The Podcast Is Back – Patrick O’Shaughnessy On Lindzanity

I took the summer off from the podcast but have been back in the awesome Renzler Media Phoenix Studio banging out some interviews with my favorite people in the financial world.

First up is Patrick O’Shaughnessy who/m I have been hesitant to have on my show because I would have to spell his name over and over.

Patrick is the CEO of O’Shaughnessy Asset Management, which manages multiple billions of dollars, and an all around great guy. He also has one of the most popular financial podcasts called ‘Invest Like The Best‘.

I had the honor of being a guest on his podcast – you can listen to that one by clicking right here – and enjoyed flipping the microphone on him and listening to him riff on a wide range of financial and personal topics.

You can listen to the podcast by clicking here.

You can watch/listen on YouTube and it is easy to click subscribe so that you are alerted to each new Lindzanity podcast.

Of course, the podcast is also available on iTunes and Spotify and all you have to do is search my name.

Sometimes The Markets Do Their Job

WeWork pulled their IPO yesterday.

There are endless stories and opinions and all I can think is the markets did their job.

What is the S&P doing?

Cruising near all-time highs.

There was no way that retail investors should have been left holding the bag of this company in current condition. End of that story.

That story has ended for now, but I also live and work in a world where this story bleeds back into and that is what does it say about the private markets?

From Bloomberg:

The value of WeWork’s bonds sunk the most on record Tuesday on concerns that the cash-burning company will miss out not only on the more than $3 billion it planned to raise in the offering, but also a $6 billion credit facility tied to a successful IPO. WeWork must carry out the offering by Dec. 31 to get the loan, Bloomberg previously reported.

It is fascinating and quite possible that WeWork could go from a planned $47 billion IPO in September to a reorganization by November.

I can tell you that not much has changed in the private markets…yet.

I have a feeling it will.

19,710 Days and Counting…Lucky Me.

I hit 19,710 days old today…give or take.

I have about 10,000 days lefT.

I have a lot I want to do with these 10,000 days (not counting 10,000 blog posts, 100,000 tweets and 500-1000 podcasts).

I was in Los Angeles for the day yesterday for meetings and it was a lot of fun.

In the Stackin board meeting, Scott Grimes asked me what you get a guy my age who has everything. I said ‘a pillpack’.

I was walking from Venice to Santa Monica after the board meeting and as I passed Google’s headquarters I was amazed to see many tents pitched against the gates and walls surrounding it. The tents of the homeless. I am reminded how lucky I am and how terrible it is for so many.

My friend Tim Chang who is also 54 was in Los Angeles (from Taipei) visiting his mom and we grabbed a lunch and talked about China, Fat Nixon, investing ideas and the little things we need to start doing habitually to live longer.

In a creative meeting later with my friend JC and his crew, we brainstormed about the financial publishing and media landscape and came away with some great ideas. In that meeting, I also discovered that the 4 most important things in my backpack for a day trip – the ones in my quick zip – are in no particular order – an iPhone battery pack, Adderall, a Tide pen and Airpods.

I helped a friend fine tune a pitch over dinner and even with an airport Monsoon delay back in Phoenix I was in bed by 11-30.

Thanks everyone for reading everyday and encouraging me to keep sharing. This one daily habit has been a most important part of my life outside meeting Ellen and having Rachel and Max.

Life is fragile and difficult and the world is complex and overwhelming, but you can still keep life pretty simple. I am grateful each day that simplicity rules.

Momentum Monday – Rotation…Rotation!

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 week I called the market sneaky good.

This week I would say that it has been sneaky bad.

Ivanhoff and I did our weekly tour of the markets to explain. You can watch/listen here.

Why sneaky bad?

The enterprise and software leaders of the last few years are being battered. No party lasts forever and the rising tide that lifted all enterprise and software boats is now receding.

There is still plenty of technology leadership including semiconductor stocks, Google, Apple and Microsoft.

Last week it seemed like every Attorney General came after Google, but the stock finished the week strong.

