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Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.

In a week that saw many stocks and major indices outperform, there were notably a few outliers on both sides. Whilst some struggled to keep up with the S&P 500’s 4% weekly gain, others stood out from the crowd.

One of these was Shopify, posting a 11.3% gain over the period.

Despite the Shopify stock price having almost completed a round-trip to its March 2020 lows, the stock split itself doesn’t change the company’s fundamentals. However, one thing that did change was the approval of non-transferable ‘founder shares’ for CEO, Tobi Lutke.

This move is to ensure that the CEO secures 40% voting power as long as he continues to serve as a board member at Shopify and will reinforce the strong leadership needed to run a business in these challenging times.

No one can deny that the volatile changes in consumer spending, owing to the current cost of living crisis, have taken the company backwards from the initial lockdown boom. However, investors shouldn’t be too put off by this as universally, it’s still not clear what the new normal will look like in terms of retail spending.

Instead, investors should be keeping a watchful eye on Shopify’s competitors, such as Amazon, and should keep assessing how the competition intensifies and unravels over these coming months.

Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Not investment advice. Past performance does not guarantee or predict future performance.

According to Pitchbook data, the total capital invested in cybersecurity deals grew at a CAGR of 30% per year between 2012 and 2019. In 2020, both the number and value of deals contracted heavily as a result of the global pandemic. However, as of July 2021, the cyberspace deal environment seems to have become red-hot again, with global deals worth €21 billion. 2021 could be a record year for cybersecurity deals.

There are multiple investors in the space, including cyber natives (young companies formed who provide cyber software or services), global consultancies, technology firms, professional services organisations, telcos, engineering businesses and defence companies. The US market is the most mature and advanced globally, but the UK and Europe are not that far behind. Alfonso Marone, UK Head of Deal Advisory for TMT at KPMG UK, delves into the topic/

Consolidation expected to continue

Although there are clear political divides between East and West, and although in some industries such as defence there is a need for obvious reasons to ‘buy local’ in terms of cyber services, we can expect to see consolidation in the global market, for a number of reasons.

Firstly, cyber is inherently a global issue – attackers can strike more or less anywhere, from anywhere. Secondly, software is an inherently suitable product category for scalability and market concentration. Thirdly, on the cyber services side, we also expect consolidation as providers look for economies of scale and scope, build client trust through having a global presence and also, as large international organisations, increase their chances of winning the cut-throat war for talent.

Investor challenges

However, there are a number of key challenges that investors need to overcome in order to realise effective deals:

It is essential that investors recognise this set of very cyber-specific investment challenges. In my view - and experience of working with a wide range of clients across the sector - there are three considerations that are of utmost importance for interested investors throughout the deal cycle.

Three essential areas of focus

Firstly, deal origination. Given the fragmentation of the market and the fact that many potential targets are still relatively small, deal origination can be a challenge. Well-connected local deal sources are needed who can advise and alert a potential investor on targets that may have real substance and potential.

Secondly, pre-signing due diligence must be absolutely robust. This must include both commercial and technical due diligence.

Thirdly, the target operating model (TOM). The difficulties of technical integration that we have discussed, together with the employee retention challenges, mean it’s vital investors think in detail about the post-deal TOM they are aiming for and how that can be achieved in the integration of any target business.

The case for investment in the cybersecurity sector remains compelling. But, like anything that’s hot, it requires careful handling!

While it has been praised for its ability to foster creativity and experimentation for both work and learning, concerns have been flagged around its riskiness. These anxieties are particularly apparent in the world of stock market trading.

Companies such as Robinhood have been celebrated in some quarters for democratising the stock market. But regulatory bodies have accused the people behind certain trading apps of manipulating users’ actions in trading. Established investors and regulatory bodies continue to reel from other tectonic shifts in market trading practices, such as the emergence of “meme stocks”, as in the case of the GameStop saga in early 2021.

To refashion a well-worn comparison, instead of likening Wall Street to a casino, is gamification truly turning it into one? Or is the influence of trading apps being overplayed, when the biggest seismic shifts to market trading are driven by social media? This article takes a closer look at these two practices to find out.

Trading has never been more fun

In principle, to ‘gamify’ means to map the mechanics of video game playing onto non-gaming scenarios. As The Conversation writes, game playing influences creativity and learning because it can “lower the barriers of established behavioural norms and routines by offering new rules and sometimes even new realities”.

However, the increasing accessibility of trading due to this added fun factor is being blamed for its destabilising influence. A new generation of young traders has emerged, riding the exciting riptide of market volatility in the same way they would from playing Call of Duty, only with little capital investment. Digital trading platform Robinhood Markets, for instance, popularised stock market trading through in-built reward systems.

Critics of gamification allege that it nurtures an addiction to trading the markets, while simultaneously minimising the dangers and hence distorting the reality of market trading. Robinhood has consequently removed some of its game-like interface features, such as confetti and lottery-like scratchcards, which allegedly incited inexperienced investors to trade the markets in a trivial way that encourages excessive risk-taking. However, these features were defended by Robinhood as a way to “cheer on customers through the milestones in their financial journeys”. By August 2021, the US Securities and Exchange Commission (SEC) began an inquiry into these practices, claiming that they were being used by online brokerages and advisers to encourage people into trading more stock and other securities thereby overtrading their accounts.

