Fractionals and the Instividual

Back in 2012 I started writing about the Instividual investor/trader and today it’s time to revisit it in this post. The instividual is enjoyng a revolution in power and choice, efficiency, access and cost.

I loved this Tren Griffin post on venture capitalist Jim Barksdale. As a trend investor in public stocks and early stage private investor this rings so true:

9. “Great opportunities are the ones that solve great problems. And a great opportunity for wealth is solving the last link in the chain, that holds the whole system back from working.” If you can find a business that is the last link in the chain, sometimes you can unleash a huge torrent of value that is primed to benefit customers. Lost of the underlying work has been done – the last link solution just unleashes the gusher of value. “Your job is to run as fast as you can towards the cliff. My job is to move the cliff.” One of the jobs of a leader is to make sure that the team is always challenged and moving toward creating additional value. In other words, says Barksdale: “Management spends too much time fixing problems instead of pursuing opportunities.”

In my role as Chairman at Stocktwits I am trying to help Ian our CEO run towards a cliff (maybe two or three) that we see.

As an investor all these years in financial services (public stocks and startups – Stocktwits, Ycharts, Chartiq, Applepie, Produce pay, Crowdability, Robinhood, eToro), I have been doing my part to help move the cliff.

The biggest cliff I have seen is on boarding and educating a next generation to financial participants which I am grateful for Stocktwits continuing to play a big role.

The last few years have seen hundreds of robo advisor startups, Robinhood and eToro (international) lead the way with getting a younger generation to actually open an account and invest and trade. I think Bitcoin, Ethereum and the rest of the new crypto and token world has also played a huge role.

I love that Bitcoins can be bought $1 at a time. This will help as the next generation will think in terms of fractionals. They will soon demand that same choice from their brokerages. I am confident that within FIVE years, the idea of buying 100 shares of Amazon (which will never split their stock again) will be replaced with buy me $88 worth of Amazon and add $3 per month out of every paycheck.

To date, it has not been in the interest of the banks and institutions to let the individual buy the stocks that they want in the dollar amounts that they want. The cost to incumbent brokers is too high and so ETF’s have exploded. ETF’s as a category are great products, but must evolve as the power structure is not aligned properly. I am hoping this happens without a massive financial crash. Like Jim Barksdale says, the ‘last link in the chain’ is where I see the biggest opportunity. I will share some more in the coming weeks.

Also published on Medium.