A Battle of Wits and NitWits

Longer riff today to clear my head…

Watching Elon Musk argue with shortsellers on Twitter is pretty damn entertaining.

It reminds me of this scene from a top 10 favorite movie of mine ‘The Princess Bride’…the battle of wits

Depending on the day I have no idea which character Elon Musk is.

I have a record number of half written blog posts right now. I am not sure what that means.

I am back in Coronado which is an inspiring place for me. It used to be we lived here ten months and left for the summer and made fun of the ‘Zonie’s’ (Arizona summer escapees). I am now that ‘Zonie’.

All the cool kids wants to break up Google and Facebook, meanwhile Comcast and AT&T are on the verge of being the two most indebted companies in the world. The old saying ‘I would rather pay interest on debt than taxes on income’ makes no sense anymore because old tech is paying interest on debt and new tech figures out how to never pay taxes!

Meanwhile my Verizon and AT&T bills are 11 pages each even though I am on their ‘simple’ unlimited data plan.

It used to be cool to compare Apple’s cash balance to every other asset or country or GDP in the world, but this year it’s all about Netflix.

Here are a few from the last few days:

Netflix passed Shittybank (Citibank) in market capitalization today. Netflix has 5,400 employees and Shittybank 209,000.

Netflix was up more in value today that what the entire company was worth just six years ago.

Market ‘factoid of the week‘:

In that case…let’s all ever up our homes and buy the breakout of the week…biotechs:

Everyone is long large cap technology stocks, biotech stocks and crypto’s which might explain why defensive stocks (utilities, consumer staples, telecom and pharmaceuticals) have NEVER been so out of favor:

(I like adding to my one 8 to 80 defensive company Johnson and Johnson when things look this bleak).

Finally…only in the Trump and Twitter era could there be a boom in meditation companies/apps. Serenity Now!

I am off to Los Angeles for the day. Have a good one.

Investing Will be the Most Popular Language

I wanted to finally get some thoughts out from my two days at The Money Conference in Dublin.

It was fun to be on stage with my friend Yoni Assia, the founder of Etoro (I am an investor) talking about trading and investing. Etoro is a social brokerage that has over 10 million accounts in 140 countries.

The social team from the Money Conference shared this tweet about my riffs which is a good start:

Have a look at this chart about languages:

I would never have guessed that Portuguese is the 7th most spoken language, but that is not the point of this post.

There is one language across all these languages that is universal and that is the language of investing/trading.

I talk about this trend often but it is till so early.

Over just the last four years global markets have grown, market data is abundant and most of what you need to start investing is free. In addition, social networks have proliferated and crypto (at least Bitcoin) is in every corner of the world. Bitcoin might already have more brand recognition than Nike or Coke.

We are all holding a smartphone easily connected to markets and our small or large groups on our favorite networks and we can dial in with ‘experts’ and mentors 24/7/365.

I have linked to Morgan’s piece titled ‘The Psychology of Money‘ before, but I keep coming back to this part of it:

In what other field does someone with no education, no relevant experience, no resources, and no connections vastly outperform someone with the best education, the most relevant experiences, the best resources and the best connections? There will never be a story of a Grace Groner performing heart surgery better than a Harvard-trained cardiologist. Or building a faster chip than Apple’s engineers. Unthinkable.

But these stories happen in investing.

That’s because investing is not the study of finance. It’s the study of how people behave with money. And behavior is hard to teach, even to really smart people. You can’t sum up behavior with formulas to memorize or spreadsheet models to follow. Behavior is inborn, varies by person, is hard to measure, changes over time, and people are prone to deny its existence, especially when describing themselves.

Grace and Richard show that managing money isn’t necessarily about what you know; it’s how you behave. But that’s not how finance is typically taught or discussed. The finance industry talks too much about what to do, and not enough about what happens in your head when you try to do it.

Do your kids a favor and start them on the path to learning the language of investing.

Momentum Monday – Emerging Flu?

It’s that time of the week again…

On today’s Momentum Monday we do our usual tour of the markets and momentum and discuss a few new ideas.

Google, Apple, Amazon, Facebook, and Netflix are at or near their all-time highs. In the meantime, emerging and most foreign markets continue to struggle below their 200-day moving averages. The divergence between U.S.and foreign stocks in 2018 is bigly.

The big question is will the emerging flu spread to US markets?

