Debunqed

Category: Wealth management

  • Accountable Supervision

    Accountable Supervision

    Leadership values are not only confined to the running of a political campaign, party, or country for that matter, however, like in any venture that has an objective and deals with human beings – it forms the backbone of a successful business.

    Consequently, what leaders such as CEO of Tesla Elon Musk, for example, say or does, have a positive or, in the recent unfortunate case, a negative impact on the shareholdings of his business.


    The share price can decline sharply and worse yet, it can lead to the exit of senior staff members and thus undermining the business, its leadership values, and objectives.


    This why it is critical for companies to adopt the right practices and responsible leadership to enable them to address both internal and external issues affecting them.


    This is even most relevant when dealing with a company that has a multinational operational facet such as the Murray and Roberts Group – a South African company that operates in a global setting.


    This specific multinational company was used in a case study for a research paper because it is firmly entrenched in the construction and engineering industry.


    More specifically, they service the global natural resources market sectors of underground mining; Oil & Gas; Power & Energy.
    Such a diverse set of operations requires a varied set of objectives spearheaded by a solid leadership path.

    A new model of leadership

    We have covered the topic of Emotional Intelligence before. It now surfaces again within a brand-new leadership model known as the ARCHES model.
    The name derives from a key characteristic of the physical structure of an arch and its durability.

    Coupled with its diversity in models and materials and its depiction as symbols of triumph, it represents an apt analogy of what responsible and effective leadership should be.


    The model was especially derived by an academic* for a syndicate group assignment and is based on six key characteristics that should be imparted in a leader.


    An effective and responsible leader is one who is attuned to their followers, responsive, possesses the necessary competencies, serves with humility, is ethical and adopts a sustainable approach to leadership.

    A leader who possesses all these attributes is one who can rise above adversity and lead their followers in a way that promotes innovation, motivates, develops skills, promotes personal growth, and encourages improved performance.

    B.Moyo

    Application of the model

    ARCHES

    The model defines attuned leadership as the act of being self-aware, informed, and aware of the environment in which you exist – servant leadership.


    Employees should be encouraged to take responsibility for their actions because responsibility and effectiveness are complimentary. The demise of US energy company Enron, for example, was due to a failure of management to execute communication-based responsibility, internally and externally.

    A volatile, uncertain, complex, and ambiguous environment in which a business operates can result in many potential projects not coming to fruition.


    In such an environment, leaders that are attuned, responsive, and possess the right competencies can expert power as their way to influence followers to exhibit the same traits.


    Referent power develops out of admiration of another and a desire to be like them. Expert power, on the other hand, is a person’s ability to influence others’ behaviour because of recognized knowledge, skills, or abilities.
    This requires the leader to have a tolerable level of humility.

    This is defined as a personal quality reflecting the willingness to understand the self (identities, strengths, and limitations). That combined with a purpose in the self’s relationship with others.


    Once again, the emphasis on Emotional Intelligence coupled with traditional leadership competencies is needed to steer multifaceted companies.

    Even more so when dealing with diverse cultures and work ethics across borders and continents.

    Direct consequences

    Being the largest employer in the locality directly implied that Murray and Roberts had to be consistent with the idiomatic Zulu expression of “Umuntu ngumuntu ngabantu”. This means: I am because you are, you are because we are.
    Good leadership in the Ubuntu philosophy is based on the engagement with communities and defines a well-led organization.


    Not paying attention to ethical issues surrounding a community or the environment can have an adverse effect on your values. This would also affect your staff and the image of the company you steer.


    A bitter consequence of the failure of ethics was evident in the $4.2m (64.1 million ZAR) fine to the said company. This was for its involvement in sector collusion related to construction projects for the 2010 World Cup.

    Concluding remarks

    Finally, a practical leader will also consider any upcoming projects with the lens of understanding the environment that surrounds them to incorporate the concept of sustainability.


    These traits might sound like they need to be learned but most should be already ingrained or come naturally to you or your leaders.

    If not this is not the case, you need to quickly install the right personnel with such to help steer your business enterprise or economy for that matter, to success.

    *This blog post contains excerpts and is derived from a master’s research paper. It was conducted by Bonnie Moyo for the Rhodes University Business School.

