#75 - Two Realities - One World, Trumps Banned and What To Do In A Bubble
In this week's episode of Reformed Millennials, Broc and Joel do their best to talk through the difficult matter of freedom of speech, the bifurcation of our cultural realities, and what it means for our jobs and markets.
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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.
The market of stocks marched higher after Monday’s minor meltdown.
Every major index closed green and the small-caps continue to see strength as the Russell 2000 rallied 1.77%.
TWO Podcast Favorites Banging out great returns - Energy and $GM
The energy was the strongest sector— $XLE surged 3.5%.
Energy has been electric so far this week. The energy ETF $XLE has already surged 5%, led by the likes of $XOM, $COP, and $PSX.
$XLE is still stuck below its previous high from last summer. Will energy finally make a higher high?
GM announced additional plans for its EV ambitions. The stock closed at a new all-time high. Peep the monstrous $GM monthly chart:
This is the story that can't find any air amongst the stupidity of American Politics.
Are we about to see the millennial version of the booming 40's/50's? Are commodities going to rip back?
We think so.
From the Housel article:
I want to tell you two of the biggest economic stories that aren’t getting enough attention.
1. Household finances might be in the best shape they’ve ever been in. Ever.
2. Covid has dumped kerosene on wealth inequality in ways we’ve yet to fully grasp.
Here’s personal income:
Here are household debt payments:
And personal savings:
Drawing similarities between today and the 2000 Tech Bubble!
6 Lessons From The Tech Bubble: Last year, I spent my winter holiday reading hundreds of pages of equity research from the 1999/2000 era, to try to understand what it was like investing during the bubble A few people recently asked me for my takeaways.
In 1999/2000 everybody knew it was a bubble Unfortunately, the quip "it's not a bubble if everyone says it is" just isn't true. Investors were comparing the internet sector to tulip mania as early as mid-98. Bernstein held an entire conference on it in June 99! Early is the same as being wrong.
Calling bubbles is easy, making money is hard In truth, the hard part about the tech bubble wasn't noticing it. The hard part was timing it. Our equity strategist tried in January 99... he was off by 14 months (and another 30 point gap in value vs growth)
Nobody knew the bubble popped until months after it did. Nobody noticed in March 2000 when it finally popped. Bernstein equity strategists (who bet his career on it!) didn't catch on until June.
The "Tech" bubble was a misnomer... it was really a large-cap growth bubble See the valuation table below, 1 year before the top Yes, Microsoft traded at 70x earnings. But Coca Cola was 43x. Pfizer was 92x. Every stock here was a disaster over the next 10 years...
Most large-cap tech stocks in the bubble had real businesses with strong fundamentals The internet stocks were a sideshow. In 2000, the software sector had a $1 trillion market cap, 20% net margins, 20% annual growth The problem? It was trading at 16x sales
Fundamentals follow price, not vice versa The bubble popped in Q1 2000. Fundamentals didn't decelerate until Q4 2000. It was reflexivity at work. Lower stock prices = less Capex spend = less revenue growth = lower stock prices. A vicious cycle
What's the takeaway here? Be humble. For bears, it's easy to call a bubble. Anybody can do that. Timing is the hard part. For bulls, it's easy to point to the fundamentals. Historical investors weren't dumb. The hard part is matching fundamentals with price...
🌊Best Links of The Week🌊
The automobile giant boldly introduced the Cadillac eVTOL air taxi today or a friggen flying car! The company said the 4-rotor aircraft will be powered by a 90-kWh EV motor and move at speeds up to 56 mph. Here’s a video mockup. GM didn’t give a timeline, but we’re excited to fly right over rush hour traffic in a couple of years.
Uber and Moderna announced a collaboration in search of ways to aid the distribution of Covid-19 vaccines. The two companies will work side-by-side to provide info on vaccine safety using Uber’s in-app messaging. $UBER and $MRNA will also partner with public health officials, targeting additional opportunities to broaden access to Covid-19 vaccines. $UBER spiked 7.25% and broke out to blue skies. $MRNA closed up 6.22%.
The New York Times has a hilarious story about people who forgot their Bitcoin passwords: Of the existing 18.5 million Bitcoin, around 20 percent — currently worth around $140 billion — appear to be in lost or otherwise stranded wallets, according to the cryptocurrency data firm Chainalysis. Wallet Recovery Services, a business that helps find lost digital keys, said it has gotten 70 requests a day from people who want help recovering their riches, three times the number of a month ago
Twitter and FB ban Trump - Facebook blocked Trump's account until after the election, and Twitter first suspended his account and then changed its mind and 'permanently suspended' it (note to Twitter - 'permanent suspension' is an oxymoron). Youtube took down a video but has otherwise been low-key.
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