After the Federal Communications Commission approved a $64.7 billion merger between Bell Atlantic and GTE Corp. in 2000, Verizon Communications (NYSE:VZ) was born. It became the largest local telephone company in the United States, serving 25 million mobile phone customers in 40 states. Verizon became a highly anticipated IPO for investors.

The first day of trading for Verizon Communications was July 3, 2000, with an IPO price set to $45.53 per share. An investor purchasing $10,000 of Verizon stock at the IPO would have 220 shares. Fast-forward to today, and Verizon is currently trading at $60.81 per share. A shareholder with 220 shares would have received $8,080 in dividends and a stock appreciation of $3,378 -- totaling $11,458, a 114.58% return on investment over the period of 19 years. Investors would have a compound annual growth rate (CAGR) of 1.53% not including dividends -- 2.69 percentage points below the S&P 500's CAGR of 4.22% during the same period.

That 114% return over 19 years has been a solid run for a large, established company (although the S&P 500 rose 121% over the same time frame). And there are indications that the company can continue to show growth. But is it a stock for IPO shareholders to continue holding onto?

Image source: Getty Images.

Nomura Instinet and HSBC Securities downgraded Verizon in November 2019 for several reasons -- mainly pointing to a potential price war between Verizon and the competition. After the Department of Justice approved a merger between Sprint (NYSE:S) and T-Mobile US (NASDAQ:TMUS), Nomura and HSBC became concerned over a "race to the bottom," in which companies lower pricing to beat out each other -- and ending in very cheap unlimited plans offered to customers with small profit margins to sustain the business. AT&T (NYSE:T) fired the first shot at Verizon, announcing a price reduction on unlimited plans $5 cheaper than Verizon's unlimited plan.

The merger between Sprint and T-Mobile US will increase the competition for Verizon, as the company is currently serving 150 million customers in the United States -- which is 9 million more than AT&T's 141 million and 24 million more than the combined total of 126 million from the upcoming merger of Sprint and T-Mobile US. Competing for customers will be a daily battle that will rely on pricing, network speeds, and network availability.

Income investors will be keeping an eye on the performance of the two largest telecommunications providers: Verizon and AT&T. The company with the better forward dividend yield, price to earnings, and price to sales is currently AT&T. Verizon has a forward dividend yield of 4.02% versus AT&T's 5.32%, a forward price to earnings ratio of 12.7, which is higher than AT&T's 10.85, and a price to sales ratio of 1.93 over AT&T's 1.55. These fundamentals show a stronger case for owning AT&T than Verizon in the near term.

An investor holding 220 shares of Verizon will want to consider diversifying the holding and perhaps consider purchasing shares of AT&T if they want to continue investing in the sector as it is currently capturing a higher dividend yield and a better value. As the investments in 5G start to blossom, investors will see an increase in revenues from Verizon in 2021. However, AT&T is investing in 5G network speeds alongside Verizon.

In addition, AT&T has an advantage over Verizon, as AT&T is investing heavily in streaming by acquiring DIRECTV in 2015 and Time Warner in 2018 -- increasing revenue diversification.

Verizon's lack of revenue diversity puts pressure on growth during an industry consolidation and a potential price war, which hampers earnings-per-share growth. Verizon's forward dividend yield of 4.02% is great for income investors; however, AT&T's yield of 5.32% is better.

Read this article:
If You Invested $10,000 in Verizon's IPO, This Is How Much Money You'd Have Now - The Motley Fool

A private survey has found that nearly 90 percent of institutional investors are worried about the possible negative effects of a law revision that tightens restrictions on foreign investment.

According to the survey, 86 percent of responding institutional investors worldwide believe the revised foreign exchange and trade law could negatively affect foreign investment in Japanese stocks.

Enacted in November, the revised law requires foreign investors to notify the government before acquiring a stake of 1 percent or more in listed companies in national security-related fields such as weapons, nuclear energy and semiconductors.

The threshold is far lower than the current 10 percent. The revised law is expected to take effect around May next year.

Organizations including the CFA Society Japan conducted the survey from Nov. 15 to 27, collecting answers from 115 institutional investors working for asset management companies, banks, life insurance businesses and others.

Institutional investors will be exempt from the tighter regulations unless they demand a position on the companys board or the transfer or discontinuance of a key business.

But many respondents are critical of what they see as an attempt to restrain shareholders from exercising the right to submit proposals.

Of the respondents, 70 percent opposed the revised law, citing the stricter requirement and the wide range of companies the obligation covers.

A respondent said the revised law is intended to suppress activist shareholders, and another commented that it bucks the current trend of improving corporate governance.

Market players say the scope of exemption is unclear and that details of the revised law are not widely known abroad because the government is not proving enough information in English.

The Finance Ministry is drawing up related ordinances.

Read the original:
Survey reveals worry over Japan's tougher rules on foreign investment - The Japan Times

320 South Canal Street, BMO Financial Group CEO Darryl White and Riverside Investment and Development CEO John ODonnell (Credit: Google Maps, BMO, Riverside Investment)

Riverside Investment & Development and Convexity Properties officially broke ground on their 50-story BMO Tower, after landing a $476 million construction loan for the West Loop project earlier this month.