  • Modern-day Profit Hunters

    Modern-day Profit Hunters

    Dealing with Cryptocurrency has its interesting dynamics. There are, however, many hidden facets making it still a mystery to the masses. Not knowing about it makes you prone to, get rich-schemes or outright scams.

    We are all by now aware of the mania caused by the soaring prices and then, the subsequent decline that followed early this year.

    What we don’t pay attention to, however, is just how complex it is to physically “acquire” and store these Cryptocurrencies.

    Mining coins can be described very basically as the process where users “or miners” become part of a Cryptocurrency network. This by making hardware (processors & graphics cards) available to support that specific network’s operations.

    As a miner, you contribute towards the working of the Blockchain. The technology requires millions of calculations to validate transactions into what are known as public ledgers.

    Click here for more about how the Blockchain works.

    There are three main ways to mine these coins but we will not be highlighting them in this post. The matter to be covered here, however, is the business aspect: how the Blockchain has created a new line of commercial entities and ‘profit-takers’.

    These modern tech “enterprises” offer you a specific or cluster of altcoins and tokens as a reward for helping them maintain their Blockchain.

    Sounds like a win-win situation right?  Or is it?

    Mining is hard

    If you have actually looked into the methods of mining, you will discover that only those with high-end hardware are able to produce enough energy to power the Blockchain. This is called “hash power” or “hash rate”. This is kind of like horsepower for cars, but for PC processing.

    There are sites that illustrate how to calculate potential profits such as one conveniently called ‘what to mine’.

    The opportunity cost of operating the customized computer systems (known as Mining Rigs), will have to be offset with the cost of acquiring hardware such as the Antminer S9i. Then there are energy costs associated with running the rigs for long periods of time.

    Your profit would, therefore, be the balance of the costs versus the revenue involved in mining coins.

    The mining profit = revenue (quantity multiplied by the price of the coin in local fiat currency). Then subtract the cost of the mining devices + annual electricity costs (measured in local currency per KWh).

    The problem with going at it alone is that it is very hard to break even. You are also faced with a conundrum:  the more powerful your hardware is, the more electricity it consumes.


    It also takes a lot longer to acquire the coins which you are awarded by the respective blockchain network after successful hashing is completed.

    To make it worth your while you would hope that the coin you mine’s market value exceeds the costs of the monthly/annual electricity bill.

    Value proposition

    There a now hundreds of these so-called Crypto/Tech companies spurting up by the day. Their modus operandi: to relieve you of the burden of the high electricity and hardware costs. This in exchange a monthly or once-off fee.

    In return, they promise to mine coins and provide you with daily or monthly profits. They can do this because they presumably have more powerful mining setups and therefore, larger economies of scale.

    Some of these establishments use big rooms, whole buildings or even warehouses to run thousands of mining rigs throughout the year.

    The payments you make supposedly help them with maintenance costs and pay for the said electricity bills. They are also usually stationed in countries where the cost of electricity is very low.

    MiningCosts

    You are likely to, however, run the risk of dealing with the occasional Ponzi-scheme – setup.  Such companies dive at the opportunity to swindle those not familiar with Blockchain and Cryptocurrencies.

    By dazzling you with the price increases and potential astronomical returns, they take your money and make a run for it!

    You can also ponder, it is incredibly difficult and expensive to mine Bitcoin these days. If these setups are actually just people who have already made their millions from acquiring Cryptocurrency.

    The acquisition naturally, would have been when they were dirt cheap, and are now offering the residue to make more profit off unknowing investors.

     

    A working example

    How it would work is: let’s say you owned 100 Bitcoins mined in 2010 for the opportunity cost of $100 each (cost of electricity).  You then sold half at the height of the Crypto ‘bull-run’ in January 2018 when they were worth $19 000 each.  You would have been $945 000 richer.

    So, with almost a million bucks in the kitty and another 50 units of coins (which would be now worth a lot less); the natural inclination would be to look at ways to make the extra coins ‘work for you’.

    And what better way than to be your own boss and head a Crypto company! You can with your new setup, sell off the residue of Crypto coins in bits for profits in cash.

    This is likely what some of these companies offering you coins for an opportunity to get Bitcoins. This under the false pretence of partaking in a ‘mining operation’. Meanwhile,  in reality, the actual mining probably took place almost a decade ago!

