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Influential Women in Finance

Following on from the last article about growth vs value as two investing strategies, here are lessons that beginner investors can take from some of the most well-known women in the investment world on how they invest their money and their best pieces of advice. One such example is Cathie Wood, CEO of Ark Investment Management. Wood studied Economics and Finance at the University of Southern California and then began managing money all the way from analyst to portfolio manager to CIO.

Her company launched its own ETF, characterised by its non-specific sector allocation to try to capitalise on a broad range of markets. Moreover, the ETF mainly focused on disruptive technology companies, who use existing successful technologies and innovate by improving them or replacing them with better, cheaper or faster products. Wood, as an active investor, looks for companies with huge growth potential, purchasing young Tesla as a hallmark investment.

However, last year was not the most successful year for Cathie Wood and Ark Invest. Many of its holdings steeply declined and the fund lost customers as a result; this tested the strength of Wood’s active investment strategy. Wood made new investments during the tech sell off despite criticism.

A second fascinating woman in finance is Mary Callahan Erdoes, CEO of JP Morgan Asset & Wealth Management since 2009. Her work primarily involves retaining and growing clients’ assets. As a result, she has increased client assets at JP Morgan Asset & Wealth Management to over $4T.

Her advice, as she said in an interview with David Rubenstein, is that first of all you should not invest into something which cannot be explained to you in simple terms. You should also start saving early to have an impact, because only over long periods of time does investing become very successful with less risk. When it comes to risk management, people should never excessively risk the money they have worked hard for. This stress test can be carried out as a measure of portfolio diversification. If one position heavily declines in the worst case scenario, the rest of the portfolio holdings should be able to salvage a bad investment.

In finance, networking, lobbying and the influence of office politics make people like Erdoes or Wood very successful. This is not easily applicable to the average retail investor, but it is important to mention to understand top investors’ success stories. Specifically, networking is key because of the private information which might not be as available to the public. Lobbying and politics are two factors that you can only predict and incorporate into your investment strategy if you have the relevant information as an established institutional investor.

An obvious, but often easily forgotten factor that should not be overlooked is the actual product(s) the company offers, not just the company and its potentially good management. Taking a closer look at the products a company offers, as well as the product life cycle is vital. This cycle shows the development from its introduction to the withdrawal of the product from the market. The four stages are introduction, growth, maturity, and decline. If a company’s product is relatively well established and has had huge success, it is now in the maturity stage and the market might soon become saturated. If the company does not innovate a new product or add-ons, its sales will drop thus hurting earnings. Hence, this might not be the best investment.

These pieces of advice from some of the most renowned investors are invaluable as their experiences help smaller retail investors, like us, find the right investments and avoid the wrong ones. Echoing one final piece of advice from Mary Callahan Erdoes, “if something is too good to be true, there’s a high likelihood that it is”.

Value and Growth Investing Methods

For many people who start investing, it is difficult to figure out the most important criteria in making their investment decision. In addition to knowing basic investing vocabulary, it is also helpful to understand some of the basic investing methods. Star investors like Warren Buffett and Cathie Wood are famous today for their value and growth approaches to investing, respectively.

Warren Buffett is one of the most famous investors worldwide and is known for his strategy of value investing. Buffett is the CEO of Berkshire Hathaway and has more than half a century of experience. His net worth now amounts to over $115.5 billion. One of his secrets to success is that he started investing when he was unimaginable eleven years old. However, that is not realistic for most people to achieve since interest in finance often develops at a later stage. That being said, the lesson to be learned is that there is no time to lose when it comes to starting to invest. Success most likely comes in the long run. Buffett’s success also lays in his acquisition of 60 companies which now account for Berkshire Hathaway. Buffett first contact with value investing was through his former mentor Benjamin Graham at Columbia Business School. He first applied and defined this strategy.


The core idea behind value investing is to first determine the intrinsic value of a company and then compare the value of the company to the current stock market price. When also comparing the stock price to that companies’ competitors, one can see if the stock is underpriced. Then, a decision can be made as to whether a company is worth investing in.

