Momentum Monday…The Wall of Worry Continues To Eat Through Supply

Happy Monday everyone…

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.

It seems like every Momentum Monday since June has been the same…buy stocks!

This week looks like more of the same.

Too many sectors look good and while there is a rager of a SPAC party happening in the neighborhood, it is best to join for a cocktail or two rather than report it to the cops.

My favorite line about this came from Mike Alfred a really good investor I follow on Twitter

They’re creating money far faster than they’re creating bad companies. The nominal bull will continue for awhile.

Here is this weeks episode of Momentum Monday. I have embedded the show below:

It is best to watch/listen to each week’s episode to get a feel for how we look at the markets and momentum.

We shared a few new ideas as always.

With the Roblox IPO (gaming) ahead, expect more attention on the sector. The best looking leaders include Acivision, Take-Two and Zynga. The $NERD ETF is a gaming ETF that is an easy way to own the sector.

Here is Ivanhoff on the action:

The Senate flipped blue. The market was somehow expecting that as solar, EVs, batteries, other clean energy, cannabis, infrastructure, and Chinese stocks have been rallying ahead of that. Most of them continued higher after the election results. Many are extended for new swing entries and are likely to offer better opportunities when they pull back or consolidate sideways for a few days/weeks.

Inflation expectations continue to rise. Interest rates jumped which boosted financials. Saudi Arabia cut oil output which sent energy stocks higher. Quite a few momentum stocks that took a dive late last year, bounced towards the end of the week. In other worlds, the bull market is still strong and going.

Mega-caps underperformed last week while the rest of the market has been strong. This has been a sign of risk-seeking as of late as capital hasn’t left the market but rotated into smaller caps.

If you find yourself looking for fresh ideas or confused about what is driving the markets, look no further to the all-time high and 52 week high list.

I do that every day,

Very few investors follow this simple screen and they end up missing all the biggest moving stocks.

Take a look at the big winners from last week:

As I have been saying for weeks, the FAANG stocks have not been the story. It is Tesla, Electric Vehicles, SPAC’s, crypto, hydrogen and China web/ecommerce,

You can spend 10 minutes on the weekend scanning the Stocktwits 25 (which is free) and you will quickly get a flavor of which sectors are leading the markets.

As for sentiment, I will leave you with this magazine cover overlay JC put together that sums up the negativity the overhangs the country:

The markets are cruel. It feels like they have become more cruel since 2008. My job is to not judge the market but to try and participate.

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

Some Sunday Reads and Listens

I am headed for my long Sunday ride this morning but first some good reads and listens for you.

Ben Thompson with his take on Trump and Twitter.

Morgan Housel has a great essay titled ‘Two Worlds: So Much Prosperity, So Much Skepticism‘.

This New York Times piece inspired by the ‘Auschwitz’ sweatshirt at The Capitol is moving.

My favorite listen of late has been Conan O’Brien’s podcast. It does not matter who the guest is, Conan just riffs and riffs and riffs. He really makes me laugh and smile and that is not easy to do. Yesterday I laughed out loud for an hour while I was on my ride as he caught up with JP Smoove. Have a listen.

Have a great Sunday.

Twitter and Trump…and Elon and Roblox

It’s finally over.

What an abusive, ugly relationship.

One thing stands out as usual from the end of the relationship is that neither Twitter or Trump have a plan.

If Trump thought Twitter was so vital to his brand and voice he should not have put himself in a position of getting kicked off everyday.

Now he only has Grindr (I could not resist because it is hysterical):

Twitter must feel Trump is so vital to their business because they let him shit all over it everyday. The stock is down 5 percent after-hours because investors think Trump is their plan.

Now Elon Musk is not just the wealthiest man in the world, but the most powerful (at least businessman) in the world.

Just yesterday Elon tweeted about ‘Signal’ (a private company) but drove the price of a bulletin board penny stock up over 1,000 percent…

Elon stays and Trump goes. Elon may be crazy, but he has a plan and while he might bend the rules, he knows how to work the refs.

Twitter is just a game and Elon is winning. Twitter has no idea how their own game is played and what their core users want which is why Roblox (another game with a fraction of the users) is pricing a direct listing at $30 billion and will pass Twitter in market cap the week it goes public.

I say shame on Twitter, Jack and their board for bending the rules to shape Trump and too many other political figures who do not understand the privilege of having such an incredible product and tool and shame on Trump for as usual not having a plan.

