I trust that we are all keeping safe and doing well during this lockdown period. Even though most industries and countries are in “sleep” mode, the world of finance and investing is still managing to carry out transactions.
This remains me of the popular Yoruba adage that says, “even though the market is noisy, those that will sell will sell and those that will buy will buy”.
This week, we will look at some of the news that caught our attention:
- Kanye finally prove naysayers wrong!
In case you missed it, Forbes recently published a report which valued the net worth of enigmatic rapper, Kanye West at $1.3 billion comprising of:
- $1.26 billion stake in the athletic wear brand Yeezy, which Bank of America valued at $3 billion last year
- $17 million in cash holding
- $35 million in stocks
- $21 million in real estate
- $3,845,162 worth of vehicles
- $297,050 of livestock
- $53 million in debt, owed by Kanye and his wife
This is no mean feat given that Kanye has for many years argued with Forbes and Bloomberg that he was indeed a billionaire. There are several lessons to be learnt here:
- He did not just wish for it, he worked at it.
The Yeezy brand is to Adidas what the Jordan brand is to Nike – a sure money spinner!
A little digression here, in 2015 during a trip to the United States, I had visited a Footlocker store with my sister to buy a pair of Air Jordans for my then 10-year-old son. I had considered $150 too expensive for a pair of sneakers and had asked if the shoes would ever go on sale and the attendant (who incidentally had gone to bring the shoes) looked at me and responded “never!”. Needless to say, I quietly paid for the shoes and left the store.
We also visited another store and saw this pair of gray Adidas sneakers – light to hold and aesthetically pleasing to the eyes only to be told that it cost around $500 a pair! The shoe turned out to be a Yeezy and the attendant pointed out the white color had sold out overnight. Apparently, Kanye wore it at a concert on Sunday night and interested buyers had bought it immediately after.
Since then, the demand and popularity of the brand has grown in leaps and bounds.
- He kept records of his net worth
Forbes grudgingly included his name on the list after he provided documentation to back his claims, they did not just take him at his word.
Are your records up to date and safely stored? Do your records truly reflect your net worth or are some documents missing? Can you track all your assets and even liabilities?
An easy example are shares in quoted companies. Have you completed the necessary paperwork? Are you duly recognized as a shareholder on the books of the company?
If the answer to any of the above is no, ensure it is on your Post COVID 19, to do list.
- He created something of value
To achieve the billionaire status, Kanye went outside his comfort zone. A look at the list of assets curiously omits anything to do with his music, I do not know why but I am sure the value of his music would not come anywhere close to that of the fashion brand.
The major takeaway here is the need for multiple streams of income. How many streams of income do you have?
By the way, Kanye earned a royalty of $140 million last year from the Yeezy brand.
- He believed in himself despite all odds
With his history, it will have been possible to discount all his claims of being a billionaire. However, Kanye did not let the opinion of others deter him. Indeed the Forbes article was not exactly complimentary but hey, it still had to agree that the man is a billionaire!
This for me is the greatest lesson here, you are your best validation. As a man thinketh in his heart, so is he!
Keep at it, do the work, pay your dues and the naysayers will be forced to take notice at the right time.
- Much Ado About Primark
A lot of analysts have had something to say about the fact that Primark – the low-cost high-street brand is making zero sales during the lockdown. The company is reportedly losing £700 million monthly in revenue.
To be fair, while it seems inconceivable for a company that large to eschew ecommerce; we need to understand that its primary target customer would most probably balk at paying for anything beyond the necessary cost of a product.
The company has repeatedly defended its position to limit its sales to brick and mortar stores and I believe that this strategy will however be revisited in the face of this pandemic especially if it wants to keep its young customers.
Although I believe that Primark will continue to be relevant after COVID 19 especially given the recessionary pressure expected after countries ease their lockdown restrictions; it will still lose out to its rivals during the lockdown.
A major takeaway here is that no company (big or small) can afford to ignore ecommerce as this trend has come to stay. Is your business or side hustle, ecommerce compliant? What steps are you taking to either digitalize your business or upscale your ecommerce offerings.
- Facebook’s Flexing Move
Shares of Zoom dropped yesterday when it was announced that Facebook is looking at offering video streaming services to its users.
The market reacted in that manner given the massive hold the company has on social media. In case you are unaware, Facebook is also the owner of Instagram and Whatsapp.
The table below says it all:
Given this market share, investors had no choice but to take notice when the announcement was made.
For me, the major takeaway is that Mark Zuckerberg has built a community in Facebook and is now expanding through additional products.
Build your followership/market base and then scale up from there!
- Going, Going……
As we know the Naira is trading close to N420/$1 in the parallel. Although the devaluation was expected, it still means that daily the value of Naira assets falls and this may just be early days.
At SIC, we will continue to teach and explore the best wealth management options to help us mitigate the impact of the devaluation on our portfolio.
Till next week, keep safe and stay at home.
The Smart Investment Club