Sunday Reads and Listens – The Selloff

Happy Sunday everyone.

You would not know it by the stock market averages or commodity prices, but there has been a nasty selloff rotating through most markets and it is catching up with crypto.

Fred sums it up here (his full post):

It also makes me wonder if the “pay any price” mentality in venture may ease up a bit this year. When the IPO markets or the M&A markets can’t/won’t be able to pay more for a business than the private markets are paying, that’s unsustainable. It can last a few quarters, maybe even a year. It can’t last forever. We will see.

I played defense most of last year which made for terrible performance versus the averages, but time will tell if it was the right move in my seed investing where I led the fewest deals since we started investing as Social Leverage in 2009.

As for what is next…nobody knows. When the markets selloff, the crazies come back out looking for clicks. I recommend reading less financial news and making more sales calls.

I will wait for prices to go much lower or to firm and start going back up again in the public markets software sector and keep looking for founders that understand the math of a reasonable seed round in the private markets. The between stuff is really messy right now.

Barry Silbert (a great founder and investor in crypto) is a little more blunt about the prices of seed rounds where I make my living:

Note to self…bug Barry until he comes on my podcast.

Moving on…

On a lighter note, the Smartless podcast had Barry Sonnenfeld (Get Shorty and so many other great comedies) as their guest and it was great. Note to self – get Barry on my podcast as well!

I am keeping it light this week so go do something fun today.

I’m excited for season finale of ‘Mayor of Kingstown’ today.

I’m dreading my long ride today but off I go.

A Couple Of Interviews I Did – Animal Spirits and The Non-Technical Pod

Happy Saturday everyone.

Recently, I sat down for a couple podcast interviews.

The first was with my friends Michael Batnick and Ben Carlson on their popular podcast ‘Animal Spirits’. They went way back to my childhood and how I got started in the financial industry as well as how I started Wallstrip and Stocktwits. You can listen here.

The second was completely different. I chatted with comedian Alexis Gay on her ‘Non-Technical Pod’ to talk about some more silly and philosophical stuff. Here is a sample of her hysterical work on the topic of NFT’s. Alexis and Ellen say I was funny. You can listen to our conversation here.

Have a great weekend.

ICYMI: 7 MUST LISTEN Panic with Friends from 2021 for a Leg Up in 2022

The year 2021 was  massive for the podcast. I’ve gone back and picked seven ‘must listen’ episodes, plus a bonus, to make sure you get a leg up as we tackle 2022.  The goal of the blog and of course the podcast is to help people become better investors and have a few laughs along the way…’Investing For Profit and Joy’,  so I appreciate all the great feedback.

Speaking of laughs, this joke is one of the best I have heard in a while.  Give it a quick listen.

You can listen to Panic with Friends here on Spotify or Apple podcast. And now all the episodes are on my YouTube channel as well.

Fintech Operator Turned Fintech Investor: Frank Rotman of QED Investors Joins Me On Panic With Friends

Profile: Founding Partner, QED Investors 

Where to Find Him: LinkedInTwitter 

What’s Frank Panicked About?:  Just about everything in the market today.


Sam Bankman-Fried, Founder and CEO of FTX, Joins Me on Panic with Friends to Discuss Futures, the Global Scale of Crypto and More

Profile: Founder and CEO of FTX

Where to Find HimLinkedInTwitter

What He’s Panicked About?: All the things I wish I were able to fit into my day and can’t.


Michelle Zatlyn Co-Founder of Cloudflare ($NET) on Building a Better Internet

Profile: Co-founder, President, and Chief Operating Officer of Cloudflare (NET)

Where to Find Her: TwitterLinkedIn

What’s Michelle Panicked About?: The loudest voices seem to get heard the most.


Rob Petrozzo of Rally: Classic Cars, Dinosaur Bones, and Crypto Punks

Profile: Co-Founder, Chief Product Officer @OnRallyRd

Where to Find Him: TwitterRally

What’s Rob Panicked About?: Howard Lindzon getting into the NFT market.


Garry Tan of Initialized Capital: Crazy Cap Tables, Crypto, Finding Balance in a World of Endless Opportunities and Much More

Profile: Founder at Initialized Capital

Where to Find Him: TwitterYouTube

What’s Greg Panicked About?: How many companies there are in the current Y Combinator.


Nicholas Adler: Crypto, Collectibles, Culture, Community, and More

Profile: Founder of The Unified and longtime business partner of Snoop Dogg

Where to Find Him: TwitterLinkedInPodcast

What’s Nick Panicked About?: Losing my mind to this NFT madness.