How?

I liked this piece by Andy Kessler titled ‘Antitrust Can’t Catch Big Tech‘ which explains.

So has Big Tech squashed competition? Hmmm, let’s see. From 2014-18, global venture-capital funding has tripled to almost $360 billion. More than 40,000 startups launched in 2018. There are almost 12 million technology jobs in the U.S. while Apple , Amazon, Google and Facebook combined employ fewer than a million, world-wide.

So here’s what’s going to happen. Big Tech is going to order the omelet—slow things down, obfuscate, hire lobbyists and hope like hell they can come up with new business models and move on from most of their current business in case the regulators in Washington speed things up.

Instead of spinning off Instagram and WhatsApp, as Facebook critics including founder Chris Hughes seem to demand, the social-media giant is trying to become the ultimate service for private communications and payments. It won’t be easy, but it’s certainly worth a try.

Google should stop running its own ads ahead of its customers’; that’s just dumb. But they should also stop running ads on YouTube and instead turn it into a legitimate cord-cutting Netflix-competing streaming service with a monthly fee. Apple should also stop favoring its own apps over companies in its ecosystem—again, just dumb. And Amazon should probably sell Whole Foods to Safeway and declare victory. Don’t be surprised if, on its own, it spins off its web-hosting business someday.

Technology’s relentless advance means markets sort things out over time. Note the irony of Amazon creating New York office space in the building abandoned by former retail powerhouse Lord & Taylor. And though IBM never did get broken up, it ended 2017 with its 22nd consecutive down quarter. It downsized all by itself.

I tend to agree with Andy’s analysis as usual.

Have a great week.

PS – this made me laugh…today’s episode of ‘NOT Jewish

A Hits Business

Fred Wilson has a post up titled ‘Hit Rate‘ which describes the key to Venture Capital Returns.

A fund’s hit rate determines their returns.

One or two companies will determine the returns in a given fund.

I have been on both sides of the hit rate phenomenon. I have invested in a seed fund that had THREE big hits (Uber, Sendgrid, Twilio) and Social Leverage has invested in a few hits ourselves.

Here is a chart from Correlation Ventures that shows how the the hit rates and returns in the venture capital industry have not returned to pre-2000 levels.

As Fred Says:

I think that is all about the amount of capital in the business now. More capital means more businesses get funded. So even if you have more winners, you don’t see the hit rates move up. The numerator and the denominator have both grown in the hit rate calculations.

Before 2000, the venture capital business was a bit of a cottage industry.

In the last 15 years, VC has become an institutional asset class with the permanence and stature that brings seemingly endless amounts of capital to it.

And so the returns have stabilized in or around the 2-2.5x over ten years number, which produces high teens/low 20s IRRs, which is enough to sustain the sector.

The only thing that I think would take us back to mean multiples of 4x or better would be some sort of massive reduction in the amount of capital coming into the venture capital business. And I don’t see that happening any time soon.

But one thing about the VC business has not changed in all of the years in that chart, which is roughly how long I have been a partner in a venture firm, and that is that your big winners will determine your returns.

Same as it always was.

Since, as Fred Says, he does not see capital drying up, when thinking about allocating your money to this sector going forward it is becoming more important to identify managers that can find the big winners.

Linda Ronstadt – An Artist

Ellen and I went to see the Linda Ronstadt documentary ‘The Sound of My Voice’ last night.

It was excellent. Go see it. Take your kids.

It brought to mind this great piece titled ‘Artist‘ by Bob Lefsetz

An Artist

Grows

Does not give the audience what it wants, but what he/she wants.

Refuses to repeat him/herself.

Is interesting in satisfying him/herself, not fans.

Are cutting edge, they lead the audience, not vice versa.

If someone doesn’t hate what you’re doing, you’re doing it wrong.

Challenges the audience.

Acts on inspiration, not desperation.

Runs on emotion, not intellect.

Will hear no more than they hear yes.

Are constantly told how to do it by people who can’t do it.