Critics of gamification allege that it nurtures an addiction to trading the markets, while simultaneously minimising the dangers and hence distorting the reality of market trading.

A social dilemma

Encouraging younger investors into the market with game-like features is not limited to trading apps. For those with even the most cursory understanding of the stock market, the impact of social media on investor trading has not gone unnoticed, as the GameStop saga highlighted. Dubbed ‘the Reddit revolt’, amateur investors used social media to influence the share price of GameStop, a bricks-and-mortar video game retailer. Members of a forum, named WallStreetBets, clubbed together to collectively buy shares in this faltering company, pushing up prices astronomically and forcing short sellers to buy back their positions in an attempt to limit their losses.

Social media was used to intensify trends and information exchanges, and the companies targeted were subsequently referred to as “meme stocks”. In one stroke, these Redditors sent a message to the hedge funds that were short-selling undervalued underdog businesses. What’s more, by codifying market rules in a David vs. Goliath, game-like battle, much of the complicated jargon around trading was stripped away.

Who holds the key to the future?

The distinction between social media’s influence and gamification is not so clear-cut. Robinhood was the app used by many of these savvy, Average Joes to upend the elite world of trading. But in the end, Robinhood stood accused of siding with Wall Street when it instigated trading halts and limited the amount of shares in GameStop that its users could purchase. As Milton Ezrati of Forbes writes, with GameStop, “there was no good or bad involved, unless stupidly taking excessive risk is somehow immoral”.

A confidence game

Following the GameStop saga, the SEC intervened to ban trading for six company names who were suspected of being “targets of apparent social media attempts to artificially inflate their stock price”. In a similar vein, Bloomberg has argued that Robinhood has made trading “so easy, and maybe even too hard to resist”. Reconfigured, gamified app trading is at odds with serious, long-term investment. It might also blunt the reality of material consequences for parties with professional investments, such as pensions and mortgages, and not just fat-cats.

However, in a recent study, Chief Economist at NASDAQ, Phil Mackintosh, downplayed the long-term influence of trading apps, citing home-working and lockdowns as reasons for the surge in the use of these platforms. In the same report, Sapna Patel, Head of Market Research at Morgan Stanley, also dismissed concerns that gamification is increasing overall risk levels. While increased accessibility may help users navigate the market, the content is what rules the roost: “the what to trade, the when to trade and how often to trade, is driven by social media influencers, whether it's the Elon Musks of the world tweeting about GameStop, or it's the Reddit-like platforms where they're making recommendations. That's what's driving retail to trade more so”. Academic reports have similarly reinforced this view. 

Balancing the scales?

There’s a case to be made for levelling the playing field. And markets are, and always have been, risky places in which to dabble, for professionals and the retail crowd. Gamified platforms do not explicitly encourage this volatility, but they can intensify it. There’s a danger that participants can lose large amounts of money on these platforms, perhaps because certain behaviours are encouraged by design.

Looking back to the events surrounding GameStop in early 2021, we can see how social media sparked an unpredictable contagion. Given the difficulty of regulating social media, this is a broader and more fraught conversation in its own right. After all, it wasn’t until Elon Musk sent one of his infamous tweets that GameStop’s stock price soared like a SpaceX rocket.

Act in haste, repent in leisure.

Newcomers to trading forex and other assets could do well getting that tattooed about their person, such is its importance to long-term profitability. Indeed, it’s a lesson that some experienced investors also need to remember from time to time.

Those six words highlight the importance of removing emotions from your trading, of how sometimes we can eat into our bottom line by opening and closing positions at the wrong times – maybe because we’ve suffered a succession of ‘losing’ trades or because we’ve closed a trade and then watched the asset increase in value thereafter.

Having the right mindset is arguably the most important weapon a trader owns, and if you find yourself acting in haste when trading, then this article is for you.

We want to explore techniques that will help you to eliminate ‘emotionality’ from your game, from taking a breath to using automated software and Tickmill trading accounts, which will help you to retain your discipline.

Get your head right and, hopefully, profit will follow.

 

Accept defeat

There will be losing days, weeks and possibly even months.

This is one of the universal truths of trading, and yet so many still utterly fail to grasp the basic concept that not every trade you execute will be paved with gold.

The implication is that, as the hands of time tick away, there is so very often the temptation to chase losses and try to turn a losing spell into a profitable one.

And so we start opening positions that we normally wouldn’t, or closing trades to lock in a return, when, actually, the indicators might be suggesting that holding for longer is the smart play.

If we could somehow divorce ourselves from our minds, we wouldn’t fall into such traps, and it perhaps explains why the most successful traders often use software to automate their actions.

Why? Because the mechanical approach takes the human element out of your trading game, and automation also enables you to use tools – such as stop loss and take profit – that actually take the emotion out of the equation.

 

The mindful approach

If trading becomes the only thing that you are thinking about, it won’t be long before you start mentally chasing your own tail.

If you are seeking a secondary income stream from your investing, then it’s only human nature to become preoccupied with thoughts of, ‘can I make more money?’ Such a mindset will almost inevitably lead to increased activity in the market, and for reasons already explored, this usually leads to bad trades.

Try to take time away from trading. It can be exciting in the early going, but in the long term you will benefit from refreshing your mind and body by not chaining yourself to your laptop/tablet/phone.

Taking regular breaks will enable you to replenish your thinking, taking some time to consider the assets you want to trade, and whether now is the right time to enter the market. Walking is scientifically proven to improve your brainpower – so why wouldn’t you take a stroll?

Alternatives include other forms of exercise, listening to music, cooking a nice meal, spending time with friends and family, and so on. Anything that gets the endorphins rushing is a good idea.

 

Know your limits

Some people are target driven – it helps them to have a clear goal in mind to avoid uncluttered thinking. This can actually be really beneficial to traders, who can set a profit target and stick to it.

However, just as important is setting loss limits, which are a pre-defined amount in a trading session that makes you go ‘okay, enough is enough’ before walking away from the action.

Of course, the stop-loss tool available in many software packages is exactly as above, but there are many traders who prefer hands-on, manual activity – in which case, setting your own loss limit is sensible. You can even write it down on a Post-it note and stick it to your device so that there’s no way that you might ‘accidentally forget’ when things are going well/badly.

 

No FOMO

Trading has a wonderful community of newbies, amateurs and professional investors who all do their bit to cheer each other along and aid improvement.

However, that brings with it challenges – especially when your fellow investors speak of their trading wins and profits.

So, learn to switch off forums, messaging services and groups during your trading and immediately afterwards – there’s nothing like a bout of FOMO to lead you into bad moods and bad decisions.

The market is a highly unpredictable place. Since trading has been incorporated and improved through the years, now, it's not just buying, selling, or exchange. Additionally, studies and developments were made to help traders, like the trade simulation system. But if there are tools to help traders, there are also traps to look out for. One of them is the bear trap.

What Is Bear Trap in Trading?

A bear trap is a condition in the market where the expected downward movement of prices suddenly reverses up. When prices in an uptrend abruptly drop, a bear trap follows. This phenomenon and market performance lure many traders in investing and buying in the market.

Most traders commonly don’t know how to trade bear traps or when they're falling into the trap. A bear trap trading happens when a trader, upon getting attracted to the falling prices, decides to put on a short position when a currency pair is falling, only for the price to reverse and suddenly goes up and moves higher.

How Does It Work?

Usually, other traders set bear traps where they sell assets until other traders are convinced that the upward trend has ended and the prices will drop. As the prices continue to drop, traders will be fooled into believing that it will continue.

And then the bear trap will be released as the market turns around and prices go higher. It’s a false market performance that leads to many traders losing money.

Bear Trap vs. Bull Trap

A bear trap and a bull trap are commonly interchanged or misinterpreted. In the market, these two are opposites. If a bearish trap happens when prices are dropping, bullish traps happen when the market rises and prices continue to move upwards.

Causes of Bear Traps

There are many reasons why bear traps happen or occur in the market. They can occur in any market and commonly happen because bears decide to drop or pull the prices down.

Additionally, the causes of bear traps include:

How to Identify a Bear Trap

A bear trap can cause any trader a significant amount of losses. To minimize this kind of risk when trading, it's for the best that you know what to look out for before you get caught in the trap. Some more technical indicators you should watch out for are:

1.     Divergence

Certain indicators provide divergence signals. When there's divergence, there is a bear trap. To look out for divergence, you have to check if the indicator and the price in the market are moving in different or opposite directions. Using this to determine whether a bear trap will occur, when the price and indicator are moving in the same direction, there's no divergence so that no bear trap will happen.

2.     Market Volume

The market volume is a critical indicator of a bear trap. There is a significant change in the market volume when a price is potentially rising or dropping. However, if there is no significant increase in volume when a price drops, it is most likely a trap. Low volumes commonly represent a bear trap since bears can’t consistently pull the price down.

3.     Fibonacci Level

Fibonacci levels indicate reversals of prices in the market since trend reversals are identified using fibo ratios. This also makes them a great indicator of bear traps. A bear trap is most likely to occur when the trend or price doesn’t break any Fibonacci level.

How To Avoid Bear Traps

Bear traps are risky, and the best way to not fall into any is to avoid them. If you get caught in a bear trap, you can quickly lose money. Here are some ways to help you avoid getting caught in a bear trap:

Bear trap trading is usually utilized for short-selling or shorting by traders. But still, it’s clear that bear traps are risky and best be avoided. You’ll lose more than you can earn. When trading, it’s essential that you know what bear traps are and what indicates a bear trap so that you can avoid getting caught in one. Be patient when trading and don’t get carried away by the price drop in the market.

Many people jump into swing trading or day trading without doing a personality assessment. Having technical knowledge of the markets, enough capital to get started, a computer, and an account with a reliable brokerage platform won’t solely guarantee success. There are virtually no guarantees for your success, but you’re taking a huge risk unless you do a psychological self-assessment before committing to your new venture.

What is a day trading personality and how do you know whether you possess the key components of one? Here’s a comprehensive list of the core personality traits that most successful day traders have. Maybe you weren’t born with all of them. So, if you find that you’re a bit short in one or two categories, consider doing at least a few weeks of simulation trades before putting your real money on the line. When you feel as if you’ve incorporated the traits, you’ll have a better grasp on what it takes to make steady profits as a day trader.

Patience

Without a strong dose of patience, you’re apt to fail very quickly if you try to make profits on intra-period price swings. In fact, if you find yourself making lots of buys within a short time frame, you’re probably already deep into the dangerous marshes of impatience. The ability to wait for attractive opportunities is one of the central characteristics of a winning day trade personality. When you do your simulation work, try to write down some of the emotional factors that cause you to jump into deals too quickly. By catching yourself at these telltale moments, it’s possible to amend your habitual behaviour and train your emotions to avoid impatience.

A Constant Willingness to Learn New Things

It’s tempting to feel as if you know it all after a few successful, profitable days of making live trades in challenging markets. Avoid this temptation if you want to enjoy long-term success. Read books by some of the industry pros and find out what they did in the early years of their careers. One thing most of them have in common is a lifelong desire to learn new techniques, concepts, and theories. They never stop learning and never reach a point where they feel as if they have the securities markets all figured out.

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Emotional Distance

Keep in mind that this new venture is not a hobby, but it’s your way of making a living. Work from your intellect rather than from your emotions. One bit of advice you’ll hear repeatedly is to avoid buying or selling if you feel angry, elated, sad, depressed, or vengeful. For some reason, these emotions tend to cloud the human mind and impede our ability to see reality. The translation is only entering into transactions when you are in a relatively balanced mood. If you’re not, step back and take a few minutes to calm down.

A Disciplined Approach to Homework

Never neglect due diligence. It’s easy to get caught up in technical charts and numerical analysis. If you are able to do research consistently, even for a half hour or so before the opening bell, you’ll be training yourself to learn all the factors that affect the price of a given security.

There are some hedge funds, however, that exist purely for the purpose of tail risk hedging and this creates consistent demand for various derivative products which in turn effects their pricing in the market. Since the 2008 financial crisis, there have been a number of ‘tail events’ which some market commentators say have been happening with increasing frequency across multiple asset classes. Some examples of such extraordinarily volatile events include, 2010 SPX Flash Crash, 2015 EURCHF peg break, GBPUSD on 2016 Brexit Referendum, 2018 VIX ETN blow up and Summer 2018 Italian BTP 2Y yields spike.

A potential cause of this apparent increase in ‘Black Swan’ events might be the amount of central bank liquidity being poured into certain markets, distorting the market structure and encouraging many liquidity providers to stop taking risk or move into other products or asset classes. Consequently, when a real market-moving event occurs, the distorted asset will gap in price due to the lack of market makers with sufficient balance sheets or risk appetite to absorb any natural volatility.

‘Flash crashes’ are another type of tail event. Stocks, bonds, or commodities may all fall victim to “flash crashes” where their value rapidly plummets before suddenly recovering. They are a phenomenon that is not fully understood but can be attributed to human or computer error.

Algorithmic trading and Flash Crashes

It has become increasingly popular to lay the blame for such volatility on algorithmic trading. This is a form of trading that utilises sophisticated and powerful computer programmes to make trades, which are governed by complex algorithms. Within the last two decades, algorithmic trading has become increasingly popular with global stock markets and institutional investors such as investment banks, pension funds and hedge funds.

A potential cause of this apparent increase in ‘Black Swan’ events might be the amount of central bank liquidity being poured into certain markets, distorting the market structure and encouraging many liquidity providers to stop taking risk or move into other products or asset classes.

Handing trading decisions to an automated system means that decisions can be made at a speed and frequency that is impossible for a human trader. Algorithms are not subject to the human emotions that can impact decision making, so decisions adhere to a consistent plan based on an underlying set of assumptions about prevailing market conditions. If market conditions change dramatically, this can trigger circuit breakers that tell the algorithm to cease trading. Alternatively, automatic stop orders could be executed in huge volume in a short amount of time, having a disproportionate market impact, particularly in less liquid market hours.

Despite the use of sophisticated artificial intelligence and machine learning to develop these systematic trading algorithms, they are not infallible. Software glitches can prevent exchanges communicating critical market data, which can result in inaccurate prices being applied to a security. For example, a glitch at the New York Stock Exchange impacted market pricing data last month, resulting in data providers showing incorrect closing prices. Similarly, the London Stock Exchange (LSE) suffers its worst outage in eight years as a technical software issue prevented some of the world’s most reputable blue-chip companies from trading for over an hour. This is the second such outage to occur at the LSE in 14 months.

In the algorithmic trading world, data is everything and if that gets compromised then that can have serious market-moving consequences.

What is the potential risk to your portfolio?

The increased use of algorithmic trading in market making has meant that a significant amount of the liquidity in markets is being provided by high-frequency trading systems. These systems are calibrated using certain assumptions on market volatility and asset class correlations. In the absence of any significant news-flow, this tends to dampen market volatility and increase mean reversion creating somewhat of an illusion of market depth and liquidity. If, however, an extreme exogenous shock were to occur in the market, it is reasonable to assume much of this fictitious depth in the order book will disappear, resulting in large gaps in market prices as no-one is willing to step in and provide liquidity due to the increased risk. In the broader context, as correlations between securities go up and diversification benefits decrease, all portfolios will incur losses at the same time, which in turn triggers further liquidation and helps fuel the market-wide ‘tail event’.

With a market that has become increasingly reliant on such high levels of liquidity, this leaves us with a very unstable equilibrium and an environment that is susceptible to flash crashes and adverse multi-sigma moves.

There is essentially an unknown tipping point that exists where the ‘algos’ effectively switch off and leave the market to fend for itself until it is ‘safe’ to re-engage. With a market that has become increasingly reliant on such high levels of liquidity, this leaves us with a very unstable equilibrium and an environment that is susceptible to flash crashes and adverse multi-sigma moves.

Mitigating the risk

Regulation is being adapted to monitor trading algorithms, given they now account for such a large part of the trading volume in many markets. Ensuring that automated trading is being implemented prudently and helping to improve market liquidity rather than create fragilities, is an important role in today’s market surveillance.

In conclusion, blaming algorithmic trading solely for the existence of excess market volatility is probably too harsh and other market factors have surely played their part. I suggest that liquidity providers using automated trading algorithms are made subject to certain constraints that protect the integrity of the market and ensure that the liquidity being offered is robust and more persistent. However, completely eliminating the possibility of crashes (whether algo driven or not) is unlikely and so investors should be aware of the risks and allocate some part of their portfolios to hedging these type of ‘tail’ scenarios.

Nassim Taleb, author of ‘The Black Swan’ and ‘Antifragile’, defines the term Antifragility in the context of investments to mean that they will benefit from unexpected market volatility, arguing that they are an essential component to a robust investment portfolio. Such assets typically include long-term treasury bonds and precious metals. Also, systematic buying of deep out of the money stock index put options is another commonly used strategy to hedge against such unforeseeable events.

 

 

 

 

Bunk looked at the cost of a rental deposit and the cost of renting for a decade. Bunk then compared this cost to the financial barrier of a mortgage deposit, and the cost of monthly mortgage payments over a 10-year fixed term at a rate of 2.58%.

Across the UK the average monthly rent is £676. With the newly introduced five-week cap, that means a rental deposit costs an average of £845 and renting at this average monthly rate over a 10-year period would cost a total £81,120 – a total cost of £81,965 when including the deposit.

The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680. This leaves a loan amount of £204,118 and at a 10-year fixed rate of 2.58% would mean a total repayment of £231,798, a total of £254,478 including the deposit.

The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680.

This means, that renting is £172,513 cheaper than owning a home over a 10-year period when it comes to the upfront and monthly costs, with the one big difference being the bricks and mortar investment secured at the end.

This saving is most notable in Cambridge with a difference of £341,090 over 10-years between renting and buying, with the saving in London also topping £316,247.

In Bournemouth, renting over 10-years is £183,376 cheaper than buying, with Bristol (£177,613), Edinburgh (£166,547), Cardiff (£143,984), Southampton (£138,617), Portsmouth (£137,240) and Plymouth (£128,480) all home to some of the biggest savings.

The lowest saving is in Glasgow where renting for 10-years is just £43,145 cheaper than buying in the city.

Co-founder of Bunk, Tom Woolard, commented: “Of course the big difference between renting and buying is that one leaves you with a sizable financial asset as a reward for your years of hard work making mortgage payments.

However, more and more of us are opting to rent long-term and what we wanted to highlight is that while the rental market is generally viewed in a negative light due to high rental costs, it is actually a considerably cheaper option when compared to homeownership, even with almost record low-interest rates. 

Not only this but those that feel resigned to renting due to the high financial barrier of buying actually have a much better opportunity to save compared to those paying a mortgage. Whether they choose to use this for a deposit further down the road or simply to enjoy a better quality of life is up to them.”

Renting vs Buying Costs Over 10-Years
Location Total Rental Cost Over 10-Years Total Mortgage Cost Over 10-Years Difference
Cambridge £148,410 £489,500 £341,090
London £203,579 £519,826 £316,247
Oxford £169,993 £465,619 £295,627
Bournemouth £104,518 £287,894 £183,376
Bristol £130,223 £307,836 £177,613
Edinburgh £129,495 £296,042 £166,547
Cardiff £88,876 £232,860 £143,984
Southampton £95,545 £234,162 £138,617
Portsmouth £95,060 £232,300 £137,240
Plymouth £70,083 £198,572 £128,490
Birmingham £86,088 £209,605 £123,518
Leeds £92,393 £207,037 £114,644
Leicester £70,931 £185,427 £114,496
Sheffield £74,326 £181,182 £106,856
Manchester £99,910 £199,768 £99,858
Liverpool £60,504 £147,298 £86,795
Newcastle £86,451 £172,170 £85,719
Nottingham £81,238 £160,786 £79,549
Aberdeen £87,664 £166,328 £78,665
Glasgow £102,456 £145,602 £43,145
UK £81,965 £254,478 £172,513
 

 