    All in all, do stay alert and do your research before parting with your money to join a mining pool or Crypto investment scheme!

  • BTC running low on battery?

    BTC running low on battery?

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    Good explanation of what the declining BTC dominance means for other Alts

    On August 11 2018, the Bitcoin dominance level (market share) touched 50% for the first time in 2018. However, the move didn’t come amid a Crypto market rally. In fact, the cryptocurrency space has been in free fall until mid-August, moving in a sideways trend since then.

    Read more via BTC running low on battery?

  • Financing your Small Business

    Financing your Small Business

    When considering small business financing, it is important to understand all your available options. If not, investors can easily take advantage of you and offer unfair terms.

    So before raising any money, find out if using equity, debt, or convertible debt financing makes the most sense for you to grow your business.

    Equity

    Raising capital through equity is popular, if not the most popular choice, for entrepreneurs to pursue. Investors buy stock (or shares) in your company, giving them a financial stake in the future success of your business.

    How It Works:

    • You set a specific Dollar/Euro amount for what your company is worth.
    • Based on that valuation, investors agree to give you money in exchange for a certain percentage of your company.
    • Investors receive compensation based on the percent of stock/share they own once you sell the company or go public.

    Pros:

    • All your cash can go toward your business rather than loan repayments.
    • Investors take on some risk and don’t have to be paid back until you’re doing well.
    • Investors often have valuable business experience.
    • Since investors have a financial stake in the success of your business, they are motivated to offer sound guidance and valuable business connections.

    Cons:

    • Selling shares of your company will make it very difficult to get them back.
    • You will also most likely lose control of part of your board to your investors.

    Debt

    Debt-based fundraising is the form of small business financing that most small businesses end up choosing, according to Fundable. It is also the easiest to understand. Money is loaned to you with the agreement you’ll repay it over time with an established interest rate.

    Get a quick loan for your business here: N26_banner-320x50-EN

     

     

    How It Works:

    • You borrow money with an agreement to pay it back with interest within a specific time frame.
    • You will also have to offer your lender some form of collateral, which are liquid assets you will give up if you cannot make your loan payments.

    Pros:

    • You will raise capital much quicker than with equity small business financing. This is especially true of smaller cash amounts.
    • You can keep 100 percent ownership of your company, along with 100 percent of its profits.
    • Interest payments are tax-deductible.

    Cons:

    • You must be completely confident you can make your loan payments in cash each month. If you don’t, lenders can make you sell your business in order to get their money back.
    • Interest payments can become one of your largest business expenses.
    • Commercial lenders will demand small business owners to personally guarantee the loan and offer personal assets as collateral. This even if your company is structured as a corporation or limited liability company, according to Forbes.

    Convertible Debt

    A convertible debt small business financing structure is a mix of debt and equity financing. The money raised is considered a loan, but at some future date, the loan can convert to equity if the lenders so choose.

    How It Works:

    • You will negotiate an interest rate to pay back the loan. This will also be the interest rate for those lenders who decide not to convert any debt into stock.
    • The details concerning how lenders can convert the debt into equity are negotiated at the time of the loan. For the most part, that means agreeing to give lenders a discount or warrant on an upcoming round of equity fundraising.
    • You will also set the valuation cap, or maximum company valuation, at which lenders can convert debt into equity. If investors decide not to trade in their loan for shares at this predetermined valuation level, they can no longer do so at a future date.

    Pros:

    • Transaction costs are low and the process moves quickly.
    • If you don’t want to set a company valuation, which involves a lot of uncertainty and risks for new startups, a convertible debt structure for small business financing makes a lot of sense, according to Covestor CEO Asheesh Advani.
    • Using convertible debt protects investors from dilution in future financing rounds.

    Cons:

    • Investors are uneasy about giving money without knowing the exact share of a company they will own. You might have to offer steep discounts on equity in order to get them to agree to the terms.
    • You may be forced to set a valuation before you are ready in order to avoid unaffordable loan repayment expenses.

    In the end, it’s best you make your final choice, based on which of the mentioned options works best for you, not just now, but in the immediate future.

    Read more: about other investment methods.