The chart that stood out to me most was from Sentiment Trader. Small options traders are in a speculative bullish frenzy:

I think these signals work better when it is the fear that is spiking. That said, the last time this indicator got this speculative the markets went sideway for more than a year.

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 oand 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 HERE to watch the show or watch below:

Would You Rather Be an Investing Legend or a Golfing Legend?

Happy belated Fathers Day to everyone!

I ate pancakes with Ellen this morning and than plopped down to watch six hours of golf today.

I was traveling all day yesterday but did catch the Phil Mickelson putt putt putt putt puttathon during my layover in Minneapolis.

Twitter went wild. The Twitter ‘Moments’ thread has some funny zingers.

I am not a huge Phil fan, but Phil is a ‘golfing’ legend. Putting a moving ball in the US Open will only add to the legend.

In the world of investing where I live…if you make five good guesses in your lifetime you become a legend (on CNBC at least)…

Dive a little deeper and you see that Bill is mostly a legend in marketing…

Bill has a $100 million yacht, so being an investing legend has it’s perks. But, I would rather be a golfing legend than an investing legend

Goodbye Bagel

Last night our dog bagel passed away.

I am on my way home today so Ellen and the kids had to handle her last day by themselves.

She was 14. She lived a good life I think by dog standards.

Bagel was a happy dog and we loved her. My in-laws gave Rachel the dog when she was 6 and Rachel chose the name. Here is Bagel in her favorite spot…sleeping with Rachel:

6 am i always catch my daughter sleeping next to her kindle and sweet dog Bagel

A post shared by Howard Lindzon (@howardlindzon) on

I am headed back to Coronado for the summer tomorrow and I will miss sitting with her on the porch.

Rest in peace Bagel.

Bagel and I just chilling … #lovemydog

A post shared by Howard Lindzon (@howardlindzon) on

Kustomer Raises $26 Million And Is Growing Fast as They Take on Zendesk

Today, Kustomer announced their Series B raise of $26 million from investors including Redpoint and Cisco. Our fund Social Leverage was a seed investor and continued to invest in this round. Here is Techcrunch with a good explanation of the round and the business.

Redpoint led the round and Tom Tunguz of Redpoint summed up the product and investment reasons below:

Kustomer is the software I wish I had when supporting customers. Brad, Jeremy and the rest of the Kustomer team have operated in the space for more than a decade. They were founders of Assistly (with our partner Alex Bard), and became executives at Salesforce’s Service Cloud after Salesforce bought their business.

They have seen companies of all types and sizes struggle to find the right way to support their customers. The product of all that experience and knowledge is Kustomer.

Kustomer has a flexible data model to ingest all relevant data to a customer interaction, from web visits to mobile interactions, from transactions to event attendance.

Kustomer couples this data store to a powerful process engine that enables orchestration and automation of other systems. For example, customer support reps can process a return and create a new order at the click of a button.

This is a powerful combination. It’s the reason companies like Ring, Slice, Glossier, SmugMug and others trust their most important relationships – those with their customers – to Kustomer.

When we invested in Kustomer in 2015, Zendesk ($ZEN) was a $2 billion company and a stock I wanted to own. Despite Kustomer eventually competing with them, I knew that owning Zendesk was a great public proxy for owning the growth ahead for the sector and industry. Today the stock has more than doubled and is worth $6.1 billion.

I last covered Kustomer back in early 2017. It is amazing to see the growth in the team, the product and sales. Thankfully we have been right about the growth in Ecommerce as well.

Congrats to my partner Gary who has led the investment on our behalf and to Brad and the fast growing team at Kustomer.

Please hit me up if you think Kustomer can help your company or you know the Director of Support or Customer Experience at high growth Business to Consumer companies.

Every Drop Can Signal The Beginning of the End

I read this today from Naval which got me thinking…

Whether you’re excited or nervous when your favorite asset falls in price marks whether you’re investing or merely speculating.

I rarely disagree with Naval but will do so here.

In early stage investing, my gut can get me into a company, but there is not much I can do after if my gut says get out. Certain moments along the way get me excited and nervous…mostly for the founders (big hires, capital raises, corporate development) and the team though (product launches etc.). At Social Leverage we do NOT average down into positions. We will make pro-rata investments as companies expand and raise up rounds.

Liquidity in the public markets changes a lot of my behavior and emotions.

In the public markets I am nervous about every big drop in price for any of the assets I own. I do not think that makes me a speculator. I have held Apple, Google and Nike for years, but have felt nervous buying big dips in their stock each and every time.

