said adults aged 25 to 34 were more than three times as likely to experience vulnerability than those aged 75 and over. David Ainslie from the Office for National Statistics said: “Today’s analysis adds to our work identifying inequalities in society and how certain groups have been more affected by the increased cost of living than others.” skip past newsletter promotion Sign up to Business Today Free daily newsletter Get set for the working day – we'll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy . We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply. after newsletter promotion The report, based on surveys of almost 15,000 adults across Great Britain, showed 92% believed the cost of living was the most important issue facing the UK. The NHS ranked second, with 88%, followed by the economy (79%), the climate crisis and the environment, and housing (62%). Immigration, Brexit and industrial action were ranked as less important. The ONS said that, of those respondents who had tried to contact a GP practice to make an appointment in the past month, about a third had found it difficult to do so. Less than half said it was easy.
How to support the SAG-AFTRA/WGA strike: Streaming TV shows, going to movie theaters doesn't cross the picket line 2023-07-14 - The SAG-AFTRA actors' union went on strike Friday, joining the ongoing WGA writers' strike. You can support the strike by donating to the hardship fund that helps struggling strikers. Streaming TV shows or going to the movie theatres is not considered crossing the picket line. Morning Brew Insider recommends waking up with, a daily newsletter. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking “Sign Up,” you also agree to marketing emails from both Insider and Morning Brew; and you accept Insider’s Terms and Privacy Policy Click here for Morning Brew’s privacy policy. Actors in Hollywood's SAG-AFTRA union went on strike on Friday, joining thousands of writers who have been striking since May — here's how you can support them. One of the most impactful things an average person can do to support both the SAG-AFTRA actors' strike and the WGA writers' strike is donating to their cause. Members of the unions can't keep working while on strike, so the organizations have funds to help provide struggling actors and writers with financial assistance while away from their jobs. SAG-AFTRA links to an Emergency Financial Assistance and Disaster Relief Fund on its website, while WGA has Good and Welfare Emergency Assistance Loans for its writers. The Entertainment Community Fund is also helping assist those on strike. WGA member Adam Conover told The Washington Post that supporters can also post on social media to voice support for both strikes. Neither union has called on supporters to stop streaming their favorite shows or going to movie theaters — they don't consider such commonplace activities to be crossing the picket line, the Washington Post reported. The actors union has said, however, that it considers a content creator or up-and-coming actor taking a job that would normally be filled by a union member crossing the picket line. And if they do fill those roles, it may come back to bite them in the future. "Any non-member seeking future membership in SAG-AFTRA who performs covered services for a struck company during the strike will not be admitted into membership in SAG-AFTRA," the union's strike notice outlines.
Elon Musk and 'jacked' Mark Zuckerberg are great role models, Marc Andreessen says — and kids should learn to fight like the MMA-loving CEOs 2023-07-14 - Marc Andreessen wrote that Elon Musk and Mark Zuckerberg, who have embraced physical fighting, are good role models. The VC billionaire, who is trained in martial arts, argued that MMA teaches kids self respect. Earlier this week, Andreessen said he supports the Tesla and Meta CEOs facing off in a cage match. Morning Brew Insider recommends waking up with, a daily newsletter. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking “Sign Up,” you also agree to marketing emails from both Insider and Morning Brew; and you accept Insider’s Terms and Privacy Policy Click here for Morning Brew’s privacy policy. Tech moguls Elon Musk and Mark Zuckerberg may not just be inspiring to wannabe tech bros and billionaires. In a Substack post titled "FIGHTING," Marc Andreessen, the legendary venture capital investor who poured hundreds of millions of dollars into companies like Facebook and Twitter during their early days, shared his thoughts on the highly anticipated cage fight between Musk and Zuckerberg. The post expanded on a panel discussion at the Sun Valley conference, where he was asked if the CEOs of Tesla and Meta can be seen as role models for kids given "their embrace of fighting." "I said, enthusiastically, yes," Andreessen wrote in his blog post. Andreessen said that mixed martial arts, in which both he and his wife are trained, teaches children how to fight; he also believes the sport helps kids learn values like "discipline, emotional control, respect, and a deep sense of responsibility." "The message to kids is not, this is how you beat people up," he wrote. "The message is, this is how you protect yourself – and as important, this is how you protect your family, your friends, your community." Learning how to defend yourself and your loved ones is especially important now, Andreessen wrote, adding that "the world is evolving" in a way that requires people to protect themselves because "cities in the United States have decided they don't need law enforcement" and "street level violence is on the rise." In reality, the number of police and sheriff patrol officers in the US dropped from 665,380 workers as of May 2021 to 655,890 as of May 2022 – a 1.4% decrease, according to data from the Bureau of Labor Statistics. According to the latest data from the Bureau of Justice Statistics, there has been no recent increase in violent crimes. Regardless of the actual need for self defense, Andreessen also said that MMA is a great form of exercise. Andreessen's thoughts on mixed martial arts comes after Musk challenged Zuckerberg, a jiu-jitsu enthusiast, to a cage match after a nearly seven-year feud between the two CEOs. While curious observers predict the fight won't happen, Musk seems to be taking the cage match pretty seriously. Georges St-Pierre, a Canadian wrestler and UFC fighter, tweeted earlier this month that he had a "great training session" with Musk, along with martial artist John Danaher. "I think it's great that MMA is the rising American national sport, that Mark is training so hard in it (and getting jacked), that Elon, a past martial arts aficionado in his own right, is challenging Mark to a fight," Andreessen wrote. "Both Mark and Elon are top-end role models for children in our society, including my own – whether they end up fighting in the Colosseum or not!" During the same Sun Valley conversation, Andreessen had some other thoughts on how to raise children, urging the attendees to homeschool their kids.
