Momentum Monday….Everyone Picks on Apple and More on IPO’s

As a follow up on yesterday’s IPO blog post of mine, today Recode was out with a story that $SLACK and $AIRBNB might do direct listings. The groundwork/roadmap from Spotify’s genius CFO has been laid.

Onwards…

It sure does feel like the era of the BTFD (Buy the F**king Dip) is behind us.

The HODLR’s have been destroyed in crypto and the FAANGS have now lost $1 trillion in value.

Today just FIVE stocks hit all-time highs and three were utility stocks. Gold bulls have emerged from the darkness as they always do when the markets correct.

Now comes patience.

If a bear market is at hand, we have been warned by the price action.

Stocks act much differently in bear markets. Even small positions can quickly turn into huge unrealized losses. Your conviction will get tested in even your best ideas.

Today’s Momentum Monday episode covers all of this and more as Ivanhoff and I look to find the next leaders. Here is today’s episode:

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

PS – Stocktwits launched a great Room for offering your best ideas for 2019. There will be thousands of people’s best ideas shared over the next month and it’s easy to participate and also skim.

The Future of IPO’s

Before I get into it…this made me laugh:

Onwards…

I might as well chime in with my 4 cents on IPO’s.

In 2017 it was all about the ICO’s which was probably the cycle low for IPO’s.

As we now know, the ICO was a mostly awful distraction.

I participated in just one ICO – Civic (a portfolio company of Social Leverage) – which saw incredible gains and now has fallen below the pre-sale price of 10 cents.

With the ICO craze behind us, I am extremely bullish on the future of IPO’s, but I have a different take on what could and should happen to bring them back.

Last week $UBER, $LYFT and $SLACK (these have been the ticker given to them on Stocktwits over the years) filed to go public in 2019.

The rush we will see for late stage Unicorns to get public makes sense now that the markets are rolling over. Money has a tendency to get tight as stock markets cave.

Sadly, Goldman Sachs and JP Morgan will be in the middle of it. It is like the financial crisis never happened when it comes to all thing IPO’s.

In August 2017, I was rooting or Uber the IPO

In October 2017 Fred Wilson talked about IPO’s being back in favor:

Based on everything I am seeing, hearing, and reading, 2018 and 2019 will be bumper years for tech IPOs, assuming the markets behave.

Here is some data on the last 100 IPO’s

So here we are at the end of 2018 and as Fred said, assuming markets behave, 2019 will be full of Technology Unicorn supply. He wrote about it again yesterday and it is a good read.

I think we would be much further along today if more companies had followed Google’s 2004 Dutch Auction (here is a good description of it).

I believe if Twitter had done things differently, there may be no need for Bitcoin and Shitcoins and Twitter could have been be a leader in financial services including IPO’s. Their loss is somebody else’s future gains.

Whatever happens next it is time for some big changes in IPO’s.

In 2018, the Spotify direct listing was unique (this was a good read on the subject) and will hopefully serve as a beacon to more innovation.

We live in an era of incredible communications products and sophisticated software. We also have financial startups with massive long tail distributions like Robinhood, Venmo and Square. The Nasdaq, Carta, Secfi, Stock X, GOAT, Rally Rd, Etoro, Stocktwits, Click IPO and Fintwit are all able to play a role.

The time is now for the best growth companies to tap the enthusiastic investors in regulated modern brokerages like Robinhood to own their IPO shares.

To fix this IPO problem, we mostly need buy in from the CEO’s and boards of these fast growing companies to change the distribution, not just fintech founders.

If the fintech founders and engineers would spend their time solving simpler financial innovations and working with regulators early, the banks would suffer deeper and longer lasting cuts and force the change we need to get costs and slippage down and IPO’s much earlier in the growth cycle.

I am confident this will happen.

Full disclosure – We are investors in Stocktwits, Etoro, Rally Rd, Robinhood and Secfi. I own shares in Paypal (Venmo).

Bull Traps, Death Crosses and Bear Flags

This is the investing money quote from Brian Shannon weekend:

Bull markets punish discipline and reward conviction

Bear markets punish conviction and reward discipline.

The trick is to find the balance in both environments

I remember the good old days of last weekend when I wondered if we were all clear on this correction

On Monday the markets took off like a rocket, but by Friday chaos was back.

Price drives sentiment…so with these lower prices, the fear and anger rises.

I have looked through hundreds of charts from my favorite technicians and it was all bull traps, death crosses and bear flags. The fact that so many of these patterns are upon us is what matters.

Andrew Thrasher shared that as of yesterday, 41% of S&P 500 stocks were more than 20% below their 52-week high. At the low in 2016 this figure reached 57% & in 2011 it hit 65%. In 2008 it was north of 80%. More S&P stocks hit new 6-month lows yesterday than when the index was at its November low. Meaning breadth is continuing to weaken.

In english, stocks look weak and vulnerable.

Go Rachel Lindzon G0

Rachel was having a nerve wracking week waiting to hear Friday if she would be accepted to University of Arizona’s Eller program – more specifically the intense one year program at McGuire center for Entrepreneurship.

She texted me yesterday that she was one of the 40 students selected.

Ellen and I are so proud of her.

I’m not sure Rachel has plans to start a company herself, but she has been fascinated hearing about the companies in our portfolio over the years.

Next up for Rachel – a summer internship in New York City or Los Angeles at a fast growing startup.

Go Rachel Go.

Be Fearful Before Others Are Fearful And Less Greedy In General

It has been an intense five days of meetings and presentations in Manhattan.

