An example of this was picking up META at around $95 per share back in November 2022. Public markets had become exasperated by Mark Zuckerberg’s obsession with the metaverse. The company had just posted brutal earnings and announced tens of billions in metaverse spending. That year, the share price had plummeted from around $350 to lows of $130, and following earnings fell further to around $92. My strong conviction at the time was that, after being decimated by the markets so badly once again, META would have no choice but to “find god”. In this case, my conviction was right, and in 2023 META announced the “year of efficiency” pivot, which led to massive cost cuts & layoffs, surging free cash flow, and a sharp re-rating of the stock.

Likewise, I bought Netflix in mid-2022 for around $187 per share, when shares had collapsed following their first-ever subscriber loss and widespread talk of “streaming fatigue.” The narrative was that Netflix’s growth story was over, and that competition from Disney+, HBO Max, and others would eat into margins. But from my perspective, the fundamentals told a different story: Netflix still had the strongest global position, industry-leading profitability, and a near-monopoly on the cultural zeitgeist with its content. That conviction also proved right. Within a year, Netflix reinvented its growth through its password-sharing crackdown, price increases (enabled by its dominant grip on popular culture), and the launch of its ad-supported tier, reigniting subscriber growth and expanding margins. The market quickly caught up to the reality I’d seen earlier — and the shares more than tripled within a 2 year period.

These kinds of opportunities are hard to come by — they depend on moments of deep market misunderstanding, which tend to arise only during turbulent times. When they do come around, you need to spot them, be correct in your conviction—which is not always the case(!!), and act quickly & decisively to take advantage.

Luckily though, a second more long term type of investment is possible, one based on owning compounding machines — businesses with durable economics, strategic clarity, and a long term path of outsized cash generation. As Benjamin Graham famously put it, “In the short run, the market is a voting machine, but in the long run, it is a weighing machine”. If you pick the right compounding machine, regardless of market sentiment and fluctuations, the underlying economics will eventually force the market to take notice.

Today I am going to share one such company I have been invested in for several years — Plus500, a publicly listed fintech trading platform.

I first invested in 2020, after screening a bunch of companies based on their Free Cash Flow to Enterprise Value ratio, and going through my lists to find companies in the kind of sectors I was excited about. At the time, retail investing was experiencing a major resurgence during COVID, with a new wave of retail traders entering the markets.

From a fundamentals standpoint, Plus500 immediately stood out. It was (and still is) exceptionally profitable, with strong free cash flow generation, a rock-solid balance sheet, and significant cash returns to shareholders through dividends and buybacks.

(Source: Plus500 Investor Relations)

On most traditional metrics — EV-to-earnings, price-to-cash-flow, and other valuation multiples — with a market cap of only around £1.5b in May 2020, it traded at a steep discount to peers like CMC Markets & IG Group, despite superior margins and returns on capital.

One reason for this is that Plus500 operates a B-book model, meaning that it takes the other side of customer trades, rather than hedging with a liquidity provider.

This approach, often misunderstood by investors, gives Plus500 higher margins, but also exposes the P&L to fluctuations in trading performance. This perhaps also explains the lower valuation multiples achieved by Plus500, with markets pricing in that extra perceived risk. Plus500 however has excellent technology and has consistently proven its operational and risk management capabilities in volatile markets over the past several years.

Volatility in general is actually excellent for trading platforms like Plus500, who make money from spreads and big swings in volatile market conditions. With the current macro and geo-political climate the way it is, and financial markets at fever-pitch with AI-driven hype, I believe that a continuing and prolonged period of volatility is likely in the coming years, benefitting Plus500. Given that retail trading positions tend to be net-long, this makes Plus500 a natural hedge against falling markets (when markets become volatile and fall dramatically — Plus500 tends to win big, producing bumper profits).

From a growth economics perspective, Plus500 has already acquired a massive and sticky user base — a long-term asset that has largely been expensed in prior years. In other words, much of the customer acquisition cost is already behind the company, yet the lifetime value of those users continues to compound. Every new cohort of traders adds incremental revenue on top of a highly cash-generative base, creating strong operational leverage without the need for heavy reinvestment — Plus500 though does opt to invest significantly in continuing to acquire new, and especially high value, users.

Another attractive quality of Plus500 is its rock solid balance sheet, with over $800m in cash and no debt. It operates an aggressive shareholder returns policy with its free cash flow — returning 50% or more to shareholders via dividends and buybacks (during my ownership, shares outstanding have dropped from over 100m in 2020 to around 70m today).

Outside of shareholder returns, Plus500 is engaged in geographical and product/market expansion via organic and inorganic means — gaining licenses in new territories as well as engaging in several M&A deals in the last 5 years, including:

• Cunningham Commodities & Trading Systems LLC (USA) in 2021

• EZ Invest Securities (Japan) in 2022

• Mehta Equities Limited (India) in 2025

Historically, CFDs (the main product which Plus500 trades) have been somewhat stigmatised by the financial markets. They are viewed as speculative and retail driven instruments that are sensitive to regulation — with this skepticism long-weighing on Plus500’s valuation multiples, and investors assigning a lower quality of earning rating to earnings derived from CFD trading.

These diversification efforts are part of a clear strategy to position Plus500 as a diversified fintech platform, rather than a simple CFD trading house. If successful, these efforts will not only grow revenues and earnings, but also quality of earnings, leading to a re-rating over time of Plus500’s risk profile and valuation multiples.

Longer-term, once Plus500’s presence in the US is more well established, a dual listing on the NASDAQ could unlock a further uplift in valuation multiples.

To sum up, as an investor, I like the following:

• Strong technology, market positioning, growth and operating engine

• Consistently high trading volumes, driven by continuing macro turbulence (something which, in the current era, I can’t see changing)

• Rock-solid balance sheet with over $800m in cash and no debt

• Continued, significant, and consistent cash flows from operations

• Significant shareholder returns via dividends & substantial buybacks

• Acts as a natural hedge to volatility and market downturns

• Significant geographic expansion and diversification via small-scale M&A

• Growing US presence and clear strategy of diversification away from CFDs should increase quality of earnings, risk perception, and valuation multiples

• The potential to dual-list on the NASDAQ presents a huge re-rate opportunity

What’s not to like?

Well, as I mentioned, key risks remain regulatory — particularly leverage caps or retail access changes in the EU. Plus500’s diversification helps, but these aren’t negligible. Institutional investors are wary of this, and have this firmly factored in.

However, with every year that goes by, Plus500 makes more profits, accumulates more cash, pays more dividends, and buys back more shares (concentrating ownership for the remaining shareholders)… and if, like me, you have conviction that the company will continue to do that for many years to come, then you don’t need the market to recognise the value straight away — eventually, the combination of a shrinking share count and a growing cash pile becomes impossible to ignore. Again, in the long-run, the stock market is a weighing machine.

In the meantime, if the company manages to reshape its market perception (and it has made significant progress here too), a re-rate could be in order too.

As of Q3 2025, Plus500 generated $598m in revenue and $268m in EBITDA in the first 9 months of 2025, representing an EBITDA margin of 44.8%. The company re-iterated full year guidance of $750m in revenue and $343m in EBITDA (Bloomberg consensus). The company remains debt-free with over $815m in cash, giving it a net cash position equivalent to roughly one-quarter of its market cap. At the current share price (~£32.76), Plus500 trades at roughly 10 to 11 × forward earnings, 6.5 × EV/EBIT, with a free-cash-flow yield just under 10%. While these multiples were even more attractive at my original entry point, they remain highly competitive relative to peers.

From my perspective, Plus500 continues to represent the kind of business I like to own: profitable, well-capitalised, shareholder-friendly, and positioned to benefit from ongoing volatility in global markets. So I’m happy to continue holding — and if the company continues to compound cash, reduce its share count, and gradually reshape market perception, I believe patience will continue to be rewarded.

Returns:

Entry price: £12.80 per share

Current price: £32.76 per share (+155.9%)

Dividends to date: £6.84 (+53.4%)

Total return: £26.80 per share (209.4%)

IRR: 27.5% (based on dividend payment timing, entry, and exit dates)

Having a strong interest in investing, I found that I enjoyed the challenge, and I felt at home making challenging decisions about what to invest in. It was also a great motivator to learn more about different industries and investment opportunities, something I am always a big fan of doing.

As it turns out - I picked a hell of a year to begin managing my own pension. With an aggressive bear market taking hold right after I took on this task.

Perhaps if I knew the market conditions in advance, I would have been tempted to leave my pension to the professionals? As it turns out though, I fared pretty well, making returns of +22.6%, during a year in which it was easy to lose money.

This is a rundown of the decisions I made throughout the last 12 months, and is an exercise I plan to repeat each year - whether the picture is rosy or not! Let’s see where we land this time next year.

Opening Investments

I started out in March 2022 by screening good quality companies, that were good value, paid dividends, and I could get behind. I allocated a roughly equal portion of my funds to each.

I varied the sectors and regions a little, but my main criteria for investing was based on solid value, profitability, and a reasonable dividend payout from each, rather than focusing on diversification in and of itself. I also opted to put a portion of the funds available into one of AJ Bell’s own funds.

In addition to strong fundamentals, I also looked to invest in companies in industries where I felt there was a positive trend. My choices were as follows:

• Autoliv - creates safety features for cars and, with a strong post-pandemic automotive industry, seemed to be a smart long-term investment as safety becomes more important in the auto industry

• MDC - a US homebuilding company known for quality construction and good customer service, a bet on growth in the strong post-pandemic housing market

• Argan - a diversified holding company with interests in different industries, offering potential for long-term growth and diversification

• Polar Capital - specialises in investing in emerging trends and innovative companies, for some exposure to high-growth industries

• Microsoft - the technology giant is poised to remain in a dominant position among the big tech companies, with its cloud business continuing to gather momentum

• AJ Bell Adventurous I ACC - an actively managed fund that invests in a mix of high-risk assets, such as equities and commodities, with the goal of achieving high returns over the long term … this is where I will hold any spare funds.

These investments however were mostly short-lived. When we entered May 2022 it became clear that the market was about to get very choppy. I decided to exit from 3 of my 6 opening investments earlier than expected.

Market Turmoil Begins

When inflation, energy prices, the Ukraine war, and interest rates talk started to get a little out of control, in April 2022, the markets became spooked, and to some extent, so did I.

I wanted to shift into investments that were more stable and reliable, during a time of extreme uncertainty. I sold off Autoliv, MDC Holdings, and Argan. As it happens, my original picks weren’t so bad, returning +21.8% +1.8% and -1.9% respectively had I kept them until now instead of selling.

With the outlook for energy prices so bleak, I instead decided to invest in two renewable energy infrastructure companies - The Renewables Infrastructure Group (TRIG) and Greencoat UK Wind.

These investments pay out ~5% dividend per year reliably. Moreover, with price-to-earnings ratios of around ~4/5, and price-to-book ratios of < 1, they should hold their value well too. I thought that they should be relatively secure bets in an energy market with huge supply issues, compared with an extremely turbulent stock market at the time.

In addition to this, I took an opportunity to invest in one of my favourite companies at around at the same time.

In late April 2022, shares in Netflix fell off a cliff. For the first time in its history, the company reported a contraction in the number of accounts quarter-over-quarter, and the share-price almost halved over the course of the following week.

Bearing in mind that Netflix was still the most profitable company in its industry, maintaining an incredible brand and some of the most watched content and shows around, I felt this was a huge over-reaction by a market that was scared.

On the contrary, my conviction was that it was precisely companies like Netflix, with an enviable brand, and profitable position, that would weather the storm the best.

I was thrilled to be investing in Netflix at $187 per share. Ever since reading founder Reed Hastings book, No Rules Rules, I have been sold on Netflix’s vision and culture, and its ability to reinvent itself as a business. This was my chance to put my money behind that.

Observing The Storm

During summer, crises continued to unfold in the global economy. Overall though, I was happy with the positioning of my portfolio. I sat tight and observed the market from a distance, satisfied with a good mixture of quality growth companies like Microsoft & Netflix, combined with some safer positions. As dividends came in I reinvested them into the AJ Bell Fund, and outside of that stayed put.

At a certain point though, it seemed to me that the market was about to get even more turbulent, and that I should potentially liquidate some investments in order to avoid or minimise the damage in case the market took a violent turn. It also seemed a good idea to have some dry powder in case an opportunity were to come up (I was certainly on the lookout). I decided to liquidate my position in the AJ Bell Adventurous fund for that reason.

It then took another two months for my opportunity to arise. Once again, with a highly profitable technology company, that took an absolute beating from the market. In November 2022, I decided to invest in the newly renamed Meta, at ~$97 per share.

This was my second high-conviction bet that I made during the year, and the one that returned the most value to my pension so far. So why did I decide to invest in a company that was seemingly in meltdown?