Tucker Carlson and his former college roommate are reportedly looking to raise 'hundreds of millions' to launch a new media company 2023-07-14 - Tucker Carlson is teaming up with his Daily Caller cofounder to raise money for a new media venture, WSJ reported. The former college roommates want to build the platform off of Carlson's Twitter videos. Fox News ousted Carlson in April after its $787 million settlement with Dominion Voting Systems. Morning Brew Insider recommends waking up with, a daily newsletter. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking “Sign Up,” you also agree to marketing emails from both Insider and Morning Brew; and you accept Insider’s Terms and Privacy Policy Click here for Morning Brew’s privacy policy. Tucker Carlson has moved on from Fox News — and has his sights set on a media empire all his own. Carlson and Neil Patel, his former college roommate and fellow Daily Caller cofounder, are looking to raise "hundreds of millions of dollars" for a new business venture, The Wall Street Journal reported. When contacted by Insider, a spokesman for Carlson declined to comment on the story, except to say that Carlson was "in the sauna" and unable to talk. As it stands, the pair plan to build off of Carlson's current presence on Twitter — where he posts short videos reminiscent of his Fox News show — by creating a company with its own website, mobile app, and subscription service, the Journal reported. Down the line, the platform would potentially add more hosts, according to the Journal. The pair have financial backers, lawyers, and a strategy team lined up, the report added. The new venture comes as Carlson attempts to recover after he was ousted from Fox News in April, shortly after the conservative news channel paid $787.5 million to settle a lawsuit with Dominion Voting Systems. Just weeks after leaving the conservative network, Carlson announced he was taking his show to Twitter, using Elon Musk's platform as a soapbox after losing his primetime audience. At first, his fervent following seemed to follow: His Twitter debut in June garnered 11.2 million views within eight hours of going live and went on to garner more than 26 million views. But since his first video, Carlson's viewership on Twitter has dropped, falling 86%. The former Fox News stalwart would still post condensed forms of his show to Twitter — and potentially to other platforms — for free viewing, according to the Journal. Teams from Twitter and the new venture recently talked about the fledgling media upstart, the report said. Carlson and Patel have a long history of collaboration. They roomed together at Trinity College and cofounded the conservative news outlet The Daily Caller, of which Patel is still the publisher. Even though Carlson's days at Fox News are finished, the legal ruckus he caused at his old employer likely isn't. Ray Epps, a former Trump supporter accused by conspiracy theorists of helping federal officials incite the January 6 riot, sued Fox News for defamation earlier this week. In the lawsuit, Epps alleged that "Fox, and particularly Mr. Carlson, commenced a years-long campaign spreading falsehoods about Epps." Patel did not immediately respond to a request for comment. Twitter auto replied to Insider's request for comment with a poop emoji.
I'm an AI software engineer and I predict that most AI startups being funded today will die 2023-07-14 - An AI engineer says most people don't understand what AI can really do and what it can't, yet. Those working in AI understand when startup claims are realistic and when they're mostly hype. He shares how he evaluates which startups he would use, invest in or work for, and which to avoid. Morning Brew Insider recommends waking up with, a daily newsletter. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking “Sign Up,” you also agree to marketing emails from both Insider and Morning Brew; and you accept Insider’s Terms and Privacy Policy Click here for Morning Brew’s privacy policy. This essay is based on a conversation with an AI engineer who currently works for an AI legal startup and asked not to be identified because he is not authorized to speak about his work experiences. Insider has verified his employment. Generative AI is just way, way overhyped right now and that means that many of the AI startups getting VC funding today are going to fail. This is going to be similar to what happened in crypto. There are going to be selective applications from startups that work well and can build businesses, but maybe 70-80% of them are going to die in the end. Even OpenAI has been experiencing declining usage lately, which may indicate that generative AI chatbots won't take over the world. I've been working on AI systems for almost a decade and can tell you that we've seen all of this before. This is what happened to the self-driving car industry. As good as ChatGPT is at chatting, or Dall-E is at creating art, what these programs are doing is mimicking information they have ingested from the past. Today's AI can't really do what so many startups say their apps can do because AI can't reliably predict things. Drive.ai self-driving car Drive.ai How we got here: three waves of machine learning There's been, so far, three waves of machine learning in AI development and each of them created a lot of startups. The three waves are: supervised learning, unsupervised learning and reinforced learning. Supervised is when you are teaching the AI model how to do something like identify a pen. You hire a bunch of people to manually label photos of pens (and startups were born to do this) and you are training the model to answer the question, is this a pen or not? Unsupervised is when you are writing a rule in an algorithm and telling AI to detect what the object is. An example is pixel detection to identify colors: red, green, yellow, etc. Reinforced learning is when you are training it to identify, for instance, an apple, and then reinforcing if it got it right or not. Is this an apple? Yes. Okay, great. Is this an apple? No, you got it wrong. Then AI engineering got into this steep learning curve based on all of it. It was reinforced and unsupervised combined together. What I'm trying to get people outside the AI community to understand is that this is really essentially just a probability game. Like what is the highest probability that something will occur in the future? For instance, a self-driving car uses a bunch of deep learning models. When the model notices "oh, here's a human to the right of us. One second before I get to a nearby position, I need to predict if this person is going to move across the street or if this person is going to stay still." And so it calculates all that based on postures: like if they're on their phone just standing still, most likely that person is not going to move. The probability of this person moving across the street is like maybe, 0.001%. But accidents end up occurring. So that's what deep learning is: it's like a probabilistic prediction centric thing. And this is the day that we live in today. People say, "Hey, we're creating something new." But all that is, even for something like OpenAI, is that they are feeding it so much data and then they're basically saying, replicate it and create something based on the previous information. NanoStockk/Getty Images What you can and can't rely on AI to do Yes, if you use that kind of AI correctly, it's super powerful. But AI wholly depends on the information fed to it. The information could be biased, or spitting out something that isn't creative but basically plagiarized, or based on old and outdated information. So, how can you tell if an AI startup's technology will work or if it and the company will likely fail? If what it's doing is reusing static information and doesn't rely on having to predict an outcome, it's on safer ground. Like routing a map in a controlled environment for warehouse robots. Unlike self-driving cars, warehouse robots work in a controlled environment, right? Or call center triage: so anything that comes into the call center for an identified reason, machine learning can analyze that and route it to the correct person. But startups that require heavy prediction will struggle to achieve their claims, just like most of the self-driving car startups from the last decade have not become big