Surf Report: You can never do just one thing

Issue 8, Nov 22, 2020 (Free Version)

Nov 22, 2020

Quick heads up: I created a new Twitter account that only focuses on my trading and investing: Surfing_Markets. It will include excerpts from the book, and I’m starting to post some of my trades in real time too. Fun times. 🏄

INTRODUCTION

November 22, 2020

Hi everyone! I’m so glad to have you here. What a week.

The pandemic-induced lockdowns have accelerated the adoption of new technologies and effectively pulled the future quickly into the present. We’ve seen unprecedented use of consumer apps and services, which has fueled the success of the underlying technologies that power these services. And as interest in gaming hits new highs due to being stuck at home, stocks for the game engines and the studios that make these games are hitting highs of their own. Meanwhile, microprocessors and graphics cards are getting a double-dose of usage due to gaming + a newfound interest in Bitcoin, whose mining relies on the parallel-processing capabilities of graphics cards.

And why all this interest in Bitcoin? Among other reasons: the Fed is printing money and effectively devaluing the dollar, so people are turning to inflation hedge assets (like Bitcoin) that don’t correlate with the market and function as a store of value.

And why is the Fed printing money? As a result of the pandemic-induced lockdown that drove adoption of apps and services in the first place. 🔃

Our economy functions much more like an organism than a machine. A complex ecosystem, not a deliberately created invention of calibrated for a specific cause and effect. And the golden rule of ecology is: You can never do just one thing.

Following news of an effective vaccine being fast-tracked by Pfizer, Abbvie, and others, the so-called “reopening” stocks like malls and airlines took off while what people apparently assume are interim “lockdown” stocks like Zoom and Slack pulled back to lower levels. But a vaccine and a healthy, traveling populace won’t put the technology genie back into some bottle labeled “innovation.” If anything, this pandemic has only revealed how fragile certain traditional businesses are compared to their digital rivals. Human behavior will eventually adapt to, and spend money on, what works best.

Software on the internet behaves much more like an organism than physical businesses do. It can be easily replicated & moved, with all sorts of dynamic knock-on effects and unintended consequences. Just like Covid. Just like our economy. Nature, like so many things, is rhizomatic. And the closer you can get to thinking or building something the way nature does the closer you’ll be to a good bet:

Rather than narrativize history and culture, the rhizome presents history and culture as a map or wide array of attractions and influences with no specific origin or genesis, for a 'rhizome has no beginning or end; it is always in the middle, between things, interbeing, intermezzo.'

Sounds a lot like the internet to me.

As always, have fun out there. And thanks again! 🤙

—Mark

"Proper temperament will beat high IQ all day." —Michael Mauboussin

Breaking 🌊

There was a lot of news that caught my eye this week so I’ll try to keep it snappy:

So far it’s been a great year for the S&P 500 Index, and now Tesla is being finally being included… which could lead to a buying spree as funds include it in their S&P-tracking funds. So What?: Inclusion in America’s iconic stock index is a sign that institutions believe in the future of electric vehicles and the continued success of its U.S.-based market leader.
Roblox, the kid-friendly game building platform, filed their S-1 in preparation for an IPO at a $4B valuation, and the public learned its a cash-generating machine: $292M in free cash flow over 9 months. So What?: Its popularity has only surged since lockdown: 54% of kids aged 4-15 play, spending 2.6 hours per DAU each day. And there were 33 million viewers for a Lil Nas X performance in November. 😳
Apple is halving its hefty 30% App Store fee for smaller developers who generate less than $1M per year (i.e. most of them). So What?: It comes as a response to recent regulatory and corporate criticism at the exorbitant nature of the fee that looks to many like monopoly behavior, most prominently led by Basecamp in light of their Hey e-mail pp as well as Spotify, who called this new policy merely “window-dressing” to a true solution.
Amazon is now in the pharmacy game, offering free prescription delivery for Prime members. So What?: Pharmacy stocks like Walgreens-Boots Alliance ($WBA) and CVS ($CVS) dropped sharply on the news of this new behemoth of a competitor, but headlines can be deceiving: prescriptions are a small portion of pharmacy revenue, so the market may have overreacted to the news.
Palantir stock was downgraded by Morgan Stanley… which caused it to subsequently surge in value. Um, okay. So What?: Another great example of why the news is a terrible place for informing good investment decisions.
BTC blew past $18k as it nears its all-time highs, already having set a new all-time high for market cap: $350 billion ($1M more than the market cap of J.P. Morgan!). This comes in the same week that the world’s largest asset manager, Blackrock, announced on CNBC that they believe Bitcoin could replace gold. So What?: All of this conviction by big names in the investment community is creating even more interest among individuals looking to follow suit. As a result, we could see another zero added to the end of its value as early as next year.