My conviction here was that Meta was too big to fail. I felt sure that the astounding loss of market cap incurred by Meta would soon become a significant enough pressure for Mark Zuckerberg to change course, and refocus on what matters. My view was that after this happens, Meta would return to its core business (including significantly under monetised opportunities such as WhatsApp), and subsequently return to new all-time-high levels of profitability in the longer term, after making the necessary changes.

This has already started to transpire, with Meta ditching low priority initiatives that were eating away at the bottom line - with the notable exception of its investment in the metaverse.

Meta went even further in the last few months, letting go of over 20k employees, sending a strong message to the market that the company’s commitment to the metaverse will not come at the expense of its core business profitability. The stock has rallied as a result, rebounding by over 100% since investing.

This was the last major decision or change I made in the portfolio this year, outside of investing spare cash from dividends into the AJ Bell fund.

Review, Predictions & Plans

So where did I end up after 12 months? Here’s a summary of my investments returns over the period:

• Autoliv [EXITED]: -0.9%

• MDC [EXITED]: -2.5%

• Argan [EXITED]: -4.7%

• Microsoft [LIVE]: -1.1%

• Polar Capital [LIVE]: -18.7%

• TRIG [LIVE]: -1.9%

• Greencoat Wind [LIVE]: +5.4%

• Netflix [LIVE]: +79.4%

• Meta [LIVE]: +113.3%

• AJ Bell Adventurous I Acc: N/A - bought in and out throughout

• TOTAL VALUE: +22.6% versus starting balance

Overall I am satisfied with the decisions I made during the year. I managed to avoid any bloodbaths, which was easier said than done in 2022/3. But despite staying safe with most decisions during the year, I was still able to make a few high conviction bets when the investment case presented itself. Key drivers of the performance were:

• Picking resilient, diversified, and value based investments

  Although many investments declined in value slightly, overall the value of the investments made stood up to the testing market conditions over the last year.

• High-conviction bet #1: Netflix

  In the market turmoil I was able to pick out an undervalued business, whose prospects were better than market indications, and acted decisively on it.

• Holding cash during a falling market

  When markets became extra sketchy, I made the decision to liquidate some holdings. This had the effect of avoiding the downturn on a portion of my funds, and set me up to make a high-conviction bet later, when the time was right.

• High-conviction bet #2: Meta

  Correctly anticipating the bottom for Meta, and investing decisively drove the most value for my portfolio this year.

Looking ahead at the year to come, markets continue to be very choppy and turbulent. With a US election on the horizon, geopolitical tensions increasing, and an uncertain macroeconomic environment, I am expecting this to be a continuing theme even as we progress into 2023/4. It is with this theme in mind that I will continue to think about which investments to make. My future investments therefore are likely to fall into one of the following three categories:

• Investments with uncertainty as a theme - i.e. businesses that thrive in unstable macroeconomic environments, for instance trading platforms (who often experience spikes in activity during market turmoil)

• High conviction bets during market fallouts - much like Netflix and Meta above, I anticipate more opportunities to open attractive positions in companies that have been oversold during turbulent market conditions

• Stocks that can buck the macroeconomic trends - some businesses become more well positioned during challenging macroeconomic times, and this could also be a theme to investigate for potential investments

Having recently changed jobs, I also have another old pension which is on its way to my SIPP. I will be using this as a chance to reassess each of my current investments, and make sure that all of my funds are well invested for the year ahead.

My aim is to be in a position where I only hold investments where I have strong convictions - no filler stocks kept to make sure my funds are fully invested.

As usual, this content is not financial advice. Please do your own due diligence or consult a professional before making any investment decisions.

Gymshark’s story is the kind that we all love to see. A modern, Great British, boy-done-good success story. Today we are going to dive in, and uncover some of the drivers of this immensely successful business.

We’re going to look at two key aspects which Gymshark was particularly innovative with, and, in my opinion, were the real drivers & enablers of this rapid growth.

First of all, we are going to examine Gymsharks marketing strategies. How did Gymshark drive such high demand for its products? How did they gain credibility as a relatively unknown brand? We will also take a look at how this has evolved and matured as the business has grown to its current, global, scale.

Then we will take a look at the business model, and the financial/operational decisions that enabled Gymshark to grow so quickly, without being well capitalised or funded.

Overall you are going to see a great example of a modern, disruptive, D2C business. But unlike a lot of the other so-called ‘disruptive’ businesses we see these days, you will observe that Gymshark kept the fundamentals of doing good business close to heart the entire time. Something a lot of the exciting VC-backed startups we see these days could learn from.

Let’s start with marketing. More specifically let’s start by examining the brand and how it became credible.

Creating A Credible Brand

Ben Francis' own interests in fitness played a significant role in establishing early credibility for Gymshark. As a fitness enthusiast himself, Francis had a deep understanding of the needs and preferences of the brand's target audience. He knew what fitness enthusiasts were looking for in their clothing, and he was able to design products that catered to those needs. He was also able to be his own brand ambassador, and was often seen working out in Gymshark's clothing, which demonstrated his belief in the quality and functionality of the products he was selling. 

Francis was also proactive in engaging with the fitness community directly during Gymshark's early years. He regularly attended fitness events and trade shows, where he would interact with customers and gather feedback on Gymshark's products. This hands-on approach helped the brand build a strong relationship with its early customers, which further bolstered its credibility in the fitness industry. Outside of the gym, he was also an ambassador for the company itself. As the business grew, he successfully built a strong personal brand as an emerging businessperson.

The early credibility that was created for Gymshark within the fitness community, combined with its good quality and stylish products, meant that many people in the fitness community were more than happy to wear Gymshark clothing. Over and above that though, they were happy to post up content on social media wearing it too. This created the early foundations of the Gymshark ‘community’, an idea they have leaned into as a brand even more since.

After gaining good initial traction, Gymshark was very quick to capitalise on scaling up these marketing channels. Having seen the effects of social media influence early on, they swiftly began a campaign of gifting and sponsoring fitness influencers to wear their products, post content, and drive sales. The decision to invest deeply in this marketing strategy is clearly much easier to make when you have already assessed its effectiveness. 

This investment in marketing efforts reinforced the brand message and credibility of Gymshark, and created a virality/flywheel effect from their happy customers, who generally went on to make multiple/repeat purchases, and recommend the brand to others. This loyalty and evangelism meant that these marketing strategies were not only good at creating hyper-growth for the brand … they were also profitable. Two things which, these days, often don’t go hand in hand.

Now that Gymshark has established a strong customer base here in the UK, the marketing strategy has been to double down on Community, Content, and CRM, with the aim of maintaining strong relationships and fostering loyalty with their customer base. They are also attempting to reach new markets, especially in the US where they have established a physical presence with new premises and warehouses in Denver. 

Meanwhile, they are also attempting to build their credibility to new levels here in their home market, by going full circle with the launch of their first retail store. A flagship store on Regent Street, in central London, which was opened in Late 2022.

Now let’s take our first peak at the numbers that these marketing strategies were able to generate.

These numbers are clearly very impressive. Most tech companies would be envious of this level of sales and growth over a relatively short space of time. However, I think comparing these numbers to tech companies does Ben Francis, and Gymshark, an injustice. 

It’s one thing to grow this fast with a digital product launched with VC-rocket-fuel such as Spotify, Facebook, or Google … but it’s another challenge entirely to scale a business like this, when you are dealing with physical products, and all the logistics and operations that are involved. This challenge is only amplified when considering the fact that Gymshark was entirely self funded up until August 2020.

Only once you realise the implications of these two factors, can you truly appreciate how much of an achievement it really is, to scale a business in this sector, to this degree. So how did they do it, and what was the secret sauce? To understand this we need to dive further into their operations and their financial mechanics.

Creating A Best-In-Class Operation

Many successful well-funded businesses in this world get by without actually running a world class operation. For a self funded business like Gymshark though, this is not an option. For Gymshark to grow the way it has, in a physical goods business, it needed to achieve an astounding level of capital efficiency. A necessary condition for that is to run an extremely tight ship and a slick operation - best in class even, to stand a chance of meeting the excessive levels of demand their marketing strategies were creating. Well, Gymshark did it.

Fundamentally, in a traditional physical products business, the level of sales achievable is limited by the amount of stock you can hold/produce. This, in turn, bears a close relationship to the financing and capital that a business has access to - a major limiting factor in the business model.

Some of the major levers which Gymshark used to overcome these challenges were:

Dropshipping

in the early years Gymshark used dropshipping as a way of fulfilling demand, without needing the capital up front to pay for stock.

Customer places order → Gymshark orders from Supplier → Supplier produces and ships the order directly to the customer

This method has its limitations, as orders can take time to produce and ship. In Gymshark’s case this added to the hype and perceived popularity of their products.

The benefits of the model are that you do not need to hold stock on your own balance sheet, reducing the capital requirements of running your business. Moreover, suppliers will often grant 90 day payment terms to their most reliable customers. This time difference between receiving immediate payment from the customer and paying the supplier gives businesses a natural source of finance.

Once a supply chain is well established, certain suppliers may also take a view that they will maintain a stock of your product, to help them with planning, keeping up with demand, or to benefit from economies of scale - giving some of the benefits of holding stock, without it being on your own balance sheet.

Stock Control

At a certain point in Gymsharks development, controlling its own supply chain by holding stock became more important. This is very capital intensive.

Gymshark has employed a high level of discipline in the early years when it came to how much stock to hold at a given time. Rather than holding lots of stock of every item, they emphasised the importance of staying in stock of their best selling items, without holding excess levels of inventory for slower-moving items.

Fundamentally, this is a simple case of making the most of what you have.

What actually enabled Gymshark to do that task well? It’s all about understanding their customers and their buying habits. At first, with a smaller range, this is a relatively easy/intuitive task for someone who has their finger on the pulse of their business.

However, as Gymshark sales increase, and their range of products and operational complexity grows, this task becomes exponentially more challenging and complex. This is where Gymshark’s innovative approach to technology has enabled them to maintain the same quality of decision making.

By using integrated technology, Gymshark is able to harvest behavioural data on their customers, which is used at scale by predictive data analytics tools to aid best practices when it comes to how much stock to hold, and where to hold it.

Just-In-Time Logistics

The supply chain and shipping lead times for new stock also plays a big role in the capital requirements of a business like Gymshark. The reliability, speed, and cost of shipping goods all play a role here.

If you have a reliable supply chain, it allows you to hold a smaller buffer of stock, and to feel confident in receiving stock just-in-time. Reducing the capital requirements on the business further.

In addition to this, there is also a question of speed vs cost which businesses like Gymshark need to answer when it comes to logistics. Air freight for example can take a few days to reach its destination, versus ocean freight which typically takes around one month depending on the destination (but is cheaper). The key questions to answer here are something like the following:

1. If using Air Freight allows me to have less capital tied up, can I put that capital to good use and drive more sales and cash into the business?

2. Is this additional level of sales and cash flow adequately covering the added cost of using quicker, more expensive, freight methods?

Lean Cost Base / Reinvestment

Aside from these factors, Gymshark has also maintained a high level of discipline when it comes to its cost base. It opts to do things in a capital efficient way, and refrain from unnecessary overhead expenses that reduce the level of cash available to reinvest in the business.

It’s taken a similarly disciplined approach when it comes to taking capital out of the business. Instead of opting to withdraw large portions of profits, Gymshark has historically preferred to reinvest in the future operations and capabilities of the business. This is a hallmark of many successful long-term-thinking companies.

Needless to say, Gymshark has dramatically snowballed and grown the capital available to the business through the reinvestment of these retained profits.

Finance

Lastly, when you have a successful, well ran, business - trade finance becomes an option. These are operating lines of credit which are made available to businesses by banks. The safest and most robust businesses receive highly competitive rates to use funding to operate and grow their business where capital is not available, without giving up equity in the business. Naturally, this is a much more private topic, and therefore it’s unclear exactly how Gymshark may have used this lever to grow its business.

We do know however, that Gymshark has also raised money from a minority equity investment in the company, in 2020, when Private Equity firm General Atlantic invested £200M into Gymshark, valuing the company at over £1B. The thesis of this investment being an entry into the gigantic US market, where Gymshark looks to replicate the success it has had here in the UK. Judging by their FY2021 results, summarised below, this investment seems to be on the right track, and i’m certainly looking forward to delving into their FY2022 results when they become available.

Summarising

In conclusion, Gymshark is a remarkable success story that has captured the hearts and wallets of fitness enthusiasts around the world. The company's innovative marketing strategies, combined with a sound business model, have enabled it to achieve explosive growth in just over a decade. By creating a credible brand within the fitness community, leveraging social media influencers, and fostering customer loyalty, Gymshark has built a devoted following that has propelled it to a valuation of over £1 billion.