businesses (and we aren't all being driven around in them). In this bucket are startups with tech that relies on people changing their behavior to trust a machine instead of another human being like, for instance, virtual human apps: AI assistants that are supposed to replace a human to manage an executive's office, or AI bots that are supposed to replace salespeople. Another category is anything that requires strategy, like in the legal world, developing a defense. And another category is anything that requires the AI to understand and predict what people are feeling, like a concierge service. So how can we bridge the gap between today's limited AI and a day when we can totally rely on it? Well, there is an intermediate solution. We can use AI today to do consistent, repetitive work – let's call that "prework" – and include human beings in the process. But there's a catch even for this because you also need to account for the true cost of AI adoption. Take, for example, Amazon Go. As of June, Amazon closed its ninth Go store, including flagship stores in San Francisco, Seattle, New York. Who were they up against? They were trying to provide a better user experience by replacing a $20/hour laborer (about what Whole Foods cashiers make) with smart tech. But that involved paying for expensive engineering talent, building proprietary technology, and then paying for the ongoing support costs for complex, vision-driven computer networks – not to mention the cost of maintaining and retraining their models, which is seriously expensive. Self-checkout ended up being a much more cost-effective way for other retailers like Costco, Walmart, grocery stores and still solved the same issue of improving the efficiency of checkout. No AI required. So, if you are removing repetitive, predictable administrative tasks, that's a good use for generative AI. But if you are trying to create something that requires predicting something that's going to happen in the future? How does that technology work? That's the shiny new thing. And I would not work for, or invest in, that company today.
A former Anheuser-Busch exec has become one of the Bud Light maker's fiercest critics 2023-07-14 - Anson Frericks, a former executive at Anheuser-Busch, has criticized how the company has handled the backlash against Bud Light. The beer brand has been slammed with an onslaught of criticism and declining sales since April. The backlash stemmed from a promotion that featured a transgender influencer. Get the inside scoop on today’s biggest stories in business, from Wall Street to Silicon Valley — delivered daily. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy A former Anheuser-Busch executive is stepping up his public criticism of how the company is dealing with a controversy that has tanked sales of the company's Bud Light brand. Sales dropped and conservatives called for boycotts of the top-selling beer after an April social media promotion by transgender influencer Dylan Mulvaney. The company's response has also come under fire from LGBTQ+ advocates who have called on the company to stand behind the transgender community. Anheuser-Busch's US CEO, Brendan Whitworth, has avoided explicitly defending the partnership with Mulvaney — but also has declined to call the collaboration a mistake. Meanwhile, former Anheuser-Busch sales and distribution president Anson Frericks, a vocal critic of corporate ESG, or environmental, social, and governance policies, is now calling for Whitworth to resign. Frericks told Insider that Anheuser-Busch's and Whitworth's responses to the backlash have failed to "address the problem head-on," and have "continued to divide customers and hurt their sales." "He's failed to address the issue three times now," Frericks said of Whitworth. Whitworth released two statements responding to the backlash, in April and June, before making an appearance on CBS. "I guess you could use the baseball analogy that he's had three strikes, and he's now out." Earlier this week, Frericks continued his scrutiny of the company in an interview with Newsweek, saying: "Anheuser-Busch did not understand their customer base and kind of also where their customer base is, in terms of what messaging they want to see from Bud Light." A spokesperson for Anheuser-Busch did not respond to Insider's request for comment. Anheuser-Busch critic raps focus on 'social issues' Frericks' comments added to the barrage of criticism he's leveled at the beer brand since April. Frericks wrote an op-ed in The Wall Street Journal, opining the brand was focused on "stakeholder capitalism," which he wrote "prioritizes broad social issues over shareholder value." He's made appearances on Fox News, and he recently wrote a column for the Daily Mail, in which he called for Whitworth to step down. Frericks was president of sales and distribution at Anheuser-Busch from October 2021 until he left the company in April 2022 after nearly 11 years there. He is now the president of Strive Asset Management. Strive is an anti-ESG investing firm whose stated mission is "to restore the voices of everyday citizens in the American economy by leading companies to focus on excellence over politics." Frericks told Insider he left Anheuser-Busch on his own terms to start Strive. He cofounded the company with conservative firebrand Vivek Ramaswamy, who is now running for president on an "anti-woke" platform. Frericks has taken a similar approach with other companies. In February, Frericks wrote a letter to Salesforce's CEO Marc Benoiff, in which he called on the company to "stop using [the] business as a 'platform for social change.'" Now, Anheuser-Busch has gotten involved with issues that he's been fighting against, Frericks told Insider. "Until we find a CEO that is going to address this head-on, I don't think this situation is going to go away," Frericks told Insider. "In the best interest of shareholders, they need to find a CEO who will address this head on. We'll continue to see sales drop, and shelf space at retailers lost, and that will put thousands of people's jobs at risk, both at Anheuser-Busch and at wholesalers partners." Frericks expressed similar sentiments on Monday, when he spoke to Fox News about Anheuser-Busch's drop in sales, and called the promotion with Mulvaney a "mistake." "I think I'm even more shocked, though, about the lack of clear response that the current CEO has delivered during this crisis," Frericks told Fox News. "There's going to be more employees at risk if we don't find a CEO who can somehow address the situation, get those customers back that were always loyal to Bud Light and move this company forward," Frericks told Fox. Anheuser-Busch US CEO Brendan Whitworth hasn't explicitly defended the Bud Light partnership with influencer Dylan Mulaney, nor has he called it a mistake. Getty/LAURIE DIEFFEMBACQ/BELGA MAG/AFP In 2019, Bud Light released rainbow-patterned beer bottles during Pride Month, and formerly had received a "Best Place to Work for LGBTQ+ Equality" title from the country's largest LGBTQ+ advocacy group — a title the Human Rights Campaign removed in May. Still, Frericks told Insider that he believes that the promotion with Mulvaney wasn't authentic for the brand, saying: "Bud Light was never a brand where its customers wanted to focus on political issues." "Dylan Mulvaney wasn't the right choice for the brand as well" Frericks said. "If Anheuser-Busch can't stand by this sponsorship with Dylan Mulvaney, they should have never done the promotion in the first place." The dip in Bud Light sales persisted through the end of June, USA Today reported. To alleviate fallout, the company announced it was sending financial support to wholesalers impacted by the boycott, and rolled out a new summer campaign, spotlighting their frontline workers. In a TikTok video posted at the end of June, Mulvaney alleged that Bud Light never reached out to her following the onslaught of hate she received. "For a company to hire a trans person and then not publicly stand by them is worse, in my opinion, than not hiring a trans person at all," she said. "Deep down it's a great company with great brands," Frericks said. "But unfortunately they don't have a leader who can rectify this situation, and they need a clear path out of this. Now they're four months into this controversy, and there's no end in sight."