    This article was originally Written by Alex Liu and published on UpCounsel

    UpCounsel is an interactive online service that makes it faster and easier for businesses to find and hire legal help solely based on their preferences.
  • Can’t Get No Satisfaction

    Can’t Get No Satisfaction

    In economic terminology, the term “utility” has not much to do with multifunctionality nor completing specific useful tasks.

    It does in context, relate to the level of satisfaction or “completeness” one derives from the consumption of a product or service. For example, there is only so much pizza you can eat before feeling ill from satiety.


    On a broader and more macroeconomics spectrum, our utility levels will also help determine how resources are allocated and consumed.

    Definition

    The concept, a brainchild of Daniel Bernoulli, has so many relevant connotations. As humans, we individually have a maximum biological boundary which when reached, signals absolute satisfaction. This in economic terms is called maximum (total) utility.

    Total utility is the complete satisfaction that you can get from consuming all units of a specific item.


    Economists are more interested in the changes in levels of utility or what is referred to as the marginal utility.

    We will return to its application to the economy.

    Applying utility

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    Incidentally, the utility has no formal unit of measurement – though we coined the term “utils”. These so-called utils equate a number to utility levels in a controlled sample experiment.


    Understandably it can be quite a feat to quantify utility as it is based on human behavioural preferences. The closest we got to quantifying such was via the marketing concept of the consumer black box.


    As an illustration, the concept can be applied to something as basic as eating a delicious meal.


    Depending on how hungry you were, you would derive the highest utility from the first few bites of your meal.


    As you progressed and depending on your appetite, each additional fork/ spoon, or handful would provide fewer levels of satisfaction. As you reach your stomach’s capacity (towards satiety) your utility diminishes.

    This can be applied to the taste of the meal. It specifically explains why we tend to eat something sweet after a main (savoury) meal.

    The appreciation of ice cream when you are starving would diminish quickly as you concentrate on filling up your stomach. This as opposed to enjoying the taste.

    When compared to the running of an economy, governments and policymakers can determine which goods and services yield the most utility.


    This helps them to consequently direct expenditure to identified priority areas (products/services).

    It is a long term concept

    Education, for instance, may not provide immediate utility (gratification) for scholars and pupils. However, when appropriately harnessed, could yield higher levels of satisfaction. This is when you enter the job market with better remuneration packages.


    Tweaking education curricula, taking into consideration levels of utility to whip up your interest for the good or service. This should, therefore, be a prime focus for legislators.


    Inputs such as maximum times you can concentrate and the length of study for a course should be offered without compromising the substance.


    Without a doubt, there would be considerations, at a micro-level to assist in enhancing both marginal and total utility in the education sector.

    Read more about fiscal policy and budgets here

    More life-related uses

    The concept of utility is a lot less ubiquitous as we think and relates to the unsavoury phenomenon of megalomania and why there is greed.
    When levels of self-gratification diminish quickly, it takes longer for those with lower levels of marginal utility to reach a plateau of pleasure.


    Drug addiction, sexual appetites, and fetishes would then kick-in. In such cases, people upgrade the “product or service” that they have already maximized utility in. At that stage, another level of fulfillment would be sought.

    The utility applied to finances

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    It also explains why you lose a lot of money gambling or investing in stocks. The satisfaction of gaining more for a little outlay will often drive you to take more risk until a level of risk aversion kicks in.


    High-risk investors “called whales”  are now delving into the Crypto market to maximize their utility. They are diverting their funds from property and stocks into digital currencies like Bitcoin and Ethereum.


    The saying too much of a good thing is inevitably bad for you applies. It can be countered by diversifying the things that deliver pleasure or satisfaction to you.


    This is to ensure that you do not maximize utility on them too quickly and lose interest.  Worse case, you end up delving into the dangerous territories of addiction.


    Economists need to be relevant, more than ever before. They also need to formulate a means to measure and quantify utility or provide “utils” for at least, the most common goods and services.

    With such a strategy, policy-making, product pricing, and the efficient allocation of resources would be more effortless.

  • A peer-to-peer Crypto marketplace

    A peer-to-peer Crypto marketplace

    250x250You can still tap into the pool of 17-odd million Bitcoins that is now in circulation. You can even purchase them in the fiat currency equivalents.
    But where do you get them then? After all, Cryptocurrency is this dark and mysterious transaction system used only by criminals and drug addicts.
    So you acquiring them would naturally be in a shady place like the dark web – where it is used to acquire illicit things – right?
    Not quite and there are publicly accessible marketplaces where one can securely purchase Bitcoins.
    Find out more via A peer-to-peer Crypto marketplace

  • Banking made easy!