Despite its rapid growth, Gymshark has remained true to the fundamentals of good business. It has focused on creating high-quality products that cater to the needs of its customers, while simultaneously building strong operational and capital efficiency into their business model and practices. These principles have allowed the company to grow quickly without being well capitalised or funded, and to maintain profitability throughout its journey.

As Gymshark continues to expand and build its presence in new markets, it will be interesting to see how it navigates the challenges that come with hyper-growth. However, with a talented team, a loyal customer base, and a commitment to innovation, Gymshark is well-positioned to continue its upward trajectory for years to come.

Rather than considering watches as a long-term investment, what if we looked at how we can flip them for profit instead? After my first article on watches last month, I had several conversations with readers about which watches I liked, and which I have invested in or flipped in the past.

Flipping watches doesn’t really count as ‘investing’, as there is work involved. However, it’s a universal truth that people are always intrigued by the notion of making a quick buck, so here’s a guide on how to do just that, from someone that has done it before.

Here’s how I have made over £5000 extra last year, with minimal effort and risk, from occasionally flipping watches.

I’m going to cover one specific angle here with the aim of making a few thousand pounds periodically, with minimal effort/risk.

What I am not going to cover (although it is possible), is treating watch flipping as a ‘proper’ side hustle - investing more time for a steadier stream of income. This comes with more risk and time investment, and is beyond the scope of my skill-set and this article. Let’s get into it!

The Method: Get hold of a brand new watch, which is selling above retail price on the second-hand market.

Why would a second hand watch be selling for more than the retail price? We covered this in a previous article, but it all comes down to Supply & Demand. Watch manufacturers like Rolex, Patek Philippe, and others will often deliberately undersupply the market with watches. This lack of supply, coupled with strong demand, leads to watches being unavailable, and thus the prices on the second-hand market surge.

The idea here is to go into an authorised dealer to put your name down on the waiting list for a watch that is hard to get hold of, popular, and selling on the second hand market above the actual retail price.

If successful, you will get called up by the Authorised Dealer letting you know that your watch has come into stock. This allows you to confirm the current market prices for the watch, the demand, and your overall ability to sell this piece for a profit, before you even make a decision to buy it.

The benefit of this is that it cuts out risk and uncertainty from the flip significantly. The other benefit of this method is that there can be more significant price differentials between the retail price and the second hand market than there would be if you were buying and selling within the second hand market itself.

So if it’s so easy, why don’t more people do this? Well, the truth is, there’s a certain amount of groundwork you need to do in order to be offered the watch you want in the first place. There’s also only so many watches that become available, and only so many dealers to get them from … and if any of them get a whiff that you are planning to flip, you can end up blacklisted from buying from that particular dealer. This limits the frequency and repeatability of this way of flipping watches.

So what groundwork is actually needed? Well, first of all, you are going to need to build up a certain level of trust with your Authorised Dealer.

An Authorised Dealer (AD) is a retailer with delegated authority to sell brand new watches from particular luxury watch brands such as Rolex. For example, Watches Of Switzerland Group have retailers around the world that are official stockists of the top watch brands of the world. ADs are the only place you can buy brand new models from the top watch brands of the world, although some brands will also operate boutiques of their own.

A knowledge / interest in watches is key to building up a relationship. Speak to a salesperson at an authorised dealer, and nerd out with them on the different models you like and talk about your dream timepieces you would love to own. If you’re in the market for a watch for yourself you can even consider buying one from the dealer you plan to flip with, this definitely helps. Otherwise, take their card, and remember their name.

Once you have earned their trust, you can now make your play for the watch you really want. Call up and ask if you can speak to the salesperson from your last visit, and make an appointment. Go there in-person and strike up a friendly conversation with them, and tell them which watch you are dreaming about. Bonus points if you tell them that it’s for a special occasion. If it’s for a wedding, or a big milestone like an anniversary or 30th birthday, even better. This will only increase your chances.

If you do a good job on earning their trust and friendship, they will move heaven and earth for you to try and get hold of the watch that you want. 

Now, which watch to actually choose? This is not an exact science.

Here you are trying to strike a balance between a watch with a high price differential between the retail and second hand prices, the length of the waiting list, and your likelihood of actually getting it. 

Be realistic about it, there’s no way you are going to get offered the ultra hard to get hold of pieces during your first time, at the same time, you only get to do this once in a while, so it’s good to make it count. Most important of all, your story to the authorised dealer needs to be realistic. The watch needs to match the person, and the occasion/reason you want to buy it.

If you can find his/hers watches that both sell for above retail price, you can even put your name down for two at the same time. Authorised Dealers will love to source a pair of wedding watches for example.

When it comes to what price differential to aim for, I think it’s important to have some guidelines. Remember that this transaction will come with costs and risks, and so you need to make sure you adequately cover yourself for these, and have enough profit leftover to make the transaction worthwhile.

I believe the sweet-spot here is finding pieces that are around 30 to 50% more expensive on the second hand market than the retail. The problem with going higher is that the likelihood of getting the piece will go down dramatically, and the timeframe of the transaction will also be drawn out because of the length of the waitlist.

Much lower than 30%, and you are at the point where, after costs, you may not be making an attractive profit on the transaction (bearing in mind you will only get to do this a couple of times a year).

I have stuck to this range and have received two pieces in total, one after three months (30% differential), and the other after nine months (45% differential). I now have my name on the waiting list for another piece, this time a little more ambitious (60% differential), having now built up more trust, relationship, and track record with my authorised dealer. [Sorry if you are reading this … !]

Now let’s talk through how the transaction will actually be executed.

First of all, upon getting called up, it’s important to have a credit card with sufficient balance to pay for the transaction - you may also need to call your bank to inform them of the transaction so that payment goes through smoothly.

When the salesperson is preparing the watch, ask if they can leave the stickers on the watch for you to take them off later - this adds to the value and saleability of the watch when you resell it as ‘fully stickered’. Beware though, this can also be a tell-tale sign of a watch flipper, so only do it if you feel confident in your relationship with the salesperson.

It’s also important to think about safety - you should plan a safe route to and from the dealer. Take a cab home - it’s much safer, especially in central London. I also prefer to safely package the watch in its box within my own bag so that nothing is visible when leaving the dealer.

Now, you’re home, and probably full of adrenaline. It’s now time to carefully and stylishly photograph the watch. Ensure to show the completeness of the box and papers, and show the watch in crystal clear detail. Prepare the listing on Chrono24, and get ready to list it for sale. You will need your ID on hand to verify and confirm your account.

Choose a price that is at the lower end of the market for this particular model. Your price should be around the same price or slightly lower than the cheapest comparable listing on Chrono24 - this will generate interest and a quicker sale. Note that a private seller is not the same as a dealer. Even if it’s a few hundred pounds more, people will likely choose a dealer over a private seller, so be aware of this and position your listing accordingly.

Finally, people love to negotiate on Chrono24. That said, if your listing is the cheapest on the market, you can hold pretty firm most of the time, and still make the sale. 

Once you have accepted a binding offer to sell the watch, the buyer will go on to deposit funds into an escrow account managed by Chrono24. At this point, you will carefully package the watch, and send the item to the buyer. You need to use a fully insured and reliable service like FedEx or UPS.

Once received, the buyer confirms the transaction, and funds are released to the seller (less fees). The escrow service that Chrono24 offers is important as it is how disputes are resolved - the money is not released or returned to the buyer unless everything has been kept ‘above board’ … protecting both buyer and seller.

Escrow is a legal concept describing a financial agreement whereby an asset or money is held by a third party on behalf of two other parties that are in the process of completing a transaction.

Escrow accounts are managed by the escrow agent. The agent releases the assets or funds only upon the fulfillment of predetermined contractual obligations (or upon receiving appropriate instructions). Money, securities, funds, and other assets can all be held in escrow.

Let’s now take a look at one of my own examples, and the numbers behind it. 

In September 2021, I put my name down for a Rolex Skydweller 326933 - a two-tone stainless steel and yellow gold watch with an annual calendar complication and a black face. This is a sought after model, but not as sought after as the pure stainless steel versions.

The retail price for this piece was £14.8k (now £16.8k), and at the time I put my name down for this watch, the cheapest sale price on Chrono24 was around £21.5k. After about 9 months, I received my call from the AD, checked the prices were still well above the retail price, and headed into the dealer to purchase the watch.

I couldn’t resist trying it on …

Now let’s get into the numbers, and the cold hard cash.

The cheapest comparable (brand new, unworn) on Chrono24 was £21.5k from a known dealer. I undercut this by listing for £20,975, and within two weeks (and a few cheeky offers from watch traders) sold the watch for £20,475.

After Chrono24 deducted their 6.5% fee, this gave proceeds from sale of ~£19,144. This is what you actually receive into your bank account as a payout.

As this is a very expensive item, I spent around £230 on postage via UPS. This was to make sure the item reached the buyer ASAP, without issues, and fully insured along the way. I also incurred some other costs like packaging, my taxi to and from central London, and so on. Call it £100.

The final and biggest cost is of course the cost of the watch itself. This was £14,800.

All in all, the transaction netted me a total profit of over £4,014, in just 3 weeks from start to finish. In fact, I hadn’t even yet made my credit card payment by the time the funds hit my current account. In terms of hours, there was probably around 3-4 hours work involved, mainly going into the AD to collect and pay for the watch.

To recap, here is a diagram of the P & L of this transaction:

To summarise then:

1. Find the right watch, and form a relationship with an AD

2. Put your name down for something realistic but profitable

3. When you get the call, confirm the demand and up-to-date market price

4. Prioritise safety when going to pick up the watch

5. List it with attractive photos and pricing, negotiate a good sale price

6. Use the Chrono24’s escrow service

7. Post using a premium, fully insured, service

8. Collect your profits!

Bonus tip: don’t reveal your sources or serial numbers online, as you may be barred from buying from your AD in the future if they come across your watch online.

There are a lot of pros to this occasional side hustle:

• Minimal effort - it only takes a few hours every once in a while

• Minimal risk on price (as you can check market prices before you commit)

• Bigger price differentials versus second hand flipping

• Quick turnaround - the transaction should take < 4 weeks

There are also some clear cons:

• If the sale takes a while, you could face cash flow challenges

• Limited repeatability - this is not a full side hustle

• Unpredictability of timing - you never know when/if you will get called up

• You need to think carefully about safety/security

• You may need to bend the truth with your authorised dealer to avoid being blacklisted by them

If you are very knowledgeable and interested in watches, and have more time to devote, you can also consider flipping second hand watches. This is more difficult, as price differentials are much smaller and so it’s harder to make good margins on a flip. You are also far more open to fraud depending on how you source your stock.

Pros:

• Knowledge is readily rewarded - if you know your stuff you will do well

• There are a whole galaxy of flipping opportunities, allowing you to flip more frequently and generate a genuine second income from flipping watches 

Cons:

• Price Risks - price movements can affect profitability, and when margins are smaller this risk becomes more significant

• Fraud Risks - you can also be at more risk of receiving counterfeit watches, than when buying from an authorised dealer

• Smaller Margins - the rewards per transaction/risk are generally much smaller, meaning that this is a volume game

• Safety, Storage & Security - if you become known as a watch trader, it is possible you could be targeted by thieves, a big risk if you have a stock of luxury watches

• Time invested - because of the volume nature of this game, it is time consuming to generate sufficient earnings

My take is that it is much easier and more pleasant to make an occasional quick buck, and be happy, rather than trying to make an actual living with this. I would also remind you to think about your own personal circumstances before trying to execute any of the strategies described here. They will not suit everyone, and this article is not intended to be financial advice!

Thanks a lot for subscribing and reading today, and I would love to answer any questions that you have in the chat. Which watch are you buying or flipping?

OnlyFans was launched in 2016 by British entrepreneur Tim Stokely as a way for content creators to monetise their work and connect with fans. The business was financed with a modest £10k loan from Tim’s father, reportedly with the caveat “this is the last one”.

The platform mainly attracted models and performers looking to monetise their adult content, but it wasn't until 2020 that the platform really took off in a perfect storm. 

When COVID-19 pandemic hit the world and large portions of the population were stuck at home, many turned to the internet for entertainment, and OnlyFans saw a significant increase in users and revenue as a result. The aftershock of this was a huge increase in earnings for creators, and a rush of news articles covering the platform, and the kind of money being made by its creators. 

Meanwhile, everyday people, with typical run-of-the-mill jobs , found themselves furloughed, with all the time in the world on their hands to seek an additional source of income. With outrageously high creator earnings being splashed all over the press, OnlyFans became a tempting option for many. In the end this created a virality effect, and a gold-rush of new adult content creators joining the platform.

By the end of 2020, OnlyFans had become a mainstream success. The platform had grown to over 1.6 million content creators and over 82 million registered users. It had also expanded its offerings to include a wide range of creators including musicians, comedians, and influencers. OnlyFans reported paying out over $1 billion to content creators in 2020, which is more than many major tech companies.

It’s gone on to be a post-pandemic success too, with the company already reporting that over $233M has been paid out in dividends in the 2022 calendar year.

Adult content sites have consistently been amongst the top 10 visited websites each and every year over the last couple of decades. The market is huge and global.

What OnlyFans succeeded in doing was taking this huge market from the seedy underbelly of the internet, into a legitimate, paywalled, self-serve platform - enabling creators to take control of their own destiny, and charge what they want for the content they create. In the process, OnlyFans managed to catapult themselves in to the zeitgeist of 2020’s pop culture.

Creators are able to post paywalled content on the platform, with the option to charge a monthly subscription to ‘fans’, or standalone paid content. OnlyFans gives autonomy to their creators, by leaving them to decide what they would like to charge for their content. Creators are able to build a steady stream of income from subscriptions, standalone content, or a combination of the two. Creators often brought their existing fans to the platform, who would then go on to find other creators to subscribe to. Others were able to build audiences from scratch on the platform itself.

So, that’s how the creators make money, but how about OnlyFans itself? I took a look in their 2021 company accounts and was astounded by the financial success this business has become.

OnlyFans take a 20% cut of all sales on their platform, leaving the other 80% to their creators. In 2021 this represented $489M from subscription based revenue, and $443M from non-subscription revenue. The majority of this came in from the USA, but Europe and the rest of the world are substantial too.

From here, OnlyFans pay processing fees, and some other direct costs associated with their platform. Their gross profit in 2021 was $560M … not a figure to be taken lightly. After this comes administrative expenses - this will include things like server costs (hosting spicy content doesn’t come for free, you know). It also includes around $24.3M for salaries (of which ~$8.6M went to the highest paid director!).

With a very lean staff for this size of business, the average number of employees was just 61. When you exclude the highest paid director, the average salary per employee in 2021 was over $260k. Not too bad either.

After some other costs like R & D and foreign exchange losses, OnlyFans earnings eventually net out to a $433M profit before tax. A phenomenal number for a business owned by one individual (OnlyFans was acquired from Tim Stokely by Ukrainian-American businessman Leonid Radvinsky in October 2018).

Usually, a tech-platform driven business like this would attract a price-to-earnings ratio of around 20, implying a valuation of the business of ~$6.5B. However, in practice, OnlyFans unshakable links to the adult industry would bring this down significantly. A more realistic valuation for this type of business would be around half that, or ~$3.25B.

Perhaps now is a good time to pivot, and talk about creators earnings. A couple of stats really drew my attention to this when reading through OnlyFan’s accounts.

• Stat #1: as of 2021, OnlyFans has 2.16M creators on its platform

• Stat #2: as of 2021, OnlyFans did $4.8B in gross sales on its platform

Individually, each of these statistics sounds incredibly impressive. But what about when you put them together? I couldn’t help but notice that $4.8B divided amongst 2.16M creators is a meagre $2,219 per creator. And that’s over the course of a year.

What’s going on here? The truth is that in fact, creators on OnlyFans aren’t all making a killing, in fact far from it. An overwhelming majority of OnlyFans revenues are driven by its top 1 or 2 percent of creators. Outside of that, there’s really not a lot of money being made at all.

Digging a little deeper into the data, and from some research online, I came to the conclusion that the inequality among OnlyFans creator’s earnings is drastic. While accurate data on this is not public, I put together a model based on my own research, adjusted based on the actual known sales figures from OnlyFans company accounts:

The real payoff for creators seems to be around the top 1% mark. At this point, earnings begin to skyrocket into the headline grabbing earnings that have been seen in the press. For me though, the more headline grabbing stat should be the fact that 95% of creators are barely making any money at all.

Selling adult content online is not without its side-effects including hateful comments, abuse, and the ever-present risk of your content being leaked onto the internet forever. These things should never be tolerated, but it’s important for would-be creators to know the risks and rewards of the industry they are entering.

OnlyFans presents itself as having a very robust stance on each of these risks, stating in its annual report that it has made several senior level hires to ensure the continued safety and security of creators on the platform. However, with so much activity on this platform, and such a low head-count at the company, it’s something that I find hard to believe. Fortunately for OnlyFans, it has more than enough profitability to continually reinvest in making the experience for its creators better and more secure. I just hope that they do.

Outside of the adult industry, OnlyFans has been repeatedly trying to shake its NSFW image. One of the strategies it is attempting to execute is attracting well known stars in other areas onto the platform. For example Actors and Music Artists.

In fact back in 2021 OnlyFans tried a little too hard in pivoting towards this strategy, making the decision to phase out all NSFW content. This strategy had to be swiftly ditched, as the platform came under a tremendous amount of pressure from sex industry workers from around the world.

It seems that the adult industry has been through an inflection point because of OnlyFans, and that return is not an option. It’s now a truly disrupted industry.

As the main player in the disruption, this is a very powerful position for OnlyFans to be in, but one of great responsibility too. To cement their dominant position, it will be important for OnlyFans to invest in protecting and serving its creators, even sacrificing some of their profits to do so. They should be establishing a strong governance structure, and a culture of putting the creators at the centre of what they do. This will earn the loyalty of the creators it depends on, and make its position of dominance more permanent.

Whatever you think of OnlyFans, I think we can all agree it’s a tremendous business, and one that truly delivered on its mission to disrupt the broken and unsafe adult entertainment industry. Whether or not this industry has been ‘fixed’, though, is another question entirely, and one that’s up for debate.

What do you think of OnlyFans? Leave your thoughts in the comments and I’ll answer.

What made AlphaZero so impressive is that it was able to teach itself how to play chess in just four hours, without any prior knowledge of the game. It was able to do this by using a technique called reinforcement learning, which involves training the algorithm by playing against itself. As it played more games (millions more), it was able to improve its own chess skills and ultimately become an order of magnitude better at chess than anything (or anyone!) that came before it.

AlphaZero was put to the test against the world's best chess engine at the time, Stockfish, developed by expert chess players over decades, in a 100-game match in 2017. The result? 28 Wins, 72 draws, and no losses for AlphaZero. Not only that, but it was able to demonstrate its dominance and superiority with an artistic elegance.

The success of AlphaZero is a testament to the power of AI, and it raised many questions about the future of the field at the time. For example, if an AI algorithm can teach itself how to play chess in just four hours, what other tasks could it be capable of performing? How well would AI adapt to the non-determinism of the real world? Could AI be used to solve complex scientific problems or help us to understand the mysteries of the universe?

The possibilities are endless, and it is exciting to think about what the future holds for AI. But it's also important to consider the ethical implications of such powerful technology and ensure that it's used responsibly. In this article, I am going to dig into four other striking examples of AI in action that have taken hold since, and pose some questions about what the future of AI has in store.

First, the one on everyone’s lips the last couple of months:

ChatGPT

The launch of chat GPT, a large language model developed by OpenAI, is another example of the disruptive power of AI. This model has the ability to generate human-like text, making it useful for a wide range of applications such as content creation, idea generation, and language translation.

The outputs from this AI are truly striking, and it’s no surprise that ChatGPT has taken the world by storm, garnering 1M users in just 5 days. To put that into perspective, it took Netflix 40 months to achieve this goal, Twitter over two years, and Spotify 150 days. Even instagram took 2 and a half months to reach this milestone.

For a taste of the kind of things ChatGPT can do, take a look at this motivational letter, for a bit of an insight into ChatGPTs emotional and human understanding:

When people think of the notion that “AI will make all of us redundant”, people typically think of the factory worker, data entry clerk, or similar. What’s becoming clear now is that no-one is safe! Not even CEOs, accountants, or management consultants.

The model's ability to understand and respond to natural language inputs makes it a powerful tool for businesses everywhere when implemented effectively.

Here’s a couple more examples of me bouncing some ideas around. You’ll see immediately that the answers are grounded in clarity and logic, and are immediately actionable.

Even software engineers, will be finding that AI will be playing a bigger role in their life, as Chat GPT is already writing, checking, and optimising code in multiple programming languages.

One of the most exciting potential applications of chat GPT is in the field of education. Imagine having a personal tutor that can understand your questions and provide tailored responses, or a learning platform that can generate personalised practice exercises and quizzes. This technology could also be used to create virtual learning environments, which could make education more accessible to people in remote or under-served areas.

Meanwhile, Microsoft are eyeing up a $10B dollar investment in OpenAI (the developer of ChatGPT), with many speculating they will use the deal to accelerate their development in AI, and potentially revolutionise their search engine, Bing, to create a serious rival to google. Could this be the breakthrough that is needed to break google’s grip on our internet searches?

The deal will see Microsoft take a 75% share of profits after the initial partners receive their investment back. Uniquely though, OpenAI is in fact a non-profit company. So beyond returning an agreed profit cap to investors, eventually profits will go solely into the continued development of OpenAI.

Recommendation Engines

A less visible but equally striking application of AI has been taking a hold of social media over the last decade - the rise of the Recommendation Engine.

Artificial intelligence is being widely used by companies like Netflix, TikTok, Instagram, YouTube, and Shein to improve their recommendation engines. These recommendation engines use a variety of techniques such as collaborative filtering, natural language processing, and machine learning to analyse user data and make personalised recommendations to users.

TikTok uses AI to recommend content to users based on their engagement history. The data is so vast in recent years that it is no longer simply looking at likes, shares, comments, or followers. It’s looking at it all. How many milliseconds you look for, which thumbnails generate the most engagement, pretty much every way you interact with social media content is being recorded and analysed by AI. By using this rich data, TikTok's algorithm can make recommendations that are more likely to be relevant to each viewer - keeping them engaged, and monetised through ads.

Similarly, Instagram, Netflix and YouTube all use AI-powered recommendation engines to show users content that is relevant to their interests.

Finally, Shein, a Chinese-owned eCommerce clothing platform, uses AI to recommend products to their customers based on their browsing history, purchase history, and other data. Shein are famous for using data and AI to generate new clothing ideas, and release 1000s of these new items at scale each day.

By analysing data from a huge volume of people, and thousands of product lines, Shein's algorithm can make personalised product recommendations that are tailored to each customer's preferences and interests - again, engaging and monetising them more. In this case the narrow domain expertise of recommending clothing helps the algorithm excel at the task even more.

Two things to note that recommendation engines rely on heavily.

• They need a huge amount of data: To become the addictive, all knowing, powers that be today on the big social media platforms, these algorithms feed and live off of data. To maximise their output, the data needs to be big, and high quality. Big Data is a vital developing industry for the enablement of AI. Along with companies that provide the cloud infrastructure and computing power to store, access, and analyse this data.

• Diversity of content and recommendations: They also need a large and varied universe of things to recommend in the first place, to truly generate the depth and richness in the machine learning that recommendation engines go through.

This is how social media giants like TikTok and Instagram have created such powerful recommendation engines - they have more data than anyone else from their apps, and their user generated content is in endless supply, giving the machine learning algorithms all they need to discover what to show you next.

AI is also helping social media companies in another way. With AI enabled ad targeting, the social media companies are able to better target advertisements. With the effectiveness of ads increasing, companies are increasingly willing to pay more for ads, driving up advertising earnings across big tech companies like Meta and Google over the last decade.

This is being achieved through the use of advanced machine learning algorithms that can analyse large amounts of data to identify patterns and make predictions about consumer behaviour. By using this data, companies can target their ads to specific segments of the population, increasing the chances of conversions and reducing the cost of advertising. In recent years though, the advertising industry has moved beyond this, into a state where, after a sufficient testing period, AI can improve or even outperform the targeting that is being originally set by the advertisers.

One of the key companies involved in this disruption is Google. Google's AI-powered ad platform, Google Ads, uses machine learning to help businesses target their ads to specific audiences. It uses data from a user's search history, browsing history, and location to show ads that are more likely to be relevant to them. Google's AI also helps to optimise ad campaigns by adjusting bids, placements, and targeting in real-time to maximise returns on ad spend.

Some would argue that more relevant ads for users is a good thing, but others would argue that its influence and power make it something to be weary of - in fact over the last several years there has been major privacy concerns and pushback from the general public.

Image Recognition

AI is now being used for image recognition in a wide range of applications, including object detection, facial recognition, and image classification. These applications make use of machine learning algorithms that can analyse images and extract useful information from them.

One of the most popular applications of image recognition is object detection, which involves identifying specific objects within an image or video. This technology is used in a variety of fields, including self-driving cars, surveillance, and retail. Companies like NVIDIA, Waymo (an Alphabet subsidiary), and Tesla use object detection technology in their self-driving cars to identify and respond to objects in the environment, such as pedestrians, other vehicles, and traffic signals.

Another popular application of image recognition is facial recognition, which involves identifying people in an image or video by analysing facial features. This technology is used in a variety of fields, including security, marketing, and entertainment. Companies like Face++, Microsoft (Face API), and Amazon (Amazon Rekognition) are using facial recognition technology in their products and services to improve security and personalisation.

With the further development of sensing and vision systems, it’s easy to imagine a world where surveillance becomes so powerful that security cameras can identify individuals and continually monitor their movements and activities.

Robotics

Robotics and AI are closely related fields, as AI provides the intelligence and decision-making capabilities that robots need to function autonomously.

One of the most popular applications of AI in robotics is in autonomous vehicles, such as self-driving cars and drones. These vehicles use AI-powered navigation systems to navigate their environment, avoid obstacles, and make decisions about how to reach their destination. Companies like Waymo, Tesla, and Baidu are at the forefront of developing self-driving cars and drones, using AI and machine learning algorithms to enable them to navigate safely and efficiently.

Another popular application of AI in robotics is in industrial automation. In this field, robots are being used to perform tasks that are dangerous or difficult for humans, such as welding, painting, and assembly. These robots use AI-powered systems to analyse their environment and make decisions about how to perform their tasks.

AI is also being used in service robots, such as robots that are used in retail, hospitality, and healthcare. These robots use AI-powered systems to understand and respond to natural language inputs, making them more capable of interacting with humans - and even capable of entertaining them.

As with several of the other AI applications I have shown here, Robotics also has a dark-side. Having seen the way that AI has excelled at thought-tasks, it’s easy to imagine a scenario where robotics and autonomous air vehicles become so advanced that they can dominate any military force which isn’t enabled by AI. If AI does indeed become this powerful, and ends up in the control of the wrong hands - dystopian scenarios are bound to happen.

Where do we go from here?

The future of AI looks promising and has the potential to bring about significant changes in many different fields. But as has been echoed throughout this article, the potential for abuse in the wrong hands is huge. The ethics and morality of the use of AI will continue to become an emerging and important issue of the day, as this technology and its applications evolve.

There are several moral and ethical considerations, including:

• Bias: AI systems can perpetuate and even amplify societal biases if the data used to train them is biased. This can lead to unfair or discriminatory decisions.

• Privacy: The collection and use of personal data by AI systems raise concerns about privacy and the protection of personal information.

• Autonomy: As AI systems become more autonomous, there are questions about how responsible and accountable they should be for their actions.

• Transparency: As AI systems become more complex, it can be difficult to understand and explain their decision-making process. This can make it difficult to trust the decisions made by the AI system.

… and several dystopian scenarios that could develop if AI got into the wrong hands or became an unfair advantage that was only available to the wealthy or elite:

• Widening of the wealth gap: AI-powered automation may lead to increased economic inequality, as the wealthy gain access to advanced AI technologies that can automate their businesses and create new opportunities, while the less fortunate lack access to these technologies.

• Job displacement: AI-powered automation may lead to widespread job displacement, as machines can perform many tasks more efficiently than humans. This could lead to mass unemployment and social unrest.

• Loss of privacy: AI systems that are controlled by the wrong people may be used to collect and exploit personal data on a large scale, leading to a loss of privacy for the general population.

• Weaponisation: AI systems may be weaponised to target specific groups or individuals, leading to large-scale human rights violations.

• Social manipulation: AI systems that are controlled by the wealthy or elite may be used to manipulate public opinion and influence elections, leading to loss of democracy

All these possibilities need to be considered by governments, regulators, and responsible AI developers, to ensure that AI brings about positive change in society, and not destruction.

For AI to thrive, it needs the following conditions:

• High-quality data: AI systems need high-quality and diverse data to train on. This data should be free from bias and accurately represent the problem that the AI system is trying to solve.

• Robust algorithms: AI systems need robust algorithms that can handle complex data and make accurate predictions.

• Strong computational power: AI systems require significant computational power to operate. This includes not only the computational power of the system but also the infrastructure to support it.

• Human oversight: AI systems should be designed with human oversight in mind, to ensure that the decisions made by the AI system align with human values and ethics.

• Transparency: AI systems should be transparent and explainable, so that their decisions can be understood and trusted.

But even with these conditions, there are still some big limitations on AI.

• Limited domain expertise: AI systems are typically designed to excel in a specific domain or task. They may not perform well in tasks outside of their domain expertise.

• Computational power: AI systems require significant computational power to operate. This can be costly and may limit the deployment of AI in certain environments.

• Lack of common sense: AI systems do not possess the common sense that humans have, which can limit their ability to understand and respond to certain situations. Take this riddle for example. All that computing power and intelligence, yet it can’t answer a simple riddle. It was painful.

  

Positive Predictions

While it’s easy to think of dystopian scenarios … there are also an incredible number and variety of scenarios that could bring tremendous good to the world.

Although it is difficult to make definitive predictions about AI in the next 10 to 20 years, there are some possible developments that we can be pretty confident and excited about:

• Advancements in natural language processing: AI systems are likely to become more advanced in their ability to understand and generate human-like language, allowing for more natural and seamless human-computer interaction.

• Development of more advanced autonomous systems: AI systems are likely to become more autonomous and capable of performing complex tasks with minimal human supervision. This could include self-driving cars, drones, and robots.

• Advancements in healthcare: AI systems are likely to become more sophisticated in their ability to analyse medical data and make accurate diagnoses, leading to improved patient outcomes.

• Development of AI-powered virtual assistants: AI-powered virtual assistants are likely to become more advanced in their ability to understand and respond to human input, leading to more natural and efficient human-computer interaction.

• Advancements in the field of robotics: AI will likely play a crucial role in the development of advanced robots that can perform a wide range of tasks, from industrial automation to service robots.

• Advancements in security: AI will likely play a crucial role in the development of more advanced security systems that can detect and respond to threats in real-time.

The overall hope for AI, is that it helps the human race to be more productive and economically successful, improving the quality of life for large segments of the population, and bringing people out of poverty.

So what do I think?

I believe that AI will bring huge productivity gains and quality of life improvements to the human race in the not too distant future, but it would be naive to think that it will never be abused. I see AI abuse as an unfortunate certainty which the world will need to deal with at certain points in the future with global collaboration and regulation of the dangerous aspects of this technology. I also firmly believe that AI will create or strengthen some of the most valuable companies of the future.

Does that mean that AI startups will all be smash hits? Of course not, like any other emerging technology, there will be winners and losers. The challenge of finding the best is one we can leave for venture capitalists (or AI?) to solve.

This article takes a look at the best and most tax efficient investment vehicles available in the UK. The good news is - they’re hiding in plain site, and can save you thousands of pounds in tax each year if used wisely.

Benjamin Franklin once said: “in this world, nothing is certain except death and taxes” … I say let’s try to reduce our taxes so that at least we can die rich!

There are three main tax bills in the UK which people can try to minimise. We are going to cover all of them here. These are income tax, capital gains tax, and inheritance tax. Income tax is a tax on an individual's wages or salary, while capital gains tax is a tax on the profit made from selling an asset that has increased in value. Finally, inheritance tax is a tax on the transfer of assets upon death.

Before we get into the investment vehicles that can help reduce some of these burdens, it’s important to remind you that this article is for information purposes only, and does not constitute financial advice. You should exercise your own best judgment, or consult with a financial advisor, accountant, or tax professional before deciding that a particular type of investment is for you.

I am going to run through the investment vehicles roughly in order of their liquidity. Starting with the simplest and most accessible investment vehicles, before moving onto more complex and longer term options that will lock away funds. Lastly, we will cover pensions and investments that are efficient when it comes to inheritance tax.

Individual Savings Accounts (ISAs)

Starting with the basics, let’s talk ISAs. ISAs are tax-free savings and investment accounts that allow individuals to save and invest up to a certain amount each year without paying tax on the interest or capital gains earned. There are several types of ISAs, including Cash ISAs, Stocks and Shares ISAs, and Innovative Finance ISAs.

At the time of writing, each tax year you can save up to £20,000 in one type of account, or split the allowance across some or all of the other types.

Cash ISAs are available from most high street banks, offer a simple way to save up cash, and benefit from a tax-free rate of interest. Remember that moving money in and out of this type of account will eat away at your allowance, so if you are planning to max out your ISA allowance each year, don’t carelessly deplete your allowance by moving funds back and forth between accounts. At the time of writing, the top rate of interest available in the market for this type of account was 4% AER.

Next up are Stocks and Shares ISAs, and if you have a higher appetite for risk with your savings, or 4% interest just doesn’t float your boat, this type of account may give you the options you are looking for. With this type of account, you still benefit from tax-free returns on your investments, but you get to choose the investments yourself - for example by buying shares in listed companies. If you don’t know what to invest in, you can always invest into a tracker fund, which will track the performance of the overall market.

This is my own personal favourite type of account, which I use to invest excess funds into liquid investments like stocks and shares. Two reputable platforms you can open this type of account with are AJ Bell and Hargreaves Lansdown. The key benefit here is that, if your returns are good, you can snowball your investments into a much bigger sum, continue to benefit from tax-free returns, and still be able to liquidate your investments into cash (during market operating hours) if you need it. The downside is that investments can go down as well as up, and so you should be prepared for that eventuality, and ensure you have access to enough cash to meet your needs at all times.

Innovative Finance ISAs are even more niche. These accounts allow individuals to invest in certain types of peer-to-peer (P2P) loans and, again, receive tax-free returns. These P2P loans can include personal loans, business loans, and property loans. P2P loans can offer higher returns than traditional savings accounts or bonds, but also come with more risk - as there is no guarantee that the borrower will repay the loan. Depending on the platform used and the details of the specific P2P loan chosen, there can also be a lack of liquidity - you may have to wait for the loan to be repaid to access your money. I have far less experience and knowledge on this type of product, but wanted to include it for completeness.

To give you an idea of the kind of returns that cash ISAs and stocks & shares ISAs could generate over a long period of time, I ran 5 simulations. In these, I show the value of a portfolio when investing solely in a 4% cash ISA, versus investing in a stocks & shares ISA with average returns of 10% per year. Since the stock market is unpredictable, I wanted to give you an idea of the kind of value fluctuations that are possible when investing in the stock market, by introducing noise in the data with a standard deviation of 15% (meaning that on average, each year, the returns are +/- 15% versus an average of 10%). Note - these simulations were done completely at random using the parameters described.

As you can see, the potential outcomes are wide ranging, with simulation 5 becoming a millionaire in 12 years, and simulation 4 not even making it after 30 years. Overall though, statistically and historically, investing in the stock market has given a better chance of superior returns versus interest on cash. In all cases though, we generated large returns, that are completely free of tax, with both types of account.

BONUS: The Lifetime ISA (for if you are saving to buy a property) this is another interesting product, especially if you are looking to buy your first property. It allows individuals who are aged between 18 and 39 to save up to £4,000 per year, and receive a 25% bonus from the government on their savings, up to a maximum of £1,000 per year. There are several high street banks which offer a cash Lifetime ISA, as well as AJ Bell and Hargreaves Lansdown who offer a Stocks and Shares equivalent.

The funds saved in a Lifetime ISA can be used for either a first-time home purchase or for retirement, and also benefit from tax-free returns. You can access your funds for other reasons too, but in this case you pay a 25% withdrawal fee (which amounts to paying back the government bonus, and a little extra). Therefore you should think carefully, and be sure you are going to want to purchase a property in the future. You should also be sure that the price of your first property will be below the limit - at the time of writing this was just £450k, which may not get you what you need in London for example.

After just a few years, you can already start to see the difference that the governments bonus has on the size of deposit saved, and therefore the kind of properties that the saver can afford. This account can be combined with a normal ISA too, if you have more than £4k to save each year. Just remember that the total annual ISA limit is £20k between all of your accounts, including the lifetime ISA.

Venture Capital Schemes (EIS, SEIS, VCTs)

Now let’s get into some non-liquid investment vehicles. By their very nature, these investments are more complex, illiquid, and higher risk. If you think these ideas are something you are interested in, it’s highly advisable to speak to a professional before making a decision to invest. If you invest using one of these schemes, you will also likely need to begin filing tax returns, if you don’t do that already.

The main types of investments I want to talk about here are EIS, SEIS, and VCTs. All three schemes are based on investing in privately owned, unlisted businesses.

The Enterprise Investment Scheme allows individuals to invest in certain types of privately owned business, and write off or reclaim 30% from your income tax bill, defer capital gains tax you may have due, and earn returns free from capital gains tax, upto a very generous threshold of £1M per year. Its sister scheme is the Seed Enterprise Investment Scheme is very similar, but is targeted at earlier stage companies who are raising their first funds, the tax benefits are more generous, but the investments themselves are usually higher risk, and the threshold for investment is £100k per year at the time of writing. Finally, Venture Capital Trusts are listed companies that invest in early stage companies which meet requirements that allow investors to claim similar tax reliefs to those using the EIS and SEIS schemes.

