Remote working and the furlough scheme have flipped the world of work on its head for many people over the past 18 months. It’s no wonder more people are starting to turn their hobby into a hustle. The idea of making money from your passion is certainly appealing – this is a bit more difficult for people like me, whose hobbies extend to walking my dog and trying different craft beers – but if you’ve got a talent you can monetise, why not?
But my colleague Andrew Willis this week raised some good points about taking on an extra gig. First and foremost, does the money you can potentially earn really offset the time, initial outlay, and the turning of your passion into a project? I’ve noticed on social media in particular plenty of people who seem to have jumped on the side hustle bandwagon in recent months. Some people are baking cakes, others are selling line drawings or colourful prints, while others spend their spare time walking packs of dogs.
Unfortunately for a lot of people, all that happens is they end up out of pocket and resentful of something they used to enjoy. So, I like the idea of assigning yourself an hourly rate of what you expect to be earning from your hobby and tracking your spending as well as your gains, to make sure your venture isn’t about to bankrupt you.
But it’s not all about the money, of course – they’re not called passion projects for no reason. A side hustle could just be something that brings you joy and keeps you busy. My mother-in-law churns out woolly hats like there’s no tomorrow, for example – she does them in team colours for the local rugby club or to hand out at the local flower show, and they never fail to bring a smile to the recipient. (I try to insist she should ask for donations to cover at least the cost of her wool, but she won’t hear of it).
Changing working patterns over the past couple of years have left a lot of former office-workers with more spare time, and made plenty of people think about what makes them happy. Maybe a side hustle is the answer - so what if it doesn't make you a millionaire?
IPOs: A Waiting Game
There were two major stock market flotations in the US this week, which came with grossly different outcomes. Language-learning app Duolingo (DUOL) finished its IPO day with shares up a whopping 36%, putting the company’s value at almost $5 billion. Meanwhile, the hotly anticipated float of investment trading platform Robinhood (HOOD) was branded the “worst debut in history” for a company of its size. Shares fell around 8% as they listed on the Nasdaq, which was particularly disappointing given that they had floated at the bottom end of their range.
The IPO market has been riddled with disappointments this year and it seems like there is no magic recipe for success. Why does a free language app soar, while a company that has been credited with disrupting the US investing market struggle? I can see the appeal of investing in a company at IPO and particularly if its one whose services or products you already use, the chance to own a part of that is exciting. But it's important to remember that by the time a company comes to market, a lot of the growth and gains have already been had. Sometimes the better strategy can be to wait and pick up shares cheaper a few days later, even if it means missing out on the IPO excitment. And particularly for the hot stocks, it's often better to hold off.
Time to Rethink Emerging Markets
You might have noticed we’ve had emerging markets on our minds this week at Morningstar HQ. The region used to be a favourite of investors looking for bumper returns, but in recent years has struggled for attention when “safer” markets such as the US have delivered stellar gains with fewer risks. China, as a global economic powerhouse, has also tended to dominate any emerging markets talk, making it easier to forget about Latin America and other areas of Asia.
It’s true that investing in these areas comes with risk. In Latin America in particular, there is a heavy reliance on commodities and the fortunes of the US dollar, which leads to big peaks and troughs in performance. But these markets are being driven by many of the same trends that are fuelling the rest of the world: young demographics, growing wealth, tech disruptors, and the electrification of the world. As with any investment, it's important to do your homework and not over-exposure yourself to one particular asset or country. But it would be a mistake to discount entire swathes of the investment world based on preconceptions that may no longer hold.