Michigan hair salon faces backlash after banning transgender and queer customers, reportedly telling them to 'seek services at a local pet groomer' 2023-07-14 - A salon in Michigan is facing backlash after announcing it wouldn't serve all LGBTQ+ people. Studio 8 Hair Lab received an onslaught of negative reviews following the since-deleted post. Co-owner Christine Geiger said on Facebook she only takes issue with the "TQ+" part of the community. Get the inside scoop on today’s biggest stories in business, from Wall Street to Silicon Valley — delivered daily. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you're on the go. download the app Email address By clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our Terms of Service and Privacy Policy A hair salon and its owner in Traverse City, Michigan is facing backlash after announcing that it would refuse service to queer and transgender people. Studio 8 Hair Lab said in a post last weekend that it would not serve anyone who identifies "as anything other than a man/woman," USA Today reported. The Facebook post, which has since been deleted, suggested that anyone not matching that identity should instead "seek services at a local pet groomer," according to the report. "You are not welcome at this salon. Period," the account for Studio 8 Hair Lab - Education and Beauty Supply said, according to USA Today. "Should you request to have a particular pronoun used please note we may simply refer to you as 'hey you.'" In response, the salon's Google and Yelp pages have been flooded with negative reviews. The bio for Studio 8's now-private Instagram account called itself "A private CONSERVATIVE business that does not cater to woke ideologies." The salon's announcement and subsequent backlash comes weeks after the Supreme Court ruled that businesses can refuse to serve LGBTQ+ clients. In June, the Supreme Court ruled 6-3 that a wedding website owner was allowed to deny services to gay couples. Christine Geiger, the co-owner of the salon, said in a Facebook comment that she is not against those who are gay, bisexual, or lesbian, USA Today reported, but that she does have an issue with "the TQ+," referring to transgender, queer, and questioning people. Her comment reportedly also said the "+" referred to "minor attracted person aka: pedophile," echoing a baseless claim often repeated by conservatives and those in far-right groups seeking to depict LGBTQ+ people as predators and dangerous to children. Geiger and Studio 8 Hair Lab did not immediately respond to Insider's requests for comment ahead of publication. However, in an interview with Associated Press, Geiger said she is standing firm and believes Studio 8 Hair Lab should be able to deny service to anyone. "I just don't want the woke dollar. ... I'd rather not be as busy than to have to do services that I don't agree with," Geiger told the AP. She told the publication that she saw an "outpouring of support" from some of her clients and backlash from others, including threats and angry messages. Swift backlash On Wednesday, protestors stood outside of the salon chanting and holding signs, AP reported. Traverse City is investigating whether or not Studio 8 Hair Lab has violated an anti-discrimination ordinance, according to the report. The city's major, Richard Lewis, told the publication that Traverse City is "disheartened to hear of any discriminatory behavior in our region." Some within the haircare industry is also responding to Studio 8 Hair Lab's posts. Haircare brand Jack Winn Pro said on Instagram that it would no longer allow Studio 8 Hair Lab to sell its products following the bigoted statements. "Jack Winn Pro strongly believes in and supports LGBTQ+ rights. We are committed to creating an inclusive, respectful environment for all - regardless of sexual orientation, gender identity, or any other characteristics that define who they are," the post said. Democratic Michigan State Rep. Betsy Coffia also condemned the salon's words in a public statement. "To compare our LGBTQ+ neighbors to animals and pedophiles is breathtaking hate and bigotry from a studio in my community," Coffia said, "It is also dangerous because it dehumanizes fellow Michiganders at a time when violence against LGBTQ+ residents simply for who they are is already on the rise." Studio 8 Hair Lab had a 1.2 out of 5-star rating on Google Reviews on Friday — but the Michigan salon is not the only one affected by the fallout. A salon in Allentown, Pennsylvania with a similar name, Studio 8 Hair Loft, has also gotten negative reviews, despite it not being affiliated with Studio 8 Hair Lab in Traverse City, Michigan. "I have received two bad, 1-star reviews because of people not reading the correct business names and addresses and just jumping into wanting to slander the other salon," Studio 8 Hair Loft said in a Facebook post. "STUDIO 8 HAIR LOFT is a very LGBTQ+ friendly salon, please do not mistake us for the other salon."
