A Few Things....
July 11 2019
|Ego Is The Enemy||Jul 11, 2019|
1. I don’t usually talk about markets, but every six months, there is something to discuss.
The last time, was December 27th 2018, when I said:
Have you been taking advantage of the sale in the market ?
It's felt a lot like Jan / Feb 2016 or August 2015.
I think we are going to look back and wish we bought more here.
Happy to share where I've been deploying personally - it's been in names I've known and been an investor in for many months / years.
Ping me if you'd like to talk further.
I got lucky…..which is why I try not to talk about markets that often. There are far more important things to discuss…..but we find ourselves at an interesting juncture today.
Modern Monetary Theory (MMT) is going mainstream, Trump is jawboning the market, the FED has turned dovish and the ECB may likely be run by Lagarde.
These are extraordinary times.
A quick aside, for those new to MMT - the basic idea is countries that control their own currencies should be willing in certain circumstances to print money to increase public spending.
Ray Dalio, the billionaire founder of Bridgewater, has written a few on the subject, Dalio has argued that a) American capitalism is no longer working for most people and b) MMT - or a variant that he calls Monetary Policy 3 could work.
Dalio argues that during the next economic crisis we’ll likely still be at close to zero interest rates, so classic monetary policy (“MP1”) won’t work and quantitative easing (“MP2”) is regressive and a causes of growing inequality. He thinks coordinating fiscal and monetary policy - i.e. printing money to invest in infrastructure and education - may be the answer.
2. The themes or sectors that look interesting to me now and super simplified thesis, to start the discussion:
Offline to Online / Atoms to Bits / Platforms & Marketplaces: Businesses are becoming digital and moving from delivering a physical product to delivering a service or digital good. Super aggregators are creating platforms and marketplaces that then control demand. Obvious examples (but not recommendations): Amazon, Google, Facebook, Trip Advisor, GrubHub, Etsy…..Could this product or service be better delivered through the use of technology, if so how, if so who is building it and is it an attractive business model ?
Online Gaming Businesses: A great example of the atoms to bits transition. A lot of these businesses have converted from one time hit driven business to a SaaS / recurring revenue type business, with higher growth and multiple re-valuation ahead of them.
US GSE (Fannie / Freddie): Trump has done everything he said he would. Privatizing the GSEs is important to them and would help the US housing market. This fits their agenda.
Gold: ~$13 trillion of global bonds now have negative yields. With both the front end and back end close to or below zero and Trump / FED pushing the DXY lower. Gold becomes useful and a hedge if inflation shows up, plus it’s been in a bear market for years.
Uranium: Long bear market combined with shrinking supply and uranium mines shutting down. This is happening right when the utilities need to buy again. Catalyst: Section 232.
Would love to hear about your big themes or sector views.
Disclaimer: The information presented above is provided for informational purposes only and is not to be used or considered as an offer or a solicitation to sell or an offer or solicitation to buy or subscribe for securities, investment products or other financial instruments, nor to constitute any advice or recommendation with respect to such securities, investment products or other financial instruments. I might, from time to time, have a position in the securities mentioned and may purchase or sell these securities in the future. Please do your own research before making an investment decision.
3. A few things worth listening to or reading:
A. Dr Peter Attia and my favorite author of 2019: Matthew Walker were discussing Sleep on his podcast. This one covers: The penetrating effects of poor sleep from metabolism to performance to genetics, and the impact of caffeine, alcohol.
B. A lot of people enjoyed the Bill Gurley podcast last time, I came across a lot of his writings here.
C. a16z recently had a great discussion on their podcast on Entrepreneurs, Then and Now, with Stewart Butterfield, covering what’s changed in venture (h/t Louis Warner)
D. Jonathan Haidt, author of a bunch of books, and most recently: The Coddling of the American Mind was on the Knowledge Project podcast. Great discussion ranging from helicopter parenting to risks of social media on our teens…..
Quotes I am thinking about:
"You don’t get paid for what’s already happened. You only get paid for what’s going to happen in the future. The past is only useful to you in the extent to which it gives you insights into the future, and sometimes the past doesn’t give you any insights into the future."
"You do not have to have tons of good ideas in this business. You just have a good idea that’s worth a ton, occasionally."