Revenge of the Nerds - Wall Street Edition
This newsletter is from February 01, 2021.
It would seem as if GameStop, r/WallStreetBets, & Robinhood has replaced Covid-19 & the 2020 Election atop many of our newsfeeds.
For details of the story, you can get check out the Background below. (Note: This includes the information that I’ve gathered. I have my own specific opinions about some of the actors and actions, but this is what I understand the situation to have been.)
That said…
Here are my recommendations:
I think it is best to have income sources and investments.
Over the past few years, we have seen the rise of “day-traders” and others (followers of r/WallStreetBets among them) who treat markets as their “job”. Were they to ask, I would suggest keeping investing activities separate from your source of income. Whether it is a “day job” or you own your own business, it is dangerous to conflate necessities like rent, food, and life’s expenses with investments and markets.
Keep them separate until your investments can replace your job; don’t try to turn them into one!
I think it is best to have a diverse set of investments.
Throughout this entire week of volatile markets, owners of residential real estate still collected rents and likely gained some margin of appreciation in their properties. Others who invest in collectibles (or similar arbitrage-dominated segments) were largely unaffected as well.
Even for investments in securities, it still makes sense to me to have a diverse set of categories ranging from more stable to higher-risk sectors.
There is nothing wrong with trying for some “home-runs”, but there are a lot more Major League careers made by players who consistently “get on-base”!
I think it is best to invest your money in things you understand.
When I invest, I know what I am buying, why I am buying it, and how I intend to hold (or exit) the position. If you do not understand how an investment works and how you stand to profit from it, you are not ready to invest in it.
There is a lot of chatter in these recent events about “options” and other complicated techniques beyond common purchases and sales of stock. The hedge funds got into trouble “selling short” (often with options or higher percentages of leverage) and found themselves deeply “underwater”. We will likely come to find that they ignored potential risks and that hubris will cost them dearly!
Know how you are going to make money and be sure that you can measure progress against your expectations.
I think it is best to consider the social aspects as a part of your investment strategy.
If there is one new thing that we need to learn, it is that the internet continues to disrupt and adapt to the reality in which we live. I included a link to a YouTube video by Gary Vaynerchuk (also below) where he highlighted this point. It is silly for us to pretend that the ease with which audiences congregate and communicate will not continue to have massive impacts economically, politically, and culturally.
Positive and negative consequences can manifest, but we need to be aware of them both as we lay out our investing strategies.
Do not ignore the extreme upside (and downside) that can manifest seemingly immediately as events, attitudes, and situations change. Flexibility and diversification have possibly never been more important components of your plan.
Background
Followers of a specific Reddit (r/WallStreetBets) highlighted a situation where a number of large investors and hedge funds were “short-selling” businesses (notably: GameStop). While “shorting” stock is nothing new (explained here), it does often hold negative opinions among many investors because you are effectively “betting against” the business.
In response, many of these followers began buying GameStop (and other stocks like AMC) which led to the prices increasing against their positions.
Among the greatest risks for “short selling” are market moves against your position. While there are theoretical limits to your losses when you purchase stock, there is effectively no limit to your potential losses if the stock price continues to rise. As this happens, brokerages require additional funds to cover the negative positions, and, eventually, you have to rebuy the stock that you borrowed and sold (at that now-higher price). This sets the “Short Squeeze” situation.
This week, a number of the hedge funds who had shorted GameStop in leveraged positions were being required to make margin calls which necessitated infusion of funds.
The plot thickened when Robinhood (an app-based brokerage offering zero-cost trades) stopped allowing purchases of GameStop drawing the ire of these retail investors (as well as attention from numerous media and political figures). While Robinhood asserts that their action was in response to margin requirements that they are required to also meet, the allegations from many smaller investors was that they were protecting (or at least favoring) the larger investor’s interests.
Ultimately, the stock markets were down for the week (even though some specific stocks like those involved in this situation) enjoyed massive increases. It is suggested that some of the overall market fall was due to the larger investors having to divest/sell other stocks to cover their losses in this particular case.
This has led to concern as markets open on Monday, February 1st to see how things shake out this week. You can read about that here.
Wall Street braces for bumpy trading in the week ahead as the GameStop “short squeeze” unfolds
Other Sources:
This is the main premise of my upcoming Digital Marketing in 2021 video scheduled for publishing on YouTube later this week. I’m including a few ideas from the video & slides below as an early sampler for subscribers.
I created a set of Marketing Strategy & Budget worksheets that go along with the video and slides. They are already available from Google Sheets and you can get the link in this blog post. While this specific worksheet is targeted at Loan Brokers & Mortgage Originators, it is easily adapted to other niches.
