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.


Also published on Medium.