The weather has played nice, allowing me to walk up, back and across town to almost all my meetings.

As the markets were crashing the last few days the term ‘be fearful when others are greedy, and greedy when others are fearful’ showed up a few times in my stream.

I edited it for my trend following style with ..’be fearful before others are fearful and less greedy in general‘.

I have no idea when this volatility will die down, but it will.

Have a great Friday.

PS – I got to visit with Dan Loeb yesterday at his Third Point Capital office. It was fun to talk with him about networking, social media, the old days of the Yahoo Message Boards (where he got his activist game on as ‘Mr. Pink) and the early stage investing landscape.

PSS – I am tempted to have my friend Michael (who sent me this pic of the piece) buy this for me down at Art Basel this week:

The Next Consumer Wave

According to my friend Brian – It feels like there might be another consumer wave coming.

Yesterday Google and Amazon announced they will be offering Airpod alternatives.

The Amazon/Google news is great because the Airpods are fantastic, but too expensive for most of America. Both Brian and I think this will lead to a lot of new creative consumer applications and services.

I am beta testing 3 really amazing consumer apps right now myself.

I just read this good piece on trends shaping Europe at the moment titled The Rise of the Experience Generation. My son Max just submitted a college English essay on the Electronic Dance Genre (EDM -a genre he loves)

Connie Chen at Andreesen Horowitz agrees and has a good post titled ‘When AI is the Product: The Rise of AI-Based Consumer Apps‘. The gist:

There’s a new era of AI consumer-based apps spreading around the world, though starting from China.

TikTok, a short-form mobile video app, was downloaded on Apple’s App store more than 104 million times during the first half of 2018 — making it the world’s most downloaded app in that period. In fact, installs in the United States in the month of October [or more specifically, between 09/29/18-10/30/18] were higher than Facebook, Instagram, Snapchat, and YouTube, reaching a whopping 42.4% of downloads among those already popular apps. Yet much of the coverage on TikTok either compares it to Facebook’s direct competitor (Lasso), or incorrectly labels it as a lip sync app for teenagers. It’s more.

Not only is TikTok a China-based company whose product is winning hearts in the U.S. and around the world, it is, more importantly the first mainstream consumer app where artificial intelligence IS the product. It’s representative of a broader shift, where AI is transitioning from the discovery phase to the implementation phase.

Americans have been busy ‘passive’ investing, me too’ing products and yelling at each other on social media while the young Chinese focus on getting rich building consumer applications.

I think that will change, but either way, the next wave of consumer applications is coming.

PS – If you want/need a good laugh try the new Jeff Ross and Dave Attell on Netflix. I watched the three -30 minute episodes – and laughed out loud a lot.

Investing Rules Do Not Change…and The Future of Technology and Society

The First Book Written About a Stock Market Is Selling for $300,000. It has appreciated 900 percent over the last 30 years.

The four principles Vega sets out are reasonably applicable to any amateur trader today:

On the off chance that you’re wrong, never give anyone advice to buy or sell shares.

Take every gain without showing remorse about missed profits, i.e., don’t kick yourself for missing the absolute peak of a share price.

Profits on the exchange are “the treasures of goblins,” meaning a profit today could be a loss tomorrow.

Finally, whoever wants to truly thrive as a trader has to have patience and money.

It is amazing how little has changed with respect to sound advice in markets.

Next up, this 2017 peer into the future of networks ended up back in my stream and I watched it again.

Seeing that the markets are closed today, make the time to watch this great video of Balaji on the future of technology and society.

Momentum Monday…Just When I Thought I Was Out They Pull Me Back In!

If you were short the markets last week…here is what it felt like to wake up this morning.

Imagine Pacino saying this famous line but acting excited….that is me today.

It’s Monday and time for the weekly episode of Momentum Monday with my pal Ivanhoff. As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

Click right here for today’s episode or watch it below in the embed:

I am happy to see a lot of names hitting new highs (none of them are FAANG stocks).

The new all-time high leaders are drug, healthcare and biotech stocks as well as non bank financials. E-commerce ($ETSY – long) and enterprise software stocks ($TWLO) are at all-time highs as well.

Ivan and I go through a lot of new individual names and ideas in the show, so have a listen to the episode.

Have a great week.

PS – I like this post from JC titled ‘When in Doubt Zoom Out‘. The enemy of good investing and trading is chasing. Taking a step back and looking at the markets from longer time frames can be a great help.

Who Knew? …and Microsoft and Cisco – The MC Hammer Of The Dow

On Saturday I thought we might be ‘All Clear

This morning it sure looks that way with the markets up huge.

The leaders of the Dow might surprise you:

It looks like the drug companies are out of a long slumber. It’s been years since I looked up their tickers on a regular basis.

Maybe all the attention on the war on Opiods is good for them?

Also, while we mourn FAANG, Microsoft and Cisco (The MC Hammer of the Dow) continue to lead technology.

It’s not the leadership you expect, but leadership it is.

Narcos Mexico

Before I get into Narcos, check out the will of these Salmon crossing a street in Washington:

The salmon will do anything they can to spawn and die.

Which brings me to Narcos Mexico

Ellen and I watched Narcos Mexico this weekend.

When you sit down to watch it you really have to pay attention because of the subtitles.

The first 3 episodes were slow and I may have to go back and watch them again before the the next season.

That said, whoa, the show ended strong.

In this interview Mexican actor Diego Luna says that 250,000 Mexicans have died because of the drug war in just the last 12 years.

As Diego says in the interview, it is the DEMAND for drugs being so strong that makes this war on drugs seem impossible to solve.