#117 - Stop Calling It Hyperinflation, Web3 Explained, and What Facebook's Name Change Means For Investors
In this week's episode of Reformed Millennials, Broc and Joel talk about the supply chain delays as it relates to everything from new cars to Apple products. They also revisit web3 including reactions of the Facebook name change, what web3 even means, and looking beyond NFTs to what's next including Vitalik’s thoughts on crypto cities.
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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
"When I am asked what I am worried about in the market, my answer is usually nothing because everyone else in the market seems to spend an inordinate amount of time worrying, so all the relevant worries tend to be covered."
We judge current sentiment by the market’s reaction to the news.
Apple, Amazon, Shopify missed earnings estimates citing supply chain difficulties and yet finished the week where they started it or higher.
Google and Microsoft reported another set of strong numbers and rocketed to new all-time highs. Bad news counts for nothing and good news leads to big moves higher.
This is one resilient market.
Anything clean energy continues to be on fire. $TSLA had another banner week cementing its place in the trillion-dollar market cap club. Enphase (ENPH) crushed earnings estimates and fueled a major rally in the solar industry. The easiest way to gain exposure to this theme is the ETF PBW, which doesn’t include only solar stocks, but also electric vehicles makers, batteries, other parts, clear energy utilities, lithium, and other rare-earth metals, fuel cells, charging stations, etc.
US Treasuries rallied, interest rates calmed down for the moment which has been a tailwind for high-multiple software stocks.
Yes, there were the usual sizable earnings blowups in the sector like ZEN, UPWK, TWLO but for the most part software names have been stable and pushing higher – U, SNOW, CRWD, ZS, DDOG, NCNO, TEAM, MANH, IGV, etc.
However, the most important signal we ran into was from Raoul Pal at real vision who dropped an awesome Tweet Thread:
Change is upon us.
Embrace change. Don't fight it.
In change lies all our future. “Raoul Pal”
💸Reformed Millennials - Post of The Week
Hyper Inflation ISN'T coming: Jack Dorsey is Pumping Crypto. from pragmatic cap
Hyperinflation is generally agreed to be a continuous 50%+ increase in the rate of inflation. It is essentially the complete destruction of a national currency. It isn’t a small problem. It’s the absolute worst kind of financial crisis an economy can have. If you think the 2008 Financial Crisis was bad, that was a cakewalk compared to what hyperinflation does. A financial panic ruins the economy for a decade, but hyperinflation ruins an economy for an entire generation.
If he really believes what he said then he should, as a fiduciary to his shareholders, be advocating for far less USD exposure within his companies. Michael Saylor has developed the playbook for this. But Square and Twitter currently have over $10B in USD reserves, which would evaporate in the case of hyperinflation. If he truly believes what he said, then he should either be advocating for revenue payments in inflation-protected assets (like Bitcoin) or be immediately converting large amounts of USD reserves into some sort of inflation-protected asset. Perhaps this is in process. Square has some Bitcoin hedging, but both firms are very exposed to USD incineration (per Dorsey’s prediction).
If I worked for a company where the CEO was calling for hyperinflation, I would walk into his or her office the next day and ask for an enormous wage increase. Hyperinflation would cause Twitter and Square employees to lose enormous amounts of purchasing power. If I were them and I knew that the CEO expected 50%+ inflation per year then I would expect a big raise to help offset this coming crisis and allow myself to better allocate more USD to other assets.
If Jack puts his money where his mouth is he’ll start gobbling up huge amounts of Bitcoin or other non-USD assets on Twitter and Square’s balance sheets. And he’ll start paying his employees in Bitcoin or giving them huge wage increases.
Or, alternatively, he should realize his words carry a tremendous amount of weight and revise his statement.
Our bet is he's just talking his book here and is doing absolutely nothing about it.
FB GOES META: the art of the rebrand
Best Tweets and Conversations from the week of Meta:
Annanth Aravinthan @ProtagorasTO1/ This week's Q3 earnings call w/ $FB will likely go down as one of the biggest bets in history. IMO they'll spend >$170B over the next decade on building the metaverse. Since it's my largest position, I've been spending a lot of time reflecting. Attached are my "scratch notes" https://t.co/PfcFep5Ofd
Our favorite suggestions from the comments:
TSMC makes >50% of world's semiconductor chips
$IONQ - leader in quantum computing and America’s best hope to compete with China.
🌊 Canadian Companies To Peruse🌊
Health Cities: Health Cities works with clinicians, innovators, philanthropic organizations, and companies to develop new models of care to drive better health outcomes and economic growth in the health sector.
🔮Best Links of The Week🔮
Growth investing is fundamentally a bet on two things: leadership and strategy. This Stripe Presentation is an amazing explanation in why.
The Illusion of Smart Money - Webinar with Aswath Damodaran
The great Boomer Wealth transfer has begun - Avg gift from parents to kids is 130k in GTA
Beyond the Meme: Ever Given, Supply Chains, and the Physical World - Strengthen infrastructure, strengthen the world