Markets in Turmoil…Hiding out in Bonds and Zoom

Finally, after all the years of me making fun of CNBC for their idiotic ‘markets in turmoil’ specials, we actually have one.

The left is blaming the right and the right the left.

Unless you own the Nasdaq, stocks are now flat for the last 12 months. Fat Nixon sure wasted a lot of time and tweets bragging about how great his stock market was.

I am trying to figure out how bad the markets will get. My best guess at what is happening is that we are headed into a recession because of the travel slowdown. Money is hiding out in bonds and Zoom. I don’t think zoom will last and sold the rest of mine on the Corona spike.

I spent a couple hours scanning the streams late last night to find a chart that could put this panic into context. Charlie had the best one…If the week ended today, it would be the largest weekly spike in the Volatility index ever.

People are scared. They are in a panic. They are selling stocks.

I tried a few nibbles and was steamrolled. I had to backpedal.

Assuming we keep crashing tomorrow I will put some more money to work during the day. The two stocks in my portfolio I may try to add to are Google and Mastercard. If (we will) and when we finally bounce, I will figure out which of my core holdings to sell.

I will be focused mostly on indexes in the next few days.

I always share the list of stocks I own on Koyfin in real time. Here they are.

I did sell some $INSP yesterday and the rest of my Zoom ($ZM).

I hope this helps.

My Corona, Leonardo DiCaprio and SPAC’s

It’s 2 am after a long day in New York and I can’t get the song My Sharona out of my head.

All day it was Corona Virus conversations in New York. Elbow bumps are the new handshakes I guess.

Tonight my friend Mike Katz got us a table for eight at Carbone’s which has a few of my favorite dishes. At the table next to us was Goldie Hawn and her daughter Kate Hudson. Sitting behind me was Leonardo DiCaprio and Kevin Connolly (Eric from Entourage). Coming over a couple times to say hi to them all was soccer great David Beckham. The tables are right on top of each other at Carbone’s and it was no surprise to hear them all talking about Corona virus (and of course podcasts). People are people

Here is our dinner table tonight which was an epic crew of founders and operators…

(that is Leo to the right in the black cap ad Goldie at the top left)

Spac’s have been on my mind the last few weeks. Here is the Wikipedia definition. The hottest SPAC I can remember of the last while has been that of Virgin Galactic ($SPCE). I am tired and can’t remember if I mentioned it in the last few days here but the ticker $SPCE has been the most popular ticker of all time on Stocktwits. It recently surpassed the volume of Tesla. As fate would have it, Adam Bain joined us for dinner and he was one of the people that owned and coordinated the SPAC that pulled off the Virgin Galactic deal. It was fun to hear him talk about the process and what he has learned. I was also at the offices of Dan Loeb (Third Point Capital) meeting with my friend Matt Ober and had no idea that they just completed a successful SPAC called Far Point Acquisition Corp ($FPACU). While all this may be the sign of the ‘top’, the optimist in me thinks that smart people with big ideas are tired of looking at a shrinking universe of public stocks. They see opportunity. It’s both amazing and ridiculous that just FIVE companies make up 18 percent of the S&P 500.

Elevator Down and Jamie Dimon Reads My Blog

I am in New York this week working.

I had a hunch that my post yesterday would get some attention and it sure did. I had some great conversations about it today.

I mentioned that JP Morgan and Goldman’s Sack had been way too quiet on the fintech acquisition front. I laughed today when I saw this headline:

I was in meetings all day and that was a good thing for my brain and business.

I was not following the markets closely the last two days and ‘people are saying’ it was ugly. I don’t look at my accounts during ugly market days. It will only increase my stress level and make me do stupid things.

All of a sudden the S&P is down 3 percent for 2020 and if we had two more days like the last two, the last 12 months of S&P gains would be wiped away.

This tweet from Ramp sums up the markets in 2020.

Everyone is worried about the things they could have easily been worried about 30 days ago.

Let them worry. Worry builds walls to climb.

Is This A Fintech Bubble?

Before I begin…good news for people nervous about the stock market panic today….CNBC is airing a ‘Markets In Turmoil‘ tonight. It never has failed at producing an investable bottom.

If you are confused or angry…you might be too heavily weighted in stocks. The warning signs have been epic. Read Ben Carlson’s excellent piece titled ‘markets have always been rigged, broken and manipulated‘.