Jason Hirschhorn, CEO of REDEF, Joins Me on Panic with Friends to Discuss Digital Content Creation and Other Media Trends

Profile: CEO and Chief Curator at REDEF

Where to Find HimLinkedInTwitter


BONUS!

3-time guest Ben Hunt is always worth a listen.

Ben Hunt, Co-Founder of Epsilon Theory, Joins Me on Panic with Friends to Discuss Inflation, Financial Raccoons, and Crypto’s “The Empire Strikes Back” Era

Guest: Ben Hunt

Profile: Co-founder and Author at Epsilon Theory

Where to Find HimLinkedInTwitter

Sam Jones, Cofounder and CEO of OOOOO on the Live-Stream Economy

You can listen to the podcast here on Spotify or Apple podcast and now all the episodes are on my YouTube channel as well.

You can also listen right here on the blog:

For more details on today’s conversation read on below…

Guest: Sam Jones

Profile: Cofounder of the social commerce app OOOOO.

Where to Find Him: LinkedInTwitter

What’s Sam Panicked About?: The future of retail.

The Takeaway:

There’s been an explosion apps in China over the last five years or so, and the reason is a massive explosion in consumption upgrade –people who never had a fridge or motorcycle or a laptop, all now have smartphones. Because of that, all sorts of wacky applications seemed to come out of nowhere; most notable where the video applications, and video shopping apps in particular. And the West is still playing catch up.

The entire live-stream economy is currently worth about $3 billion a year, but in one of the craziest statistics you’ll ever hear, a streamer in China, Austin Lee, did a show that was twelve hours long and racked up sales of $1.7 billion! Only five years ago Austin was working behind the beauty counter in a department store. Today, he’s known as the ‘Lipstick Brother’, and he’s doing approximately 400 live shows a year. He’s got a team of people around him who are assessing different beauty and skincare products for his live-streams. But there’s a dark side to the live-stream economy as well; it’s easy to make live content that sucks. Without the studio and cameras and producers and creatives, you can destroy your brand in about five minutes.

Favorite Quote:

“The nature of mobile video commerce is the person on the other end can and often is using a mobile, so the freedom that you have to create content anywhere you want.  Whether that’s hanging off a cliff in Yosemite, or in a vineyard. or in a fish market. You know the content is wildly different. You’re not sat on a sofa selling a vacuum cleaner.”

Buying Broken IPO’s ….Stocks as Venture Capital

Last year was a record for IPO’s.

With all that supply comes a lot of buyer exhaustion and a lot of broken IPO’s.

This has not happened in a while. The next generation of stock market leaders come from the IPO’s.

In the past, I have written about how I treat my crypto allocation as venture capital. I expect 50-70 percent drawdowns and some zero’s. I position size accordingly.

With so many broken IPO’s I am starting to consider an allocation of capital to a group of these IPO’s like I would Venture Capital as well.

Koyfin has a free dashboard called ‘Recent IPO’s‘ that categorize the IPO’s of the last year and all the metrics. It is easy to organize. I am likely going to allocate 3-5 percent of my stock portfolio to the software and biotech stocks down 30-80 percent and treat the holdings as venture capital for 3-5 years and manage accordingly.

Just an idea.

If any on the list stand out to you hit me up.

There Has Never Been a Better Time to Be a Speculator AND/OR a Storyteller

Yesterday, Ellen, Rachel and I watched ‘The Lost Leonardo‘ (rented it on Amazon).

It was a fantastic documentary.

The story of the story was incredibly well done.

Whether you like/dislike/appreciate NFT’s and digital art you will learn a lot about why this moment in time is so electric and captivating.

I could spend a lifetime talking about all the things that have me steaming mad and excited about this one painting – the people, the provenance, the process and the institutions.

Let me make this point clear:

Never has it been easier to speculate. Never has the world been smaller (at least digitally). Never has capital been so abundant and never has there been so many storytellers with platforms to tell stories.

Get used to more ‘Lost Leonardo’s’.

You can watch from the sidelines (I am wired to mostly do that), complain about it (most people do) or jump in and ‘play’ and even do very well if you do the work, find the right people/network and manage your risk and time well.

Morgan Housel posted a great quote yesterday about ‘valuation’ that fits well right here and now:

“To suppose a stock’s value is determined purely by a corporation’s earnings discounted by the relevant interest rate is to forget that people have burned witches, gone to war on a whim, defended Stalin and believed Orson Welles when he told them Martians had landed.” – Jim Grant

Morgan also had a great post last February titled ‘The Best Story Wins‘. The gist:

A truth that applies to many fields, which can frustrate some as much as it energizes others, is that the person who tells the most compelling story wins. Not who has the best idea, or the right answer. Just whoever tells a story that catches people’s attention and gets them to nod their heads.

