HomeResearch and NewsSpace Instead of Gold

Space Instead of Gold

Now that high technology is no longer a gamble, billionaires are starting to pay attention. The collapse of the Greek and Irish financial systems, the revolution in Ukraine, the Russian stock market’s decline, and the first corporate defaults in China show that thanks to politicians, the owners of large fortunes can lose even assets registered in developed countries and the London courts won’t help them. And because of the behavior by regulators, even banks have become unreliable places to stash a fortune: in developed countries they’re bureaucratic, inefficient and overly transparent, while in developing countries they are unreliable.

What’s the best way to invest a large fortune today?

Cash is flowing toward more efficient markets and businesses based on knowledge and the technologies of the future, precious metals and valuables such as stones and works of art. Consequently, high technology may become a major investment trend. First of all, such investments depend minimally on bankers and the financial bureaucracy, are not tied to the national industrial base, and are better protected in today’s legal environment. Second, owning a business based on the technology of the future makes it possible in the 21st century to not only generate a return on capital, but reduce the risks posed by a growing population accustomed to living on welfare.

In developed country companies, where not just white collar employees, but also the most highly paid engineers and researchers working on individual fixed-term contracts will make up the bulk of a small workforce, there is a lower risk of being in the situation of a traditional company with thousands of workers that cannot be cut. Post-industrial economies in the U.S., Germany and several other countries have led investors to understand that “human-dependent” business, in which millions of dollars in revenue are attributed to one employee, are safer than giant industrial enterprises in which one worker generates $100-200k per year at the most.

Users of high tech products will focus on minimizing human participation in the industrial sector (transport without drivers in developed countries and a conveyor without people in developing countries), and robotic cleaners, nurses and caretakers at the household level. Private investors are increasingly looking for opportunities to invest in this area. Already for the very wealthy, the latest technology is not an experiment or a gamble. It’s possible to list a few striking examples of investments in high tech companies.

Among investors in the company Planetary Resources, which is developing a new generation of satellites, rockets, robots and mining assets in space, are Google executives Larry Page and Eric Schmidt, as well as Virgin Group founder Richard Branson. Yury Milner, 57, is enjoying considerable success in managing the assets of Russian billionaire Alisher Usmanov with a competing investment in Planet Labs.

Clean energy is a favorite theme of billionaires, who’ve been watching the segment for more than ten years. Terra Power, in which Microsoft founder Bill Gates and the “Oracle of Omaha” Warren Buffet have invested, is developing a new generation of nuclear reactors. Buffett also invests in water purification systems based on the fact that the cost of clean water will grow faster than that of other types of resources. No wonder he has invested in Nalco.

Don’t forget Elon Musk with his SpaceX, Tesla Motors и Solar City. He still hasn’t sold his principal creation, Tesla, but he’s already gotten into space and is expanding his investment in solar energy. Billionaires’ projects can make a long list. The main difference between our time and other periods, when it wasn’t easy to find a sector for promising investment, is that interoperable information and production technologies allow for new levels of communication, transportation and energy. Today this has opened possibilities for investors that reduce investment in traditionally safe options such as real estate, gold and bank deposits.

space, investment

Read more

Oil Market Report - March 2020

Crude oil prices ended February 2020 sharply lower with both ICE Brent and NYMEXWTI showing monthly declines of more than 12% to reach their lowest monthlyvalues in almost 2.5 years as the rapid spread of Covid-19 in China and several othercountries raised investors’ concerns about the impacts on the global economy and oildemand, and triggered a sharp sell-off in markets amid uncertainties on the extent ofdemand destruction and worries that this health crisis might evolve into a pandemic.

oil, investment, equity

Arbat Capital: Banking Sector Report - February 2020

US banks tumbled again in February after very weak performance in January amid spreading COVID-19 around the world. The broad market was underperformed substantially for the second consecutive month after 4 months in a row of leading dynamics. Thus, BKX index decreased by 12.5% MoM in February vs -8.4% MoM of SPX index. Absolute performance on MoM basis was -2 std from the mean and it is in the bottom 4% of absolute MoM performance of BKX index.

investment, banks;

Commodity market Report - February 2020

Trade war is officially over but Chinese risks resurfaced from the other side - extreme quarantine measures after coronavirus outbreak in Jan-Feb resulted in significant breakdown in the industrial production chains and construction activity. However monetary and fiscal stimuli quickly reversed negative sentiment and overall risk conditions returned to the high Greed mode with only commodities market kept in risk-off mode. Energy complex was very volatile as its initial sharp drop was lately compensated by OPEC verbal interventions and renewed risk in Libya and Venezuela. Industrial metals fell sharply, but Precious shined brightly with unbelievable bubble in Palladium. Agri commodities were mostly range bound with Cocoa being top performer

Macroeconomic drivers turn to negative as positive developments after the Trade Deal signature and record financial markets levels gave the way to fears of world economic slowdown after the virus outbreak. On the other hand there were not many voices for recession as stimulative monetary policy should provide the cushion. However we think that markets overstated willingness of the Fed to keep on printing and the main risk once again turned to the hawkish surprise when it exits REPO stimulus gambit and the ECB to end QE.