The 1.5 million-square-foot-building will be home to BMO Financial Group, which signed a lease for 500,000 square feet and 14 floors. The firm also snagged naming rights to the building. Other companies with signed leases include the law firm Chapman and Cutler, which will also be headquartered there.

Globe St. first reported on the ground-breaking ceremony, held Friday.

The building, which will rise at 320 S. Canal St., and is expected to open in 2022. It will include 400 parking spaces, and there will be a 1.5-acre park adjacent to it. The project is near the Old Post Office, whose 2.5 million-square-foot space is undergoing a massive redevelopment.

Mayor Lori Lightfoot attended the groundbreaking ceremony, and said the BMO Tower will serve as a vital link to economic, cultural and recreational investments for residents and visitors, according to Globe St. [Globe St.] Jacqueline Flynn

Go here to read the rest:
Riverside Investment breaks ground on 1.5M sf BMO Tower project - The Real Deal

As speculation started to ramp up regarding the sale of Weyerhaeusers forest lands in Montana, the buyer stepped forward to keep rumors in check.

On Saturday, attorney James A. Bowditch sent an email to media outlets announcing that Southern Pine Plantations would be buying 630,000 acres of timberland from Weyerhaeuser. The sale is expected to close in the second quarter of 2020.

While we cant provide specifics before the deal closes, (Southern Pine Plantations) has no plan to change the long-standing practices of the prior owners related to public access, forest management, grazing, existing outfitting agreements and conservation easements, and other programs. Again, we cant comment further at this time, but we felt it was in the public interest to provide this assurance to concerned Montanans, Bowditch wrote in the email.

Weyerhaeuserannounced the saleon Dec. 17, saying a private timberland investment company had agreed to by the land for $145 million in cash.

Because the sale includes a 110,000-acre conservation easement and Weyerhaeuser has long allowed locals to recreate on some its lands, people worried what the intent and policies of the new owner would be. Would they still be able to hunt, hike or cross-country ski in their favorite areas of the Salish Mountains between Kalispell and Libby?

In particular, wildlife advocates were concerned how new ownership and possible development would affect the ability ofgrizzly bears to migratebetween the Northern Continental Divide and Cabinet-Yaak ecosystems. Such connectivity is essential to keeping grizzly populations healthy, both in numbers and genetically. Without gene flow among all the populations, grizzlies could become inbred, particularly in the Cabinet-Yaak, which hosts only about 60 bears.

So far, only a few bears have tried to navigate across the people-packed Flathead Valley. Reducing the forested areas around the populated areas would make travel more treacherous for the large carnivores.

Bowditchs words may put a few fears to rest for now.

Montana Fish, Wildlife & Parks director Martha Williams said last week that her employees would reach out to the prospective buyer once it was known. The identity known, theyll try to educate the Georgia-based company about Montanas wildlife concerns, from grizzlies and lynx to elk and grouse.

But a few concerns remain about why the southern company would want Montana timber. Although most of its property is in Georgia, Florida, Mississippi and South Carolina, it is an investment company that touts its ability to move fast on acquisition opportunities.

According to its website, We buy large acreage; keep some of the land that fits our long term management goals; then sell some of the land as large investment blocks and some of the land as individual tracts.

In other words, they can buy big stuff and turn around and sell it as small stuff that the rich can more easily afford.

Thats what happened three years ago in Idaho.

Thats when the Potlatch Corporationsold 172,000 acresof former Boise-Cascade land in southern Idaho to Southern Pine Plantations for $114 million. Potlatch had bought the land in 2007, anticipating the development of the Tamarack ski area, which later went bankrupt.

Three months after Southern Pine Plantations bought the land in May 2016, the company quietlyturned around and sold itto the Wilks Brothers.

Dan and Ferris Wilks of Cisco, Texas, are two billionaire brothers who have been buying up land in both Idaho and Montana since 2012 after making more than $3 billion in the fracking industry.

They gained notoriety in Montana after they tried to talk the Bureau of Land Management into swapping some land for the public inholding on their Lewistown-area ranch known as the Duffee Hills, a haven for elk and elk hunters who can fly into the little landing strip. When the BLM refused after an outcry from hunters, the Wilks shut down an access road to the Wild and Scenic Missouri River.

Having already developed a working relationship with Southern Pine Plantations, the Wilks Brothers may be trying to raise money to buy some new property. Earlier this year, theyput four ranches up for salein eastern Montana. If they scored the total asking price for all four, theyd pocket almost $44 million.

Contact reporter Laura Lundquist atlundquist@missoulacurrent.com

The rest is here:
Weyerhaeuser selling to timber investment group with Wilks Brothers ties - Missoula Current

Dan Hallett is vice-president and principal of Highview Financial Group

I have often criticized the investment industry for pumping out products designed to sell rather than build wealth for investors. I have also worked to raise investor awareness of how gimmicky products destroy wealth. The battle against such products took a step backward recently with an Ontario Securities Commission panels decision to allow the launch of a bitcoin investment fund.

The OSCs Investment Funds Branch was initially opposed to the fund; citing several concerns pertaining to public interests. The panels decision document clearly lays out the OSCs legal limits when it comes to approving products that are considered risky and speculative. Ultimately, the panel concluded that the fund will be able to reliably value the funds assets, secure the holdings (from hacks/theft) and complete a full financial audit.