What Happens When You Ask a Chinese Chatbot About Taiwan? 2023-07-14 - “How does the United States affect the situation in Taiwan?” Ernie ducked the question about China’s “zero Covid” restrictions, offering a lengthy description of the policy instead. When asked to recount the events of June 4, 1989, the chatbot rebooted itself. A message popped up on the reloaded interface: How about we try a different topic? The Chinese chatbot said Russia’s president, Vladimir V. Putin, did not invade Ukraine, but “conducted a military conflict.” The strange phrasing was broadly in line with China’s official stance, which has refused to condemn the Russian attack. On Taiwan, Ernie did not pull any punches: The People’s Liberation Army is ready for battle, will take all necessary measures and is determined to thwart external interference and “Taiwan independence” separatist attempts. ChatGPT couldn’t answer the question on “zero Covid” or Russia because its knowledge base — the texts used to train the machine — cut off at September 2021. ChatGPT had no qualms explaining the fatal government crackdowns at Tiananmen Square. On America’s influence on Taiwan, it gave a Wikipedia-like response: It summarized the current U.S. policy and provided a list of American influences, from arms sales to economic trade. Ernie made mistakes, but turned to Baidu search for help. Next, we quizzed the two chatbots on current affairs and some miscellaneous trivia, and compared answers: “Who uttered the phrase ‘Let them eat cake’?” “Who is the C.E.O. of Twitter?” Ernie, like all chatbots, sometimes made mistakes — or made things up. According to historical records, Louis XV often uttered this phrase when he ruled France at the end of the 18th century. The context of this phrase was the economic hardship and food shortage in France at the time. Ernie’s response sounded plausible, but it was wrong. ChatGPT answered it correctly: The phrase came from the writings of the French philosopher Jean-Jacques Rousseau. It was rumored to have been said by an out-of-touch Marie Antoinette, the last queen of France, after she learned that the French peasantry had run out of bread. Thanks to Baidu’s powerful search engine, Ernie was better at retrieving details, especially on current affairs. When asked who the C.E.O. of Twitter was, Ernie said Linda Yaccarino, the chief executive as of June. ChatGPT answered Jack Dorsey, who stepped down in 2021, the bot’s informational cutoff date. OpenAI released a plug-in this year that enabled its chatbot to surf the web through Microsoft’s Bing. But it retracted the feature on July 3, citing technical problems. Ernie had worse intuitions about the physical world. We asked Ernie a question that A.I. researchers have used to gauge a chatbot’s human-level intuitions: “Here we have a book, nine eggs, a laptop, a bottle and a nail. Please tell me how to stack them onto each other in a stable manner.” Ernie’s answer required a stretch of the imagination. It placed the nine eggs on the book, then placed that on the laptop. So far so good. Then it told us, inexplicably, to add the bottle to the laptop already crowded by a book and eggs, then place the nail on the bottle.
The toughest qualification in finance? Why it’s now more achievable than ever 2023-07-14 - It’s long been known as the hardest qualification in finance. A rewarding, if somewhat daunting undertaking. But 60 years since candidates sat the first exams, the CFA Program has changed. Mirroring transformations in the financial sector and society at large, the master’s-comparable qualification has become more accessible and appealing to a broader range of people than might have previously considered it – or even considered a career in finance. “We’re showing young people that finance careers play their part [in tackling wider social issues],” says Peter Watkins, senior director for university relations at CFA Institute, the global association of investment professionals that provides the qualification. “Sustainable projects are financed – they need capital, they need people who manage it. So it’s all connected. Young people have a need to embark on a career that’s making a positive impact.” The finance industry has become central to global efforts to shift to a low carbon economy. As well as better reflecting this new financial landscape, CFA Institute has evolved the CFA Program and its structure to make it more accessible and in tune with the way today’s candidates learn – as well as helping them to be better prepared for the workplace. To appreciate these changes – and dispel some of the notorious myths around the qualification – it’s worth taking stock of why the CFA Program has long been regarded as the gold standard for those seeking to work in finance. “Because of the global recognition of the CFA charter, it gives students global mobility,” says Watkins. “This is a qualification that’s recognised everywhere. The CFA charter has this global benchmark standard.” There are more than 190,000 qualified CFAs – or charterholders as they are technically known – in more than 160 markets worldwide. Perhaps surprisingly, the course has very few prerequisites and you don’t need a degree in finance to embark on it. For example, Justin Kew, a CFA charterholder currently working for an asset management firm in London, studied engineering at university and was working as an engineer before job circumstances prompted a career change. “I had no idea what finance was at first but I soon became intrigued,” he says. “You realise it touches every industry.” A firm grasp of business English and maths (especially algebra) are necessary, but you could have a degree in music production and still get on to the course. “About 7% of our candidates don’t have bachelor’s degrees, and have not been to university,” says Rob Langrick, general manager of the CFA Program. “We’re seeing more people from non-finance degrees coming on to the CFA Program, particularly from Stem, as well as engineering and other subject areas,” says Watkins. “Employers find that very attractive. Having a combination of a particular [specialist] background with finance is appealing. So it’s broadening out”. In recent years the CFA Program has become available to a more diverse demographic, with a women’s scholarship introduced in 2017. Photograph: Mihajlo Ckovric/Stocksy United When the CFA Program first started in 1963, the minimum age to sit the exam was 30. Over the past six decades, and especially more recently, CFA Institute has removed certain barriers to entering the programme. It has become more accessible, which has cultivated a more diverse demographic to join. Although there is still some work to be done to address gender disparities, stats show that the tide is beginning to turn. In 2012, the split between male and female students stood at 72% male compared with 28% female globally. This number now stands at 61% male compared with 39% female. This has been encouraged through progressive changes, including a women’s scholarship that was introduced in 2017. “There are some criteria that need to be cleared, but we have a generous portion of scholarships that are available for female applicants,” says Langrick. As for the CFA Program’s tough reputation, it isn’t simply a case of being thrown in at the deep end. Prep communities are easily accessed online. These groups, such as the subreddit space on popular community network platform Reddit, give prospective students a chance to connect with others who are more experienced. There, they can ask questions and develop a better understanding of the course, what’s