10-Year Rental Cost Data
Location Average Rent (per month) Rental deposit* 10 Year Rental Cost** Total Cost + Deposit
Cambridge £1,224 £1,530 £146,880 £148,410
London £1,679 £2,099 £201,480 £203,579
Oxford £1,402 £1,753 £168,240 £169,993
Bournemouth £862 £1,078 £103,440 £104,518
Bristol £1,074 £1,343 £128,880 £130,223
Edinburgh £1,068 £1,335 £128,160 £129,495
Cardiff £733 £916 £87,960 £88,876
Southampton £788 £985 £94,560 £95,545
Portsmouth £784 £980 £94,080 £95,060
Plymouth £578 £723 £69,360 £70,083
Birmingham £710 £888 £85,200 £86,088
Leeds £762 £953 £91,440 £92,393
Leicester £585 £731 £70,200 £70,931
Sheffield £613 £766 £73,560 £74,326
Manchester £824 £1,030 £98,880 £99,910
Liverpool £499 £624 £59,880 £60,504
Newcastle £713 £891 £85,560 £86,451
Nottingham £670 £838 £80,400 £81,238
Aberdeen £723 £904 £86,760 £87,664
Glasgow £845 £1,056 £101,400 £102,456
UK £676 £845 £81,120 £81,965
*Monthly rent divided by four to find the weekly rate and then multiplied by the five-week cap.
**Average monthly rent multiplied by 12 to find a year and then by 10
***Deposit plus total rental payment costs
10-Year Mortgage Cost Data
Location Average House Price Deposit (10%) Loan Amount Monthly Repayment* Total Repayment** Total Cost***
Cambridge £436,255 £43,626 £392,630 £3,716 £445,874 £489,500
London £463,283 £46,328 £416,955 £3,946 £473,497 £519,826
Oxford £414,972 £41,497 £373,475 £3,534 £424,122 £465,619
Bournemouth £256,579 £25,658 £230,921 £2,185 £262,236 £287,894
Bristol £274,351 £27,435 £246,916 £2,337 £280,400 £307,836
Edinburgh £263,868 £26,387 £237,481 £2,247 £269,656 £296,042
Cardiff £207,531 £20,753 £186,778 £1,768 £212,107 £232,860
Southampton £208,692 £20,869 £187,823 £1,777 £213,293 £234,162
Portsmouth £207,033 £20,703 £186,329 £1,763 £211,597 £232,300
Plymouth £176,973 £17,697 £159,276 £1,507 £180,875 £198,572
Birmingham £186,806 £18,681 £168,125 £1,591 £190,925 £209,605
Leeds £184,517 £18,452 £166,065 £1,572 £188,585 £207,037
Leicester £165,258 £16,526 £148,733 £1,408 £168,901 £185,427
Sheffield £161,475 £16,147 £145,327 £1,375 £165,035 £181,182
Manchester £178,039 £17,804 £160,235 £1,516 £181,964 £199,768
Liverpool £131,276 £13,128 £118,149 £1,118 £134,171 £147,298
Newcastle £153,442 £15,344 £138,098 £1,307 £156,826 £172,170
Nottingham £143,297 £14,330 £128,967 £1,220 £146,456 £160,786
Aberdeen £148,236 £14,824 £133,412 £1,263 £151,505 £166,328
Glasgow £129,764 £12,976 £116,787 £1,105 £132,625 £145,602
UK £226,798 £22,680 £204,118 £1,932 £231,798 £254,478
*A 10-year fixed loan payment at 2.58%, with 12 payments per year = 120 payments
**Total cost of loan including interest
***Total cost of mortgage repayment and initial deposit

 

To hear about valuations and middle market M&A, Finance Monthly reached out to the experts at IBG Business.

IBG Business exists to bring merger and acquisitions skills, resources and knowledge to middle market business owners selling (or buying) businesses. “The firm is defined by its expertise, character and commitment to delivering exceptional results”, says IBG Oklahoma Managing Partner and Principal John Johnson. “Our team brings extensive background, robust training and deep resources to each deal. Time and again, the precise execution of our refined professional process has yielded maximum value under optimal terms and timing for our clients.”

Owners should seek professional help prior to selling a business or planning an eventual exit. IBG Denver Managing Partner and Principal, John Zayac, explains the complexities sellers face: “Price is often a starting point in the discussion, a common marker for value. However, it is only the tip of the iceberg. Price is predicated on a complex foundation of components including shifting responsibilities for risk, tax treatment and intangible values, all of which may move dramatically as a sale is negotiated”. Regarding the question “What is my business really worth?” Gary Papay, IBG Pennsylvania Managing Partner, also asks “And why?  Knowing the reasons underlying the value of a business can reveal value-enhancing improvements or set up better initial positioning of deal terms.”

Casual opinions of what a business is worth are as abundant as sparrows. Those opining rarely have knowledge of the particulars of the business, the deal terms, an understanding of the sector or any transaction expertise. All are imperative to formulating a competent view on value. Sellers often reach out to valuation specialists for a fair market value opinion, but these regimented, theoretical valuations - while an improvement on sparrows - are better suited to litigation, divorce, or estate planning.

The most useful guidance for prospective sellers will combine sophisticated appraisal techniques with recent ‘boots on the ground’ experience on actual transactions. A market-informed opinion of the value of a business will gauge how potential buyers might respond to its sale. The opinion should provide a range of values, articulate what factors underlie the opinion, and comment on possible impacts of different deal structures. Strategies to minimise obstacles and enhance value may be offered.

Seasoned mergers & acquisitions advisers can also expertly evaluate and manage the nuances and practicalities that arise in the ‘real world’. In any transaction, the buyer and seller have opposing goals: each seeks to best serve their own interests but must ultimately acquiesce in some part to the other while retaining sufficient benefit for themselves. The odds of success in this process dramatically improve when it is proactively managed by a seasoned professional who can keep polarising realities within a cooperative framework. The parties will also be more likely to work well together post-close.