I have always said to just assume the above when investing your hard earned money.

Onwards…

Before my fintech rant begins, do read this excellent fintech piece from John Street Capital in December titled ‘Fintech: The 2020’s‘.

Ok…begin rant…

I think we are in a fintech bubble. I am not sure if we topped for now or a big acceleration is at hand.

I’m all for bubbles. They happen. I’m guilty for blowing on this one. I am even working on a fintech SPAC which has to be the top.

I have been trying to ride this boom now bubble for 13 years when Youtube inspired me to start Wallstrip and Twitter inspired me to start Stocktwits.

On a macro level of this bubble, rates are low and printing money seems to be accelerating. I see no end to this so that is a plus for the bubble inflating further.

There is a multiplier of ‘fresh’ fintech money being unleashed on a world that will do its job pushing valuations in fintech higher (at least that’s what I am seeing at the seed stage).

What is this multiplier you ask? The founders and early employees of the companies below will have serious cash that they will use to buy homes and Tesla’s no doubt. Bored with stocks and zero interest rates, they will triple down on fintech (and other startups) because that is their domain experience. These teams see the problems that their own startups could not fill. The fresh money comes from:

Intuit buying Credit Karma
Paypal buying Honey
Schwab buying TD Ameritrade
Morgan Stanley buying Etrade
Visa buying Plaid

These are just the recent multi billion acquisitions. Revolut just raised $500 million more for their neo bank in Europe now coming to USA. Lending Club just bought Radius Bank for $170 million. My friend and fellow venture capitalist Semil unpacks the Intuit/Credit Karma deal and chimes in on fintech as well in this short but sweet post.

Goldman and JP Morgan are still thinking they can build things themselves. Good luck. They will likely panic and chase prices too.

If the chase is on, there will likely be a cushion for fintech startups that cannot get traction.

Not to be outdone…you can basically hedge the fintech bubble in what might be another bubble…Bitcoin is at $10,000 (the trust and scarcity are the features that matter right now) and Gold is ripping higher. Gold miners are cool again. Smacks forehead!

Just a quick rant on what I am feeling and seeing…

Go yell at me on Stocktwits or Twitter is you agree or disagree.

Momentum Monday – The Other Side of Froth and People Love Pizza

Happy Monday…and fasten your seat belts!

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.

Last Monday I wrote that ‘a little froth was fun‘. This week we are going to be seeing the other side of froth…with a side of Corona Virus.

Two Monday’s ago I shared a chart of the closed Chinese airports. Turns out that finally matters to traders and investors.

We are going to open deep in a red hole this morning. This whole might be a little different IF the reason is Corona Virus.

Technically and behavior wise, the froth and bullishness was pointing to a change in direction.

I thought this post from MacroCharts was excellent. He was pointing to something truly rare in the markets taking place. The gist:

Yesterday I questioned whether software was eating the world.

Of course Software is eating the world…Bitcoin is still hanging at $10,000 and Microsoft market cap is bigger than the all the energy stocks combined.

But…

Even the best trends take breaks.

To prepare you for the week as always, Ivanhoff and I discuss the momentum and lack thereof on this week’s Momentum Monday. You can watch and or listen here.

It turns out that while we argue about technology, we are doing so over more and more pizza…

The hottest sectors right now are solar ($TAN $SEDG and $ENPH) and battery companies ($PLUG and $BLDP) and Gold. None of it interests me, but traders gonna trade.

Have a great week. I am heading to New York to work.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. For full disclosures, click here

Is Software Really Eating The World?

This list that Charlie shared the other day of the top 20 stocks of the last 20 years in the S&P 500 reminded me how early we still are in the technology/digital/ecommerce boom…

Monster Beverage
Tractor Supply
Old Dominion Freight
CarMax
Altria Group

The best 5 stocks/companies are the ‘UNsoftware’. The only software stock in the top 20 is Activision.

No wonder the Nasdaq 100 ($QQQ) – and Venture Capital – have been the place to be for at least the last 10 years.

I have no idea when a swoon begins for the Nasdaq 100 and Venture Capital, but I do know the top 20 stocks of the last 20 years in the S&P 500 will look a lot different when we check back on the list in 10 more years.

Happy Sunday.

Being A Mentor

Bill Gurley gave a great talk at University of Texas on finding/being a mentor and finding an immense passion. You can watch it here.

Gurley called the talk “Runnin’ Down a Dream: How to Succeed and Thrive in a Career You Love“.