These types of investments are high risk, but the schemes themselves offer potentially huge amounts of tax relief and risk limitation. This makes these types of investment particularly attractive to those with excess cash, and big tax bills - especially if they are knowledgeable on the businesses that they choose to invest in, and comfortable with risk. It’s important to note that these really are very illiquid investments. Once made, you will not be able to access your funds and will not be able to for the foreseeable future, unless the company makes an exit. Generally the investment horizon is around 5 to 10 years.

There are several key tax benefits to investing in these schemes:

• Income Tax Relief - first and foremost, all three schemes offer up to 30% income tax relief on investments made (50% for SEIS). This means that on a £10k investment, you could claim a tax deduction/rebate of £3k (or £5k for SEIS). This immediately brings down the effective cost of these investments significantly.

• Capital Gains Deferral Relief - what’s more, if you are due to pay any capital gains tax, or have paid capital gains tax on something in the last few years, you may also be able to defer or reclaim this amount, and pay it later (when you exit your investment). Deferral Relief lets you treat the gain as not arising until some future date, as long as you use the funds to acquire EIS or SEIS eligible shares.

• Capital Gains Disposal Relief - now let’s talk about exits. There’s large tax benefits here too. Ordinarily, exiting an investment for profit would count as a taxable capital gain. With these scheme’s though, this is not the case - provided you have held the shares for more than 3 years, no capital gains tax will be due on exit.

• Loss Relief - and what about if things don’t go so well? If you sell your EIS shares at a loss, you can choose to offset the loss amount, less any Income Tax relief already given, against your income. You can do this for the tax year that you sold the shares or the tax year before. For someone paying the top, 45p, rate of tax, this would effectively mean losing no more than 38.5p in the pound for an investment that went wrong.

Each of these investment vehicles is slightly different. But all three share common limitations based on the high-risk nature of investments, the illiquidity during the investment period, as well as the 3+ year time horizon, and the admin involved in taking advantage of these schemes.

To try and clarify some of the differences with these schemes, I have put together a comparison with some examples below. However, as stressed already, these schemes are complex, and therefore you should always seek expert advice before jumping in to any of these schemes, and consider your own unique circumstances.

EIS Scheme

Annual Limit - £1M invested (and up to an additional £1M per year for knowledge intensive companies)
Income Tax Relief - up to 30% of the amount invested
CGT Deferral - invest a capital gain in an EIS eligible investment, and reclaim/defer 100% of the capital gains tax due until you exit
CGT Disposal - no capital gains tax payable if held for 3+ years
Loss Relief - when exiting for a loss, you can offset the loss (less any relief already received) against income and/or capital gains
Conditions - less than 250 FT employees, gross assets less than £15M, limit of £5M EIS investment per year up to a maximum of £12M in the lifetime of the company, company must be trading for less than 7 years
Time Horizons - 3+ years
Dividends - no tax relief
IHT Relief - inheritance tax exempt after 2 years

Example: you pay income tax in excess of £5k each year, have a capital gains tax bill due in excess of £2k, and decide to invest £10k into an EIS eligible company.

• You get to claim back 30% of your investment from your income tax bill (£3k)

• You decide to defer paying £2k of CGT on £10k of your capital gains

• Your effective up front cost for this £10k investment comes down to £5k

• You hold on to your investment for over 3 years, and the company is acquired for triple the valuation that you invested at

• You receive £30k from your original investment tax-free, and repay the CGT of £2k that you deferred, at the time of exit, netting you £28k

• Net effect of the scheme in this example was that it amplified your returns from 2.6x without all the tax relief to effectively 5.6x with it

SEIS Scheme

Annual Limit - £100k invested
Income Tax Relief - up to 50% of the amount invested
CGT Deferral - invest a capital gain in an EIS eligible investment, and reclaim/defer 50% of the capital gains tax due until you exit
CGT Disposal - no capital gains tax payable if held for 3+ years
Loss Relief - when exiting for a loss, you can offset the loss (less any relief already received) against income and/or capital gains
Conditions - fewer than 25 FT employees, gross assets less than £200k, not yet raised money through EIS or VCT schemes
Time Horizons - 3+ years
Dividends - no tax relief
IHT Relief - inheritance tax exempt after 2 years

Example: you pay the 45p rate of income tax each year, have no capital gains to claim or defer, and decide to invest £20k into an SEIS eligible company

• You get to claim back 50% of your investment from your income tax bill (£10k)

• Your effective up front cost for this £20k investment works out to £10k

• You hold on to your investment for 5 years, but in the end the company is unsuccessful and is sold for just 10% of the valuation you invested at

• You receive £2000 from the sale, meaning a gross loss of £8k

• You write off the £8k loss against your income, reducing your tax bill by 45% of £8k, saving you £3.6k

• In this example, even though the company failed, the effective loss from the investment after tax relief worked out to be just £4.4k, versus an effective £14.4k loss had you invested £20k in the company without using the scheme

VCT Scheme

Annual Limit - £200k invested
Income Tax Relief - up to 30% of the amount invested
CGT Deferral - no deferral allowed
CGT Disposal - no capital gains tax due
Loss Relief - no loss relief
Conditions - less than 250 FT employees, raising less than £5M per year
Time Horizons - 5+ years
Dividends - no dividend tax payable
IHT Relief - no inheritance tax relief

Example: you pay £30k in income tax each year, want to invest £100k into a VCT, you have capital gains but you can’t defer them using the VCT.

• Upon investing £100k in the VCT, you claim back £30k from your income tax bill

• The VCT goes on to invest only in eligible companies, and does so successfully

• After 6 years, the VCT liquidates its investments, netting a 3x return

• The VCT returns your funds of £300k, which is fully exempt from capital gains tax

• Net effect being a ~4.3x return, versus a 2.6x return without income/CGT relief

There is also the Social Investment Tax Relief scheme, another venture capital scheme, with similar tax benefits to the EIS scheme, but with a focus on social enterprises that are working towards a community interest rather than solely profits.

Other Tax Efficient Investments

There are several other more niche investments which can be tax efficient. For example, certain types of alternative assets, that can go up in value over time, are exempt from capital gains tax.

Some examples include watches, vintage cars, and an old favourite from country estates - collectible guns. Some of these assets can go up in value over time, yet aren’t liable for capital gains tax when sold. When executed well, the rich can enjoy ownership of these items over a long period of time, whilst also seeing their value go up over time, without needing to pay capital gains tax when selling.

There are also more conventional/accessible investments like NS & I premium bonds, which are also tax free.

Pensions & SIPPs

Now we have covered illiquid investments, let’s talk about a category of investments that you can’t access until aged 55+ … pensions. Saving in a pension plan can provide tax benefits in a few different ways.

• Contributions to a pension plan can be made from pre-tax income, which reduces your overall taxable income and can lower the amount of income tax you owe.

• The money in your pension plan grows tax-free until you withdraw it in retirement. This means that you don't have to pay taxes on any investment gains or interest earned in the plan.

• Withdrawals from pension plans are taxed as income, but you may be able to take advantage of a lower tax rate, depending on your other income in retirement.

Not only that but it’s common for employers to make or match contributions to pensions too, meaning your investment in your pension could be boosted even further by your employer too.

Outside of workplace pensions, Personal Pensions, and Self Invested Personal Pensions (SIPPs) are a type of UK pension plan that allows individuals to take more control over their retirement savings. SIPPs work like a personal pension scheme, but with more investment choices and more control over your savings. You can choose from a wide range of investments, such as shares, bonds, and property, and you can switch between them at any time.

One of the main advantages of a SIPP is that it allows you to take more control over your retirement savings and make investment decisions that align with your personal financial goals and risk tolerance. However, it also requires more knowledge and research, as you are responsible for choosing and managing your own investments.

My own personal approach is to transfer my workplace pensions from previous employers into one SIPP with AJ Bell, while keeping my workplace pension active with my current employer. Each time I change jobs, I transfer funds over from my old pension, to my SIPP, so I can maintain control and visibility of the funds and investments. Please note that this approach may not be suitable for you, and if you are in any doubt you should seek professional advice.

It’s important to understand your pension in detail, as with such a long term investment, small details and optimisations can accumulate and compound into very significant changes in the total value of your pension pot by the time you retire.

Inheritance Tax Investments

At the start of this article, we joked about the certainty of death and taxes. Another ironic certainty in life is that when you die, there will still be taxes. These next few investment schemes are designed to reduce that burden on your next of kin, and maximise the level of wealth you are able to pass on.

1. Business Relief: Business Relief (BR) is a provision that allows certain business assets to be passed on to beneficiaries at a reduced rate of IHT, or potentially even free of IHT. To qualify for BR, the business assets must meet certain conditions, such as being shares in an unlisted trading company or certain types of land and buildings used for the trade. Business Relief can also apply to certain types of assets such as intellectual property, renewable energy related assets and certain types of investments. It's important to note that the business must have been owned and controlled by the deceased for a minimum of 2 years to qualify for BR.

2. Agricultural Property Relief: Agricultural Property Relief (APR) allows agricultural land and buildings to be passed on to beneficiaries at a reduced rate of IHT, or potentially even free of IHT. To qualify for APR, the land must have been used for agricultural purposes for at least two years before the date of death. This means that the land must have been used for the purposes of farming, forestry or the breeding and keeping of horses, cattle or sheep.

3. Alternative Assets: Certain alternative assets, such as art, antiques, and vintage cars, can be passed on to beneficiaries at a reduced rate of IHT if they meet certain conditions. For example, a valuable artwork must be considered as "wasting assets" (assets that have an expected life of less than 50 years) and must have been owned by the deceased for at least 2 years. Most of the alternative assets mentioned earlier in this article would fall into this category.

4. Trusts: Setting up a trust can help to reduce IHT liability by transferring assets out of the estate and into the trust, which can then be passed on to beneficiaries. There are different types of trusts, such as bare trusts, interest in possession trusts, discretionary trusts, and more. Each of them has different rules and regulations and it's important to seek professional advice on which one is suitable for your circumstances. Trusts can also be used in conjunction with other IHT planning strategies, such as giving away assets or making gifts.

It's important to note that the specific requirements and conditions for each of these investment vehicles can vary, and professional advice should be sought before implementing any IHT planning strategy as these are a complex area of UK tax law and regulations are subject to change!

Conclusion

To sum up, I would reiterate that this article does not constitute financial advice, and you should use your best judgement before implementing any of the investment strategies outlined here, or speak with a financial adviser if you are unsure.

We talked about ISAs, which give tax free savings and capital gains - including Stocks & Shares and Lifetime ISAs.

Venture Capital Schemes that offer income tax, capital gains, and loss relief.

Alternative Investments that are CGT free like premium bonds and alternative assets.

We covered the benefits of Pensions and SIPPs.

Lastly, we covered some investment vehicles that can provide inheritance tax relief.

This article is for inspiration, ideas, and knowledge of the schemes - and with the right advice, I hope you find ways to successfully implement them into your own financial planning!

A quick look around my flat over the Christmas & post wedding period, and you would be forgiven for thinking my wife is a Dyson brand ambassador. Not only have we spent a lot of money on each Dyson item, but they also incite the kind of excitement in my wife that defies the product itself. 

How can a vacuum cleaner, hair dryer, or air purifier get you excited and hot under the collar? Objectively these are some of the most boring types of items you can find in a house. Dyson somehow manages to do that, and my wife is by no means unique here. In fact, I find them quite satisfying too.

So I decided to do a bit of research of my own, to try and discover how this iconic brand has managed to position itself as a leader of so many different categories. How did my wife and I end up spending over £1000 on 3 devices that fundamentally just blow and suck air in different ways - and even weirder, how did they make us feel good while doing it?

Dyson was formally founded in 1991 by James Dyson, an inventor and engineer - and now 4th richest Brit in the world according to the 2022 Forbes Rich List, with a net worth of ~$9.2B. The company initially focused on developing innovative vacuum cleaners that were designed to be more efficient and effective at cleaning than traditional models.

James Dyson was 42 years old when he founded the company we know today, but his journey started some time before that. Before founding the Dyson company, James Dyson was an inventor and industrial designer. He developed and licensed several inventions, including the "Ballbarrow," a wheelbarrow with a ball instead of a wheel, and the "Dyson Bagless Cyclone," a vacuum cleaner that used cyclonic separation to improve suction. 

He licensed the technology for the latter to a Taiwanese manufacturer in the early 1980s, but was disappointed with the resulting product, which he felt did not live up to his design's potential. This led him to pursue the development of his own vacuum cleaner, and ultimately led to the formation of the Dyson company in 1991, using the funds he had made thus far from his licensing agreements.