Pre-sale valuation work and pro-active management of transactions are key, but subtle dynamics and market factors unique to a deal can also be vital determinants of value. IBG Arizona’s Principal and Managing Partner Jim Afinowich and Managing Director Bruce Black recently worked on a deal that perfectly illustrates such market dynamics. The client’s firm, a niche food manufacturer, initially might have had a competent fair market value of around $20M. IBG perceived growing demand in the industry vertical, and thought an opportunity existed with the evolving market dynamics. They advised the client to decline early offers and to continue to build value in the business. Improve it did, but IBG’s “read” on the market and recommendation on timing made a tremendous impact for the client:  a buyer seeking market control and expansion in the vertical ultimately out-bid several competitors to buy the company for the cash price of $120M. While such extreme opportunities are uncommon, the “savvy” of a seasoned dealmaker can radically impact what is already one of the biggest financial events in the lifetime of a business owner.

Business owners must understand optimal timing and valuation complexities prior to any sale. Today, demand remains robust for quality middle market businesses and valuations are still excellent, but a cooling in the market is anticipated. Active mergers and acquisition broker and advisory firms prepared to assess opportunities with a ‘real-time’ read on transaction market remain the most vital resource for owners seeking to sell for top value.

 

Contact details:

Email: jim@ibgfoxfin.com

Web: www.ibgbusiness.com; www.ibgfoxfin.com

Direct: 480 327-6610

Main: 480 421-9789

Fax: 602-792-3811

 

Bitcoin was created in the aftermath of a catastrophic economic recession and a fiasco in the worldwide banking system. It was the poster-child of the ‘cypherpunk’ movement, which believed in the transformative power of cryptography to mitigate that of governments and of capitalism. More broadly, it was the latest in a long line of political movements that have occurred throughout human history – from the French revolution in the 18th Century to the communist revolutions that gripped the 20th – all of which have aimed to give power “back to the people”.

But Bitcoin, the cryptocurrency once heralded by anarchists and libertarians as a technology that would unfetter us from a domineering financial system, now stands on the cusp of assimilating with the very sector which it was supposed to circumvent. For staunch advocates of total crypto liberty, that philosophical sea-change might feel like an expedient betrayal – and they would be right. But Bitcoin has evolved in a way that even its founder surely didn’t anticipate: its popularity has forged a whole new financial market, and an entire crypto ecosystem in its wake.

That’s no small feat, and it’s not one that financial institutions can realistically ignore. The power of blockchain, crypto’s underlying technology, may be in its decentralised nature – and in many sectors, that level of decentralisation is viable. But for the world of finance, this simply isn’t the case, and it never will be. The destiny of all successful financial products is institutionalisation, and given the triumph of crypto, institutional involvement – and the regulation that follows from that involvement – was always inevitable. If the client demand is there, which it is, then institutions have every right to meet that demand – and many already are.

The horse bolted last year, when two exchange giants, CME and CBOE, launched bitcoin future trading operations. That set the gears turning for other exchanges and banks. In May this year, Goldman Sachs, the most prestigious of the major Wall Street Banks, waded into the crypto world with a crypto futures trading operation and a dedicated trading desk. There’s plenty of activity on the horizon too: the New York Stock Exchange, part of the Intercontinental Exchange, is reportedly setting up an online platform for buying and holding crypto.

Crypto has also strayed into the world of asset management, where the number of funds currently stands at around 251, with $3.5 - 5 billion in assets under management. Considering only 20 hedge funds for cryptocurrency existed in 2016, this represents substantial growth. Even George Soros is said to have given approval to trade virtual assets in the last few months, having called it a bubble in January of this year.

Firms like Soros Fund Management and Goldman Sachs are far from outliers in the world of finance. According to a recent survey from Reuters, one in five financial institutions is considering trading cryptocurrencies within the next 12 months. That’s a noteworthy shift from 2017, when BTC and crypto were derided by the financial world as a scam and an avenue for criminality. Financial institutions may be saying one thing, but they’re doing quite another, and there will be fast followers now that Goldman has put the wheels in motion: very few want to lead, but everyone wants to be second.

As tends to be the case with the crypto market, wherever BTC goes, others follow. Ethereum futures appear to be on the horizon, at least as far as CBOE is concerned. The Initial Coin Offering market as a whole has also witnessed rapid institutionalisation. Back in 2017, all token sales were public, and widely advertised. Now, most ICOs get their money in private sales from a handful of investors. Even if start-ups do decide to run public sales, the vast majority of funding still comes from institutional money.

The elephant in the room is now working out the effect of all this institutional involvement. Most obviously, we’ll soon be seeing the impact of big money, as the process unlocks billions on billions of dollars that float in the world’s financial systems. With that, we’ll see more block trades occurring. Prices are likely to rise. Volatility may increase, or indeed, it may decrease as the market becomes more liquid.

Regardless of price movements, institutionalisation looks set to be a positive thing for the market, providing legitimacy in the space: after all, the more positive actors there are in the market, the better.

Outsourcing agreements worth £718 million were signed between January and March, according to the Arvato UK Outsourcing Index.

Outsourcing contracts worth £718 million were signed in the UK between January and March this year, with financial services and retail businesses the most active buyers, according to the Arvato UK Outsourcing Index.