Goldman and Bitcoin at All-Time Highs But Little Is Fixed – The Next Frontier in Fintech….

The other day I talked about the unbundling of markets and indexes.

Rex Salisbury a fintech VC at a16z asked where the next ‘war’ in fintech will be fought.

The thread is here.

I replied that with Bitcoin and Goldman Sachs at all-time highs right now, it looks like the last ‘war’ got very little fixed.

Yoshi, the founder of Alpaca (we are investors and here he is on my podcast) chimed into the conversation with:

It will be “war of crossing-borders” While work-from-anywhere enables live-from-anywhere, it also surfaces various issues around our daily financial lives (spending, getting paid, tax, sending money etc).

Alpaca is going after an incredible opportunity.

Just yesterday, I had a fintech entrepreneur email me this re Alpaca:

OMG — alpaca looks pretty awesome

Everything Apex is not

It is the same day that SOFI was merged into Chamath’s SPAC which is a 15 percent owner in Apex!

It’s exciting to see the fintech space get so much attention and for me to have the opportunity to invest in this sector. There is much to be done.

Zebra IQ CEO and Gen Z Whisperer Tiffany Zhong Joins Me on Panic with Friends to Discuss the 5 Cs: Creators, Community, Content, Commerce and Culture

I am surprised by how many young people use Twitter to follow me and ask great questions. It turns out that a lot of these young people are the ones I turn to on Twitter to learn from.

One of my faves is Tiffany Zhong who I asked to be on ‘Panic With Friends’ to answer a bunch of my questions about the yoots and Tik Tok, SnapChat, the creator economy and culture.

You can listen to the full podcast here on Spotify or Apple.

For some more details on the episode have a quick read below…

Guests: Tiffany Zhong

Tiffany’s Profile: Co-founder, CEO at Zebra IQ

Where to Find Tiffany: LinkedIn, Twitter

Fun Fact: Before starting Zebra IQ, Tiffany was a VC at just 19 years old. She has a great post breaking down 55 things she learned from this experience.

What’s the Panic About:
OK boomers, we’re kicking off our first episode of 2021 with Gen Z whisperer and Zebra IQ CEO Tiffany Zhong. I’m a big fan of Zebra’s annual Gen Z report and I recommend all my listeners take a look at it too. It’s important to stay in touch with audiences and perspectives other than those similar to you (something Tiffany talks about in this episode). Tiffany’s company Zebra IQ helps brands create communities to understand Gen-Z and Millennial consumers by offering real-time feedback. They’ve worked with more than 20 companies including Snapchat, Levi Strauss and Turner Broadcasting. Zebra IQ is just one example of how Gen Z can help you make a lot of money if you just listen to them. In this episode, Tiffany and I talk about Zebra IQ, dropping out of college, her Twitter strategy, her “five Cs,” moguls, monetizing an audience, TikTok, startups, ecommerce and more.

The Takeaway:
Social platforms like Twitter can be a powerful tool. Tiffany started using Twitter in high school to ask investors and entrepreneurs questions. Her advice: Use Twitter as a place to learn as opposed to a means to gain clout.

Favorite Quotes:

“I learn best when I’m thrown into a real-world environment.”

“Today’s creators are going to be tomorrow’s fortune 500 founders.”

“The two main types of content are entertainment and education.”

“Startups are interesting because they have the chance to disrupt things.”

Food for Thought:

That teen of yours that won’t talk to you might just be on his way to being a mogul. I think 2021 is the year I figure out a fun way to build an audience on TikTok.

PS – I am now doing two ‘Panic With Friends’ podcasts per week. Thanks for listening and make sure you subscribe over on Spotify or Apple.

The Unbundling Of Indexes and Markets – Further Explained

I have some very smart friends who have been asking me to further explain what I mean by ‘unbundling of indexes’ when I write about it on my blog and Stocktwits and Twitter. I am sure I have riffed about this on many podcasts, but let me try again in as few a words as possible.

In the first internet bubble, picking stocks was cool. If you did not want to pick them you picked a mutual fund manager with a cool name or hair and you let them do it. Fees be damned. That did not end well.

For reasons that probably don’t matter to my explanation, the idea of indexing really accelerated after the bubble crashed. The mantra of ‘cut your fees’ and ‘you can’t beat the S&P 500‘ was all that mattered.

Over the last 15 plus years, Vanguard, State Street and Blackrock have taken advantage of this movement and herded as many people as possible into what I consider the same product/s.