When looking at a company from a value investing point of view, one must first look at the management and fundamental quality of a company before looking at the price. One should be able to see whether the company has a leading, experienced team, and if they have a track record of overcoming challenges. A long term strategy is key with this investment method since one must believe the quality of the business behind the stock will push up the price; short-term price falls mean value investors can buy the same business at a cheaper price.

Growth investing, meanwhile, is all about a fast approach to get to the desired price target. Obviously, like the name already predicates, the most important criterium is fast growth in comparison to the market, apparent through higher than average returns. Companies which show these characteristics are often younger firms in futuristic markets, such as electric vehicles. Because growth companies tend to be younger, investors often do not get dividends when investing in companies like this; rather, the company’s profit is used to reinvest back into the company.

Each of these investment methods offer a different way to view a business and its investment decisions. One can look for stocks selling at discounts based on a fundamental analysis, or one can look for a stock that is poised for rapid price growth. These strategies are often used by successful investors in the financial world, especially women like Cathie Wood. Stay tuned for the next finance article that will delve into inspiring women in the world of finance.

Interview with Deirdre McIlvenna – Partner at the Maples Group

Introduction

Over the past five decades, the Maples Group has become a global market leader in the provision of corporate legal services. The Group has 16 offices across the globe with operations in Europe, Asia Pacific, and the Middle East, as well as the Americas and Caribbean. Launched in 2006, the Irish office has become one of the largest in the Maples network. Speaking with funds and investment management partner, Deirdre McIlvenna, the Trinity Business Review team learn about a career in corporate law, the funds industry in Ireland, and Maples’ Professional Internship Programme.

The Maples Group  

With over 440 professionals in its Irish office, the Maples Group has a wide range of practice areas, including Corporate, Data, Commercial and Technology; Employment; Finance; Financial Services Regulatory; Funds and Investment Management; as well as Litigation; Property; Projects and Infrastructure and Tax. The wide range of services enables the firm to tailor its offering to the unique requirements of its clients. However, the focus of the firm is directed at funds and investment management, as well as finance and corporate, reflecting the strength of the Irish financial market. Deirdre notes that the firm is increasingly advising on sustainable finance and renewable investment projects within each of these core practice areas.

The Maples Group also prides itself at being at the forefront of innovation in legal service delivery for its clients. Deirdre recognises that ‘delivering legal services efficiently is a critical priority’ in an ever-changing technological landscape. By leveraging a wide range of innovative legal technology tools and techniques across its practice areas, Maples can deliver its services in a cost-effective and productive manner, ensuring greater value for its clients.

Deirdre is of the view that the unique selling point of the Maples Group is that it is a ‘genuine international business’, serving numerous international clients. This global reach brings crucial perspective and comprehensive expertise to the firm. Maples strives to provide time-zone convenient legal advice and ancillary services in regions where their clients are based. The firm also takes pride in a partner-driven knowledge culture, investing significantly in keeping up to date with all Irish, EU and International market developments which impact on its clients. This requires extensive planning as well as communication with relevant government departments, regulators, and industry associations on proposed legislation. Deirdre notes that ‘commercial awareness is very important’ and, according to its clients, this sets the Maples Group apart from other law firms. The firm places a huge amount of value in knowledge sharing, which is achieved through ‘Know How’ meetings and the support of the Professional Support Lawyer (PSL) team.

The Irish Funds Industry  

Ireland’s fund industry was established over three decades ago and has continued to grow, with net assets in Irish domiciled funds rising to €3.32 trillion in 2020. Investment managers and asset managers from all over the globe have sought to develop and expand their European distribution footprint through Ireland, motivated by our globally recognised skilled workforce and our ability to provide full access to the EU. As a result, the Irish office serves as an important European hub for internal clients doing business in and from Ireland.

This growth in the Irish funds industry has contributed significantly to the growth and development of the Irish economy. Deirdre comments that it has been ‘hugely rewarding’ to be part of this success. The Maples Group maintains strong connections and representations on various working groups, including Irish Funds, AIMA, and the American Chamber of Commerce. The firm is also in direct communication with the Central Bank of Ireland, being the governing body for Irish regulated funds, as well as the Department of Finance, on projects such as the Sustainable Finance roadmap.  

Deirdre observes that ‘no day is ever the same’ working in the Irish funds industry. In Ireland, each regulated fund is required to appoint regulated service providers, such as fund administrators and investment managers. In her role of legal adviser, Deirdre is in contact with these various service providers, as well as with auditors and tax professionals. This interaction with different people from diverse areas is something which Deirdre has ‘really enjoyed’ during her career. She says that ‘there is always something new and interesting taking place’ each day.’ 

Professional Internship Programme

Maples Professional Internship Programme is the firm’s ‘primary recruitment method for future trainees’ and provides ‘an excellent platform for those interested in securing a training contract’ with the firm. Last June, the Maples Group welcomed 29 students into its Irish office and looks forward to seeing many of these interns return to the firm as trainees in future years.

The Programme has been thoughtfully structured to ensure that interns gain an invaluable insight into life as a corporate lawyer at the firm. It includes a mix of training; department, committee, and global talks; various workshops, Q&A sessions, and several social activities, ensuring interns are exposed to a range of diverse and interesting work. Interns are offered the opportunity to work alongside Partners, Associates and Trainees in one of the firm’s core practice areas, namely, Corporate, Employment, Finance, Funds & Investment Management, Litigation, Property and Tax, and are paid for the duration of the placement. Deirdre is of the view that ‘people are our greatest asset’ and as such, ‘recruitment and retention of talent is a core part of our business strategy’. A law degree is not a precursor to applying to the Maples Group and Deirdre observes that some of the firm’s best lawyers have undertaken different courses. The firm looks for applicants who are good team players with strong communication skills and ‘a curious mind’. 

Further Information

Applications for the Maples Group’s Professional Internship Programme close midnight 7 February 2022.

Website: https://maples.com/en/careers/students-and-graduates/internships

Shoring up Businesses in the Face of Inflationary Pressures

Annual inflation hit its highest point in twenty years in November 2021, with consumer prices up 5.3% year-on-year. EY reckon this trend could be lasting, with inflation expected to average 3.3% next year. Considering the EU target inflation rate of 2%, the severity of these figures is clear. Similar statistics are seen internationally, with the European Central Bank (ECB), Federal Reserve (Fed) and Bank of England all preparing to quash inflationary pressures over the coming months. For example, the Bank of England recently announced increased interest rates to 0.25% , the Fed has signalled to end their bond purchases (heightened during the Pandemic) in March and plan to enact three interest rate rises during 2022. In a differing response, the ECB will continue bond purchases for at least 10 months, before scaling back the procedure. They also ruled out raising interest rates next year, illustrating the ECB’s viewpoint that inflation should fall in 2022. With these actions taken by various central banks in mind, businesses ought to prepare to minimise the potential costs of inflation.

Reasons Behind the Rise 

McVities’ recent announcement that some family favourites such as Hobnobs, Jaffa Cakes and Penguins could see price increases of up to 5% illustrates the direct impact of these inflationary pressures on consumers’ pockets. The UK Managing Director at Pladis Global, owner of McVities, attributed this to Covid-induced staff absences and the rise in input costs, with double digit percentage increases on ingredients such as cocoa beans, alongside higher labour costs.

The vaccine rollout and the economic recovery is also releasing pent-up demand from the pandemic, causing demand to outstrip supply in the economy and prices to rise; this is also known as demand-pull inflation. Another view, as McVities shows, suggests that weakened supply due to labour shortages, aggravated by Covid-19 induced absenteeism and the new Omicron variant, could be driving inflation. Other supply-side issues include the rising costs of core ingredients, perhaps due to supply chain disruption (as a result of the pandemic). This is known as that cost-push inflation, whereby an increase in the costs of wages and raw materials is passed onto consumers in the form of higher prices, is boosting inflationary pressures even further. The rise in inflation can be viewed from both the demand and supply-sides, illustrating its pervasiveness.

Costs of Inflationary Pressures on Firms 

Rising costs due to inflationary pressures means rising uncertainty amidst a backdrop of an already unstable trading environment. This means that firms are less likely to invest in research and development, alongside technological changes for longer term production, hence negatively impacting long run growth rates. Furthermore, the impact on profit margins is ambiguous, and dependent on whether firms will be able to pass higher input costs on to consumers. The more price elastic a good/service is (i.e. if consumers reduce their demand a lot, given a small price increase), then the less likely a firm will be able to pass their rise in costs onto consumers. In this event therefore, profit margins for businesses are likely to fall, a clear cost of inflation on business owners. Additionally, the current business environment, with large staff shortages and absenteeism, means employees have stronger negotiating power regarding their wages. Therefore, despite both the Bank of England and the ECB suggesting there is little current risk of a wage price spiral, labour costs for firms could rise, thus aggravating this fall in profit margins. Ultimately, the costs for firms encompasses the uncertainty of the trading environment, and the resulting impact on long-term growth, alongside the potential fall in profit margins – the extent of which is dependent on the price sensitivity of their consumers. 

Shoring up Businesses

With inflation clearly upon us, it is vital for firms to be aware of their business’ sensitivity to price changes. Despite being a challenge to accurately calculate, awareness of a products’ price elasticity, alongside forecasted and current inflation means that firms can be better placed to react to any price changes and minimise the impact on profit margins. Additionally, awareness of competitors can also help firms respond to rising inflation; if the competition raises their prices, it becomes easier for smaller firms to increase their prices without losing too much demand. Thus, awareness of the competition’s actions, alongside a focus on the business’ unique selling point to make it stand out from the competition, are vital to reduce the impact of inflation. With much of inflation because caused by shortages on the supply side, international diversification can reduce supply chain risk and diminish the impact of rising costs. Indeed, the evaluation of supply chain risk alone, alongside analysing the necessary responses to these risks, can help prepare firms, enabling them to better respond to crises once they arise.

Furthermore, issuing debt can allow firms to diversify their financial portfolios in a way that reduces the impact of rising prices. Since inflation erodes the real value of money, businesses ought to reduce their cash holdings and instead buying capital assets or equipment that promote long-term growth and help businesses ride through the uncertainty. The ability to take out a loan to fund these investments depends on interest rates. Despite the Bank of England’s announced rise in interest rates to combat inflation, rates still remain low; the ECB, for instance, has thus far decided to keep rates at their low. Hence, as long as rates do not rise further to combat the inflation, businesses will be able to pay back their loan cheaper relative to what they borrowed it at. If this loan is used to promote long-run growth through solid investments, then businesses could use inflationary pressures to their favour. Furthermore, stockpiles could be used as long-term buffers, better preparing firms for the rise in inflation. Additional long-term buffers could be sought through locking-in long term contracts at current prices – taking advantage of futures markets to reduce the costs of inflationary pressures.

Ultimately, for businesses to respond well to the current pandemic-induced inflation pressures, forecasting and preparing for all scenarios, alongside acknowledging their competition, price sensitivity, and reassessing their investments is crucial to shore themselves up against rising prices.

The Story of Diglot: A Language Learning Start-Up

Diglot dispatches with traditional methods of language education and makes language-learning fun, engaging and effective for beginners. The company creates books that weave foreign words into English sentences so that readers can learn languages while reading classic novels like The Great Gatsby, Sherlock Holmes or Pride and Prejudice. Evan McGloughlin and Cian McNally, Diglot’s co-founders, discuss the story behind the language-learning start-up.

The Team

Evan and Cian live five minutes down the road from one another in Skerries. They played rugby together as children and, after going their separate ways for a few years, found themselves back together again as teenagers in the Institute of Education. They both went on to study at Trinity – Cian in psychology and Evan in neuroscience – where the idea of Diglot began to form towards the end of their penultimate year. The team came up with the business name as well as the concept of their first book, Learn Spanish with Sherlock Holmes, which was published in June 2020. By the end of the year, they had launched the Diglot website and sold over 500 books.

Cian has always been interested in language-learning; he recalls how one evening he began talking with a linguist at a party, who told him about research projects taking place in South Africa. These projects showed that the best way for children to learn languages in a classroom setting is for a teacher to speak in different languages. Following on from further research into the study, Cian found that the best way to learn languages is to read novels that mix languages together. However, the problem is that this method of language-learning is not available to beginners. Cian sees language-learning as simple for intermediate or advanced learners; all they must do is read a book or watch a movie which ‘will get you insanely good, insanely quick’. Meanwhile, beginners must study lists of vocabulary, memorise grammar rules, and read small sentences instead of stories. This led to the idea of Diglot, which aims to bridge this gap and cut out the textbook form of language-learning. As Evan says, Diglot is about ‘making language learning accessible to people who maybe traditionally do not like language learning’ by allowing them to acquire language subconsciously through reading a book.