From the Tweetbox 🐦

🔗 Your complaining is someone else’s business idea.

🔗 A nice, easy-to-understand primer on Bitcoin from @AmandaMGoetz

Tony Hawk is hawking stocks on for social investing platform Public:

Tony Hawk @tonyhawk

I once skated through the NYSE because trading on the floor was too intimidating. Investing in the stock market is scary if you aren’t an expert or don’t have money to burn. But @public is changing the game; the app allows you to invest small amounts in publicly traded companies

For The Pros 😎

What Warren Buffett is buying and selling. 🔗 (Link available to Pro subscribers)

The killer negotiation hack that as simple as it is powerful. 🔗 (Link available to Pro subscribers)

A master class for investing. 🔗 (Link available to Pro subscribers)

Worthwhile Long Read ☕️

In keeping with the theme of this week’s members-only article, this is a great deep dive on the multiplicative concept that could change your life: The Age of Infinite Leverage

“Today, we live in an age of infinite leverage where our work can be replicated at no cost, and we don’t need permission to get started.”

Check This Out 👀

Fortnite now integrates with Houseparty so that your 'IRL' squad appears on screen alongside the game, taking us one step closer to ✨the Metaverse✨ (Fortnite maker Epic Games also acquired real-time facial motion capture creator Hypersense earlier this month too, justttt sayin. 🤔 )

Tips ☝️

Clean bathrooms.

Austen @Austen

"Someone once asked me why McDonald’s is so successful. I said ‘our bathrooms are always clean.’ ‘Sure,’ he said, ‘But that’s easy.’ ‘Well,’ I replied, ‘Are your bathrooms clean?’" - Ray Kroc

Write like you talk. + Other good tips for writing better copy: Why No One Reads What You Write, by @kevon69

PNG 🖼

In the markets: focus on the finding, not the winning.

Here’s An Idea 💡

The swapping of the primary and the mirror, as what digital becomes the new default in new areas of life (From @balajis via this podcast from @MacaesBruno)

For example, online weddings may go from unheard of to actually preferred:

“Years ago I joked that we should Skype into this wedding—now it’s actually happening. And people are saying that’s so sad and so bad etc., but what I actually think is going to happen, and it will probably start in subcultures, is people will realize you can do extremely fancy weddings in VR, with all sorts of fancy effects and fireworks in a way you couldn’t in the real world. And it will be cheaper. And you’ll be able to film it from 5000 different angles.”

Here’s another idea, from Paul Skallas’ recent article, What Happened to Video Games?:

“For some reason they never put real video games on the cardio machines. It never happened. I can’t go to the gym and play GTA on the elliptical. Instead I get messages like this.”

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

Groms 🐣

VENN (Video Game Entertainment and News Network) wants to create the next MTV for gaming and esports but in a post-cable world.

“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: $SSSS, took addition profits at a 42% return

Pods & Schools 🐬🐠

(I clip all my favorite podcasts excerpts on the Bitcast.fm app. Give it a try! You can follow me @markmulvey)

Podcast Reco: Kat Cole, Focus Brands // Leading A $5 Billion Company, International Expansion + Brand Partnerships Kat is climbing the ranks as one of my most favorite business executives to learn from.

One takeaway for me: The very thing you need to do when times are tough is provide more opportunities for entry which, paradoxically, often involves lower price points.

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 ~39% (~35% 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.

Cointracker. Track your coins like you track your stocks.

Hypefury. Easily the best tool out their for growing a quality Twitter following.

Validate Your Business Idea: Includes everything from researching, writing, getting attention, and engaging with people, plus a spreadsheet template for tracking subs. Surf Report subscribers get $5 off with the code: surfreport

SPONSOR

Sforzo Audace is my own company—lifestyle brand for renaissance men and creator of the Original Renaissance Bag. “One can do much.” Get yours at renaissancebag.com

Disclaimer

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

Surf Report