It has mostly worked for investors as they build a 60/40 or 70/30 portolio of indexes and bond funds/etf’s with their financial advisor. Advisors get to show a pretty smooth return line with lower and lower fees.

At many levels this is great.

The trend just may continue forever.

I have long believed that Blackrock, State Street and Vanguard should have opened up the tools and processes they created to help people own fractional shares of hundreds of stocks so that people could just build their own indexes.

They did not and have not. They won’t.

Along comes software and the iPhone and Etoro and Crypto and Robinhood and free trading and collectibles and collectible investing and trading (Rally Rd) and Stocktwits and Reddit and Twitter and WhatsApp and Discord and Slack and Koyfin and Alpaca. Yes of course I am pimping many of my own investments in that last sentence.

Also, the $QQQ has outperformed the S&P 500 for forever.

This software and free money and technology boom and now COVID have spawned so many new exciting companies and industries that just not available in the S&P 500 and it turns out that people want something new. They also want to play. They also want ridiculous growth because they have seen it. There friends talk about it all freaking day on social media.

Too many choices, too many ways to learn and so the unbundling.

Startups and consumers have used software to unbundle the indexes because it is now simply unbundleable.

We are very early in this trend away from owning 500 stocks.

I have no idea what this will look like five years from now.

Maybe people will own 30 stocks, 20 liquid collectibles, pieces of 10 private software companies that pay them a yearly dividend and some crypto but I doubt they own a simple 60/40 or 70/30 indexed portfolio.

This is what I mean by unbundling.

Already Behind In My Reading…

I have some reading to catch up on so I thought I would share it today.

Fred Wilson wrote ‘What Is Going to Happen in 2021‘.

Brad Feld wrote about the ‘Great HQ Migration.’

Eli Dourado’s ‘Notes on technology in the 2020’s‘ was shared a bunch of times so I plan on reading it today.

Blake Robbin’s ‘Modern Suppliers‘ was also being passed around and I am going to read it as well.

Finally, ‘Building The Middle Class Of The Creator Economy‘ is excellent. I am sharing it again. Read it.

Momentum Monday….Let’s Travel?

I had a nice little break to start the year and am excited to get back to work. I got in 100 miles on the bike to get the year going strong.

My January ‘to do’ list is full up so I needed the downtime.

This is the first Monday of the new year and that means the first Momentum Monday of the year.

Of course Ivanhoff and I chatted about Bitcoin, but what caught my eye this week were the software/marketplace travel stocks.

Expedia is on the verge of breaking out. Booking.com is back at all time highs and even Live Nation is back at all-time highs.

The best of travel ‘destinations’ Disney is also at all-time highs.

I won’t comment on the valuations, or when this virus is behind us, but the market seems to be speaking…possibly shouting… that the roaring post pandemic world will be fantastic (and upon us) for these travel and entertainment companies (I do not own any of these at the moment).

The other big topic of our show this week is the continued rotation which is keeping the froth contained.

Here is this weeks episode – please subscribe to it on YouTube. I have also embedded the show below:

Ivanhoff’s thoughts on the week in momentum are here.

Elsewhere…

I continue to enjoy Aaron’s @atmchartsRotation Report‘ which offers me a quick good look at a broader range of markets. It is free too. This week he outlined travel, Latin American and agriculture stocks, but also felt the Global Equity markets were in a good spot still.

Israel is breaking out to all-time highs. It is a center for biotechnology, security software and supposedly months ahead of the US in deploying the vaccine to citizens.

I really enjoyed the year end ‘Happy Hours For Traders‘ that had a few interesting stock picks. JC’s $GMED pick was the one that I put on my watchlist.

Here is the Stocktwits Weekend Top 25.

Here are the BEST stocks of the past year. Take some time to scan the list and you will be amazed how few companies you have ever heard of. As I have been saying for months, this is no longer a FAANG market. The unbundling post COVID makes checking the 52 week and all-time high list weekly and monthly super important if you want outsized gains.

Charlie sums up the last 10 years in asset classes and ponders the next 10 years.

Last but not least, Gavin Baker ( a must follow) has an excellent Twitter thread on why he’s a bit worried to start January.

PS – It was nice to make Investopeadia’s list of top ten business podcasts for 2020. Lists don’t really matter, but who I am on this with is makes it cool.

PPS – My friend Om’s piece on his ‘Unusual Year of Solitude‘ was excellent. Have a read.