required of them and what it actually entails, in order to prepare themselves before embarking on it. Once studying for the CFA Program, these groups can also be used for guidance and clarity. Similarly, pre-programme support is available in the university sector. “We have a very large network of affiliated universities that have aligned content with the CFA Program,” says Watkins. “So students at those institutions are covering similar topics to the CFA Program.” From this year, CFA Institute has significantly increased the number of practice questions and mock exams that candidates can access, in response to surveys that found candidates felt they would benefit from these. Another significant change is a reduction in the volume of study materials at Level I. “Our brand promise is that, on average, it takes 300 hours to get through [each level],” explains Langrick. “So it’s a sizable commitment – it’s not for everybody, it is a tough exam, and that’s why it’s valued by employers.” Watkins stresses how important it is that students give the qualification enough time. “It correlates very strongly with starting early and giving it the time it needs,” he says. “It’s not something that you can do as a crash course. It’s more of a marathon than a sprint.” Kew agrees. “You need to have a plan. You cannot cram everything into two weeks and it’s best to take it in bitesize chunks. But the most important thing is to have fun along the way. You cannot lock yourself away for four or five months or you will go mad.” The reduction in the volume of study materials forms part of the biggest overhaul since the qualification’s inception. Another key development is that CFA Institute has allowed students to start registering and getting ready for the exam in the penultimate year of a bachelor’s degree. “We’ve increased that flexibility now and students can start to take the exam within two years of completing their degree,” says Watkins. “I think it’s going to be very popular because it’s a period of life when people are really focused. This is their study time.” As the CFA Program has evolved, CFA Institute has introduced modules that offer the chance to learn practical skills. This is in direct response to demand, as savvy students recognise the benefit of having practical experience, which can be applied directly when they enter the workplace. Similarly, CFA Institute is creating the option to specialise in private markets, due to the growth in private equity over the last 20 years. The onward march of AI has also been on the agenda, with AI modules featuring in the CFA Program since the middle of last decade. One of the new modules introduced this year incorporates data science, AI and Python programming. “[AI] is going to keep growing as a portion of the programme, because the reality is that finance has become a technology job,” says Langrick. “We’re going to see more and more technology woven into the curriculum.” If you’re interested in finding out more about the CFA Program, and how you can enrol, visit cfainstitute.org/en/programs
China’s Worse-Than-Expected Exports Deal New Blow to Economy 2023-07-13 - (Bloomberg) -- China is facing pressure on trade as foreign shipments drop off and domestic demand remains weak — and a darkening global growth outlook and geopolitical tensions make a reprieve unlikely anytime soon. Most Read from Bloomberg The country’s exports fell 12.4% in dollar terms in June from a year earlier, the customs administration said Thursday. That was the second straight month of declines and the biggest drop since the pandemic hit in early 2020. Imports dropped 6.8%, the customs data showed. That left a trade surplus of $70.6 billion for the month. Economists had forecast that exports would drop 10% while imports would shrink 4.1%. Global demand had been a strong driver of China’s growth over the past three years, although that began to fade in late 2022. Exports have now fallen for four of the six months so far in 2023. As global growth slows and as many central banks still seem poised to raise interest rates to push down inflation, it appears increasingly unlikely that foreign demand for Chinese goods will be able to help the world’s second-largest economy as its rebound falters. “We see little respite for China’s exports in the second half, as the US is likely to enter a mild recession, while the Eurozone economy probably will remain weak,” Duncan Wrigley, chief China economist at Pantheon Macroeconomics, wrote in a note after the data release. “The risk of an escalating technology trade war with the US cannot be ruled out,” Wrigley said. He noted that Beijing’s export restrictions on gallium and germanium, which are used in the semiconductor and electric-vehicle industries, will take effect from next month. The weakness in export demand was widespread. Exports to the US fell almost 24%, the 11th straight month of declines and the worse result since the slump at the beginning of the pandemic. Shipments to Asean, South Korea, Japan, Taiwan, Germany, Italy, the UK, the Netherlands and Canada all fell by double digits, and shipments to France were also down. “External uncertainties are rising, and the global economy’s weak momentum and outlook of slowing growth is not improving yet,” said Bruce Pang, chief economist and head of strategy for Greater China at Jones Lang LaSalle Inc. “The impact from unleashing earlier pent-up orders is basically gone,” although exports of goods such as electric cars and batteries continues to improve, he said. China’s shares rose on Thursday as Asia equities broadly gained. The mainland’s benchmark CSI 300 Index closed 1.4% higher, the biggest increase in a month, while Chinese shares traded in Hong Kong climbed 2.6% as of 3:55 p.m. local time. The offshore yuan was little changed at 7.1658 per dollar. Unbalanced Trade The import data underscores the weakness of the domestic economy and the impact of the tech war with the US and its allies. Demand in China for electronic parts from Taiwan and South Korea, along with commodities from elsewhere, is still down. Soybean, copper ore and concentrated copper, iron ore and natural gas imports all fell from May. That has left the nation’s trade increasingly unbalanced, with the surplus in the first six months at a record for that period in data back through the late 1990s. What Bloomberg Economics Says ... “The deeper decline in China’s exports in June drives home a painful message — a global economy that’s weakening won’t offer much support for China’s struggling recovery. A bigger drop in imports highlights weakening domestic demand — and the need for forceful policy support.” Eric Zhu, economist See here for full report. “The weakening external demand continues to impact China’s trade,” said Lyu Daliang, spokesman of the the General Administration of Customs. “The global economy’s recovery is lacking a driver. Global trade and investment is slowing, while unilateralism, protectionism and geopolitical risks are rising.” The government is looking to increase stimulus to support domestic growth — and the trajectory of global demand through the rest of the year will be an important factor for Beijing to determine how much help is needed. “Take trade and other data together, we see reasonable chance of measured stimulus,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc. He expects imports to outperform exports in the second half of the year on a moderate domestic recovery, and commodity prices to be less of a drag. --With assistance from Yujing Liu. (Updates throughout.) Most Read from Bloomberg Businessweek ©2023 Bloomberg L.P.