    Banking made easy!

    The sexy looking N26 Metal card is available (for now) in Germany, Austria, France, and Italy!

    Read about what this Fintech / savvy online bank is about and has to offer.
    via Your portable ATM
    N26Card2

  • For investment gains or for purpose?

    For investment gains or for purpose?

    As much as institutions, risk-averse, or simply skeptical people have downplayed the new digital currency revolution. It still, a decade after coming to public light, remains resilient.

    Bitcoin now gets a regular mention in daily news and stock market reports. It is being traded by several established investors and even included by fund managers as high-risk portfolio instruments.

    We all by now, have heard the rhetoric of high volatility and use for criminal activity when it comes to Bitcoin and its crypto-family.

    Billionaires Warren Buffet and Bill Gates also weighed into this by publicly lambasting Bitcoin. Buffet equated cryptocurrency to rat poison 🙂

    Be it may, digital currency, however, does have some unbeatable benefits and functions you cannot ignore.

    Financial emancipation

    Bitcoin and ‘altcoin’ investing have created a new wave of financial investors.

    These include retired bankers, ‘millennials’ – who instinctively jump on-board a new discovery that has creative destruction-like tendencies. You also have the plumber, bartender, or ‘average man on the street’ looking to change their lifestyles instantaneously.

    Based on their phenomenal returns, many people have taken to social media (via groups, profiles, and communities) to share their success stories. But this is also a reason to for you to heed caution when you take counsel from anyone claiming to be an expert in cryptocurrency investment.

    Volatility is not new to trading – and especially not with Crypto trading. It is constantly on a rollercoaster ride making it hard for even seasoned trading experts to predict movements with traditional market analysis tools.

    Money transfer

    We all have undergone the painful stress of waiting for funds to clear so your rent gets paid or waiting endlessly to receive money from abroad.

    With cryptocurrency, the aim is to be not only the most secure form of funds transfer – but the fastest.

    main-qimg-ff968a87730554a92951137b04f01117

    Converting cryptocurrency to fiat money, however, remains a bottleneck. It still needs institutions to adopt or directly accept payments in cryptocurrency to avoid you going through another step in order to transact.

    Cryptocurrencies still cut down transfer time significantly compared to traditional electronic fund transfers of fiat money.

    Some well-established companies already use Cryptocurrencies like Bitcoin, and Litecoin for fund transfers, or even direct exchange for services.

    Cost savings

    We cannot ignore the reduced costs associated with dealing with money you have (hopefully) earned from hard work.

    Even inheritances are gained because of the toils of the giver’s hard work. So, it wouldn’t be fair for a group of a few companies headed by executives to siphon it from you while claiming to ‘provide you with a service’.

    We all pay for Internet use (and the security software associated), for smartphones and computers.

    We, therefore, have the technology to make transactions ourselves without having to rely on others to charge us for things we can do ourselves.

    The financial institutions have long preyed on your ignorance, obedience, and unquestioning trust. This, while they brazenly burn cash dabbling in equally questionable high-risk investments like derivatives and futures.

    Use cases

    Cryptocurrencies have nevertheless, got us thinking about making profits, the tax implications, and anything financial for that matter!

    A recent development called Hodl Waves attempts to track and predict Bitcoin movements via complex usage history. It basically compares behavioural patterns of what you do when you have coins and when you choose to reinvest them.

    N26 Bank

    Blockchain technology has also spurred a new path of careers and industries. More companies globally are looking to acquire lucrative Crypto-exchange licenses to operate.

    These cryptocurrency exchanges require people to service clients in various areas. They will require employees as any company would.

    Governments too will benefit from their operations. While there are still discrepancies in most countries about how to tax you, authorities can get a lion’s share from directly taxing exchanges.

    A new wave arises

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    It is only a matter a time before the banking institutions and big companies get on board to benefit from the high-level encryption and speed provided by digital currency.

    To conclude, the ‘wait and see’ mantra is all that we can exercise when predicting the future of digital currency.