One of the key innovations that Dyson brought to the vacuum cleaner market was the use of cyclonic separation technology, which allows for the effective separation of dust and debris from the air using centrifugal force. This technology was incorporated into the first Dyson vacuum cleaners, which were launched in 1993 and quickly gained popularity among consumers, after 5 years in development, and no less than 5127 prototypes (yes that’s the actual number).

In the years since its founding, Dyson has continued to innovate and expand its product line beyond vacuum cleaners. The company has developed a range of other household products, including air purifiers, hand dryers, and lighting products. It has also expanded into new markets, such as personal care and beauty products, with the launch of its Supersonic hair dryer in 2016.

During its three decades and counting, Dyson has consistently demonstrated the ability to incubate and invest in new innovations whilst remaining profitable as a business. They have now successfully built up a brand that spans multiple categories.

So what has contributed to Dyson’s ability to reinvent itself?

Firstly, Dyson's culture is centred around innovation and problem-solving. According to James Dyson, the company's founder, Dyson's culture is based on “solving the problems that others have ignored, and solving them first using our technology and ingenuity”, and this has been reflected in the company's approach to product development and its willingness to take risks and try new things.

But these aren’t just empty words either, Dyson puts its money where its mouth is via huge financial bets focused on research and development into new products and categories. The company has a dedicated team of ~14k people including ~6k engineers and designers who are constantly working on new ideas and technologies, and this has allowed Dyson to stay at the forefront of innovation in a number of different markets. In fact, as of 2022, Dyson had a total of 10552 patents and patents pending.

[Note: usually I source my own data and charts, but in this case, Dyson’s corporate structure was too complex to unravel, so this graphic from the FT will need to do!]

Another important aspect of Dyson’s identity is its commitment to quality. The company has a reputation for producing high-quality products that are designed to last, and this has helped it to build a loyal customer base and establish itself as a trusted and respected brand, even as a ‘new entrant’ in completely different categories.

Dyson successfully leverages its strong brand identity across categories. Always tastefully leaving you in no doubt that you are looking at a Dyson product, and therefore one that can be trusted.

Not only does Dyson have the habit of entering new markets, but it also has a track record of doing it while completely blowing mainstream price points out the window, and establishing higher and more controlled pricing than any of its competition.

Their unfaltering attention to tiny details, and over-engineering for life’s daily tasks, together with the high price points has, in my opinion, created a new concept - the ‘appliance as a status symbol’. In this sense, Dyson’s brand and marketing strategy has been a resounding success, spanning decades.

Dyson has leveraged all forms of advertising over the years. From their first TV ad in 1993 (shown above), through to digital advertising and even influencer marketing now in the modern era. The budgets have been very big, but then again, they are selling unique but mass market products at very high price points. Dyson’s differentiation helps to convert the masses, and their high price points comfortably absorbs their multiple heavyweight ad campaigns and product launches, keeping the campaigns profitable.

There are several threads that have been continuously present in Dyson’s marketing. Despite the media landscape changing dramatically over the last 30 years, Dyson’s brand message and style of delivery has remained consistent.

• The Product is the Focus - Dyson centre all of their ads firmly around the product itself. This is where their product and marketing/brand strategy come together. By creating futuristic, colourful, designs - they create a level of intrigue and brand identity that feels completely effortless. You see the product and are immediately intrigued, and immediately recognise that it is a Dyson product.

• Illustrate Vividly - the product shots that Dyson choose to use are almost always extremely illustrative. When the design is simple and clearly visible, they show it in use. When there are hidden or technological aspects, they rely on vivid illustrations that show you the thought, detail, and innovation that has gone into the design. These immersive visualisations and animations of technological innovations feature prominently, and are often complemented by deconstructions of the products.

• Glamourise the Technology - the illustrations and animations are styled to be natural and sexy, not scientific. Making what could easily be a scientific barrage simple, sleek, and even sexy.

• Keep it Simple - Dyson manage to illustrate their complex product and innovations in very few words. Their copy is kept extremely simple, having let the product and illustrations do the heavy lifting.

Of course, when making such investments in marketing new and future products and categories, it’s helpful to have a profitable company that can fund this activity in the first place. In this sense too, Dyson has been incredibly successful. Remaining consistently profitable since its inception.

[Note: usually I source my own data and charts, but in this case, Dyson’s corporate structure was too complex to unravel, so this graphic from the FT will need to do!]

The most resounding success has been Dyson’s entry into the hair care market. Since the launch of its first hair dryer, the Dyson Supersonic in 2016, the company has seen strong sales and has gained a significant share of the hair care market. Dyson has also expanded its hair care product line with the launch of the Dyson AirWrap styling tool and other hair care devices, which have also been well-received by consumers. Dyson has succeeded in ramping up sales and market penetration in the hair care market to the extent that it is now considered a major and leading player in this space.

Are there any failures lying behind Dyson’s successes?

The answer to this is a resounding yes. It’s highly improbable that a company like Dyson can take so many risks and big bets without suffering its fair share of losses. It comes with the territory. Perhaps the most resounding public failure has been the ill-fated Dyson electric car.

The company announced in October 2017 that it was ending its plans to develop an electric car, citing that despite significant investment, it was unable to find a way to make the project commercially viable. Dyson had been working on the car for more than two years, and had invested over £500M in the project (with plans to spend £2B more). The company had announced its intentions to develop an electric car back in 2015, with the goal of launching the vehicle in 2020.

Dyson's electric car project was led by a team of engineers and designers in the UK, and the company also acquired a battery technology start-up, Sakti3, as part of its efforts to develop the car. However, the company ultimately decided that the car project was not financially viable, and that the market conditions and regulatory environment were not favourable for the project.

There have been multiple other failures for Dyson over the years, in addition to the Dyson car … and probably even more failures behind the scenes that didn’t make it out of the lab. Dyson is a great example of embracing failure, and not being afraid of learning from it.

The fact that Dyson remains privately owned has probably contributed to this characteristic - not being at the mercy of public shareholders and the need to maximise near term returns. Dyson is free to invest in R & D and new innovations at whatever pace it sees fit. However, it has also managed to balance that whilst remaining extremely disciplined - knowing when to cancel and withdraw from potentially expensive or even destructive projects is a hard art form to master, and requires strong leadership to exercise.

So what’s next for Dyson?

In their annual report, Dyson references multiple areas of research and interest. These include Electric Motors, Sensing and Vision Systems, and Solid State batteries; as well as more bleeding-edge high-tech areas such as Robotics, AI, and Machine Learning. So who knows what we can expect from this ambitious and innovative company.

First though, they are going to attempt an entry into the Audio market this year, with the Dyson Zone - a pair of air purifying luxury headphones priced at ~£750.

Wacky, dystopian, futuristic? You can take your pick of adjective. But this wouldn’t be the first time an odd looking set of headphones completely disrupted the market at a new price point.

P.s. If you don’t remember thinking that AirPods looked odd, this is more testament to how much Apple have penetrated the market now, than your ability to remember back to 2016 - they were ridiculed on a large scale back then! Clearly Apple had the last laugh here though.

Ultimately, the success of this product is a complete unknown right now as it is just being released. But this makes for an interesting thought exercise. Why don’t you leave your prediction in the comments, and see how things pan out over the next 12 months?

Brands such as Rolex, Patek Philippe, and Audemars Piguet are well known to the world for producing some of the most luxurious timepieces that money can buy. They are also very well known for being expensive.

Perhaps less well known is that, for many of these brands, their more popular models are almost impossible to get hold of. For example, if you go into any Rolex dealer in London at the moment, you will be lucky to find a store with watches in stock to buy and walk away with that day. Brands like these exercise discipline in supply, to make sure that demand consistently exceeds supply year after year. This has a twofold effect - limiting supply, but also generating a level of hype, exclusivity, and desirability for the brands’ watches.

Not only that, but these watches are so well made that they will continue to function for 100 years or more if taken care of properly. This, together with their aesthetic appeal, functionality, and potential for value appreciation makes watches a compelling alternative investment. 

An alternative investment is a financial asset that does not fall into one of the conventional investment categories. Conventional categories include stocks, bonds, and cash. Alternative investments can include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts. Real estate is also often classified as an alternative investment.

Let’s now talk about some of the reasons people choose to invest in luxury watches, before turning to a few illustrative examples, and a more deep analysis of the costs and risks involved in investing in watches.

1. Potential for appreciation in value: Luxury watches, and particularly those made by well-known brands, can hold their value and potentially appreciate in value over time.

2. Enjoyment: Collecting and owning luxury watches can be a hobby that brings joy and satisfaction to the owner.  Owning a luxury watch can be seen as a symbol of success and a way to celebrate life’s milestones.

3. Quality and durability: Luxury watches are often made with high-grade materials and craftsmanship, which can make them last for a long time and retain their value both from a financial and enjoyment point of view.

4. Potential for resale: Luxury watches, particularly those that are rare or in high demand, can be resold for a profit. Not only that, but the UK Government exempts profits on most watch sales from capital gains tax.

5. Diversification of investment portfolio: Adding luxury watches to an investment portfolio can also help diversify and potentially mitigate risks.

6. Potential for rental income: Some luxury watch owners can even rent out their timepieces for special events or photoshoots, providing an additional source of income for high-end collectors.

7. Heirloom potential: Finally, luxury watches can often be passed down through generations as heirlooms, providing sentimental value in addition to any potential financial value. Bearing in mind that in the UK, any gifts, including watches, made more than 7 years before death are not liable for inheritance tax, makes this even more compelling as a way to securely pass on wealth to the next generation.

So what does this actually look like in practice, and what are the potential outcomes? Let’s dive into a few examples:

Speaking of diving, let’s take a look at a classic luxury dive watch - the Rolex Submariner. This watch is known for its durability and reliability. It features a stainless steel case and a unidirectional rotating bezel, as well as a waterproof design that allows it to be submerged to depths of up to 300 meters (984 feet). The Submariner is powered by an automatic movement and has a choice of a metal bracelet or a rubber strap. It is available in a range of dial and bezel colors, including classic black and blue. The Submariner is a timeless and iconic watch that is recognized and respected by collectors and enthusiasts around the world.

Variations of this watch have been in supply for decades, and are no exception to Rolex’s signature steady appreciation in value over time. In this example, we took a look at data on used Rolex Submariner Dates (reference number 16610), in good condition, from Chrono24 - a leading marketplace for watch buying and selling.

Over the last 5 years, prices increased by ~80.7% for this particular model (in good condition). That represents a CAGR (Compound Annual Growth Rate) of ~12.6%, beating out the returns from the S&P 500 index over the same period by over 2x.

The compound annual growth rate (CAGR) is the rate of return (RoR) that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment’s life span.

It is calculated as follows (where EV is the end value of an investment, BV is the beginning value of an investment, and n is the number of years the investment is held for):

Impressive returns. Especially considering that the owner has the benefit of owning and potentially even wearing this timepiece for the duration of the investment. The idea of owning and wearing a luxury timepiece for 5 years, and at the end of that 5 years observing an increase in its value by over 80%, is a watch collectors dream (and an oft quoted justification for a collectors next purchase!).

Now let’s look at a more extreme example. In this case, an unworn Patek Philippe Nautilus (reference number 5711). This is one of the most popular and sought after watches in the entire world, and being from the most elite and coveted watch brand in the world, is subject to even more aggressive demand patterns, and borderline impossible to get hold of from Patek Philippe themselves. 

In January 2022, Patek Philippe set the already frothy market for this model into overdrive, by announcing that they would discontinue the model. By the end of February, the value had exploded from an already ridiculous £120k at the start of the year to an eye-watering £196k - enough to pay off the average UK mortgage in full. 

This chart above demonstrates another type of opportunity which can be exploited by more experienced and knowledgeable watch collectors - being able to anticipate supply and demand dynamics, predict market moves or trends for particular models or brands, and profiting from large market movements. This is a high risk strategy, but one that can heavily reward the knowledgeable and brave.

At this point, it may be a good time to talk about some of the risks involved in investing in watches. There are several risks that individuals should be aware of when investing in luxury watches:

1. Market risk: The value of luxury watches can fluctuate over time due to changes in demand and supply. It is important to understand that there is no guarantee that a watch will appreciate in value, and prices can move up as well as down - even with good watches. For instance, using the example above - a Patek Philippe Nautilus bought in February 2022 for £196k, would be down over 35% in the months since. Market timing matters.

2. Counterfeit risk: Unfortunately, there is a significant market for counterfeit luxury watches. It is important to do thorough research and only purchase from reputable dealers to avoid buying a fake watch. Don’t get caught out, as if you do, you will likely lose the entirety of your investment.