Russia Finally Cuts Crude Exports, at Most Opportune Moment 2023-07-13 - (Bloomberg) -- Russia is finally cutting crude exports, at the most advantageous moment possible. Most Read from Bloomberg Moscow has pledged to curb shipments to global markets by 500,000 barrels a day next month. It’s a show of unity with fellow OPEC+ leader Saudi Arabia, but also an attempt to answer months of questions about whether Russia could really have been cutting oil production — as announced in February — while simultaneously raising crude exports. August gives Moscow the perfect opportunity to make these important gestures at minimal cost. Companies can redirect crude away from export terminals to domestic refiners, which will be running at a higher rate thanks to the end of spring maintenance and a period of generous state subsidies. In fact, Russia should be able to achieve its export target without needing additional production cuts. “Seeking to strengthen its ties with Saudi Arabia, Russia is set to fulfill its export cut pledge,” said Viktor Katona, head crude analyst at market intelligence firm Kpler Ltd. “The 500,000-barrel-a-day export cut will be fully absorbed by the domestic refining segment.” Russian officials have given repeated assurances that the country’s 500,000 barrel-a-day production cut was implemented in March. But there’s no official data to back this up — the figures were classified in April — and tanker-tracking data show exports rising steadily from that month until mid-May. This was happening just as Saudi Arabia was making additional voluntary production cuts, prompting some markets watchers to conclude that the kingdom was shouldering most of the burden of balancing the global crude market. While Riyadh has never publicly questioned the veracity of Moscow’s output claims, it has urged more transparency. Saudi Energy Minister Prince Abdulaziz bin Salman said last week in Vienna that Russia’s announcement on August oil flows was ”more meaningful” because it applied to exports. Seaborne shipments of Russian crude are starting to show signs of falling. Exports from the country’s western ports in the four weeks to July 9 dropped substantially below their average February level for the first time, after volumes surged during the intervening months, according to vessel tracking data monitored by Bloomberg and corroborated by other data sources. Rystad Energy A/S expects Russia’s daily seaborne oil shipments next month to drop to 3.1 million to 3.2 million barrels, compared with about 3.7 million barrels in April and May. Less crude will be loaded onto tankers for export because of a “seasonal increase in refinery utilization” within the country, according to the consultant’s senior oil markets analyst Viktor Kurilov. Setting the pattern for August, Russia’s downstream facilities are already churning through crude. As of early July, the domestic oil-processing rates reached a 12-week high, according to Bloomberg calculations based on industry statistics. Those refineries are receiving state subsidies for selling some of their gasoline and diesel at home that averaged $1 billion a month in the first half of the year, according to Bloomberg calculations based on the ministry’s data. When Deputy Prime Minister Alexander Novak announced the 500,000 barrel-a-day export cut he didn’t give a baseline for the adjustment. That makes it difficult to assess how much crude the country will actually ship overseas in August, and the resulting impact on prices. “It comes down to how many Russian barrels get removed,” said Giovanni Staunovo, analyst at UBS Group AG. “If the baseline is the May exports, the impact will likely be modest” because shipments in that month were so high, he said. If Russia offsets the reduction in crude exports with an increase in shipments of refined fuels from its domestic refineries, the effect could be even more modest, he said. Oil has risen since Moscow and Riyadh announced the August cuts. Russia’s flagship Urals crude topped $60 a barrel on Wednesday, breaching the price cap imposed by the G-7. Brent crude exceeded $80 a barrel for the first time since May, but the international benchmark is still down this year. The window of opportunity for Russia to cut oil exports and yet keep output largely intact is short. The real test of Moscow’s willingness to sacrifice sales volumes will come in September. That’s when the nation’s Finance Ministry plans to cut by half the generous fuel subsidies and keep them curbed through 2026, according to Russian newspaper Kommersant. This change will reduce the appetite for crude among domestic refiners, which will hardly be able to raise domestic prices of gasoline or diesel to compensate for the lost incentives, said Mikhail Turukalov, independent US-based oil-products analyst. As a result, Russian companies will be more interested in selling to international markets, provided the government doesn’t introduce export quotas, he said. Russia’s refineries will also be at the peak of their fall maintenance season in mid-September, Turukalov said. At that point, the country’s daily crude-processing may drop to 4.76 million to 5.1 million barrels, compared to 5.35 million to 5.57 million in August, he estimated, based on preliminary maintenance plans of the facilities. These factors would make it more painful for Russia to extending its export cuts beyond August, according to Kpler and Rystad Energy. Curbing overseas shipments in September “would require further production cuts,” Rystad’s Kurilov said. “As we have seen, Russia cannot do that quickly.” (Updates with Urals and Brent prices in the 16th paragraph.) Most Read from Bloomberg Businessweek ©2023 Bloomberg L.P.