Boots & Eyeballs
Let’s face it – At some time in the past, we were unknown to our customers. It was through marketing & messaging via a medium that we attracted their attention and triggered some response from them. By speaking about things important to them & answering their needs (or wants), we opened the door to a relationship with them.
As Dave Ramsey will often say:
Key Trends to Consider for 2021
Google Local Service Ads (LSAs)
If your client & prospect base is predominately local, you should really consider adding Google Local Search Ads to your marketing mix. By adding the location-based boundaries, LSAs are often both cheaper and more effective than standard PPC Google Search Ads.
They are cheaper because they target a smaller (more localized) audience and, for local providers, you are less likely to get leads from prospects who are outside of your best service area.
Note: By becoming more focused and targeted, you can even focus your advertising on your best and most-preferred areas. Implementing this type of detailed strategy, you can target ads (and offers) in a more granular fashion.
Shift Phone To Text
It is difficult to imagine that advances in smartphone technology have functionally served to minimize our preference for phone calls! Had you asked users to predict the evolution of our interactions after the initial release of the iPhone, few would have guessed that we would talk on the phone less!
However, this is the reality in which we live. Text-based interactions are replacing (and have replaced) those that would have been handled via phone less than 10 years ago.
While phone calls are unlikely to go away, many of our prospects (and customers) prefer to communicate via text. If your business processes (and marketing interactions especially) are not text-friendly, you will undoubtedly suffer.
Note: In this environment, another outcome manifesting is that it now requires 4-6 interactions (across multiple platforms – phone, text, web, etc) for prospects to convert into customers. Always consider how you can enable more “touch” points with interested parties, prospects, and existing customers to keep you and your business fresh in their minds.
Voice Search Is Here!
This trend has been developing, but with Covid-19 & the shutdowns/quarantines, it is already here! Some estimates suggest that as many as 50% of all searches are performed with voice technologies. We have all become accustomed to asking “Siri” or “Google” to answer our voice-based queries.
Keep in mind for Voice Search – There is ONE result!
Search optimization (as well as other attention-focused specialties) was a hot topic before when it was suggested that:
Develop a Multichannel Strategy
All of these speak to the reality that it is no longer adequate to “run some ads” or “just create a blog” or “start a podcast”. Successful businesses are going to have to communicate in a coordinated fashion across multiple channels. Messages have to focus on building both conversions and brand.
With the cost increases that we see from Lead Aggregators and PPC providers, we have got to dually focus on more targeted messaging and more effective conversion of Leads into Customers.
If this is something that you would like some help with, feel free to reach out and let me know. I’ll be happy to get on a call to review your objectives and see where we might be able to help.
Other Links
PPC award winners talk strategies
Creating Effective Facebook Ads for Lead Generation
Whether talking about Search Engine Marketing (SEM) or Social Media Marketing (SMM), Pay-Per-Click advertising (both targeting interest and interrupt) is a require tool in our box. We recommend that our clients include PPC (focusing on both search and social) as part of their overall multichannel strategy. While costs continue to rise, ads continue to be a solidly-performing mechanism for putting your message in front of a ready audience.
If you need help laying out your marketing strategy and budgets, shoot me an email and we will schedule a time to review your goals/objectives.
What is Clubhouse?
Clubhouse – How to get started
Should Entrepreneurs join Clubhouse?
Were it not for RobinHood/Gamestop, Clubhouse might be a bigger story right now. The platform is audio-only and is currently limited to iPhone users only (*for shame*), but since it enables group conversations in a “house party” type of atmosphere, its potential as an online congregating place where you can interact with prospects or customers in a social setting is enormous.
Currently, it is invite-only and, unfortunately, I do not have any to share. 🙁
Best Digital Marketing Ideas to Grow Your Business in 2021
I have been including 2021-focused marketing links and content over the past few weeks. This is another good post giving hints for possible new areas of focus in your marketing plans as we start 2021.
Don’t miss my upcoming YouTube video sharing my recommended strategies for 2021! It should be going live this week!
Top Threats to WordPress Sites
I use WP for all of my sites as well as the ones that we build for clients. As the platform that millions of other sites are based upon, it endures a seemingly endless parade of hacks and attacks. Kudos to the creators and community for their hard work keeping the platform safe, but it’s always good to keep an eye out for threats as they arise.
For those checking out the book reviews, I finished The Ultimate Sales Machine by Chet Holmes. My post of notes from the book is complete. You can check it out on my blog at this link.
If you would like to read along, I will be starting Content Inc. by Joe Pulizzi soon.
Note: Book links are Amazon affiliate links.