3. Fraud risk: There have been instances of fraud in the luxury watch market too, where individuals have sold fake or altered watches as authentic, or taken payment without releasing the item to the buyer. It is important to be cautious and do your due diligence to avoid falling victim to fraud. Again, don’t get caught out.

4. Insurance risk: Luxury watches can be expensive, and it is important to consider how you will insure your investment. Make sure to research different insurance options and choose a policy that will adequately protect your investment.

5. Damage risk: Although luxury watches are generally very durable and reliable, wearing them carelessly or abusing them can affect their value significantly, or lead to significant repairs or maintenance costs.

6. Liquidity risk: Finally, luxury watches are not as liquid as some other forms of investment, meaning it may be more difficult to sell them quickly or at their full value. It is important to consider this when deciding how much to invest in luxury watches. It is prudent to only invest excess funds, and money that you won’t need in the near-term future.

By understanding and being aware of these risks, individuals can make more informed decisions about whether investing in luxury watches is a suitable choice for them. There are also significant costs involved in watch ownership and investing, which individuals need to be well aware of before making any investment decisions.

1. Maintenance and repair costs are an important consideration when investing in watches. Like any mechanical device, watches require regular maintenance to keep them running smoothly and to ensure that they remain accurate. This can include regular cleaning and oiling, as well as more complex repairs if necessary. Depending on the exact model and brand, these costs can vary from a few hundred to a few thousand pounds. It is recommended to get a full service once every 5 to 10 years, depending on the model.

2. It's also important to consider the costs associated with storing and insuring your watch collection. Depending on the size and value of your collection, you may need to invest in specialised storage solutions to keep your watches safe and protected. You may also want to consider purchasing insurance to protect your investment in the event of theft, damage, or other unexpected events. Insurance on luxury watches can be sourced for around 1% of the watch’s value per year.

3. Finally, when it comes to liquidating or selling luxury watches, there are inevitable fees that come into play when selling. Due to the fraud and counterfeit risks surrounding the watch market, to get the best price for your watch it is usually advisable to use a reputable platform to sell. These selling fees can vary from between 5 and 15% depending on the transaction. A site like Chrono24 will protect the transaction and payments in a secure account until all parties are happy. This costs the seller a 6.5% fee.

These costs all erode the potential returns from investing in watches. Let’s dig into another example to illustrate what more realistic returns could actually look like. In this example we will take a look at a Rolex Datejust (reference number 16234), in very good condition.

This Rolex Datejust is a classic and elegant watch that is suitable for both formal and casual occasions. It features a 36mm stainless steel case, a stainless steel jubilee bracelet, and a date window at the 3 o'clock position. It is powered by an automatic movement, and this particular example comes with a silver face and fluted bezel. A timeless classic suitable for both men and women.

First, let’s dig into the price movements for a used model, in very good condition, over the last 5 years:

The data suggests a return on investment of ~62.5% over the time period, beating out the S & P 500 return of ~36% over the same period. But what about the costs during those 5 years?

Let’s start with the purchase price of the watch of £3,406 in January 2018.

Now consider storage and insurance. While it is possible to wear a watch rather than store it, this also comes with a cost in the form of increased wear and tear / servicing costs. So to be prudent, here we will allow 1% per year towards insurance, as well as 1% per year towards storage or additional wear and tear costs. Over a 5 year period this amounts to around £340.

Considering that 5 years is a long time to own a watch, it is also likely that the watch should be serviced during this time to protect its value. An official Rolex dealer will charge you around £750 for this service, depending on the specific work that should be done. It is possible to have independent watch experts service a watch for less, but this can have its own knock on effects when it comes to selling the watch with its full service history.

This brings the total cost of ownership to around £1,090 over the 5-year period, or a total sum invested in this watch of ~£4,496. 

With a current value of £5,534 this watch has still managed to generate an ROI of over 23%, but definitely less impressive than the ~62.5% ROI before costs (as shown in the chart).

The picture worsens further when considering that, to sell the watch, you will likely incur costs of around 10% in the form of platform fees, postage, transaction fees, and selling at slightly below market to attract a sale. Meaning that the amount you actually receive from a sale, is more likely to be ~£4,980. In other words, a measly ~£484 profit (10.7%) on the £4,496 invested into the watch.

This is clearly below the kind of returns you can get from the stock market, and even some bonds or cash based investments over the same time period. But, that said, what other investments give you access to an item as coveted and aesthetically pleasing as a Rolex watch, while still generating returns? For me, I would definitely settle for wearing a beautiful Rolex watch for 5 years, without it costing a penny.

What’s more, if these investments are scaled up or optimised, you can easily imagine that some watches or collections could yield significantly better returns than this, indeed, in some cases, market-beating returns. 

So, in conclusion, who is this right for? And what should an aspiring watch investor look for to maximise their margin of safety?

There are several factors that may influence whether investing in luxury watches is a suitable investment for an individual.

1. Financial stability: It is important to have a solid financial foundation before considering investing in luxury watches. This includes having enough savings to cover emergency expenses, as well as any other financial obligations you may have. Watches are relatively illiquid investments, and so if you need to access money, you may need to liquidate your investments below market rate to access your funds. You should be prepared to not access these funds for a long period of time, and be financially prepared to maintain, insure and look after them for the duration of ownership.

2. Investment goals: What are you looking to get out of your investment in luxury watches? Are you seeking to generate a profit, or are you simply looking to add to your investment portfolio for personal enjoyment? Your investment goals will help determine whether investing in luxury watches is a suitable choice for you.

3. Risk tolerance: Investing in luxury watches carries some inherent risk as their value can go down as well as up, and therefore you may not recoup your original investment. It is important to consider your risk tolerance and whether you are comfortable with this level of risk.

4. Knowledge of the market: It is helpful to have some knowledge of the luxury watch market and the specific brands and models that have a strong track record of appreciation. This can help you make informed decisions about which watches to invest in.

5. Personal interest: If you are passionate about luxury watches and enjoy collecting and learning about them, investing in luxury watches may be a suitable choice for you. Personal enjoyment is a key benefit of investing in luxury watches, and so this should be something that brings personal value to you.

6. Diversification: It is generally advisable to diversify your investment portfolio, rather than putting all of your eggs in one basket. If you are already heavily invested in luxury watches, it may be wise to consider other investment options as well.

When it comes to which watch to invest in, there are also several factors to consider. 

1. What you like: First and foremost, it should be a model that you know and love. This massively increases your margin of safety. The last thing you want is for an investment to go badly, with a watch you don’t even like. At least if an investment on a watch you like goes wrong, you get the pleasure of wearing and owning it, even if its value has depreciated.

2. Brand reputation: Some luxury watch brands have a longer track record of success and a stronger reputation in the market. These brands may be more likely to hold their value over time. Look for brands that don’t over produce or sell stock on sale. Brands that control retail stock and pricing tightly are more likely to create the demand patterns that lead to appreciating values over time. Some strong brands with good track records on this are Rolex, Audemars Piguet, Patek Philippe, and Vacheron Constantin.

3. Rarity: Watches that are rare or limited edition may be more sought after by collectors and therefore more likely to appreciate in value. However, always ensure that there is a healthy pattern of demand. A common trap to fall into would be to buy a rare limited edition watch that not many people want. These investments can be risky, illiquid, and hard to find a buyer for (think NFTs!).

4. Condition: The condition of the watch is important, as a watch that is in poor condition may not hold its value as well as one that is well-maintained. Try to buy watches with their original box and paperwork, and keep all your receipts and service history to add to the watches records.

5. Age: Older watches may be more valuable due to their rarity and historical significance. However, putting your name down on a waiting list for a brand new model can also prove profitable too, as luxury watches can often be sold above the actual retail prices on the resale market. Beware though, quick or frequent watch flipping will get you on the blacklist of your favourite brands and dealers.

6. Functionality: Some watches have additional features such as chronographs or moon phase indicators that may make them more desirable to collectors. However, beware, the more complicated a watch is, the more likely you are to be dumped with a significant servicing bill.

7. Style: Classic and timeless watches that are stylish and fashionable throughout the ages may be more likely to appreciate in value over time, and less likely to fall out of favour with the watch market, again, protecting you to some degree from potential downside.

It is important to do thorough research and consider these factors when looking for a luxury watch to invest in, and when deciding whether or not investing in luxury watches is for you. It may also be helpful to consult with a professional or seek the advice of someone with expertise in the luxury watch market. Remember, this article is not financial advice!

I hope you enjoyed reading about this niche alternative asset class. For more valuable insights and analysis, on all kinds of business, technology, and investing topics, be sure to subscribe below! There’s a lot more value coming your way if you do…

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Using London as an example, I am going to do a deep dive into the costs and revenues involved in putting on a spectacular show, and ask whether it’s worth the hefty price tag.

In London, the tradition of having an extravagant fireworks display to mark the start of the new year began in 1999, to bring in the new millennium (along with an even bigger project - the millennium dome - costing ~$1B). Since then, the cost of London’s famous fireworks display has risen steadily. The tradition had become so popular by 2013, that almost 500k people tried to attend. From then on, it became a ticketed event. Nowadays, there are 100k tickets available, at a cost of £15 each.

Now this may sound like a lot of money for an 11 minute firework display, but the ~£1.5M+ from ticket sales barely touches the sides when it comes to the costs involved in putting on the show.

So what’s actually involved? Why do London’s New Years Eve fireworks cost so much? And who pays for it? Here’s a breakdown.

Let’s start with breaking down that ticket revenue. These tickets are not exempt from VAT, and so 100k tickets bought at £15 each by the general public quickly goes from £1.5M to £1.25M, after HMRC get their cut of the sales. Add to that a likely platform fee for ticket sales of ~10%, and a standard credit card processing fee of ~3%, and this diminishes even further, to ~£1.09M. This is before paying for a single firework, security fence, or security guard to make the event a success.

So what about those costs? The government’s approach here is to contract out the production to a third-party. The approved figure for this in 2022/3 is ~£3,935,000. In addition the government will spend ~£70k on administering the contract and funds, as well as ~£80k on marketing. This brings the total to an eye watering £4,085,000 in total. This is without thinking about additional policing or any other costs that fall outside of the production costs. 

This is all funded by the Greater London Authority, a cultural body responsible for distributing funding for arts and culture throughout the capital city. According to the application for funding, it’s expected that costs outside of the production will be “broadly neutral” - people will be celebrating New Year in any case, whether that is in central London or elsewhere, the policing and other costs are likely to be the same when considered in aggregate. In fact, by creating a focal point for celebrations, it may make it even easier for emergency services to plan and staff for New Year’s Eve.

So why do the government pay so much to put on the New Year’s Eve Fireworks? And is it worth it?

The main justification for putting on such an extravagant show is the increased level of economic activity that occurs in the days surrounding a big New Year’s Eve event. Crowds come from all over the country (and the world) to see the spectacle in person. This immediately boosts the hospitality sector as around 70% of guests come from outside of London, spending an average of ~4.4 days in the capital, and spending ~£112 per visitor. The total immediate boost to the economy of this is thus estimated to be well over £10M from ticket holders alone, and this is not including those that come to London to soak up the atmosphere, without having bought a ticket. 

Not only that, but the fireworks are also a huge advertisement for London in general, leading to a halo effect of increased tourism throughout the year as people are reminded of this great tourist city. 

Quantifying this halo factor is much more difficult, but you can easily see how the £3M net spend by the government may not only be justified, but in fact be a great investment. The event is televised around the world and viewed by ~12M people live and many many more people around the world will see clips of our celebrations from their home countries.

Other countries have become even more accustomed to spending huge sums on firework displays than we have. Australia has potentially one of the most impressive displays, and ROI to match. Each year, Sydney spends around £5.5M, and as one of the first cities to officially enter the new year, is viewed by over 1B people around the world. The position of the fireworks display in Sydney also allows for an enormous in person audience, attracting ~1.6M people to line the shore of the Sydney Harbour. The Australian government estimates that the new year fireworks display leads to in excess of £105M in immediate increased levels of spending in the local economy, and with an even bigger reach internationally than any of its counterparts, acts as an advertisement for Australia that economists say is a critical tool for the marketing of its entire tourism industry. That’s 8.5 tonnes of fireworks well spent.

To close out, here are a selection of other world famous firework displays, and what they spend to bring the new year in with a bang.

• Abu Dhabi - £16,000,000

• Kuwait City - £12,000,000

• Hong Kong - £8,500,000

• NYC - £5,000,000

• Dubai - £5,000,000

• Edinburgh - £1,200,000

That’s all for now! So happy new year to you, and I’ll see you in 2023 when I will be posting once per week with analysis and insights into the latest topics in Business, Technology, and Investing. If you haven’t already - please consider subscribing below!

I plan to deliver a whole lotta value to your inbox in 2023 if you do.

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