Evolution shareholder Magnus Andersson believes investors should aim to cut through the noise and fear of macroeconomic uncertainty to capitalise on the opportunity it presents.
Since the beginning of 2022, markets across the world have declined as a result of an unprecedented combination of macroeconomic factors, driven in no small part by a precipitous rise in the cost of energy.Naturally, the gaming industry has not been immune to the dips. For example, the Evolution share price is down 30.5% year-to-date, while other industry giants like Entain and DraftKings are down 34.1% and 42.8%, respectively.
From an investment perspective, Andersson suggested during the investNEXT conference track at iGaming NEXT Valletta 2022, that the collapse in these prices has been driven by – and contributed to – widespread fear and reluctance among individual investors.
“The public population nowadays, as we all know, is completely driven by fear – the fear of losing money – and as investors, yes, we can be our own worst enemy,” he told audience members at investNEXT during a panel discussion.
“Evolutionarily, right from the start it was a good thing to run when the tiger was attacking, and everyone else was running, as that increased your potential for survival. But as an investor, that’s not really the thing to do.”
“People used to say that it’s difficult to lose money buying shares in a fantastic company, at any price, because it will reward you with time. The flipside to that is when things happen, such as everything that’s happened in the last eight months, we have lots and lots of fear.”
He explained that investor fear is driven by natural human behavioural habits, as people have a tendency to find safety in numbers.
“We all like to follow the crowd much more than being the one – or one of the few – not to,” said Andersson.“Evolutionarily, right from the start it was a good thing to run when the tiger was attacking, and everyone else was running, as that increased your potential for survival. But as an investor, that’s not really the thing to do.”
At the moment, Andersson suggested, investors are flocking away from the ‘tiger’ of crashing markets due to the fear the economic situation is spreading and will get worse before it gets better.
“If you seize this opportunity now, especially if you have some cash on hand, then maybe you can really get wealthy fairly easily, just like you could in the financial crisis, if you saw through all the noise and the fear.”
“And it’s difficult, I think, for people to appreciate the opportunities that are being presented right now,” he suggested.
“I think the situation now is nowhere near the financial crisis, but you can feel the feelings and the sentiment and the things that people say, when they see their net worth just declining, perhaps everyday, gradually declining.
“And you can feel that there are the same feelings out there, this primal fear that ‘oh my God, I’m going to lose everything’.
“And that’s a very bad thing. Because if you take the opportunity now you can find – of course you need to find good companies – but there are very many good companies out there.
“If you seize this opportunity now, especially if you have some cash on hand, then maybe you can really get wealthy fairly easily, just like you could in the financial crisis, if you saw through all the noise and the fear,” he added.