History tells us that the origins of stock markets were born out of the public’s desire to invest in exciting, stand-out businesses. Markets were driven by the retail investor driven largely through sentiment. People wanted to invest in the great railway developments of the 19th century because they genuinely believed in the potential and the romance – the sentiment.
Conversely, today our stock markets are dominated by institutions and hedge funds, driven by complex mathematical algorithms and trading strategies that look to beat or even cheat the system, rather than genuine belief and sentiment in business. Even the so-called high-growth and high-risk small cap markets, like AIM, are so over-regulated that companies are simply unable to communicate their grand visions, their noble endeavours.
Yet, the holy grail of active and engaged retail investors in our stock markets still alludes – particularly the younger generation, the millennials. Are we surprised? There is no real transparency, no vision to believe in, no positive active engagement, no benefits. It’s boring – so, why bother?
Has the retail investor, therefore, disappeared?
Of course not. They have simply migrated to more interesting and exciting opportunities.
Initially, we have seen a huge growth in crowdfunding, a dangerous move from public companies to the shark pool of private equity. Has crowdfunding fundamentally got it wrong, with little success to date required to sustain the model given the critical missing ingredient of investment management? Moreover, have they missed the point? Who wants to be part of a crowd?
To the birth of the crypto world, a revolution in transparency, belief, driven by sentiment.
A world of flag-waving communities, where regulators and institutions fear to tread.
A world where ownership comes with value added benefits, a truly multi-dimensional form of equity ownership.
A technology that moves the centre of power back to the people – a technology that many believe will form the foundations of the way in which we will all conduct business.
A rapidly growing world populated by millennials, the retail investors of today.
The market is growing fast, mimicking the halcyon days of the online revolution. Many protagonists are using old school vernacular in the new world – “I want to create a crypto bank.” Is there such a thing as a bank in the crypto world? The winners will be those who think outside of the box, creating business strategies that fall outside of our current thinking. YouTube did not set out to create a TV channel.
Like the dot-com boom, the market will contract and the dominant players will consolidate. The market will also face regulation in the same way as the online economy. This is inevitable.
Do we see a world where crypto and traditional financial services overlap? This is kind of fundamental. Will the stock markets of today adopt crypto or distributed ledger technology and evolve to become inclusive once more. Will owning a share in a business bring more than financial gain? We hope so…
So, how do we pivot our traditional businesses in preparation for this revolution?
Moreover, is the pivot restricted to financial services? Many leading crypto evangelists are stating that peer-to-peer (or DLT) will become the way in which all businesses will operate.
These are fundamental questions in our line of work. We at Capital Plus Partners specialise in bringing investment opportunities our clients would not be able to access to the corporate stars of tomorrow. Therefore, understanding this landscape is pivotal to our success.
Our focus is to look at the beliefs and values of this burgeoning economy—beliefs and values like transparency and inclusion. In our opinion, the winners will be those companies that focus on building communities, not businesses.
Build an eco-system based on the beliefs of the distributed ledger technology and deliver a sentiment driven narrative to create a community. These communities or co-operatives will form the bedrock of the new economy and become the banks of the future.
It will be a world where traditional one-dimensional businesses fail. The crowd model, whether equity or debt, without a community will fail.
Businesses will strategically need to adapt, evolve or transform and bring a community play. This is one of the fundamental questions we ask potential investee companies and at the very heart of the genesis of our own business.
When we set out to build Capital Plus Partners our focus was and still is on building our community. Today, our community has 12,500 Pan-European committed and engaged citizens managed through an unrivalled technology platform.
We are a business built on the bedrock of community sentiment and belief in one another, the management and the companies we invest in. A highly curated and fully managed investment club delivering outstanding results for all involved.
Originally posted on LinkedIn