Doesn’t self-judge based on the money they make.

Knows when they do something great, they don’t need the audience to validate it for them, they already know.

Stretches. To repeat oneself is emotional death. And since an artist runs on emotion…

Refuses to look back unless they want to. Once you play to nostalgia, it’s hard to push the creative envelope once again, the world has labeled you a has-been.

Needs help to make it but must push back against that help.

Is inherently tortured. Needing to get their message/soul out. They don’t fit in. Their goal is to express raw humanity so that people can connect with it, they channel the zeitgeist.

Are always ahead of the audience and the critics. People are confounded by artists who do something for the very first time.

Don’t stay in their niche.

Are people first, not factories.

Have a great weekend

All Things Audio and Podcasting

I really like Matt Hartman’s ‘Voice Computing‘ weekly email.

It covers all things voice apps and podcasting and I am really into learning about the space.

I have been back in the studio making my next 10 podcasts which will be going out weekly, but I have also had my friend Knut Jensen build out a podcast studio in our new Social Leverage offices that I expect to be using daily (when I am in the office).

This week he mentioned podcast discover and search engine PODCHASER which I am going to try out.

This piece titled ‘Howard Stern Is Getting Ripped Off‘ was an excellent read as well.

Have a great Friday.

Stocktwits Launches Advanced Search

Come rain or shine, the Stocktwits community shares over 200,000 messages per day. That includes charts, news, trade ideas, and yes — lots of memes. With that many messages, it can be hard to look back in time to see your best posts about your favorite stocks from months or even years ago.

Today, that changed as Stocktwits has launched Advanced search.

This is the killer feature I have been begging for which will give users the ability to quickly search their timelines for past mentions of tickers and quickly search other users timelines to see if they might be worth a follow and some extra conversation. This is all made possible with amazing open source software like Elastic (I own the stock – $ESTC), which was up 10 percent on the news (just a coincidence I am sure). I imagine this search feature and functionality will only get more powerful.

I am excited to see all the different ways the community grows now that it can do more meaningful research, discover talented people and find fresh ideas.

If you are serious about creating a financial journal (which is the best way to become a better investor), there has NEVER been a better time to get started on Stocktwits.

Here is a quick primer on how to use it.

Dude…My Camera Has a Phone

Apple is boring, but busy.

I like boring, but busy.

Last year, the market took the stock to the woodshed and at one point in December the stock traded to $140.

I was adding to my position and it became my largest stock position and of course they survived.

Today, Apple unveiled a bunch of new products.

I joked on Twitter that the headlines should read New Apple Camera Has a Phone!

The beauty of Apple’s distribution and pricing power is that they are actually lowering prices. Josh joked:

Today Apple is about the camera, health (watch), services and price. Future iPhones are now just gravy as analysts expect zilch. A fantastic transition considering the China trade war and their size.

As for their TV and media business…I don’t get it. I wish they would give it all up, write it off and buy Spotify.

Covfefe Volfefe

Back in 2017 when Fat Nixon was only tweeting 10 times a day and Twitter had a 140 character limit …life was good.

It was the innocent days of ‘Covfefe’.

Today, Orange Julius is tweeting 30 times a day and having fun moving the markets.

It was only a matter of time really.

The stock market is the only remaining person/thing that is listening to him.

He is going to hate what it has to say if he keeps it up, but guessing when is not something I can do.

In the meantime, the zookeepers at JP Morgan launched a ‘Volfefe‘ Index (I thought it was a joke all day to be honest) which short term will only serve to embolden President ‘Sharpie’.

The script would be funny as an HBO show but this is real life and so we wake up and see what he will say next.

In the meantime – 50 attorney generals are suing Google, Insiders are selling stock at a pace not seen since the Titanic and today was THE BIGGEST momentum shift since 2009…

I am not sure if this is a ‘Wall of Worry’ we should be thankful for or ‘The Last Warning’ before the crash of a lifetime.

Investing is not easy.