    There are, however, concerns on how secure the encryption can remain with the advent of quantum computing.  This ground-breaking tech can make calculations at millions of speeds faster and thus able to crack the toughest data encryption.

    Some form of regulation would be required in some form to keep Crypto prices stable.
  • The fuss about trade disputes

    The fuss about trade disputes

    What does a small-scale farm-holding, two presidents, some tech companies, and their respective local currencies all have in common?

    The answer might be obvious if you have been paying attention to the so-called trade war between China and the US in the news lately.
    But why is it of concern and what are the far-reaching implications for the rest of the world?


    Active involvement in international trade is a vital sign of your country’s financial health and boosts its Gross Domestic Product (GDP).

    GDP measures the value of all goods and services produced in a country. From raw materials (input costs) to value-added (assembly and skilled labour costs) to come up with final goods or services.


    And though “domestic” implies that this refers to your country’s internal economy, the contributions can be extended from a services perspective.


    This occurs when your country places emphasis on or relies on income from Foreign Direct Investment (FDI) to help boost its economy via its GNP. GNP is a similar measurement but slightly different from GDP as it incorporates.

    Importance of trade

    Fact is, all our goods and services come from unit price or costs that arise from the initial extraction of raw materials.


    These then undergo production leading to the product or service of intrinsic value for both local and international (via exports) consumption.


    An ideal situation for your country is to export more than it imports to maintain a positive balance of trade. So basically more money flowing in than out.


    The trade surplus is then plowed into your economy via the fiscal budget. It can supplement a shortage of funds raised from domestic taxes.
    The opposite, which isn’t always a bad thing, (trade deficit) would have to be managed and nursed like any other loan.


    The US has often criticized Germany for exporting a lot (cars, trains, and machinery) but not importing much. This is deemed not being ‘fair’ in trade practice. But trade itself arises from market forces, priorities, and consumer demand.


    We all love a BMW, Audi, and Mercedes Benz. So these German-made products will always be in demand compared to US car makes.
    Who you chose to trade with gives rise to favourable balance of trade if you are engaged in a trade agreement or a trading bloc.


    Why this is also a big deal

    The demand for your country’s goods and services will directly impact the strength of its local currency. More trade means more of your currency is required to pay for goods and so its value goes up.


    A strong local currency leads to stronger purchasing power for its citizens and residents. Comes in handy when you plan things like holidays, purchase goods online, invest or just send cash abroad as gifts.


    So, you can see why a strong Dollar or Euro is always favoured and why sometimes drastic measures are taken to keep it that way.

    “A higher demand for your country’s products has a direct positive impact on its currency and exchange rate”

    Country Trades

    A quick glimpse of the world in terms of the input costs for goods and services gives it a competitive edge when it comes to trade.

    • US – intellectual property, services, weaponry.
    • Germany – steel and engineering machinery giving rise to high performing automobiles.
    • Many African countries – mineral resources such as oil, tobacco cocoa, and precious stones.
    • Israel – military intelligence.
    • South America – agricultural produce.
    • India – IT and customer services.
    • China – agriculture, building/(manual) labour, and of late technology.

    The beef with China

    The technology that China (no.2 on the list) offers the rest of the world is the subject of hot debate. The alleged theft of US intellectual property for tech gadgets and software by China.


    This is one of several unfair trade practises and motives for why the US recently decided to start imposing heavier (punitive) tax-like increases on multiple goods imported by China.


    These extra costs, referred to in trade terms as import tariffs, have a spill-over effect on the costs of production.


    China then reciprocated by hitting the US with tariffs (on agricultural produce) causing the trade war that drives each country to protect its own economy.


    The higher input costs naturally, lead to the price of your product going up and reducing its competitive advantage and demand. Higher input costs can also affect your local labour force for the worse too.


    Factories, multinational corporations, and industries such as farms (both commercial and subsistence) will have to cut the cost of labour. In worse cases which we have seen, workers are laid-off in a heartbeat to stop or prevent accounting losses.


    These factors would have hopefully been taken into consideration by the respective leaders before pulling the tariff triggers. Acting with emotions rather than looking at the far-reaching implications is irresponsible.


    Have the talks of the trade war impacted productivity and the global trade economy? So far it’s just the stock markets (securities and commodities) reacting. Only time will tell.

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