2017 Made No Sense…Fasten Your Seat Belts for 2018

Ben Carlson has a great post out today titled ‘When Things Don’t Make Any Sense‘.

The crypto craze makes no sense to a lot of people, but reading Ben’s post put this mania in some perspective:

By 1990 the total Japanese property market was valued at over 2,000 trillion Yen (around $18 trillion) or 4x the real estate value of the entire U.S.

Grounds on the Imperial Palace were estimated to be worth more than the entire real estate sectors in California or Canada.

Those Japanese were cray cray!

I also loved this piece from Charlie called ‘The Year in Charts‘. Cliff notes version…

1. Volatility died
2. The S&P was up every month – a record and also a record 14 months in a row
3. Short term interest rates hit highs last seen in 2008
4. Housing prices surged
5. Bitcoin…natch!
6. Every major currency was up versus the US Dollar
7. We closed out 2017 with the 9th consecutive positive year for the S&P 500, tying the record run from 1991-99.

Months ago, The Economist had a cover with the title ‘The Bull Market in Everything’. Everything but the US Dollar it seems.

This dollar weakness is setting off some monster moves in commodities.

The big unintended consequence from the 2008 crisis, easy money and currency debasement was Bitcoin.

The next big trends are now underway from Trump’s very mentally stable #MAGA.

You may not like the media and the politics, but the markets sure love them.

Intelligent Fanatics

I was watching some reruns of Comedians in Cars Getting Coffee tonight because Netflix is my homepage after 9 pm every night.

I love the show.

Jerry is an ‘intelligent fanatic’.

I love that term which I just picked up from this blog called of course ‘Intelligent Fanatics‘.

This post titled ‘The Fallacy of Instant Success‘ is very true.

It feels as though every day we read a headline of some money losing technology business that just eclipsed a $1 billion valuation in a short period of time. Constantly reading such things distorts reality and exacerbates a disjointed view of the effort and timeframe needed to create an exceptional business.

Few exceptional businesses are created quickly. While studying Intelligent Fanatics, one thing that becomes evident is many of them put in years of intelligent, diligent, and obsessive work before they hit their inflection point.

The inflection point, if visualized, isn’t an explosion but a wave. It is the result of countless incremental improvements or breakthroughs that build up over a period of years that finally crest and accelerate the business at a rapid pace.

Have a great Saturday.

Happy Birthday Rachel Lindzon

Rachel turns 20 on Saturday.

I spent the day with her today in San Diego. We ran errands, had some sushi for lunch, hit the Apple store and went to see a movie.

I took this picture today of her and I at lunch today and posted it to Instagram:

It’s just another picture of course, but what was cool was a comment from Werner Vogels (CTO of Amazon) who remembered Rachel from a boat ride we all took in Amsterdam 7 years ago:

I remember a boat ride in Amsterdam with a super-smart 12 (or 14?) year old. Congratulations!

We both remember Rachel quizzing him about the Kindle as Rachel is a voracious reader.

Rachel remembers too of course.

Long live Rachel and of course Amazon.

One Man’s Bubble is Another’s Wealth Generating Event

It’s January 3rd and I can’t keep up with all the action.

I already missed a day of my blog which is half of all the days I missed in all of 2017. The pressure is now on.

The good news is like always, stocks and crypto’s were up…oh and Hooter’s is finally on the blockchain. Of course the stock was up 50 percent.

This photo captures the crypto mindset at the moment

In the first day of the year (a weekend in case you old farts were wondering) about 10 different tokens appreciated 1,000 percent.

Many were up 800 percent.

A perfect storm for moving tokens (not all pump and dumps of course) is underway – The chat apps of today are global and mobile including Stocktwits of course, Twitter, Telegram, Whatsapp, Discord, Slack.

If you don’t have a paid crypto chat room in 2018, you are a nobody.

Sure, it’s a craze, but as Ari said to me earlier – one man’s bubble is another’s wealth generating event.

I am seeing some data that blows my mind. The cryptocurrency market is doing the same daily volume as The New York Stock Exchange.

Ian (Stocktwits CEO), shared some data with me today that was staggering. I remember the days of 2011-2016 when the average bullish to bearish message ratio was 3 times with spikes to 4 times. Today I saw it was 9 times.

Sentiment is just one data point and I rarely trade off of it (I will trade off of negative spikes), but you can just feel the pigs becoming hogs.

My nephew, who I blogged about here a few weeks back, now has his first TWO ten baggers. He opened his first account less than 6 months ago. As he said to me in person in Toronto a few weeks back..it’s hard not to be a hog.

The greed of the newbies and the chasers is equally matched by the smugness of the people that have not participated.

I continue to tell people that want to short the mania to open a wallet somewhere and actually BUY some Bitcoin and Ethereum because telling the story about investing at the top is less expensive than trying to time the top.

While the mainstream is now fascinated with the price of Bitcoin, it is that price that may be a distraction.

PS – Because I missed yesterday, here are a few extra good links

The price of Bitcoin is the distraction from what is really important.

The NEXT 50 Index.

The massive hedge fund betting on AI.