Selling Early… And Bitcoin Recap

I am at it again this weekend selling early according to EVERYONE that owns Bitcoin on Twitter.

I sold some Bitcoin at $29,000 and $32,000 and it feels great. Of course, Bitcoin has gone straight to $34,000 this morning as I write.

Whenever I think of my selling early issues, one joke comes to mind from way back when I was a kid with an eyepatch (I had a lazy eye) watching Johnny Carson from my room late at night:

I was born by Cesarean section, but you can’t really tell. Except that when I leave my house, I always go out the window.

The joke is Steven Wright’s who is like me, one strange guy.

I have not sold any Bitcoin since 2017 on the last great run up to $19,000. I have done some buying and shared that on the blog and Stocktwits.

Along the way, I have also invested in a couple of crypto funds, one that crashed and burned and one that is currently in a massive jihad to the upside.

I have no control over my Bitcoin/crypto exposure in Etoro (which has a large crypto business) and Robinhood.

Because I can’t control the areas with my largest exposure to Bitcoin through indirect investments, I simply sold some of my Bitcoin to help me feel responsible.

I know, it’s not perfect and it may be dumb if crypto does indeed go to the moon.

You need to develop your own strategy for selling. There is no perfect selling strategy.

I will tell you though that if I truly need Bitcoin in the next 5-10 years, I think we have worse problems than me selling some of it early.

……….

Next up.,..one of my friends who is a very smart guy chimed in on my Twitter stream that ‘if only he understood math and science’ he too might have bought some Bitcoin’.

I felt compelled to chime in that math and science had nothing to do with most of my investing let alone my crypto gains.

I followed smart people into Bitcoin and am waiting for them to indicate when the party may be nearing an end. So far, they have not.

All my friend had to do was follow them or in this case me (because he follows me).

I did a search on my blog for my first blog post on Bitcoin.

It was March 2013 and I called it ‘The Jurassic Park of Currencies‘. I still think that holds…The asset jumped the fence and has not been easily explained/caged/managed.

In May 2013, I finally owned some because I saw that Union Square Ventures invested in Coinbase…my reasoning was dead on:

‘Not too early for Fred Wilson and way too early for Warren Buffett’, Fred remains long at it remains rat poison to Warren. Check!

In August 2017, Howard Marks was calling Bitcoin a pyramid scheme at $3,000, I said:

If Bitcoin is a pyramid scheme, we need more pyramid schemes‘. I stayed long.

The last important post (to me) on Bitcoin came in 2017 from Fred Wilson when he explained how it became a store of value.

We can all continue to yell and scream and HODL or trade, but Bitcoin will remain a store of value until proven otherwise.

That is where we remain today. The only thing that matters is your risk tolerance and money management.

There Are No Lanes – Investing in 2021

Hedge fund activist Dan Loeb tweeted the following yesterday:

It’s difficult to compete as an investor now if you don’t expand your investable universe into private securities. First, you miss the best entry points; second you will not be tuned into the new innovators that maybe about to disrupt your public cos.

Also, you miss out on the fun of working with entrepreneurs to help build businesses. VC is the tip of the spear of what makes free enterprise the greatest system to improve lives innovate and deliver products and services to customers while creating jobs and economic growth.

Back in 2018, I was in Dan Loeb’s Third point office pitching Dan our (Social Leverage’s) third fund. My friend Matt Ober (who runs data for Third Point) set up the meeting. I thought the conversation/pitch was going well, but halfway through Dan said I reminded him of Ron Popeil. It was like getting an uppercut to the chin. I could not think straight the rest of the meeting and let’s just say Dan is not an LP.

The SPAC’s, IPO’s, crossover funds, hedge funds starting venture funds is all just a much overdue reaction to the fact that in 2020, just 5 companies accounted for north of 25 percent of the S&P.

COVID was a trigger point for the unbundling of the indexes that was long overdue. Of course, technology got pulled forward and new leadership is inevitable.

Retail went from 10 percent of total trading to 25 percent and maybe it sticks. In a Robinhood, Tik Tok world, the yoots may accelerate the unbundling of indexes that I have been writing about as they choose to own 10-30 stocks not the S&P Index.

In my last New York dinner with friends back in February (boy was it a fun night at Carbone’s), I wrote:

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.

The writing had been on the wall, we just needed a trigger and COVID was that trigger.

Ben Carlson took a deeper look at the data at the time and asked at the time if investors should care? It is worth a read.