‘Stories’ not a new subject for this blog. I have a ‘Tell Me A Story’ set of posts that you can read here.

Have a great day.

Momentum Monday – The Trend Is Your Friend

Happy Monday everyone.

Yesterday I screwed up the Scott Belsky link to his forecasts and so here it is.

Onwards…

Let’s get right to this weeks first Momentum Monday of the 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 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.

You can watch/listen right here and I have embedded the show on my blog…

In this weeks episode I cover all my worries just to get the out of the way. I really liked Charlie’s post ‘$29 Trillion and The American Psyche‘.

Ivanhoff’s summary thoughts are below:

I am not going to make any specific predictions. What I am sure of is that the year will be full of surprises and that the crypto markets will continue to be way more volatile than the stocks markets. More volatility means better opportunities for those who know how to manage risk and more headaches for those who don’t. There will be thousands of three-to-five-day 10-20% moves and they will all start the same way.

The last few days and the first two three weeks of every year stand out with big mean reversions. Some of the worst-performing stocks and sectors suddenly wake up and attempt a powerful rally from the bottom of the ocean. We caught a glimpse of this last week. Chinese stocks, which were some of the dogs of 2021, had a big 5-10% jump across the board on Thursday. More often than not, these end up being “dead-cat” bounces that fizzle quickly but while they last, they can deliver for the prudent short-term speculator.

At any other time of the year, we are better off looking and trading momentum stocks that are close to their 52-week highs. They allow to trade with the established trend (which means trading with an edge) and offer much better risk-to-reward opportunities. But in this brief window at the beginning of the year, the pumpkins can become Teslas and the rockets from the past year can take a break.

With all this in mind, I want to share some interesting trend data as we start the year …

The trend is your friend:

Owning the biggest tech stocks by market cap has been an astoundingly good trend and trade ($QQQ FTW) :

The chart really sums up why big tech is such a target and now so hated. This form of wealth gap has fed the decentralization and crypto mantra. There are enough smart, wealthy tech people that feel comfortable enough and excited enough to leave and try something new.

As always, here is this weeks Stocktwits 25 Momentum Lists a good place to start to find what is working.

Have a great week.

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

Sunday Reads….Predictions …What I Got Right and Wrong …And Another Wallstrip

Happy Sunday

I am already a bust on my 2022 resolutions. I drank a lot of water and my pee was white by the end of the day, but, we went for Chinese food and I slept like shit.

Surprisingly, a lot of people have loved the Wallstrip links I have been adding at the end of my posts recently. I will keep adding them here and there as I go back through and find my favorites. I have been getting asked to make more videos and at some point I do plan to make Wallstrip 2.0 but I have to create a ‘gap’ 6 months to a year to do it in the right way. The markets create the content and the behavior that helps write the material itself, but finding the people to help me make it fresh and modern is something I have not put much time into yet.

Onwards…

One of my blog readers read my resolutions yesterday Alec sent me a good article titled ‘100 Ways To Live To 100‘ which I scanned. I do about 50 of them so I guess I am doing well getting to 56! I do think I can get to about 80 of them so I will keep the list handy.

Next…

My 2021 predictions were mostly on the mark last year which made it almost impossible for me not to have my best ever investing year.

Blabbing about my winners is easy, so let’s start with my biggest mistake of 2021…

I owned a lot of the wrong tech stocks so $QQQ was just a way better idea and just continues to be until proven otherwise if you want technology diversified exposure including web 3.

I covered this a few weeks ago but because I am a trend follower, I was hit hard by the end of trends that came as some historic (in hindsight) runs came to an end in 2021. I also got cannabis wrong. The year started fantastic and was a miserable mess for the last 9 months.

I will always be wired to pick stocks but I plan to do much less of it going forward and index more myself. I am not enjoying the process as much so it makes the decision easier. Furthermore, my allocation to stocks continues to drop as well as I continue to invest in seed and emerging managers and get interested in real estate. As always, I carry a high cash level because of the low liquidity in my private investing.

To the predictions…

In December of last year I penned THREE prediction posts here and here and here (Daddy What’s A Bond And Everything is a Game).

The one I got most right was the following:

1. Increase in speculation and elevated volatility. So, my first prediction for 2021 is the intensity of speculation will increase. A bear market or crash will not stop this trend in 2021. People are armed with free trading, API’s, group chats up the wazoo, mentor networks and free time. The stock market has always been a game, but now tens of millions more people are in on the game.