Here is his slide deck.

This speech and slide deck really speak to me because I love my career and want others to have the same passion and joy for theirs.

Have a great Saturday.

Portfolio Companies In The News – 1upHealth and Rally Rd

Good morning everyone.

Another day, another ridiculous idea by a social network to act like they care about news and misinformation. Today it was Twitter…

To which I joked…’This is bad news for CNBC’.

Onwards…

Congratulations to Social Leverage portfolio company 1uphealth for raising $8 million in a series A investment. We are seed investors and continued to participate in the round. My partner Gary has led the investment for us. A quick explanation on what the company does:

1upHelath jumped early on the FHIR® regulations, which we believe is the future of healthcare standards. Our company rapidly established itself as a leader in the interoperability space making it easier for others to access and share data. Since 2019, we have tripled our hospital system connectivity, connecting to over 10,000 health facilities in the US, which expanded our capability to access over 90% of the patient population to date.

1upHealth is built entirely on FHIR® and is focused on helping bridge the gap between patient centered data and provider needs, thus creating a FHIR® API platform for patients to aggregate and share medical data from external health systems and wearable devices with their providers, enabling improved healthcare outcomes and lower costs. Our goal is to make it easier for any developer, provider, or payer to integrate electronic health records (EHRs) into various applications.

Having recently been in the hospital twice via emergency rooms and trying to gather my data for doctors outside the hospital network, this could not be happening sooner.

Next up…

Today on Rally Rd, a Babe Ruth baseball card goes on sale:

Also on Rally Rd, the company announced an exclusive relationship with Prive Porter and some rare Birkin Bags. My daughter Rachel helped put together the first Birkin Bag IPO for Rally Rd as an intern this summer and she gets some proper shoutouts from Prive founder and Rob at Rally Rd in this Bloomberg interview that explains the mechanics of the sale and the aura of the Birkin bags. It is worth a watch/listen.

Finally…I can’t NOT talk about the markets which continue to be a party. Charlie has the hot take with this one chart…a chart of the 30 year treasury hitting all-time lows.

Have a great Friday.

Give Me More Shots On Goal

Good morning everyone. There is so much to unpack this morning as the markets have my full attention.

This post may make your armpits sweat but don’t worry, do what Mark Zuckerberg does:

Everyone manscapes so please don’t judge. In fact..join the club.

Onwards…

The last time I was writing this much about the markets was in December of 2018, when the government was shut down and the markets were in a panic. I was writing about the markets to keep me calm and make sure I was buying Apple.

Today the panic is to the upside. Everyday, there is a new ticker surging 50 to 100 percent. It is silly, but it is fun. Panics to the upside last much longer, so this could go on for months. I am writing to make sure I ride this part of the wave as long as possible. I have done my selling of my favorites stocks to a point where I will ride this wave until it crashes. I know that stocks will give up a quick 20-30 percent when the tide turns on this period but some of the stocks I own may first go on to much bigger gains.

Everyone is trying to figure out why this is happening.

The important point to me is to get more shots on goal while the getting is good.

In fact, this whole fantastic era of trading investing is likely due to the fact that tens of millions of people around the world have never had it easier to put shots on goal.

We have been living in an ‘every kid gets a trophy era’, but the real story is that ‘everyone can and should be taking shots on goal’.

Why?

Free commissions, social networks and fractionalization.

The experts are trying to value everything and like any new phenomenon, this one is unmeasurable.

Let me give you a prime example again of how markets have changed (for the better)

Today’s boom has NO SPLITS. In 1999 Tesla would be announcing a 40 for 1 split tomorrow and the stock would go up 20 percent. At the time I was furious, because I had an MBA and it made no sense. But, the splits made the stocks more appealing to retail traders who in a period with high commissions and no fractinalization could finally buy the stock.

Today, tens of thousands of new investors can put $50 on Amazon or Tesla instead of worrying about ‘shares’.

MORE SHOTS ON GOAL.

You can’t just learn by watching when it comes to investing. You need skin in the game. You need to be cut.