Where They Are Now

The Diglot team spent the past five months in Spain, where they were able to keep their burn rate low whilst delving into Spanish culture. The base location of the company is subject to change depending on different programmes and projects. As Evan says, Diglot is a ‘very multicultural company so it makes sense for us to travel around the place’. Cian agrees that ‘we can be anywhere in the world working away, which is a real privilege’.

There are ‘a lot of pieces to put together’ in creating a Diglot book. The novels Diglot use are all public domain and out of copyright, which makes the script easily accessible online. The text is sent through an in-house algorithm, which was developed by Diglot’s Head of Research and Development, Oisín Morrin. This produces a script weaved with foreign words, with the percentage of weaving dependent on the difficulty level of the book. This script is then sent to a translator who restores the nuance and ‘beauty of the language’ and is edited and proof-read several times before being sent back to the team. The design process is usually carried out by Evan, who arranges the chapter headings and grammar lists in accordance with a prescribed template. This script is then sent to a cover designer, who designs the front cover and back page of the book. Once this is completed, the script and cover are uploaded to a book publisher who manufactures and distributes the book.

In terms of marketing and promotion, the Diglot team are of the view that they were ‘pretty lucky early on’. The books got ‘unbelievable promotion’ from the ‘bookstagram’ community on Instagram. This community is made up of influencers with between 20,000 and 100,000 followers that share books on their account. This created a ‘very positive-sum relationship’, as Diglot were able to get great promotion and the bookstagram influencers were able to get engaging and innovative content.

In February 2021, Diglot secured a spot in Tangent LaunchBox Accelerator, a competitive summer programme run by Trinity which provides mentorship, funding and a collaborative environment to Trinity students with a start-up business. Evan says that the advantages of the programme are ‘insane and incalculable on multiple dimensions’. Although the team is awarded funding, this is ‘secondary’ to the connections and the network that they build. Not only were they able to get free legal advice that was ‘unbelievably beneficial’, but they were also able to access business mentors that they were able to consult with and talk to each week. As Cian notes, one person or one piece of advice can ‘fundamentally change your business’. The entrepreneurial environment provided by LaunchBox also had a positive impact on the Diglot team. Evan talks of the ‘constant positive reinforcement’ from being around like-minded people, reminding that ‘you can actually build something and have an impact on the world’. Cian agrees that having that support and group of friends has had a positive impact on his mindset and that ‘mindset is everything’ when it comes to running a start-up.

Evan says that one of the most challenging aspects of the start-up has been ‘figuring out leadership, how to manage people, and how to get the most out of people’. With 80 translators in over 20 countries around the world, leadership and management is ‘really important’ for the Diglot team. The style and tone of leadership plays into what the business represents and what it seeks to accomplish. It is important to manage people in an effective way but also in a way which enables them to excel, grow and learn. Evan identifies this as the ‘biggest challenge’, especially in the current online environment; organising people and managing relationships over Zoom is ‘challenging’ and ‘hard to get right’. When asked about the key success factors of the business, Cian recognises the importance of having software to manage people. The Diglot team utilises Notion, a project-management software which helps to take cognitive energy off the team. This has helped the company to automate all cognitive work and manage the multi-part production process at Diglot.

Plans For The Future

Diglot is expanding its book titles and languages every week. The team currently have books in Arabic, Hindi, Mandarin and Japanese in production. For the first time, a person will be able to pick up the Great Gatsby and at the same time pick up a few words of Japanese or Mandarin. As Evan says, ‘that is just not a thing that has existed up until now’. The Diglot team also plan to work directly with authors and weave their books in some exciting projects they have coming up. They also hope to expand into audio books, so that a person will be able to listen to their favourite story in English with foreign words weaved into the audio. The goal of the company is that a person will be able to bring any book, either fiction or non-fiction, and weave the book using Diglot’s system. That person would be able to nominate their language and difficulty level and then start reading from day one. It will be exciting to see how Diglot will continue to reimagine language learning and make it more accessible, engaging and fun for beginners.

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