The year 2021 brought us the meme stocks (AMC, Gamestop) as well as Elon Musk tweeting about Doge and of course crypto NFT degenerates so I will definitely take a bow.

While volatility only spiked a few times overall, there was incredible volatility within certain sectors like small caps and crypto.

The other big predictions I got right were ‘that people want to be Cathie Woood (and that would end badly for both here and people that chase) and that ‘supply is coming’:

I spent more time than I would like this year staring at the markets. Like sugar, it was addictive. Like sugar, I want to break the addiction. But, like sugar, most addicts will just stay hooked.

The markets as I mentioned in my predictions yesterday are in millions of new people’s head, bones and soul.

A whole new generation will want to ‘Be Cathie Wood‘ (please read Ben’s post and be careful of chasing returns).

I am a simple trend follower so as I stated at the end of 2019 with ‘Could 2020 Be As Good As 2019‘ (fintech and healthcare will continue to lead), I simply work off the premise that a lot of the trends that we see exiting 2020 will continue for years to come.

The only real market prediction I can safely make in 2021 is SUPPLY IS COMING. It will be up to you to figure out when that supply leads to a market downdraft.

SPAC’s, IPO’s, Direct Listings will continue in a relentless fashion because stocks are going up.

The ‘Daddy What’s A Bond and Everything Is A Game’ themes/predictions will continue to have the greatest impact on markets and growth. If rates do rise, all bets are off as to what really happens to equities and Venture, but I am not a guy that will make the timing bet on that trend change.

AS for other predictions, I will share two smart people’s predictions that I always read and share…

1. Tom Tunguz – Five Predictions For 2022

2. Scott Belsky – ‘10 Forecasts For The Near Future of Tech

PS – After CBS acquired Wallstrip, I created a short run of shows called ‘Naked Putz’. Here is one episode of me walking the streets of New York looking to change a $20 Canadian bill.

Happy 2022

Happy new year everyone.

I am excited as always to turn the calendar.

I will turn 57 this calendar year which means I have 42 more years to go in order to beat Betty White.

I can’t imagine being 99 years old with all the daily aches and pains I have at 56.

With the 99 goal in mind this year I best drink more water, sleep more and eat less. If I get more specific, I will never be able to keep the resolutions.

I drink so little water, sleep so poorly and eat do badly that I should not have a hard time keeping these resolutions this year.

I am counting on all of you to keep me on track.

I am off for a long ride and my first round of the year with Max. I’m already hungry too.

Damn.

Follow The People…Some Predictions For 2022

I left the world of trading and running my hedge fund for Web 2.0 back in 2006 to start Wallstrip and Stocktwits. YouTube and Twitter made me do it.

I spent a lot of time in New York (not as much in San Francisco) as web 2.0 proliferated.

As I mentioned in my year end outlook podcast yesterday with Knut, people are moving to Florida over San Francisco as the web evolves and expands.

I like this riff from Thomasz Tunguz in his FIVE predictions for 2022

The spirit of Silicon Valley continues a spread outward. The valley remains an important locus on innovation but its monopoly recedes as new geographies rise in importance and remote work, plus the return of in-person travel, creates a new way of working for many. Silicon Valley falls to below 20% in all venture financing.

I have seen it with my own eyes visiting Miami and San Francisco this year.

They are not just moving to work remotely keeping their old jobs, they are leaving their jobs to work on ‘web 3’ projects/companies.

I have read at least 50 year end Venture Fund letters and many describe some version of the same data point…

A ‘critical mass’ of the smartest people in the world have enough confidence in the future of crypto/web 3 that they are willing to bet their professional careers on it.

I did not know I was following Fred Wilson when I started Wallstrip at the beginning of Web 2.0, but since he was my first investor at Wallstrip I had an inside view of what he was doing and thinking though he was writing about it every day on his blog.

So what is Fred thinking now?

Even Fred this week was writing about ‘Why Web 3?‘. You should read it too.

All these web and people changes are still big wins for data companies and machine learning companies so they will continue to grow rapidly.

My gut feeling is that unlike past changes in technology, our centralized internet rulers will be heavily involved in ‘Web 3’no matter what the ‘brain drain’ happens to be. They have too much cash and too much to lose and they actually are quite aware that the stakes are high.

PS – People enjoyed watching me make an ass of myself in Wallstrip so here is another one with me walking the streets of NYC with my sleep machine from 2006.

Have a great New Year’s eve.