In fact, the same goes for angel investing but we are still in an era where this ‘street alpha’ (what I call seed investing) is not open to everyone. Maybe after we crash, the next boom will see this happen. Semil has a great post on the subject of ‘shots on goal and angel investing‘. My fave part:

These new investors need enough “Shots On Goal” in order to (in their mind) give themselves a chance to find one, maybe two, stellar investments in the lot. Of course, this randomness is most intense for those who invest at the early stages. There is simply no way to know the shape of a company or financial outcome when the earliest investments are made. Having enough “shots” is important because, at a primal level, newer fund managers or investors within firms need to demonstrate the ability to find a few good deals to parlay into the next fund or as evidence for promotion.

There is a cost, though.

Increasing “Shots On Goal” comes at the expense of concentration. As most early-stage investors eventually realize, obtaining and maintaining (or even increasing) ownership in a basket of investments is of utmost importance. The theory goes as follows — 1/ most startups don’t make it, no matter how smart the team and/or noble the effort; and 2/ given the high loss ratios of early-stage portfolios, and given that most portfolios follow a power law curve, an investor building a portfolio needs enough shots to find those 1-2 companies which will drive the returns. Therefore, investors care a lot about ownership, should a portfolio company be acquired or go public — maintaining high ownership can help smooth the harshness of the loss ratio in the event of a large exit.

While the old people on TV are yelling at us telling us that the markets make no sense, the mechanics of the markets have changed by such a great magnitude that the markets may stay in this state for an extended period.

Now, just because chasing stocks and writing angel checks at silly valuations has been working the last few months, does not mean it is a good strategy.

Amazon Keeps On Chugging…And The Space Bubble

I will admit that I was surprised to see the market so friendly on a day when Apple warned about sales because of the Corona Virus.

I won’t complain.

I figured Apple would be down at least 5 percent and that the semiconductor stocks would be smashed. I also figured Nike would feel the China news pain.

Nope.

It is not the news that matters, but the reaction to the news.

Meanwhile, Amazon has been sneaky strong despite all the negativity surrounding Mr. Bezos…printing more all-time highs…

It is impossible to value Amazon so while the mood is good, the stock continues to run.

Jeff seems a lot more serious about content and media right now. He has the thick skin, the money and the platform to take Hollywood by force and Scott Galloway has a great post on that subject. Have a read. This riff was my fave:

In the streaming wars, everyone offers great content. If you were on a deserted island with nothing to do except watch streaming video on demand, any of the players would keep you occupied. The value of the services is incredible, offering $1 billion of content for less than $1 per month.

My colleague Sonia Marciano teaches that to achieve success, the best strategy is to find the dimension with the greatest variance — the biggest delta between best and worst. In the streaming wars, both flywheel and distribution offer the greatest variance, and monopolies dominate those categories. Most of the above terms are self-explanatory, except flywheel.

A flywheel is a disk that stores kinetic energy and then spins it out to a nearby engine. In the context of business, as the flywheel rotates it increases output or revenue without increasing input or cost. The ultimate flywheel is Amazon. Amazon Prime attracts shoppers who want a wide assortment of products with rapid fulfillment. These subscribers also enjoy the benefits of services like Amazon Prime Video, which increase the stickiness of Prime and time spent on the platform.

My colleague Aswath Damodaran says Amazon isn’t an ecommerce company or a cloud company, but a disruption platform that through great execution and unparallelled access to cheap capital, uses the flywheel effect to spin into completely different industries.

The sheer volume of people on Amazon (82% of households in the US) makes the platform more appealing to advertisers. Amazon Media Group is now a $15 billion business, the third-largest advertiser in the world behind Facebook and Google. More advertising results in more products, which leads to more purchases, which leads to greater investment in Amazon Prime Video to continue to increase the stickiness … and the wheel flies.

This flywheel is now the mother of all chainsaws wielded by a bald 56-year-old in a hockey mask.

With respect to the space bubble, Virgin Galactic ($SPCE) was up another 34 percent this morning before closing up JUST 10 percent. Boo.

I call these moments, fevers and I have not seen one this hot…at least on Stocktwits. The ticker today had more messages than Tesla on their earnings day. The ticker has been a hot one for weeks and a lot of smart people I follow have been long for this ride, but the noise is too loud to ignore.

Of course, this surge in Stocktwits messages can also just mean a massive shift is still to come. Just maybe as I have been half joking…’space is the new cloud’.

Way back in 2017, I remember when messages for Bitcoin on Stocktwits surged past messages for the $SPY (S&P). Bitcoin had already gone on a big run but still went on to quickly add 500 percent and is still one of the most popular tickers on Stocktwits.

Have a great day.