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Many look to bitcoin and other assets such as gold and other commodities to provide diversification from traditional financial assets. An investment must meet two basic conditions for it to effectively diversify a portfolio. First, it must be weakly correlated with other investments. Second, it must produce a positive return. Bitcoin passes the first test with flying colours. But the second a positive return is quite a leap of faith, and violates the warning attached to virtually all investment products.

Regulators have long required every investment fund prospectus to be stamped with a statement reminding investors that past performance is no indication of the future. And yet, it seems that any assumption that bitcoin offers portfolio diversification is implicitly based on bitcoins performance during its one decade in existence. This is a drop in the bucket of financial market history. But there are two problems with this assumption.

First, we have no idea even using history how bitcoin will behave in a recession, financial crisis or bear market. History can be useful to gauge behavioural patterns and worst-case scenarios. But bitcoin hasnt existed through any such environment.

Second, by claiming that bitcoin can diversify portfolios, I wonder what basis is used for assuming positive future returns. As I stated for a Globe and Mail article on the panels decision:

We design client portfolios to achieve a specific goal a specific long-term return target. I can take each component of the portfolio and give you a very good ballpark estimate of how each piece will contribute to achieving that long-term goal. I have no idea how anyone can do this with bitcoin or any cryptocurrency. It cant be done.

We have designed an algorithm to forecast long-term asset-class returns. (The method is summarized in a 2012 blog post and has been pretty accurate.) But bitcoin doesnt fit into this or any other sensible model that facilitates a confident return forecast. Im certainly not comfortable blindly relying on 10 years of data to form any type of future return expectation; particularly since that decade overlapped a very long economic recovery and bull market.

Bitcoin and other crypto or digital currencies are likely to have a future. And blockchain technology seems destined to change some industries e.g., the way we handle legal documents. But investment assets require fundamental characteristics upon which to base some value assessment and, in turn, return expectations. In the absence of such characteristics, buying bitcoin and other cryptocurrencies either for attractive returns or portfolio diversification is speculating not investing.

See more here:
Cryptocurrency is a tool for speculation not an investment - The Globe and Mail

Dont miss these top money and investing features:

The eve of a new year is a time to take stock. In the case of your investment portfolio, its a time to take away stocks, along with other holdings that no longer work if they ever did.

Assess your assets, and make sure your portfolio reflects your current views and goals. Read about how to get your portfolio in order by clearing out the ghosts of investments past, plus several stories on current and expected stock market trends, and what happened when one investment manager took Tesla stock for a test-drive. And check out video reports on managing investment risk and how to save on 2019 taxes.

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Market timers are as bullish now as they were bearish a year ago, writes Mark Hulbert. If you believe stock market bulls have the bears locked out, this will rattle your cage

This past decade has delivered some of the best stock market returns in history, which unfortunately is a bad sign for the next 10 years, Mark Hulbert reports. Brace yourself for mediocre stock market returns in the next decade

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Managers of fixed-income funds may be able to add more value than many stock-pickers do - or at least that may be the perception of investors. Fixed-income strategies dominate actively managed ETFs

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Chris Hyzy, Bank of America Private Bank & Merrill CIO, explains how investors can effectively maneuver risks and find opportunities in 2020. Managing investment risk in 2020

Here are three ways to reduce this years tax bill even if you got a late start. Dont worry, its not too late to save on this years taxes

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Read the rest here:
How to confront the ghosts of investments past plus other top investing tips - MarketWatch

As the end of the year draws closer, discussing what the future holds for the crypto industry becomes increasingly relevant. In particular, how global financial and technological trends will affect the adoption of cryptocurrencies in the coming year.

Despite the critics, the number of industry experts and crypto enthusiasts who foresee a promising future for cryptocurrencies has been on the rise. Institutional investors are now paying more attention to crypto-related projects and products, and universities have even started to offer courses on cryptocurrency and blockchain technology.

Now, talks of how emerging technologies like artificial intelligence and the Internet of Things can influence crypto have emerged, with possibilities for new applications coming to the fore. Furthermore, a global trend toward a cashless society is set to have a real impact on how privacy and freedom are perceived. Could cryptocurrencies provide a much-needed solution as early as 2020?

Increased use of AI and the IoT

No matter the industry, experts are more than willing to proclaim that artificial intelligence is the next big thing in their industry. The ubiquity of datasets, not to mention machine learning and high-performance scalable computing, are truly propelling the world into an age of AI. Many even consider the technology to be a sure sign of the incoming fourth Industrial Revolution.

However, despite the fast rise of AI technology, few practical applications are being discovered at present. A report called The State of AI 2019 shows that projects associating themselves with the AI buzzword receive up to 50% more funding. This overwhelming hype around AI has led to a scenario where real applications are outnumbered by projects that only claim to be AI-related.

The good news is that the crypto industry has various applications where AI can be used to make cryptocurrencies attractive to the mainstream public. For instance, efficiently optimizing energy consumption during the mining process. For the most part, the energy it takes to mine Bitcoin has been a concern, and certain programs can reduce the energy costs. This provides increased profit margins to miners, who reduce transaction fees as a result.

Once implemented, AI can potentially compute the probability of a particular nodes performance and recommend methods that can be used to enable faster and cheaper transactions on the blockchain. Furthermore, when combined with IoT tech, different nodes will be able to communicate autonomously, achieving an increase in efficiency in terms of consensus protocols on the blockchain.

Al, IoT and blockchain can be used to make electronic devices completely autonomous, so that instead of using credit cards, these devices can be programmed to use cryptocurrencies to transact with one another.

On the subject, Cointelegraph reached out to Dominik Shiener, the founder of Iota a cryptocurrency project that seeks to integrate cryptocurrencies to IoT. Shiener said that he believes autonomy should be the ultimate technological goal:

The ultimate vision of all these technological advances is it to move from automation towards autonomy, and turn machines into autonomous economic agents. By simply giving a machine a wallet and way to verify, receive and send payments, we are creating an entire new Machine Economy where machines provide services and data to each other.

Shiener also added that by combining IoT, AI and DLT, new and groundbreaking applications will become available, and as such, we move away from todays centralized networks with single points of failure, towards Smart Decentralization where our networks are decentralized, resilient, secure, and smart.

Institutional investors increased interest in crypto

Another trend that will likely take cryptocurrencies to the mainstream in 2020 is the increased interest in crypto-related projects from institutional investors.

A survey by Fidelity investment reveals that out of 441 United States-based institutional investors, 47% appreciate that digital assets are an innovative technology play.

The survey also showed that more than 70% of respondents view digital assets favorably, and four in 10 respondents said that they are open to future investments in digital assets.

Whats even more interesting is the fact that 22% of institutional investors already own digital assets. Basically, interest in cryptocurrencies or digital assets has matured from a reserve group of early adopters to financial advisors, traditional hedge funds, and family offices taking a keen interest in the industry.

For instance, JP Morgan issued its customers the JPM Coin as a newly released cryptocurrency aimed at facilitating international money transfers among its institutional clients.

Furthermore, Morgan Creek Digital Assets (an asset management firm) partnered with two pension funds that have a combined $5.1 billion in assets under management. Through the partnership, Morgan Creek Digital Assets reportedly raised $40 million that will go into a venture fund that invests in Bitcoin and other blockchain-related companies.

Another study conducted in the last quarter of 2018 by the Global Custodian and BitGo states that 94% of financial endowments have been making investments in crypto-related projects.

The report further showed that only 7% of the endowments anticipate a decrease in their allocation in the next 12 months and that the rest were optimistic about increasing their allocation. Whats most fascinating is that despite the heavy regulatory pressure and volatility that the cryptocurrency industry has been facing, these institutional investors and endowment fund managers are hardly showing any signs of stepping away.

Because a crypto-asset fund needs to exhibit sufficient capital flow, not to mention liquidity, the increased interest from financial endowments is a clear indicator that the crypto industry is growing. The University of Michigan, for instance, has planned this year to increase its stake in the crypto fund managed by Andreessen Horowitz.

Other top-ranking universities whose endowments have shown interest in cryptocurrencies include Havard and Yale. In 2019, Harvard, together with two pension plans in Virginia have bought about 95.8 million tokens of Blockstack, a digital rights protection platform, valued at about $11.5 million at the time. Furthermore, Blockstacks token sale managed to make history by being the first token sale to get qualified by the SEC.

For Yale, in particular, the move to invest in crypto seems to have been inspired by a study conducted by Yale economists (Aleh Tsyvinski and Yukun Liu). In their study, the Yale economists reported that although cryptocurrencies demonstrate a lot of volatility, they also show a return that is higher than the risk implied by volatility.

Increased microchipping and use of cashless systems globally

All over the world, the movement toward a global cashless society is picking up speed. From Africa to Europe to Asia and America, there is no shortage of countries that are replacing banknotes for the convenience of electronic or plastic money.

In places such as Sweden, the move toward a cashless society has been so efficient that cash in circulation in the country has dropped to just 1% of GDP. Furthermore, Swedish legislation has made it possible for various retailers to refuse cash payments altogether.

Related: Crypto Vs. Cash: Which Countries Expect to Go Digital Soon?

To keep up with the changes, the Swedish central bank has set up plans to issue a digital version of its national fiat currency dubbed e-krona. Add that to the increased popularity for microchipping among the Swedes and, in a few years, experts predict that the country could be among the first in the world to go completely cashless, bringing about several major advantages.

Swedes who make cashless payments with microchip implants report that they can pay for train tickets, eat at restaurants, and even open office doors without the inconvenience of pulling out their wallets, phones or keys. However, the price for this level of convenience is the threat of surveillance and safety of personal information.

Although electronic payment methods might offer convenience, a detailed record of the users purchases, location and time are recorded. This data can be sold and marketed by a users payment provider, retailers, and payment processors.

In China, the ubiquity of digital payments has become so instrumental that the countrys social credit system has been built around it. So far, cash payments in China have been reduced from 96% in 2012 to 15% as of 2019.

As countries further embrace the cashless movement, people will gradually lose the ability to transact value without the involvement of third parties or government entities. A cashless society might enable governments to better protect their people from crime, but it comes at the cost of each citizens data privacy and autonomy. On the subject, Cointelegraph spoke with Ray Wang, founder, chairman and analyst at Constellation Research, who said:

This is the paradox. The companies contending to win our trust to manage our digital identities all seem to have complementary (or competing) business models that breach that trust by selling our data.

Cryptocurrencies like Bitcoin could provide a hedge against the cashless movement, allowing people to transact value without the involvement of third parties or the government. Although not as private as cash payments in terms of user data, Bitcoin payments much like cash payments are decentralized and do not require a third party, thanks to the blockchain. Therefore, as societies go cashless, the demand for alternative payment methods such as what Bitcoin and other cryptocurrencies offer will be in demand.

Furthermore, with increased global economic uncertainty (keeping in mind that fiat currencies are affected by government policies), cryptocurrencies will likely provide a hedge against negative interest rates.

Even though global trends can highlight significant changes that are yet to come, the future remains highly unpredictable, and what happens in 2020 and beyond is anyones guess.

The rise of key Industry 4.0 technologies like AI, IoT and blockchain can shift the scales of power quickly and in directions previously unexpected. As much as the increased interest in blockchain technology is worth considering as a telltale sign of what the future has to offer, one still has to take multiple other factors into account before concluding with a definitive answer on whether crypto will go mainstream.

Hopefully, with the increasing flow of institutional capital, not to mention the influence of the trends mentioned above, the industry will be legitimized in the eyes of the mainstream public.

Read the original here:
Tech Development, Investments and NFT to Drive Crypto Adoption in 2020 - Cointelegraph

Many of us were not fortunate enough to buy shares of today's high-growth tech stocks like NVIDIA (NASDAQ:NVDA) at the initial public offering (IPO) price. But for a few reasons, it's a helpful exercise to look at how much money you would have made if you did get in at the beginning.

To start, it reinforces the power of compound returns on a relatively small investment. Along with that, it highlights the importance of patience. There may be some investors who did buy a $10,000 stake in NVIDIA around the IPO price, but did those investors keep holding after that $10,000 turned into $50,000? If not, they left a lot of money on the table.

It can be very tempting to sell a winner after it's risen in value, but investors who think of themselves as business owners will keep holding, knowing that it would be nearly impossible to find another company to invest in that is as good as the one they currently hold.

With that said, let's look at how much you would have made if you had bought shares of NVIDIA at the IPO price.

Image source: Getty Images.

NVIDIA first sold shares to the public on Jan. 22, 1999, at $12 a share.The stock has split four times over the years: Three splits were 2-for-1, while the other was 3-for-2. (A quick note about how splits work: With a 2-for-1 split, shareholders receive two shares for every one share they own. But the stock price is adjusted accordingly so that the value of your investment remains the same. It's not free money.)

A $10,000 investment would have purchased 833 shares at the IPO price. Those shares would have turned into 9,996 shares after all the stock splits. At the current stock quote of around $214, the value of your investment would be $2,139,144.

To be honest, I probably would have been one of those investors who started selling some shares once my initial investment turned into $30,000 or $50,000. But if you have the mindset to let your winners run, all it takes is one moderate NVIDIA investment to make you a millionaire.

NVIDIA's business involves selling very pricey graphics cards that generate high margins.This allows it to generate more free cash flow than management knows what to do with, so the company takes some of that spare cash and pays a small dividend to shareholders. The current quarterly payout is $0.16 per share.

If you owned 9,996 shares, you would be earning $1,599 per quarter in dividend income, which comes to $6,397 over a year.

NVIDIA initiated its first quarterly dividend in 2012 at $0.075 per share.The dividend payout has more than doubled in the last seven years, and it should continue to increase over time as revenue and free cash flow grow.

Another reason that early investors of NVIDIA would have wanted to hang on to their shares is that the business has found more ways to grow over the last decade. The cumulative return of the stock since the IPO is 21,300%.Over the last 10 years, the stock price has increased by 1,290%. That means a $1,000 investment in December 2009 would have already turned into $13,900.

NVIDIA has long been known for its innovation in graphics cards for those who play video games on a PC. It's the market-share leader in the discrete graphics card market, leading its rival Advanced Micro Devices.But management has found additional applications for its core graphics technology, opening up a lot more possibilities for NVIDIA to expand.

More demand is coming from organizations that need powerful graphics chips to process mountains of data with artificial intelligence (AI) and deep learning (an advanced form of AI).NVIDIA has also formed partnerships with several leading automakers to develop self-driving cars using the NVIDIA DRIVE platform.

Sales of gaming graphics cards still make up most of NVIDIA's annual revenue, but the data center, professional visualization, and automotive segments are just as important to the company's future growth.

NVDA data by YCharts.

The stock is up 62% year to date,but it is still below the all-time high in 2018. NVIDIA suffered a setback last year from a slowdown in its gaming and data center business.With those markets starting to return to growth, it's not too late to consider adding shares of NVIDIA to your portfolio.

Read more:
If You Invested $10,000 in NVIDIA's IPO, This Is How Much You'd Have Now - The Motley Fool

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Dec 22, 2019 at 13:00 UTC

This post is part of CoinDesk's 2019 Year in Review, a collection of 100+ op-eds, interviews and takes on the state of blockchain and the world. Scott Army is the founder and CEO of digital asset manager Vision Hill Group. The following is a summary of the report: An Institutional Take on the 2019/2020 Digital Asset Market.

No. 1: Theres bitcoin, and then theres everything else.

The industry is currently segmented into two main categories: Bitcoin and everything else. Everything else includes: Web3 innovation, Decentralized Finance (DeFi), Decentralized Autonomous Organizations, smart contract platforms, security tokens, digital identity, data privacy, gaming, enterprise blockchain or distributed ledger technology, and much more.

Non-crypto natives are seldom aware that there are multiple blockchains. Bitcoin, by virtue of it being the first blockchain network brought into the mainstream and by being the largest digital asset by market capitalization, is often the first stop for many newcomers and likely will continue to be for the foreseeable future.

No. 2: Bitcoin is perhaps market beta, for now.

In traditional equity markets, beta is defined as a measure of volatility, or unsystematic risk an individual stock possesses relative to the systematic risk of the market as a whole. The difficulty in defining market beta in a space like digital assets is that there is no consensus for a market proxy like the S&P 500 or Dow Jones. Since the space is still very early in its development, and bitcoin has dominant market share (~68 percent at the time of writing), bitcoin is often viewed as the obvious choice for beta, despite the drawbacks of defining market beta as a single asset with idiosyncratic tendencies.

Bitcoins size and its institutionalization (futures, options, custody, and clear regulatory status as a commodity), have enabled it to be an attractive first step for allocators looking to get exposure (both long and short) to the digital asset market, suggesting that bitcoin is perhaps positioned to be digital asset market beta, for now.

No. 3: Despite slow conversion, substantial progress was made on growing institutional investor interest in 2019.

Education, education, education. Blockchain technology and digital assets represent an extraordinarily complex asset class one that requires a non-trivial time commitment to undergo a proper learning curve. While handfuls of institutions have already started to invest in the space, a very small amount of institutional capital has actually made it in (relative to the broader institutional landscape), gauged by the size of the asset class and the public market trading volumes. This has led many to repeatedly ask: when will the herd actually come?

The reality is that institutional investors are still learning slowly getting comfortable and this process will continue to take time. Despite educational progress through 2019, some institutions are wondering if its too early to be investing in this space, and whether they can potentially get involved in investing in digital assets in the future and still generate positive returns, but in ways that are de-risked relative to today.

Despite a few other challenges imposed on larger institutional allocators with respect to investing in digital assets, true believers inside these large organizations are emerging, and the processes for forming a digital asset strategy are either getting started or already underway.

No. 4: Long simplicity, short complexity

Another trend we observed emerge this year was a shift away from complexity and toward simplicity. We saw significant growth in simple, passive, low-cost structures to capture beta. With the lowest-friction investor adoption focused on the largest liquid asset in the space bitcoin the proliferation of single asset vehicles has increased. These private vehicles are a result of delayed approval of an official bitcoin ETF by the SEC.

In addition to the Grayscale Bitcoin Trust, other bitcoin-focused products this year include the launch of Bakkt, the launch of Galaxy Digitals two new bitcoin funds, Fidelitys bitcoin product rollout, TD Ameritrades bitcoin trading service on Nasdaq via its brokerage platform, 3iQs recent favorable ruling for a bitcoin fund and Stone Ridge Asset Managements recent SEC approval for its NYDIG Bitcoin Strategy Fund, based on cash-settled bitcoin futures.

We also observed a growing institutional appetite for simpler hedge fund and venture fund structures. For the last several years, many fundamental-focused crypto-native hedge funds operated hybrid structures with the use of side-pockets that enabled a barbell strategy approach to investing in both the public and private digital asset markets. These hedge funds tend to have longer lock-up periods typically two or three years and low liquidity. While this may be attractive from an opportunistic perspective, the reality is its quite complicated from an institutional perspective for reporting purposes.

No. 5: Active managements been challenged, but differentiated sources of alpha are emerging.

For the year-to-date period ended Q3 2019, active managers were collectively up 30 percent on an absolute return basis according to our tracking of approximately 50 institutional-quality funds, compared to bitcoin being up 122 percent over the same time period.

Bitcoins performance this year, particularly in Q2 2019, has made it clear that its parabolic ascents challenge the ability of active managers to outperform bitcoin during the windows they occur. Active managers generally need to justify the fees they charge investors by outperforming their benchmark(s), which are often beta proxies, yet at the same time they need to avoid imprudent risk behavior that can potentially have swift and sizable negative effects on their portfolios.

Interestingly, active management performance from the beginning of 2018 consistently outperformed passively holding bitcoin (with the exception of opportunistic managers who also take advantage of yield and staking opportunities, as of May 2019). This is largely due to various risk management techniques used to mitigate the negative performance drawdowns experienced throughout the extended market sell-off in 2018.

Although 2019 has challenged the large-scale success of these alpha strategies, they are nonetheless in the process of proving themselves out through various market cycles, and we expect this to be a growing theme in 2020.

No. 6: Token value accrual: Transitioning from subjective to objective

At the end of Q3 2019, according to dapp.com, there were 1,721 decentralized applications built on top of ethereum, with 604 of them actively used more than any other blockchain. Ethereum also had 1.8 million total unique users, with just under 400,000 of them active also more than any other blockchain. Yet, despite all this growing network activity, the value of ETH has remained largely flat throughout most of 2019 and is on track to end the year down approximately 10 percent at the time of writing (by comparison, BTC has nearly doubled in value over the same period). This begs the question: is ETH adequately capturing the economic value of the ethereum networks activity, and DeFi in particular?