I Love 2018…and Trump Made American Stocks Below Average in 2017

I fell asleep early on New Years Eve to Black Mirror.

This morning I went for a ride in the Camelback Mountain hills.

This afternoon we drove to Coronado to start a brief family vacation.

Ellen drove part of the way and I was on the streams catching up on the markets. I have been noticing the relative strength of Ethereum vs Bitcoin the last few weeks and posted on Stocktwits that I was going to buy some more at $750.

By dinner, Ethereum was up $130. That’s a 15 percent move on a holiday afternoon! I will ring the register on a bit of it now (Sunday eve).

First of all I love the fact that the crypto markets are open 24/7/365. It’s 2018 and they should be.

I have never traded futures or currencies. They never interested me. Crypto is another story. I am a cash trader (no margin) which puts me in the minority but I love the idea of trading with/against the world on a weekend or holiday.

The stock markets have been part of my life for 35 years and I never had the urge to trade on holidays or weekends. In fact, I have argued they need to be open less!

As for what is in store for stock markets in 2018, nobody knows, but everyone has an opinion.

The year 2017 was an epic one for global stock markets. EVERY major country ETF was positive in 2017 with an average return of 28 percent. The fact is Trump made America below average in 2017. Charlie has the numbers and while America was being made great again, Austria, Poland and Argentina were all up over 50 percent!

If you think 2018 will be bad for US stock markets because 2017 was so good, my friend Ryan who heads research at LPL has some data that says not so fast!

Ryan also has some data that says a lot may be riding on the first day of trading tomorrow.

I know that Crypto mining caught fire in 2017 and will continue into 2018 because of the fat margins at the moment.

Here is what it costs to mine a Bitcoin around the United States:

Mortimer…turn those machines back on!

Happy New Year

I am excited to turn the calendar.

For the Lindzon’s 2017 was great. We are grateful to slip into 2018 healthy and optimistic.

The markets were as tame as I have ever seen.

We made Poland, Argentina and Austria great again in 2017.

At Stocktwits, a whole new world of crypto helped onboard a younger and even more optimistic stream of ideas and opinions.

At Social Leverage, Tom, Gary and I continue to find great founders and teams to invest in.

I have not made any resolutions other than to stick with the routines that got me here. Blog every day, eat less, more weights in the workout, and lot’s of face time with new founders and current portfolios teams.

And remember…there is no such thing as information overload…just filter failure.

An 8-80 Update

It was another fantastic year for my 8-80 list of stocks.

An equal weighting of the fourteen (14) stocks in 2017 would have returned more than 45 percent – more than double the returns of owning the S&P 500. That is a good reward for picking stocks.

Only Starbucks disappointed this year and underperformed the 19 percent S&P rise.

I picked the wrong food stock for my list as McDonalds was up over 40 percent. My favorite fast food sneak food of 2018 is Mcdonald’s breakfast burritos where I can buy 2 for $2. I saw it, I ate it, but I did not own it.

I am keeping Starbucks on a short leash for in 2018 (note – you can subscribe to my ‘Peloton’ service you get real-time updates throughout the year).

I imagine in 2018 I will consider adding crypto asset to my list as 8-80 year olds are already familiar with Bitcoin. In the meantime, Visa and Mastercard have kicked butt.

As always I urge people not to chase stocks or returns.

Have a great New Year’s Eve everyone.

PS – I started writing about my 8-80 list in February, 2016. In February, 2017 I updated it.

Playing Kerplunk with Trust – Will Commodities Join Crypto Party in 2018 in the ‘Flight From Crazy’

The year 2017 was like watching a game of drunk Kerplunk.

Every day someone in the Trump administration pulls a stick from the wall of trust knowing the marbles will eventually spill out.

Today, the disguting Scott Pruitt named a ‘barred for life‘ banker to head the Superfund. It is almost impossible to get barred for life from the brokerage or banking industry.

The stock market does not care because as Josh Brown says (in a great post today):

We no longer take a single word any of these organizations say at face value; we’re questioning their motives and communiqués before they’re even finished speaking. Fingers pointing from every direction.

Our faith in the conventions of American government and these institutions isn’t just fading away. As in the Gaiman story, it is being transferred. We still have faith, that part of human nature doesn’t go away.

Our new beliefs are making one thing happen, relentlessly – we’ve selected a new Pantheon. We have more faith in their ability, their capacity to learn and improve, their adaptability, than we have in the President or in Congress or in the courts.

Here are a handful of the very large stocks making new 52-week (and, in many cases, all-time) highs right now: Amazon, McDonalds, Google, Apple, Salesforce, Visa and Netflix.

These are not brand new companies, and in many cases they are not selling a brand new product. Rather, they are institutions that have earned the trust and devotion of millions of customers, shareholders, employees and managers. We believe in their products and services, we have faith in their durability, their competitive advantages, their vision of what the future looks like and how they’ll fit into it.

En masse, we have decided that, come what may in Washington, these are the entities that will find a way to thrive. They will not merely survive the future, they will be responsible for shaping it.