Each drop can signal the beginning of the end.

When investing in public markets, investors and traders should/must have a plan. I am sure some people always feels excited and some never get excited, but I think it is pretty normal to get nervous…at least from some of the great investors and speculators I talk with every day.

The Macchiato Market

I still have Italy on my mind after four days in Dublin.

Today I head to Amsterdam for a few days before heading back home. The family is heading home today.

From Wikipedia – Caffè macchiato is an espresso coffee drink with a small amount of milk, usually foamed. In Italian, macchiato means “stained” or “spotted”.

The market is like this right now. It’s got a little bit of foam…a spot of froth.

Most of my 8 to 80 stocks continue to rise relentlessly and it seems prudent to sell some of them into the foam which includes higher rates, higher oil prices and the highest inflation since 2012.

The frothiest and wierdest part of the market surrounds Netflix. Netflix is forcing cable and certain media companies to chase. As they chase to try and position themselves to grow in a Netflix world, Netflix stock continues to behave like it is the safe bet no matter what happens around them.

As the US markets enter the Machiato stage, Crypto would best be described as stale drip coffee.

I am long term bullish on Bitcoin (at least as a digital gold), so I don’t mind putting some money to work over the next few months in Bitcoin and Ethereum as they drop from todays prices. I treat them as public Venture Capital ideas, which means I could lose everything and invest accordingly.

On the venture side, we have entered as ben Thompson calls it, ‘The Scooter Economy‘. It is a great read on the explosion of financing in the race for scooter dominance. Ben believes it is Uber’s second chance, but most importantly I love his conclusion…

More Tech Surplus

More generally, in a world where everything is a service, companies may have to adapt to shallower moats than they may like. If you squint, what I am recommending for Uber looks a bit like a traditional consumer packaged goods (CPG) strategy: control distribution (shelf-space | screen-space) with a few dominant products (e.g. TIDE | UberX) that provide leverage for new offerings (e.g. Swiffer | Jump Bikes). The model isn’t nearly as strong, but there may be other potential lock-ins, particularly in terms of exclusive contracts with cities and universities.

Still, that is hardly the sort of dominance that accrues to digital-only aggregators like Facebook or Google, or even Netflix; the physical world is much harder to monopolize. That everything will be available as a service means a massive increase in efficiency for society broadly — more products will be available to more people for lower overall costs — even as the difficulty in digging moats means most of that efficiency becomes consumer surplus. And, as long as venture capitalists are willing to foot the bill, cities like San Francisco should take advantage.

Hope this helps.

Have a great day.

The Gut and Power Laws

Most of my angel returns have come from gut feeling and almost all of my stock market losses have come from same gut!

My gut has been ‘right enough’ for angel/seed investing.

Being ‘right enough’ in the stock market can lead to outsized returns, but using my gut to be right enough in the stock market did not work.

Until I started getting more mechanical with my stock market investing I struggled.

I think you have to have some system for investing in the stock market. I think that is why ‘stock picking’ is not for everyone. A system is a lot of work. The reason S&P index investing works for so many people is it is a system in itself. You still have to manage your emotions, but it does work over a long time horizon.

Angel/seed investing also has power laws at play. If you want to read more about ‘power law’ investing try these links –

If you want to read about power laws:

Angel Investing and Power Laws

Fred Wilson – Power Laws

Power Laws

Have a great day.

Momentum Monday…Are We Too Extended?

Hello from Dublin.

I am with the family in Dublin and we have an Airbnb at what is called Google’s Headquarter (that is the address I give the taxi’s…no Uber here).

Not much has changed since last week’s show with respect to Momentum.

Ivanhoff sums it up well:

Recent Chinese IPOs have gone wild. Many of them have doubled in a month or two. Highly-shorted stocks are forcing short sellers out of their positions. Many momentum tech stocks are looking dangerously extended, but other sectors are starting to perk up and keep the stock market indexes afloat. Is the market running on fumes or sector rotation will save the day again and keep pushing higher?

This week’s show is a little longer but we cover a lot of tickers including:

QQQ (Nasdaq 100), MSFT, ETSY, MMYT, ROKU, TSLA, ISRG, TWTR, BABA, RH, MA, V, and many others.

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing 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.

As always in the show, Ivanhoff and I go through some new ideas and our SL50 list of momentum leaders. Click HERE for the show or watch below: