My Brain Food This Week...

Zoho offers African startups an alternative to Google, a market correction is under way, TikTok is closer to being banned in the U.S, and I wrote about how our savings are losing value

Mansa

Apr 27, 2024

You're Not Maximising Your Savings Returns.

(Mansa Sithole)

Key takeaways:

Traditional asset returns are relatively flat when denominated by money supply: The performance of assets like the S&P 500 and gold appears extraordinary over time, but when adjusted for money supply, their returns remain modest. Excessive monetary policy has diminished their value appreciation, signalling a potential concern for everyday investors.
Inflation and stimulus drive money supply: Central banks manipulate money supply to maintain price stability and stimulate the economy. This includes inflation targeting and stimulus for economic shocks especially after major crises like the 2008 financial meltdown and the COVID-19 pandemic.
Bitcoin emerges as an alternative: Bitcoin's scarcity and transparency position it as an attractive alternative investment. It’s outperformance compared to traditional assets suggests it could serve as a means to preserve cash and maximise returns in an era of increasing fiat currency devaluation and government debt. The recent approval of Bitcoin Spot ETFs by the SEC underscores institutional validation and further potential for Bitcoin's role in investment portfolios.

💎 Africa

Nigerian edtech startup Flexisaf, seeking to trim costs, shifted from Google Workspace to Zoho's similar suite, saving about $6,960 annually. Zoho, though lesser-known, is gaining traction in Africa by offering affordable alternatives to global tech giants like Google and Microsoft. This move highlights the significance of having alternatives in the market, especially for startups aiming to reduce expenses. While Zoho's expansion in Africa faces challenges such as building a developer community and enhancing product sophistication, its localisation efforts, pricing strategies, and partnerships with local business communities position it as a viable contender in the region's enterprise software space. As African companies increasingly adopt digital technologies, the emergence of alternatives like Zoho signals a potential shift in the dynamics of the tech market, offering diverse options tailored to local needs and financial constraints.

🌐 Global

There’s a potential unraveling of the 2024 market rally as traders withdraw profits amidst rising Treasury yields, hawkish sentiments from the Federal Reserve, and escalating tensions in the Middle East. This reversal has led to a sell-off in equities and junk bonds, with investors adopting a more defensive stance. Market indicators, such as the S&P 500's worst losing streak since 2022 and increased short positions in exchange-traded funds, reflect growing concerns. The shift is underscored by central bankers' cautious approach towards monetary policy, with expectations for rate cuts diminishing. Heightened valuation worries, especially in tech stocks, suggest a preference for value-oriented investments over high-growth assets. The combination of these factors suggests a challenging landscape for investors, prompting a reevaluation of portfolio allocations.
The U.S House of Representatives passed legislation to ban TikTok in the U.S. unless its Chinese owner sells its stake within a year. Initially stalled, the ban was fast-tracked as part of a foreign aid package prioritised by President Biden. The modified bill, now heading to the Senate, extends the selling deadline to nine months, with a potential additional three months during a sale. Legal challenges could further delay the ban, with TikTok indicating plans to contest it. Lawmakers' concerns centre on Chinese threats, fearing data exploitation or content manipulation. Despite lacking public evidence, the ban reflects widespread unease. Past legal battles and opposition from civil liberties groups indicate a tough road ahead. TikTok has launched a vigorous lobbying campaign against the ban, spending millions on TV ads and urging users to contact Congress. Critics argue the ban would infringe on free speech, harm businesses, and stifle economic contributions. Content creators, like Nadya Okamoto, express anxiety over the potential impact on their livelihoods, highlighting the real-world consequences of the ban.