There’s an element of blind faith at work here, and of self-fulfilling prophecy. Because the larger these stocks become, the larger their weight in the index funds that investors have taken to deifying. Vanguard is a Mecca for money, and as it draws in more adherents, by extension the market caps of these companies draw in more invested dollars.

Howard here again…

While Trump was taking credit for the stock market, what really unfolded was a continuation of a trend set in place from the financial crisis of 2008. A continuation of money flowing into the institutions that Trump and his band of creepy knuckleheads can’t do much to slow down, let alone stop. In fact, the tax plan helped the largest and most profitable corporations and may accelerate their growth.

The tax plan will also set off some new mega trends in 2018 which we will start seeing in the charts of new stock market leaders as 2018 begins.

The money that the administration really got moving in 2017 was into crypto which I would call ‘the flight from crazy‘.

As ‘crazy’ and negligence continue, I go into 2018 wondering if as a group commodities start getting more love.

Look at this chart showing how commodities have plummeted to all-time lows relative to stocks.

One bet I am looking to make is that this gap shrinks in the coming years.

One sure thing the ‘experts’ agreed on was gold would have a good year. It did not.

At one point in 2017, Gold did look to be on the verge of a breakout, only to keel over again.

But as 2018 ended, commodities perked.

Copper was up 31 percent and up 16 days in a row to end the year.

The ‘oil vey’ trade is back on as Crude crossed up past $60 for the first time since 2015.

Palladium (not the nightclub) was up 51 percent in 2017, at prices not seen since 2001.

Lithium (not the drug we wish Trump took daily) and Cobalt are lit.

Even gold finished 2018 strong. Greg Harmon has a great technical roundup of gold going into 2018.

The rage right now is to charge 2 and 20 to manage money in the crypto and token space.

A lot of cold money will be trying to time a trade on that stock and commodity gap shrinking.

I am excited for the calendar to turn.

Investing in 2018 – Minimax Regret

This iguana versus snakes video from Planet Earth blew my mind. I have watched it 20 times.

Ok now to my idea for the day:

I loved Ben Hunt’s piece at Epsilon Theory titled ‘The Three Body Problem‘. It is long and winding, but if you have invested or traded the last 10 years, a lot will ring true.

My fave nugget was this:

I think we should adopt a classic game theory strategy for dealing with uncertain systems — minimax regret. The idea is simple, but the implications profound: instead of seeking to maximize returns, we seek to minimize our maximum regret. Keep in mind that our maximum regret may not be ruinous loss! I know plenty of people whose maximum regret is not keeping up with the Joneses. In fact, from a business model perspective, that’s more common than not. Or if you’ve bought into Bitcoin north of $15,000 per coin, I think you know what I’m talking about, too. The point being that we need to be painfully honest with ourselves about our sources of regret and target our investments accordingly. If we can be this honest with ourselves, it’s a VERY powerful strategy.

So Excited for 2018…

At the risk of jinxing 2018, I am really excited.

Anything seems possible if you are in the creative/content business (as long as you do not want to get rich off it).

If you have an entrepreneurial spirit, the mentoring at your fingertips is astounding.

If you are an investor or trader…you have the rigged and regulated stock market or the wild west of crypto.

I have a ton of ideas and content in my head, but for some reason all I feel like doing today is sharing some great content that I have consumed the last few days.

To begin, I am in Netflix beast mode. The two trips to Israel allowed me to consume a ton of shows. Ellen and I have been binge watched Godless, Peaky Blinders, The Crown, and comedians Russell Howard (insane energy) and Todd Barry. All worth the time.

This comeback story being staged by Chinese phone maker Xiomi is a great read.

This podcast with Chris Dixon on the future of tech is a MUST listen. Chris has been ahead of the curve too often to ignore the freebie. All the Investor Field Guide podcasts are worth a listen.

This ‘Year of Stocktwits ‘ is a fantastic review of how smart crowds can be when it comes to investing and the importance of community and networks.

Dan Ramsden who runs strategy for Stocktwits had this great piece out on ‘Interpreting The Networks‘. Read it once a month. The conclusion (does not change the fact that you will enjoy the meat of the piece):

Tipping points and freedom

As any analysis written around this time must eventually arrive at Bitcoin, one way to read all of the foregoing is as a setting of the stage, a preface to the worldwide explosion in cryptocurrency.

If these are to be seen as a financial asset class in the traditional sense, then the value spike of the recent past resembles a bubble. If these, however, are more correctly interpreted as distributed digital networks that happen to be linked to trading mechanisms, then what shows as a bubble to the price chart reader may actually be a network tipping point.

Money and markets are themselves big network systems. They’ve been here a long time and grown even with repeated changes and disturbance. They want to be inclusive and widely accessible. Like all networks, in the last analysis, the markets want to be free.

Finally – big technology and healthcare is game on Garth! You will enjoy this read, even if it seems too early to get excited.

On the dark side, the trolls have had a great year. This New York Times piece about digital nazi’s beating a digital nazi hunter is absurd and sad.

I have to believe that 2017 was peak troll. Twitter can’t continue to be so clueless. Facebook sadly can and will, but that deal with the devil is more complicated for all of us.