A new fundamental metric was introduced earlier this year by Chris Burniske the Network Value to Token Value (NVTV) ratio to ascertain whether the value of all assets anchored into a platform can be greater than the value of the base platform's asset.

The ETH NVTV ratio has steadily declined throughout the last few years. There are likely to be several reasons for this, but I think one theory summarizes it best: most applications and tokens built and issued atop ethereum may be parasitic. ETH token holders are paying for the security of all these applications and tokens, via the inflation rate that is currently given to the miners dilution for ETH holders, but not for holders of ethereum-based tokens.

This is not a bullish or bearish statement on ETH; rather it is an observation of early signs of network stack value capture in the space.

No. 7: Money or not, software-powered collateral economies are here

Another trend we observed this year is a larger migration away from cryptocurrencies in an ideological currency (e.g., money/payment and a means of exchange) sense, and toward digital assets for financial applications and economic utility. A form of economic utility that took the stage this year is the notion of software-powered collateral economies. People generally want to hold assets with disinflationary or deflationary supply curves, because part of their promise is that they should store value well. Smart contracts enable us to program the characteristics of any asset, thus it is not irrational to assume that its only a matter of time until traditional collateral assets get digitized and put to economic use on blockchain networks.

The benefit of digital collateral is that it can be liquid and economically productive in its nature while at the same time serving its primary purpose (to collateralize another asset), yet without possessing the risks of traditional rehypothecation. If assets can be allocated for multiple purposes simultaneously, with the risks appropriately managed, we should see more liquidity, lower cost of borrowing, and more effective allocation of capital in ways the traditional world may not be able to compete with.

No. 8: Network lifecycles: An established supply side meets a quiet but emerging demand side.

Supply side services in digital asset networks are services provided by a third party to a decentralized network in exchange for compensation allocated by that network. Examples include mining, staking, validation, bonding, curation, node operation and more, done to help bootstrap and grow these networks. Incentivizing the supply side is important in digital assets to facilitate their growth early in their lifecycles, from initial fundraising and distribution through the bootstrapping phase to eventual mainnet launches.

While there has been significant growth of this supply side of the equation in 2019 from funds, companies, and developers, the open question is how and when demand for these services will pick up. Our view is that as developer infrastructure continues to mature and activity begins to move up the stack toward the application layer, more obvious manifestations of product-market fit are likely to emerge with cleaner and simpler interfaces that will attract high volumes of users in the process. In essence, it is important to build the necessary infrastructure first (the supply side) to enable buy-in from the end users of those services (the demand side).

No. 9: We are in the late innings of the smart contract wars.

While ethereum leads the space on adoption and moves closer to executing on its scalability initiatives, dozens of smart contract competitors fundraised in the market throughout 2018 and 2019 in an attempt to dethrone ethereum. A handful have formally launched their chains and operate in mainnet as of the end of 2019, while many others remain in testnet or have stalled in development.

Whats been particularly interesting to observe is the accelerative pace of innovation not just technologically, but economically (incentive mechanisms) and socially (community building) as well. We expect many more smart contract competitors operating privately as of Q4 2019 to launch their mainnets in 2020. Thus, given the incoming magnitude of publicly observable experimentations throughout 2020, if a smart contract platform does not launch in 2020, it is likely to become disadvantageously positioned relative to the rest of the landscape as it relates to capturing substantial developer mindshare and future users and creating defensible network effects.

No. 10: Product-market fit is coming, if not already here

We dont think human and financial capital would have continued pouring into the digital asset space in such great magnitude over the last several years if there wasnt a focus on solving at least one very clear problem. The questionable sustainability of modern monetary theory is one of them, and Ray Dalio of Bridgerwater Associates has been quite vocal about it. Big Tech centralization is another. There are also growing global concerns related to data privacy and identity. And lets not forget cybersecurity. The list goes on.We are at the tip of the iceberg as it relates to the products and applications blockchain technology enables, and mainstream users will come with growing manifestations of product-market fit. As more time and attention gets spent on diagnosing problems and working on solutions, the industry will begin to achieve its full potential. Facebooks Libra and Twitters Bluesky initiative confirm that as an industry we are heading in the right direction.

We see 2020 shaping up to be one of the brightest years on record for the digital asset industry. To be clear, this is not a price forecast; if we exclusively measured the health of the industry from a fundamental progress perspective, by various accounts and measures we should have been in a raging bull market for the last two years, and that has not been the case. Rather, we expect 2020 to be a year of accelerated industry maturation.

Digital assets are still an emerging asset class with many quickly evolving narratives, trends, and investment strategies. It is important to note, that not all strategies are suitable for all investors. The size of allocations to each category will and should vary depending on the specific allocators type, risk tolerance, return expectations, liquidity needs, time horizon and other factors. What is encouraging is that as the asset class continues to grow and mature, the opacity slowly dissipates and clearly defined frameworks for evaluation will continue to emerge. This will hopefully lead to more informed investment decisions across the space. The future is bright for 2020 and beyond.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Institutional Investment in Crypto: Top 10 Takeaways of 2019 - Coindesk

Old brightly coloured houses with balconies on the waterfront on a sunny day in summer in Porto, ... [+] Portugal

Real estate in major European cities has had a wild ride in 2019. Brexit was, in theory, going to be taking place toward the beginning of the year and all eyes were on cities outside of the United Kingdom to figure out where it would be the most financially beneficial to invest in a second home. But then the political decision-making dragged on for the rest of the year with signs that the deal wasnt going to be as favorable to Britain as what had initially been in the news, leading to an even greater pressure to purchase a home before the deal was done and its economic effects rippled through the European economy.

