Asshat or Genius

Ellen and I have now been in the big Apple for two months. We are loving the Grammercy neighborhood. No surprises on the food front. Pizza, Falafel and Chinese Food have been the go to meals.

Today we went to ‘Junk‘ a matinee at Lincoln Center. It was our second play of this trip. I slept through the first one so let’s just say that the lighting was good.

After seeing a packed house for ‘Junk’ I think Broadway might be ready for the play I have been working on called – ‘Bitcoin – a Crypto Musical‘.

Ok..on to the post…

On Friday the Nasdaq hit ALL-TIME-HIGHS. Most of us are geniuses again. It feels great.

But, it’s a fine line in the money world between asshat and genius.

Bill Miller was a genius for 15 years straight (1991 to 2005) as he beat the S&P. In 2007, he was named Chairman and Chief Investment Officer of Legg Mason for all his genius and of course the financial crisis came calling.

He quickly became an asshat (at least according to The Fly and in 2008 he won the first and only Stocktwits ‘Asshat of the Year‘ award.

Bill is back now running billions after leaving Legg Mason and one of his smaller funds has 30 percent of it’s assets in Bitcoin and is up 74 percent in 2017.

Bill is a genius!

The markets have a way of making the geniuses asshats and the asshats geniuses.

If you are feeling down because you still own JC Penney or god forbid short Amazon, remember that it is easy to start fresh. Go to cash and start again.

Even Larry Blankenfein – CEO of Goldman Sachs – has to make customer support calls in 2017.

Bitcoin – Errors of Commission and Ommission

I love this tweet from Eric Jorgenson that sums up his investing strategy:

If you invest, you have had ‘FOMO’ (fear of missing out) and you have had ‘Regrets’.

It may not happen in this perfect circle of investing life that Eric draws, but for most it does.

Over the years, I have developed my own investing strategies that have helped me become a better investor, but I continue to make mistakes.

With Bitcoin, I had no fear, I just did not ask the right questions. I was shown them back in 2010 at 12 cents by Yoni Assia in Israel, but was skeptical rather than inquisitive.

I finally bought some Bitcoins north of $100 when Fred Wilson bought them. But, I never tried to use them (transacted).

I should have played with them more.

In 2015, a friend introduced me to Numerai (probably one of the first, if not most unique crypto hedge funds) and I passed on the investment. Most likely because I had never ‘played’ with Bitcoin. Fred Wilson ended up investing.

In the past month, I have gotten ten Crypto hedge fund pitches. There are now 123 active crypto funds with $2.3 billion in assets and that will likely double by the end of the year.

One thing about all the managers in the hedge funds I have seen…they all have two and three year returns of 1,000 plus percent.

The FOMO is building up inside of me, but instead of chasing, I have been transacting more and more. I am getting closer to the system.

If the crypto assets are a bigger part of our future, there is still much time to back fantastic founders and ride big trends.

Yesterday, Fred wrote about Polychain Capital, yet another investment of theirs that invests in crypto assets. Watch the short Vice video with the founder.

You can overcome a lot of ‘FOMO’ by opening a wallet with Coinbase and just putting in $100. Send $10 to a few friends or start a monthly contribution plan for your kids.

Participating, investing and playing will help calm FOMO and reduce errors of omission.

The Cloud Bubble!

I don’t think the ‘Cloud’ boom ends for some time.

The cloud is like outer space. It is infinite.

Tren Griffin is one of my favorite financial writers and he says the cloud has changed earnings. This post from the summer is a great.

Tonight, Amazon, Google and Microsoft all reported earnings.

Combined, the stocks spiked $76 billion in just a few minutes.

The problem with these three ‘sad’ cloud companies is they have employees.

Not so with Bitcoin.

Bitcoin is the purest ‘cloud’ entity to date.

That might explain the impossible to imagine returns since inception in 2010…

Bitcoin has averaged a 25% monthly return since inception. Even if we subset to 2015 and beyond, Bitcoin has had an average monthly return of 10% (or a 8% median monthly return) compared to ~1% for the S&P 500. Additionally, I included the “Gold Only” portfolio in the chart above to illustrate how differently Bitcoin has behaved when compared to Gold. Bitcoin is not the new Gold. It is some other beast entirely.

This snippet is from this great post titled ‘Is Bitcoin in the Optimal Portfolio‘.

Something on page 10 will stop this ‘cloud’ boom.

In the meantime, the first 9 pages are all Trump and that’s fine with all the CEO’s of stocks that are growing thanks to the cloud.

When Momentum Dies…Thanks Softbank and Adios iRobot

It’s been mostly lollipops and balloons in my 8-80 list and my trend following accounts the last few years.

But, all good things come to an end.

Today I lost an old fave…iRobot.

The stock peaked at $105 a few months back on news that Softbank was taking a 5 percent stake. Turns out Softbank was the top tick. A nice start for their ‘Vision’ fund. Today it closed at $65. Softbank has lost a quick 40 percent.

It was one of my favorite stocks heading into 2017. The trend was good to me as I rode it from the 30’s. My last piece I parted with today is still up 100 percent. If you follow me here and on Stocktwits I was selling stock on the ride up as well.

The robot trade is just beginning but iRobot is no longer leading it.

If it gets past it’s highs one day I will revisit the stock.

Ivan posted this chart today of iRobot which shows how heavy the stock has been:

He also mentioned that he was at Target the other day and there were 6 robot vaccum cleaner products on the shelves and none of them was iRobot.

It turns out the robots are eating the robots and it’s only 2017!

The Facebook Monopoly?

I admit it. I do not own shares of Facebook.

I bought Facebook perfectly back in 2012 and covered it here on this blog .

But after a fast 40 percent I sold my shares over the next 6 months.

