Surf Report: Game... back on.

Issue 19: 01.31.2021 (Free Version)

INTRODUCTION
January 31, 2021

If you missed Friday’s e-mail breaking down this past week’s events regarding GameStop and Robinhood, it’s a doozy: Surf Report: Game stopped. I think it’s as good an introduction as ever for this weird, wild week.

But believe it or not other things happened too so let’s drop back in to our regularly scheduled format 🏄‍♂️


“The most important lesson that history has to teach us is that men do not learn very much from the lessons of history.” —Aldous Huxley

Breaking 🌊

Here are a few things that happened this week that did not involve GameStop or Robinhood:

  • Nearly 1/4 of the S&P 500—39% by market value—reported earnings including Apple, Facebook and Tesla. Friday was also an expiration day for options contracts. So What?: Weeks like this will cause a lot of expected volatility in otherwise stable securities, as people are forced to buy/sell options (a contractual obligation) while others are reacting to earnings reports (a judgment call). Not a big deal for long-term investors, but rough seas for anyone watching their account all day long. (Don’t do that.)

  • Since early November about 2.7 million (5.5%) of American mortgage holders have been putting off payments, according to weekly data released by the Mortgage Bankers Association. So What?: That’s down from a peak of just over 8.5% in early June, but with a slower-than-expected recovery and weak job market it’s unclear when borrowers will be able to resume payments. Some may negotiate lower rates and others may just sell their homes, which would probably be snapped up quickly given current demand.

  • Massive companies in the industrial sector reported way better than expected earnings. These include firms like 3M, Raytheon, General Electric, and Rockwell Automation. So What?: If you want to gauge the future outlook of the economy as a whole, you look first to industrials. It’s a category of stocks of companies who produce goods used in construction & manufacturing.

  • Twitter acquired newsletter platform Revue. So What?: Newsletters, like podcasts, are bigger than ever, and Twitter sees an opportunity to become the de facto platform for creators of long and short form content. (Don’t forget they bought social podcasting app Breaker earlier this year too.)


From The Tweetbox 🐦

John Madden thinks NFL teams can benefit from hiring gamers who play Madden.

“A gamer who has played thousands of Madden games has encountered all sorts of situations that could help with thinking through strategies, clock management, play calling and all the in-game decisions that coaches only get a chance to practice 16 times a year.”

🔗 “We are moving our HQ from the United States to the Internet”

🔗 “Today showed us that the SEC has had it wrong. The problem isn’t that some cryptos may be securities. The problem is that all securities aren’t yet cryptos.”

🔗 "Instead of spending your money on avocado toast, you should invest"… "No, not like that"


For The Pros 😎


Worthwhile Read ☕️

Cargo Cult Startups by Luke Burgis. Luke’s work is all about mimetic desire, a theory pioneered by the philosopher René Girard explaining why so much of what we do is due to imitation—not intrinsic wants and likes. A great place to dive in if you’re not familiar!

I wanted more than the traders’ wealth or prestige—as elusive as both of those things are. (Did you know that the word prestige comes from the Latin praestigia, which means “illusion”? Prestige is literally an illusion.)


Insights 💡

No one is as impressed with your possessions as much as you are. It’s easy to overestimate the social signaling benefits of having nice stuff. The quirk is that people who see your nice stuff spend more time imagining themselves with your stuff than they do admiring you for having that nice stuff.”

Extreme adherence to an investment strategy is dangerous in a world that changes all the time, so an important question to ask when things aren’t working whether you’re being patient or stubborn.

Investing ability is unproven until it’s survived a disaster. So be careful when identifying skill, whether your own or others’.

from Personal Finance Philosophies by Morgan Housel


Check This Out 👀

"Clone your voice and insert your recipients name into a video at scale" Vidon shows how to 5x email engagement using what appears to be magic ✨

Also: Drag and drop mobile app creation with Adalo. Here’s a guide from Makerpad to help get you started on building your first no-code app.


PNG 🖼


“The beginnings of all things are small.” —Cicero

Groms 🐣

This week saw the launch of Every. Here’s a video case study.

“The collective rethinks traditional editorial and financial structures to better suit how writers and editors work, and how people read, every day.”

Also: Clash, a new short-form video app, announced that it had purchased Byte, another new short-form video app. Remind you a little of Vine, the beloved 6-second looping video app that shut down in 2016? It should. Dom Hofmann, the creator of Byte, was a founder of Vine; Brendon McNerney, a founder of Clash, is a former Vine star. Their goal is to allow fans to tip influencers and pay them monthly subscription fees. Users can also monetize individual pieces of content.


Don’t tell me what you think, tell me what you have in your portfolio.” —Nassim Nicholas Taleb

Drop Ins 🏄

My latest investments & trades
Buy & Hold Investments (I will hold these forever)

This section is only available for contributing subscribers. If you’d like to trade and invest along with me, consider one of the paid tiers!

Swing Trades (1-3 month time horizon)

This section is only available for contributing subscribers. If you’d like to trade and invest along with me, consider one of the paid tiers!

Barrels 🎯

Portfolio Highlights
  • Winning Trade of the Week: $NOK, because some reddit users decided to pump a stock I invested in back in September, just for lolz. Scaled out some profits for an 88% return.


Pods & Schools 🐬🐠

📚 This week a contributing Surf Report member asked me for an accessible (but not too light) introduction to game theory, and I knew just the book. Game theory is at the heart of strategy because it’s all about managing tradeoffs. Highly recommend this one: The Art of Strategy: A Game Theorist's Guide to Success in Business and Life

“Game theory means rigorous strategic thinking. It's the art of anticipating your opponent's next moves, knowing full well that your rival is trying to do the same thing to you. Though parts of game theory involve simple common sense, much is counterintuitive, and it can only be mastered by developing a new way of seeing the world.”

🔊 I think it’s important to build conviction (in anything) by understanding opposing opinions thoroughly and being able to argue against yourself better than opponents can. Your argument either becomes weakened or strengthened, and it gives you a chance to fill gaps in your knowledge. So if you’re skeptical about Bitcoin and want to hear some debate, this is one of the best ones recently:

📄 Here’s an amazing collection of Bitcoin resources someone recently put together for people just starting out: https://bitcoin-resources.com/

TL;DR: Read The Bitcoin Standard and The Bullish Case for Bitcoin.

👨‍🏫 Free event on Feb 4 hosted by RealVision: Bitcoin In The Real World. RSVP here.


Tools of the Trade ⚒

Products I use to make money

Wealthfront. ~25% of my portfolio is in Wealthfront, which since 2016 has netted me a time-weighted return of ~53% (~50% money-weighted) at the time of this writing, all while harvesting tax losses like the pros do.

Use this special link to get your first $5,000 managed for free: https://wlth.fr/2ephpyb

StockCharts. I easily make back the small monthly subscription fee with the superpowers it gives me.

Carrd. Use this link or referral code 892PYX69 to start your own web empire.


Disclaimer

Nothing in this email is intended to serve as financial advice. Do your own research.