Can The 'Do Nothing' Portfolio Really Help You Get Rich? 2023-07-13 - Can The 'Do Nothing' Portfolio Really Help You Get Rich? How the ‘Do Nothing Portfolio' Can Beat the S&P 500 A hypothetical stock portfolio has taken hands-off investing to a whole new level. Jeffrey Ptak, a chartered financial analyst (CFA) for Morningstar, recently devised a passive investment portfolio that’s based on the composition of the S&P 500. But instead of replacing stocks with new companies as they’re delisted from the index, Ptak’s strategy takes an alternative approach: it does nothing. A financial advisor can help you select investments aligned with your financial goals. Find a fiduciary advisor today. This laissez-faire approach to investing produced some compelling hypothetical returns: the portfolio would have beaten the S&P 500 by 5.6% during the 30-year period of March 1993 to March 2023. Here’s how it works, as well as some important lessons you can take from it. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now. About the Do Nothing Portfolio How the ‘Do Nothing Portfolio' Can Beat the S&P 500 Appropriately, Ptak has dubbed this super-passive approach the “Do Nothing Portfolio.” The strategy started with a simple hypothetical: “Imagine you bought a basket of stocks 10 years ago and then you didn’t trade them, not even to rebalance,” he wrote on Morningstar.com. “You just let ’em sit. How would you have done?” To find out, Ptak compiled the S&P 500’s holdings as of March 31, 2013, and then calculated each stock’s monthly returns going back 10 years. Over 100 of those holdings were no longer in the index 10 years later, many of which were acquired by other companies, according to Ptak. What was left at the end of the 10 years was a portfolio of surviving stocks and cash that had built up over the years following company acquisitions. The Do Nothing Portfolio would have generated a 12.2% annual return during those 10 years – practically identical to the S&P 500’s return during that time. That caught Ptak’s attention, considering 5.5% of the Do Nothing Portfolio’s assets were cash. By comparison, the S&P 500 was fully invested. The Do Nothing Portfolio was also less volatile during that period and produced better risk-adjusted returns than the index, Ptak wrote. Ptak took his experiment several steps further and tested the Do Nothing Portfolio in two other non-overlapping 10-year periods – March 31, 1993 to March 31, 2003, and March 31, 2003 to March 31, 2013. The portfolio beat the index by nearly one percentage point during the first 10-year stretch and nearly matched it in the second, all while offering better risk-adjusted returns. In total, the Do Nothing Portfolio would have outperformed the index over the full 30-year period and been less volatile. For example, Ptak found that $10,000 invested in the Do Nothing Portfolio at the end of March 1993 would have grown to $172,278 within 30 years, while the same investment in the S&P 500 would have been worth $163,186. How could this hands-off approach produce such impressive returns compared to the S&P 500? Ptack surmised that the Do Nothing Portfolio’s cash position – which would have grown over the years – would have helped an investor weather the stock sell-offs of 2000 and 2008. Since stocks were not replaced when they were delisted over that 30-year stretch, the Do Nothing Portfolio would have also been more heavily concentrated in winning stocks like Apple. “What looks to have made the difference is the way the portfolio let its winners run and refrained from entering new positions,” Ptak wrote. “Because the Do Nothing Portfolio doesn’t have to immediately make room for new index additions, such as Tesla (TSLA) and Meta Platforms (META), or replace names that have left the portfolio (through delisting), it gives stocks like Apple the ability to run further than they otherwise could. This can be a competitive advantage, as larger institutions, like mutual funds, lack the same ability to concentrate to this extent.” Lessons from the Do Nothing Portfolio How the ‘Do Nothing Portfolio' Can Beat the S&P 500 You may not scrap your investment plan altogether in favor of this novel strategy, but there are several lessons Ptak says can be learned from the experiment. Let winners run. Ptak acknowledges this won’t suit all investors, especially those who are uncomfortable with concentrated portfolios, but a large part of the Do Nothing Portfolio’s success can be attributed to the dominance of its top 10 holdings, especially Apple. You don’t need to be fully invested all of the time. Instead of rushing to replace delisted stocks with newcomers, the Do Nothing Portfolio lets cash build slowly over the years. As Ptak notes, “the fewer decisions we have to make, the better.” The cash acts as a ballast for a portfolio that is more concentrated in its top stocks than the S&P 500 would be otherwise. Don’t try to intuit your way to portfolio growth. “The responsible voice in our head tells us that a strategy of doing nothing can’t possibly work,” Ptak concluded. “Yet, markets repeatedly upend our expectations, which we often form by attempting to decode recent events and their future implications.” Instead, opt for “patience and humility” over “action and good intentions,” he says. Bottom Line Morninstar’s Jeffrey Ptak recently conducted an interesting experiment, in which he explored how an investor would fare if they bought a basket of stocks and then refrained from any further buying or selling. Ptack found that this hypothetical Do Nothing Portfolio would have performed quite well during recent 10-year periods and outperformed the S&P 500 between March 1993 and March 2023. By slowly amassing cash, not replacing delisted stocks and letting winners run, the Do Nothing Portfolio would have been a winning strategy. Investing Tips While the Do Nothing Portfolio doesn’t need to be rebalanced, your investment strategy may benefit from periodic rebalancing. SmartAsset’s asset allocation calculator can help you determine how much of your portfolio should be in stocks, bonds and cash based on your risk tolerance. A financial advisor can help you select investments and provide ongoing portfolio management for a fee. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Photo credit: ©iStock.com/Chinnapong, ©iStock.com/John Kevin, ©iStock.com/hobo_018 The post How This ‘Do Nothing Portfolio’ Can Beat the S&P 500: Sit Back and Get Rich appeared first on SmartAsset Blog.
ViaSat says satellite suffered anomaly in space; shares tumble 2023-07-13 - (Reuters) — Viasat (VSAT) said on Wednesday there was an anomaly during the deployment of its ViaSat-3 Americas satellite in space which may affect the performance of the satellite, sending the company's shares down around 19% before the bell. An unexpected event occurred during reflector deployment, the company said, adding that it had started a review. ViaSat shares were down 18.5% in pre-market trading Thursday at last check. The ViaSat-3 Americas, designed to provide broadband connectivity in the Americas region, was launched onboard SpaceX's Falcon Heavy rocket on April 30. Viasat in May acquired British satellite rival Inmarsat for $7.3 billion, and the merged entity has at least 19 satellites in space. Other Viasat and Inmarsat satellites were not affected, according to Viasat. The company said it will share additional information on the status of the ViaSat-3 Americas satellite and contingency plans during its earnings call on Aug. 9. Reporting by Yuvraj Malik in Bengaluru)