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Examining the Reach, Impact of Social Media for Users, Investors

By Contributor
Wealth Management

Into the Metaverse

By Jeff Liguori

 

Social media has evolved from a niche digital trend into a global force, reshaping how people communicate, consume content, and interact with businesses. With billions of active users worldwide, platforms continue to evolve, adapting to new trends, technological advancements, and changing consumer preferences, with artificial intelligence a central force in driving that content.

Social media’s reach is staggering. As of 2024, more than 4.7 billion people globally use social media, accounting for nearly 60% of the world’s population. The sheer number of active users on platforms like Facebook, Instagram, TikTok, YouTube, and X (formerly Twitter) highlights the pervasive nature of social media in contemporary society.

These platforms are not only communication tools but also major drivers of entertainment, commerce, news distribution, and politics. For instance, Facebook, Instagram, and WhatsApp (all owned by Meta) have become critical for digital marketing, with businesses of all sizes leveraging these platforms for brand awareness, lead generation, and direct sales.

Jeff Liguori

Jeff Liguori

“With billions of active users worldwide, platforms continue to evolve, adapting to new trends, technological advancements, and changing consumer preferences, with artificial intelligence a central force in driving that content.”

These outlets have provided an infrastructure for the ‘influencer’ class, who directly profit from an increasing number of visitors or subscribers to their sites. It is estimated that an influencer on Instagram with 100,000 followers earns between $1,000 and $15,000 per post, depending on content, product placement, engagement with subscribers, and ads running on their sites.

For perspective, high-profile athletes and celebrities can earn millions of dollars per post. The professional soccer player, Christiano Ronaldo, arguably the most recognized and popular athlete in the world, has 645 million followers on Instagram and more than 1 billion on all his social-media accounts combined. Taylor Swift has 280 million Instagram followers and 550 million across all platforms.

 

Meta Dominance

Meta Platforms, which owns Facebook, Instagram, WhatsApp, and Oculus, is undeniably one of the largest players in the social-media space. The company has expanded far beyond its original social-networking service, diversifying into virtual reality (VR), digital advertising, and even the metaverse.

As of Q3 2024, Meta reported having 3.1 billion monthly active users across its family of apps. Facebook itself remains the dominant player, with more than 2.9 billion active users, followed by Instagram with 2.4 billion, WhatsApp with 2 billion, and Messenger at around 1.3 billion users.

Despite its massive user base, Meta’s stock performance has been volatile in recent years, especially following its aggressive push into the metaverse. While its quarterly earnings reports often show healthy revenues — primarily driven by advertising — investors have been divided on the long-term potential of Meta’s shift toward virtual reality and the metaverse. The company’s stock price has been subject to dramatic swings, particularly when its investments in the metaverse didn’t immediately translate to a clear revenue stream.

For instance, Meta’s stock price saw a significant drop in late 2022, losing nearly half of its value in just a few months. This was in part due to concerns that its focus on the metaverse was draining resources that could have been used to improve its core social-media business. But investors have gained confidence in CEO Mark Zuckerberg’s vision as advertising revenue has continued to grow, and its foray into AI-powered tools has generated excitement among investors. Since January of 2023, the stock price has skyrocketed nearly 400% to the end of November 2024.

Meta is now the fifth-largest publicly traded company in the world, with 72,000 employees and a total valuation of roughly $1.6 trillion. By contrast, Walmart, the largest global retailer, employing more than 2 million people worldwide, is valued at less than half of Meta currently.

The strategic shifts, user growth in key markets, and a focus on optimizing ad revenue continue to propel Meta’s profits. The company’s Q3 2024 earnings revealed a 20% year-over-year increase in revenue, with much of this growth coming from ad sales on platforms like Facebook and Instagram.

While Meta is undeniably one of the largest players in the social-media space, it faces intense competition from several other platforms. To get a better sense of the broader social-media landscape, the most recognized key performance metric is monthly average users (MAUs), which measures how many unique users interact with a product or service within a 30-day period.

The dominance of a few platforms, with Facebook, YouTube, and WhatsApp leading the pack in terms of monthly active users, is clear. Facebook remains the largest social-media platform with nearly 2.9 billion MAUs, a testament to its broad global reach. WhatsApp and Instagram, both under the Meta umbrella, have similarly vast user bases, collectively reaching more than 4.9 billion people each month.

Despite its impressive user count, TikTok has emerged as one of the most formidable competitors, with 1.7 billion MAUs. TikTok’s rapid growth, driven by its addictive short-form video content, has captured the attention of younger audiences and advertisers alike. The app has become a significant disruptor in the digital advertising space, particularly in reaching Gen Z, a demographic that Meta has struggled to retain.

 

The Future … Not Without Controversy

The future of social media is uncertain, with new platforms emerging and user habits shifting. While Meta’s advertising business remains robust, its long-term stock performance will depend on how well it can balance innovation in areas like the metaverse and AI, while maintaining its massive user base across Facebook, Instagram, and WhatsApp.

And the social ecosystem is not without controversy. Social media can contribute to mental-health issues, such as anxiety and depression, due to constant comparison and online validation. The spread of misinformation is another significant challenge, as false narratives can quickly gain traction and influence public opinion. Additionally, the pressure to maintain a curated, idealized online persona can lead to feelings of isolation and a lack of authentic connection.

Expect greater scrutiny of all things digital, especially as AI becomes exponentially more powerful, driving these sites and adapting to changing user habits.

 

Afterword

This article was almost entirely written using the AI platform ChatGPT. While I’m not an active user of AI tools for research or writing, I think it is an important commentary on the state of technology today.

I come from a family of writers — my brother is an editor for the New York Times and a vocal opponent of using AI for such articles. And while I agree there are many pitfalls to the artificial-intelligence phenomenon, as a society, we must work diligently to use all these tools for the betterment of humanity. With the ease of content production today, it is incumbent on all of us to use AI and social media responsibly and help police those that do not.

 

Jeff Liguori is the co-founder and chief Investment officer of Napatree Capital, an investment boutique with offices in Longmeadow as well as Providence and Westerly, R.I.; (401) 437-4730.

The Death of Long-term Thinking

By Contributor
Banking and Financial Services

And Why Investors Should Consider Re-evaluating This Strategy

By Jeff Liguori

 

Humans are historically bad at long-term thinking. In the world of finance, that behavior has dramatically worsened over the past 50 years.

Today, the average investor holds an individual stock for less than six months; in the late 1990s, that period was approximately two years. Go back to the 1950s, and investors were holding individual stock for nearly eight years on average.

What has caused such a drastic shift in investor behavior? First, access to markets has never been greater, which creates ample amounts of liquidity for trading. Second, ever-growing reams of information are disseminated at lightning speed, preying on our psyches. Finally, the cost to trade shares of a stock is negligible — in many cases, zero. Each of these trends is quite beneficial to the average investor. However, the combination of these factors promotes behavior that does not support a long-term view of investing.

For the sake of analysis, let’s look at the performance of Target Corp. (symbol: TGT). From July 1, 2013 through Nov. 30, 2021, the total return of Target’s stock (price appreciation and dividends) was 350%. During that same timeframe, the S&P 500 had a total return of 230%. However, shares of Target largely underperformed the broader market in the five years following July 1, 2013, returning 29% vs. 86% for the S&P 500.

Jeff Liguori

Jeff Liguori

“Ever-growing reams of information are disseminated at lightning speed, preying on our psyches.”

There was no lack of bad news in that five-year period, including a change in leadership with a new CEO and a failed plan to expand into Canada that cost the company more than $5 billion. But a patient investor with a long-term view, who believes in owning solid businesses, has been handsomely rewarded by staying with Target.

A recent article in the Wall Street Journal highlighted a little-known mutual fund manager, Wilmot Kidd, who has had exceptional investment performance.

“Over the past 20 years,” it notes, “Mr. Kidd’s Central Securities Corp. … has outperformed Warren Buffett’s Berkshire Hathaway Inc. Over the past 25, 30, 40, and even nearly 50 years under Mr. Kidd, Central Securities has resoundingly beaten the S&P 500. The keys to his success? Patience, concentration, and courage.

“If you had invested $10,000 in Central Securities at the end of March 1974, when Mr. Kidd officially took over,” the article continues, “you would have had nearly $6.4 million by the end of this October, according to the Center for Research in Security Prices. The same amount put into the stocks in the S&P 500 would have grown to $1.9 million.”

Analysis on Kidd’s fund suggests an average holding period north of 10 years. But some of the companies in which Central Securities is invested have been part of the fund for more than 30 years. And during Kidd’s tenure, the fund has underperformed the S&P 500 several times. But having the courage of his convictions, and staying invested through market cycles, has served his clients very well, despite periods of underperformance.

Investing today is about constant measurement. Companies produce quarterly earnings reports, compelling Wall Street analysts to change projections and adjust ratings, which forces investors to rethink their investment ideas. Add in exogenous events to amplify anxieties, and it is no surprise that the investing public has become so shortsighted. No, I don’t worry about the potential ramifications of Russia invading Ukraine on my stock portfolio (an actual assertion from a client!).

As a kid, I remember my grandfather diligently keeping track of the few stocks he owned, writing the end-of-month prices in a journal. He didn’t have the luxury of technology; his analysis was straightforward and pragmatic. He invested in companies with which he was familiar. He had no formal degree, having to forgo college to support his family during the Depression. The son of immigrants, he owned and operated a small grocery store whose customers were almost entirely working-class or even working poor.

One of his suppliers was a company called Corn Products Inc. The company still exists, now called Ingredion (symbol: INGR). For him, investing was about owning a piece of this company that he had a personal connection to, in the hopes of growing a nest egg. Whenever there was ‘extra’ money from his earnings, he would add to his positions. My grandfather retired in 1982 having never earned more than $30,000 in any given year. The value of his portfolio exceeded $600,000 prior to his death in 2011.

He didn’t know he would live for nearly a century, passing at age 97, but he sure invested like it. u

 

Jeff Liguori is the co-founder and chief Investment officer of Napatree Capital, an investment boutique with offices in Longmeadow as well as Providence and Westerly, R.I.; (401) 437-4730.

North East Real Estate Investor Summit

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The Western Mass Real Estate Investors group is excited to announce that we are hosting our first annual Real Estate Investors Summit here in the Greater Springfield area on Saturday October 19th, 2019. Join other North East Real Estate Investors at the Mass Mutual Center in Springfield, MA for the REI event of the fall. Whether you are a seasoned investor or just starting out, this event will bring the value and change that you may be looking for to succeed in real estate and your business.

This is a fully educational and networking type event and will not be a pitch fest of services. For more info and to grab a ticket, head over to our site we recently launched at https://nereisummit.com/. Hope to see many of you there!

Buy Tickets here!: https://nereisummit.com/register/
Ticket Prices : $75

Agenda: https://nereisummit.com/agenda/
Travel/Parking: https://nereisummit.com/travel/

Advice Investors are Hearing Amid Turbulence

By
Wealth Management

Stay the Course

Jean Deliso, CFP said she started calling her investment clients several days ago to gauge how they’re feeling amid some growing turbulence for the economy — and on Wall Street.

As she talked with BusinessWest about this initiative, she paraphrased the message she would leave if she encountered voicemail. “We just want to check in to see how you’re doing. The market has done very well, but we’ve seen some volatility in the market, and want to know how comfortable you are. On a scale of 1 to 5 (with ‘5’ representing the highest level of anxiety), how are you feeling about volatility, because there’s a political environment going on, we have China going on. Are you comfortable that your assets are positioned well?”

Again, that was the gist of the call. Deliso, owner of Agawam-based Deliso Financial and Insurance Services, said the firm has contacted about half the investment clients, and so far, there have a lot of 1’s and 2’s and generally nothing higher than a 3. And she’s not exactly surprised.

She believes those numbers tell her she’s doing a good job of helping her clients not just invest, but create and execute a plan. It also means she’s done well explaining to people that volatility — and yes, the markets have seen some this year amid trade turmoil, interest-rate movement, the dreaded inverted yield curve, and recession talk — is part of investing and nothing to really be feared.

“It’s important to keep their timeline in mind and not panic,” said Deliso, adding quickly that matters change the closer one is to retirement. “If you have 20 years … take a long-term perspective, don’t panic, don’t sell, and learn to live with volatility, because you can benefit from it because there are opportunities.”

That last comment is a perfect segue to the three words investment managers and financial planners always summon at times like these, especially for people with a long time window — ‘stay the course’ — as well as the seven words they also put to frequent use — ‘you shouldn’t try to time the market.’

“My job is to make sure, when these clients go into retirement, or are in retirement, that they have peace of mind. I want to make sure they’re not going to be emotional when the market drops. I want them to be secure that they know that, if it drops, they’re OK.”

Karen Dolan Curran, MBA, CFP, a principal with the Northampton-based firm Curran & Keegan Financial, used both phrases, and turned the clock back to 2008, the start of the Great Recession, to get her points across.

“In 2008, most portfolios lost an average of 30% to 40% of their value,” she recalled. “But if you stayed in those portfolios, they fully recovered after close to 18 months; you had to play the cycle out. And if you tried to go or if you tried to time the market as to when to go and when to jump back in, most people failed — because the most challenging part is trying to figure out when to jump back in. Those who stayed did fine.”

Neither Curran nor anyone else we spoke with is predicting anything close to 2008 again. In fact, some are hedging their bets on whether there will be a recession, not only this year but next year.

“In 2008, most portfolios lost an average of 30% to 40% of their value. But if you stayed in those portfolios, they fully recovered after close to 18 months; you had to play the cycle out. And if you tried to go or if you tried to time the market as to when to go and when to jump back in, most people failed.”

“We don’t believe that recession is coming necessarily in the next 12 months,” said Curran, noting that, while there a number of matters contributing to tension nationally and globally, overall, the economy is quite solid and unemployment and interest rates remain quite low, and investors should keep this in mind moving forward.

Still, the dreaded ‘R’ word is being heard and read more frequently these days, and that’s one of the reasons why Deliso launched her survey, noting that it’s a good conversation to have and she has it at least annually with clients.

The results of her polling, as noted, show there is not a high level of fear, a reaction that seems to mirror what’s happening on Wall Street, where, despite some turbulence and uncertainty, the S&P is up nearly 20% (or was at press time; things can change quickly), and when most of those ‘fear/greed’ gauges are tilting more toward the latter.

Beyond that, the comments seem to indicate that she’s doing well with what she considers her primary assignment. And that is to take fear out of the equation for her clients, even at times, like this one, in some respects, when one might be tempted to show some fear.

“That’s how this practice works; we provide a tremendous amount of education,” she explained. “And we make sure clients are positioned well with fixed assets and investment assets, because when we set people up for success, there’s a balance between the two.

“My job is to make sure, when these clients go into retirement, or are in retirement, that they have peace of mind,” she went on. “I want to make sure they’re not going to be emotional when the market drops. I want them to be secure that they know that, if it drops, they’re OK.”

Curran said her firm works in much the same way, with an emphasis on financial planning, not simply investing. As a result, she said she rarely gets a ‘panic’ call from an investor when the market takes a tumble, as it’s done a few times this year, or even when it takes a hard fall, as it did in the fourth quarter of last year.

She told BusinessWest that her firm helps clients plan against the backdrop of what she called the ‘worst-case scenario,’ meaning what happened in 2008.

“We do a lot of stress-case analysis,” she explained. “Saying, ‘well, what is the basic assumed market return? What if the market fluctuates downward during a particular time? What if it is nothing but positive for a particular time?’ And in certain cases, we replay 2008 right at a point of retirement, because that is the worst-case scenario — the moment you retire and you draw on your investment, the market comes down.

“We do all those simulations with clients so, when there are swings, like that 800-point drop recently, we get few, if any, calls, because we’ve already considered the worst-case scenario,” she went on, adding that, when people retire, they have more free time and spend some of it watching — and worrying about — the markets and their investments. “We don’t want them to have those reaction swings.”

Thus, the firm, like Deliso’s, recommends that those entering retirement do so with six months or perhaps a year’s worth of cash reserves to draw on, rather than their retirement savings.

Curran said effective planning, not to mention a willingness to stay the course, or “play the cycle out,” as she called it, is critical in this environment where interest rates on CDs and other very conservative forms of investing are far too low to generate real returns.

“The new norm is that people can’t go to a conservative portfolio of bonds and cash in retirement and live comfortably,” she said. “They have to be in the market, and they have to feel the weight of the ebb and flow of the market and understand that, if they stay long enough, the market will give them a positive return.”

Deliso agreed and reiterated that a big part of her job is to remove fear from the equation through proper planning and an effective mix of investments and fixed assets.

That’s why she hasn’t had anything over a 3 yet from her phone poll, and why she isn’t expecting any, either.

— George O’Brien