As a result some cities saw demand increase rapidly and the idea of finding a good investment became much more difficult to obtain. Going into 2020, I reached out to LeadingRE, a global consortium of 565 real estate brokerages across 70 countries, to find out what other cities were showing signs of real estate growth but hadnt yet surpassed the threshold for turning a profit.

Naples, Italy

Aerial view of Naples, in Campania region, southern Italy. (Photo by Salvatore ... [+] Laporta/KONTROLAB/LightRocket via Getty Images)

Always a popular destination for holiday-goers, Naples has seen a 15% increase in property sales over the past year. By being an hour away from Rome (by train) on the coast of the Mediterranean, with a warm climate and Capri and Ischia islands nearby, it has become a popular place to live over and above the more population-dense city of Rome. Prices start around $200 per square foot versus the approximately $315-per-square-foot starting prices in Rome.

The increase in demand represents something of a reverse in fortunes for the historic city of Naples, which is often overlooked for its northern counterparts, said Chris Dietz,executive vice president of global operations for LeadingRE. The comparatively low prices reflect the historicallysubdued demand here.

Megve, France

The city of Megeve, which hosted the 103th Tour de France in 2016 TDF / (Photo by KT/Tim De ... [+] Waele/Corbis via Getty Images)

Besides being the site of a Tour de France stage a few years ago, Megve has seen an influx of interest from several different European countries largely attracted to its ski resort identity as part of the Mont Blanc mountain range. For example, according to local agent Antonin Allard, buyers from Britain have increased from 5% to 15% over the past twelve months and those from Switzerland account for 25% of sales compared to 20% in 2018.

Property prices typically start under $500,000 for two-bedroom chalet-style condos or freestanding cottages. One sure sign of the surge in interest is the luxury Four Seasons hotel was just one of a several hotels that opened in the past year.

Szkesfehrvr, Hungary

Street musician playing in Szekesfehervar, Hungary

Dont be put off by the hard-to-spell name. This secondary market has a 17% increase in home sales when compared to 2018, largely thanks to a major upgrade to the rail link between Budapest and Szkesfehrvr. It is on the route between two popular recreational spots: Lake BalatonandLake Velence, the latter of which is known for its beaches.

The countrys economic prosperity and strong real estate growth make it an attractive option for those looking to invest, and were seeing increasing interest from across Europe for Szkesfehrvrs attractive stock, said Dietz. Investors also from neighboring Turkey are attracted to the 2,000-year history and culture as well as the favorable prices compared to other more well-known European coastal hubs.

Batumi,Georgia

An aerial photo taken on August 27, 2017 shows the Black Sea resort city of Batumi. / AFP PHOTO / ... [+] Vano Shlamov (Photo credit should read VANO SHLAMOV/AFP via Getty Images)

This port town is the third largest city in Georgia and home to the popular Black Sea Resort. At the moment there are no height restrictions on new buildings so developers and buyers alike are maximizing on the opportunity. According to data from Batumi Expert, new construction homes cost approximately $37 per square foot and the majority of buyers in this city are from overseas. An estimated 22,752homes (including single-family and condos) were built over 2018 to 2019 as a response to the increased demand.

With plenty of land available in Batumi and little restriction on development, new projects are popping up in the city to cater for the uplift in demand, said Dietz. Investors, also from neighboring Turkey, are attracted to the 2,000-year history and culture as well as the favorable prices compared to other more well-known European coastal hubs.

Porto, Portugal

City Porto (Oporto) at Rio Douro. The old town is listed as UNESCO world heritage. Portugal. Europe. ... [+] (Photo by: Enrico Spanu/REDA&CO/Universal Images Group via Getty Images)

Last years list had Lisbon as a good place to invest in a second home, but the growth has been so significant over 2019 that good deals on homes are harder to find. The next best place to look is Porto, where home prices are still 30% lower than Lisbon despite seeing a 15% increase in closed sales, according to Rita Ribeiro at INS Portugal. Demand has increased both because of the comparatively more expensive homes in Lisbon and because there has been a change in rental laws making it more favorable for landlords to make a profit.

Portugal is also one of the more lower-priced places to obtain a Golden Visa for EU citizenship. Ribeiro estimates home sales to foreigners has grown over the past three years from one out of ten buyers to one out of three.

Rotterdam, Netherlands

Rotterdam Skyline with Erasmusbrug bridge at sunset in morning in Rotterdam, Netherlands

After Amsterdam, this is the largest city in the Netherlands. Located on the River Maas, that traverses several European countries, Rotterdam is home to the largest port in Europe and sometimes referred to as the Manhattan on the Maas.

For those looking for a more urban place to invest, Rotterdam is still a good place to look (it also made last years list). As Erik Noordamat VOC International says, It is fast becoming a refuge for buyers who feel Amsterdam has become too expensive.

Prices here have increased about 10% since last year, with average sales prices at around $295 per square foot, though the average is about 20% higher for new construction homes.

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The Best European Cities To Invest In For 2020 - Forbes