The research, compiled by business outsourcing partner Arvato and industry analyst NelsonHall, found that deals worth £363 million were signed in the financial services sector, accounting for 51% of the total UK outsourcing market in Q1 and more than double the value agreed in the previous quarter (£153 million).

Retail companies agreed outsourcing deals worth £140 million in the first quarter of this year after three months of no activity in October to December 2017, according to the findings.

The rise in spending across retail and financial services contributed to an eight% increase in total contract value compared with the last quarter of 2017.

Customer service agreements continued to factor highly in UK outsourcing activity, accounting for over 20% of all spend (£152 million). This, combined with HR and payment processing contracts, saw Business Process Outsourcing (BPO) deals account for £256 million of spend – up from £179 million agreed in Q4 2017.

IT Outsourcing (ITO) contracts worth £462 million were signed in Q1, with procurement focused on cloud computing, and asset and infrastructure management.

Despite the rise in activity quarter-on-quarter, the value of outsourcing contracts signed in Q1 represents a more subdued start to the year compared with 2017 which was a record year for the industry. The research found that spend on outsourcing deals between January and March has fallen 75% year-on-year from Q1 2017.

Debra Maxwell, CEO, CRM Solutions UK & Ireland, Arvato, said: “Following a strong year for UK outsourcing in 2017, we’ve seen a more subdued market in the first quarter. With Brexit uncertainty continuing to influence buying decisions and the imminent implementation of GDPR taking up internal resources, it is to be expected that fewer deals would make it over the line in this period.

“Yet, our findings show there remains strong appetite from businesses to work with outsourcing partners to bring in external expertise for key operational areas such as customer services, and to invest in maintaining a robust IT infrastructure.”

The private sector dominated the UK outsourcing market in Q1 as businesses accounted for 90% (£645 million) of the total value of contracts signed, according to the findings.

The research found that public sector organisations agreed deals worth £73 million over the period, down from £229 million in the previous quarter. Government departments focused on securing contracts for cloud computing and application and infrastructure management.

The Arvato UK Outsourcing Index is compiled by leading BPO and IT outsourcing research and analysis firm NelsonHall, in partnership with Arvato UK. The research is based on an analysis of outsourcing contracts procured in the UK market between January and March 2018.

(Source: Arvato UK & Ireland)

Ordering a product recall can give even the hardiest CEO cold sweats, yet if the latest BMW recalls tells us anything it’s that a lengthy delay can cause even more problems. How should businesses approach a recall and what are the best ways of preventing a quality failure? Vincent Desmond, CEO of the Chartered Quality Institute (CQI), discusses with Finance Monthly.

For CEOs and other senior management life is complex in the current climate. There is a confluence of consumers and customers expecting rapid innovation and change in products and services, while at the same time any mistakes are increasingly likely to be held up to public scrutiny. This is all taking place in a globalised backdrop where information can be spread quickly and effectively online.

The questions for any CEO and senior management team confronted by a potential recall, therefore, are; how far are we willing to gamble with trust? What does our response say about us as an organisation and how will that impact our long-term sustainability? What systems can we put in place to prevent similar issues recurring?

With any product or service issue understanding what the fault is, how many people could be affected and what the risk is will be established in the first instance. On a moral level it’s cut and dried. Doing things that aren’t in the interests of your customers or wider society, particularly those that lead to loss of life is morally indefensible. From a societal and business perspective, however, there are mixed messages.

In the case of BMW, the decision was made in 2011 that they would recall vehicles due to an electrical fault that could lead to complete loss of power in some models in the US and other markets, but not the UK. The death of former British soldier, Narayan Gurung brought this decision to light after he swerved to avoid a BMW suffering an electrical failure. Subsequent media attention led to an initial recall of 36,000 vehicles in 2017 and a BBC Watchdog investigation led to the carmaker recalling a further 312,000 in May this year.

“In essence, BMW appears to have taken a short-term view to avoid the costs of a major UK recall. This will have been informed in part by conditions in the UK where the cost of litigation tends to be a lot cheaper and Government issued compulsory recalls are uncommon. One of the questions that remains unanswered, however, is what will be the longer-term impact on the BMW brand, as a result of this decision and the way it has been handled?

Whereas in the business to business market reputational issues have led to swift punitive actions, such as in the case of Bell Pottinger and Cambridge Analytica, the behaviour of consumers has proved much more difficult to judge. Despite controversy around the Volkswagen emissions scandal for example, the company sold a record 2.7 million cars in the first three months of 2018.

A decision-making process that focuses exclusively on the short-term concerns of the existing executive and financial stakeholder only, however, will inevitably impact long-term sustainability. For any leadership team this is the point at which you need to go back and establish what are our values and are they informing our decision-making process? More so than ever before, businesses, need to consider their impact on customers, wider society and the environment not just short-term returns.

For organisations such as BMW and Volkswagen, who trade on their German engineering heritage, taking a new approach to commercial realities is essential. With shorter development times and product cycles, the focus needs to be on prevention rather than cure. This is where extra emphasis at the quality planning stage, identifying and avoiding risks before they occur will pay dividends.

Potential product recalls cannot be judged in isolation. It’s in the long-term interests of organisations that CEOs and senior management take a systemic view of how to deliver for all stakeholders upfront, to avoid having to remedy issues at a later stage.

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