#121 - Why Jack Left; Same Business, Five CEOs. Software as a Service 3.0, Shopify Dominates BFCM, and Peak Funcertainty
In this week's episode of Reformed Millennials, Broc and Joel tackle Jack Dorsey stepping down from Twitter as CEO, we'll talk about Saas 3.0 and why so many software companies are turning into commerce platforms. We'll also chat a bit about Mr. Beast’s Squid Game versus the real thing and what we can learn from Josh Brown's article called funcertainty.
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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
Every major sector got slammed after Jerome Powell suggested the Fed may let off its bond-buying program as inflation concerns rise.
The S&P 500 sold off 1.9% and closed at its 50 day-moving average. The Russell 2K got ripped apart 1.92% in its third consecutive down day. The Dow dropped 1.86% and the Nasdaq held up the best, though it still lost 1.55%.
Here’s a heat map of the S&P 500… A sea of red with just a few survivors. 🤦 💔
The World Health Organization (WHO) announced they had classified
the Omicron Variant (B.1.1.529) of COVID-19 as a Variant of Concern after American thanksgiving. According to the attached press release, the variant was first reported to WHO in South Africa on Wednesday, November 24th. This variant has an increased risk of reinfection as well as a large number of mutations. The news of this variant caused a buying frenzy in COVID winners - Logitech, Zoom, Peloton, and vaccine makers - Moderna and BioNTech. All of these stocks rose by more than 5% on Friday when all broad market indices were negative.
Bill Ackman thinks it’s NBD:
Market Sentiment: charts from All Star Charts
Small-caps tried to break out this month, after going nowhere since February.
But that attempt failed and now Small-caps are back in the penalty box:
This chart is a beautiful microcosm of what happened underneath the surface in stocks since February: Sideways to lower.
Back in February, Emerging Markets peaked, the IPO Index peaked, Biotech stocks peaked, the Nasdaq New Highs list peaked, and as you can see up top, Small-caps stopped going up.
If you're only looking at the Major Large-cap Indexes, you may have missed all that.
Now with that said, a big fuss is being made of what we saw this week.
But when you zoom out, the S&P500 just had 1 down week after making a new all-time high:
Meanwhile, the Dow Jones Industrial Average is still above those former highs from May.
If you recall, May is when the NYSE new highs list peaked, Financials peaked, Industrials peaked, Transports, Materials, and NYSE Advance-Decline line all peaked.
We're still seeing higher highs and higher lows and as long as we're above those May highs, I don't see a major problem.
But all big problems start out as little problems.
The Small-cap Index failed miserably. That's definitely an ugly one.
What about Crude Oil? This one is pretty nasty too:
But Energy stocks are still above those key 2016 pivot lows and as long as that's the case, Energy (like the Dow Industrials & Dow Transports) is still innocent until proven guilty.
Energy stocks were positive for the week, despite Crude Oil falling by double digits.
I don't know what's going to happen next. But I do know what the market would need to do to get us much more cautious. And I know what the market would need to do to get us much more aggressive from the long side.
**Nothing good happens under 4500. Small-caps failing (maybe just temporarily) is one thing. The S&P500 losing 4500 and falling below the September highs? That’s something that worries us.**
💸Reformed Millennials - Post of The Week
A really interesting post from one of my favorite fund managers - Gavin Baker
from Adobe and Salesforce
CREDIT CARD USAGE:
Down 4% YoY per Salesforce - surprising and maybe an isolated data point.
PayPal down 2% per Salesforce.
BNPL up to 8% of all purchases per Salesforce and up 422% YoY per Adobe.
Discounts down 8% YoY per Salesforce.
Curbside services were used in 20% of all online orders on Black Friday per Adobe.
Generally, weak YoY growth for e-commerce is likely a function of consumers spending earlier given shortages.
PSA to anyone investing in ad tech & eCommerce - this is an important data table to consider.
Data found here:
Joel here: I wonder if spending early is a matter of 1) consumers becoming increasingly sophisticated + experienced with eCommerce, and 2) consumer spending off the charts for a sustained period.
The disappearance of Cyber Monday as a day of interest supports increasing sophistication + experience...
King Of Entertainment: Mr. Beast
.@MrBeast Squid Games video: 103M views in 4 days. It took 7 weeks to make.@netflix’s Squid Games series: 111M views in 30 days. It took 10 years (!!) to make.
More views, less time, fewer gatekeepers. That’s the promise of the creator economy.
Lux Capital Letter to LP’s:
🌊Companies To Peruse🌊
Milk Moovement - $1.5m Grant - Halifax based company that creates a dairy supply chain management platform that connects all dairy supply chain players.
🔮Best Links of The Week🔮
A Duel of Capital Allocators & The Perils of Investing Heroes - Comparing Warren Buffett's and Mark Leonard's investment record and why I prefer having investing role models as opposed to heroes
Canada GDP bounced back in Q3 as virus restrictions eased - RBC Economics
'Tis the Season... for Inflation - Peter Zeihan
When a Hacker Calls: How Robinhood Fell Victim to a Vishing Raid
Oil’s Black Friday: Algos and Options Turn a Tumble Into a Crash
Josh Brown with an absolute banger - Funcertainty