As Peter Lynch once famously said: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”

If an investor missed the best 5 days in the market, dating from 1980-2020, they would have missed out on a total return of 40%. That’s 1% per year over 40 years. If one missed the best 10 days, then the return was cut in half. See this chart below.

Next, let’s look at a chart below of the overall U.S. stock market return each year for the last 50 years. I created this chart which displays the years that stocks were down 0-10% in red text, down 10-20% in light red fill, and down more than 20% in dark red fill with white text. I’ve included light green fill for positive years but that were below the average of 10% (i.e. 0-10%). The bold green text represent the years where the markets returned above the average of 10%.

Not included is 2020-2021, which despite the COVID drop-down, ended in the dark green for 2020 and 2021, well above the average of 10%. In 2020 a record number of investors began selling stocks in March, shifting to cash until things cleared up. Now many are still waiting on the sidelines for their next entry point. While it may be tempting to shift entirely to cash, that is usually not an advisable decision. Take a look at the chart above. It can feel challenging or even exhausting to endure a 1973-1974, 2000-2002, or a 2008-2009 stock market crash. Despite this, however, notice how much more green is on the chart above. Shifting an entire portfolio to cash presents another decision of when to re-enter back into the market. This introduces the possibility of human error, an added risk to the portfolio. By sticking with your long-term investment plan,📊 depending on your time horizon and preferred risk level, continually investing, dollar-cost averaging and maintaining, despite a market correction, 👉you will prosper! 🤑

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We recently reported that China’s central bank digital currency (CBDC), the eCNY, processed $56 billion in transactions in a single month. It reached a cumulative volume of RMB 7 trillion, which is nearing the $1 trillion mark ($932 billion to be precise). However, a fair proportion is business usage. Stories continue to circulate about a lack of consumer enthusiasm for the digital RMB. Now a senior Chinese academic at Peking University, Dong Zhiyong, has proposed how to incentivize usage. These are not the views of the central bank’s Digital Currency Research Institute. However, one of China’s big state-run news agencies published them.

Mr Dong highlighted that banks aren’t really incentivized, that consumers are comfortable using WeChat Pay and Alipay, and that there’s room for improvement with the current eCNY consumer incentives. In the past there have been reports that many people spend the ‘red envelope’ free money giveaways, and don’t bother using the CBDC much beyond that.

The first suggestion is the use of the digital RMB by the state and the vast number of state-owned enterprises. That’s already happening to a degree. Some people receive salaries in eCNY. However, they often immediately transfer the money to their bank accounts because the eCNY doesn’t earn interest. Additionally, not enough outlets accept the eCNY for payment.

The academic also suggested more promotion of the CBDC, which the central bank, local governments and state-owned enterprises are already doing.

Zero fees means no revenues to share

One of the most challenging areas is incentives for intermediaries, with Mr Dong mentioning payment institutions. Merchants pay no fees for accepting the digital RMB, which one would think is a positive. However, if it’s not used much, it’s a hassle for the merchant to onboard and they have another account balance to deal with administratively.

On the other hand, no fees mean there’s no revenue to share with banks and others.

Last year we reported that many point of sale (POS) equipment manufacturers in China usually take a small cut of merchant fees. And the primary merchant fees are slim at around 0.6%. If transactions switch to the digital RMB, the POS companies lose their cut, so they lack incentives to support the eCNY rollout.

Hence, Mr Dong suggested a reasonable fee mechanism for payment institutions and proposed exploring value added services with them.

His next suggestion is about creating an ecosystem for industrial and business use cases. One reason the eCNY currency volumes are respectable, despite the unenthusiastic reception by consumers, is because businesses are already processing high ticket transactions.

Finally, he proposed accelerating innovation by incentivizing developers with a reward program, which makes sense.

Meanwhile, a separate report shows some of the administrative burdens for retailers are getting addressed. The digital RMB is yet another payment format, besides conventional RMB payments, WeChat Pay, AliPay and others. A new “Smart Account Splitting” application is being trialled to split the incoming funds automatically for accounting, making reconciliation easier.

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DeCurret Holdings has raised Yen 6.35 billion ($45m) in funding from 13 firms. The Internet Initiative Japan (IIJ) remains the largest shareholder, and is also part of the first use case for DCJPY, the tokenized deposit platform created by DeCurret DCP. Six of the backers are banks or have stakes in banks, including MUFG, SBI and GMO. The rest provide IT consulting or solutions, including household names Fujitsu and Hitachi. This implies they see an opportunity to help clients to integrate with DCJPY and the digital transformation solutions it enables.

DCJPY went into production two weeks ago with a use case similar to a tokenized renewable energy certificate. IIJ tokenizes the asset and sells the tokens to its server hosting clients, with settlement using DCJPY.

DeCurret’s last major funding was in 2021 when it raised $62 million from nine firms. At that stage, apart from the digital currency unit it also owned a crypto exchange. It sold the exchange in 2022 to Amber Group. Following the crypto slump, Amber sold it to Sony last year, and the exchange was recently rebranded to S.BLOX.

Now DeCurret has a total of 43 investors. MUFG, SBI, KDDI and TIS were existing investors alongside IIJ, which we believe was a founding investor. The full list of investors in the latest round are: SBI Holdings, Hitachi, SHIZUOKA BANK, TIS, NSD, Fujitsu, KDDI, MUFG Bank, Higo Bank, Kagoshima Bank, GMO Financial Holdings and ABeam Consulting.

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