Big mistake.

Today, Facebook is a Social Network Monopoly according to Ben Thompson.

Ben pushed out this piece titled ‘Why Facebook Should Not Be Allowed to Buy TBH‘. It is excellent. Please read it. In a nutshell, Ben says the FTC is clueless. It’s worse in Europe. Here is a social network grid Ben has created:

Long story short – ‘social networks should not be allowed to acquire other social networks’.

I am not sure where I sit with Facebook being a monopoly quite yet.

I sent the article to my friend Dan Ramsden who has thought about networks deeply the last decade and is now head of strategy and finance at Stocktwits.

He emailed me back with some notes which he said I could include here:

Thanks… I wonder though if some views will change if/when one or more of the popular networks blows up, which can happen, like MySpace… and especially if his drags others down by association… which could happen to FB. It isn’t inconceivable. Increasingly I think the ones mentioned in this article are at risk because they focus on very personal things, which leads to strong emotional reactions that are not always positive

.

Dan I both agree that this is where I think StockTwits has a long-term and lasting edge, because the subject is not personal but at the same time hugely engaging and permanent.

If Dan and I are correct, it’s possible for many more social niche, deep networks to develop over time.

Ben is on to something though because Facebook may buy any and all social networks before you (mainstream) ever hear of them.

Microsoft and Never Count Your Chickens

This video made me LOL today…

It got me thinking about Microsoft.

It was fun to joke about Microsoft in the Ballmer years.

But, he was CEO when they made a $240 million investment in Facebook in 2007.

Here is a chart of what has happened since

Microsoft shortsellers feel a lot like that goalie.

The Other Side of This Bull Market – Momentum Monday

There will be warnings as this bull market ends. They won’t come from your TV. Actually, everyday the warnings are blasted from financial television.

The real warnings will show up in the price action. You can keep the TV off.

Companies will eventually disappoint. Stocks will start falling on good news.

Facebook and Nvidia trade at 15 times sales. Of course it’s possible that earnings, sales and traditional metrics are outdated, but when the markets turn those metrics will come back in vogue. They will be the way of gauging how far stocks might fall.

In the meantime, as long as the indexes continue to rise in the face of sinister behavior like that of Equifax and Wells Fargo, do not apologize or be shy riding this trend.

How good has 2017 been?

The returns of 2017 vs other years in the S&P says it all.

Every Saturday Callum Thomas does a great ‘chartstorm’ on Stocktwits. He offers a deep dive focused on the health and sentiment of the markets.

This chart stood out this week:

Some other interesting charts this week…

3M – the post-it-note and sharpie boom continues

GE – while they are pathetic, the stock did manage to reverse off a miserable run down after they said admitted they just suck. My friend JC says the price action is interesting…

Baidu’s stock performance (search in China) is beating Google and the rest of the world…Google’s sale of their Baidu stock at the IPO may go down as one of the worst early sales of all time.

Here are the largest 12 stocks to double this year. The themes…Gaming, China, Education, Biotech.

The biggest proof that Donald Trump has destroyed Twitter shareholder value lies in the Chinese copycat Weibo performance…compare the two stocks. Politics is a shitty business. You can’t just say that China is bigger. You can definitely say the Weibo’s management and strategy have been better than Twitter’s.

PS – I remember my parents saying don’t get so close to the TV…which makes this tweet from Stocktwits really funny.

PSS – The most interesting, sad and disturbing read of the week is this Esquire piece on the Opiod crisis and the family behind most if it.

The Frightful Five and Software Stock Breakouts Galore

This week flew by for me. The weather in Manhattan was fantastic and I probably walked 50 miles getting around town.

The markets had a big week. Again

So did Bitcoin. By Friday, the value of all the world’s Bitcoins surpassed the value of Goldman Sachs. I own them both.

The lack of volatility in the stock market continues to be the story.

I love this tweet from Joe Fahmy:

If a correction lasts longer than 4 hours, call your financial advisor.

One story that really caught on this week was New York Time’s ‘Frightful Five‘ – about how Amazon, Google, Facebook, Apple and Microsoft are squeezing the life out of startups.

It’s a good read, but I think the bigger story is the China and what I call the ‘Frightfull Digital Wall‘ – which allows China a never ending advantage to homegrown internet companies.

Meanwhile, the largest software stocks like Microsoft are creeping to new all-time highs daily.

Adobe actually exploded to new all-time highs.

In the enterprise software space, two favorites are lurking at or near all-time highs – Workday and Zendesk. They report earnings this week.

One enterprise stock that surged to all-time highs this week after earnings was Atlassian ($TEAM).

So, despite the Chinese digital wall and ‘Frightful Five’ the markets continue to provide tech and software winners….for now.

Late Night Fantasies

It was fun to watch David Letterman on Jimmy Kimmel.

It was once a dream of mine to be interviewed by Letterman and make him laugh out loud. If only my mom had let us have a dog to teach a stupid trick too.

The early inspiration for my weird fantasy began with Johnny Carson.

I had a TV in my room when I was a teenager.

I don’t remember much other than watching Leaf games, Blue Jay games, and Johnny Carson each night.

I used to laugh out loud lying in bed listening to comics like Gary Shandling as they got their big breaks.

The late night genius of Carson and Letterman inspired me to try stand up comedy in high school. I sucked. It was still the hardest and dumbest thing I have ever done.

Because of Youtube, I was inspired to get creative again and I came up with Wallstrip. When CBS acquired Wallstrip in 2006, I hoped/fantasized that someone from Letterman would ping me and I would get my shot making Letterman laugh.

Crrrrrrickets!

I am excited David will be back with a Netflix show and plan on teaching Bagel and Lindzee (our two dogs) a really stupid trick to send to him.

When there is a will there is a way.