#86 - Mr. Beast Is a VC, Stocks Don’t Always Go Up and The Importance of Semiconductors.
In this week's episode of Reformed Millennials, Broc and Joel get into it about the future direction of stocks, Mr. Beasts new VC scheme and Bill Gurley’s most recent podcast tour. The guys also discuss Microsofts potential acquisition of Discord and how that likely drives the stock ahead of AAPL.
Check the substack notes as this episode is full of links and idea.
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The Grand Market that Only Goes Up is Over. Welcome to the thunder dome.
The easy money is over.
We've just seen the best 52-week year-over-year performance for stocks and many risk assets in history.
Shouldn't some time to digest all that be perfectly normal?
Now, does a correction necessarily mean a stock market crash?
This first wave off the lows last year was tremendous. All those breadth thrusts we've seen since June, and even through January this year, are characteristic of early cycle behavior.
These thrusts historically show up near the beginning of bull markets, not near the end of them.
But one common denominator among all of these longer-term bullish environments is that there were corrections along the way.
In October of 2018 and January of 2020, there was real risk out there. We saw it across the Intermarket landscape.
That's not what we're seeing today. This is much different, in my opinion. This market behavior has all the hallmarks of a correction within a longer-term uptrend for equities and risk assets.
In my view, this is the time to take out your shopping list, if you're a longer-term investor.
Understand your time horizon:
Is this environment conducive to your strategy? What is your plan?
There are times to make money in the market, and then there are times to keep your money.
In sports, you play offense and you play defense.
The offense sells tickets, but the defense wins championships.
That’s how I learned it.
It’s no different in the market.
Sure, these sexy growth stocks, and solar and SPACs and Crytpo, and all that is great for the storytellers. They make the story-telling process very easy.
As a consequence, it makes investors vulnerable to fall prey to those stories.
We can’t help ourselves. Humans love a good story. That’s perfectly natural.
How long will this take? I don’t know. Could be weeks, could be months, could be quarters. I have no idea.
But what I do know, is that if Staples are outperforming, U.S. Treasury Bonds are outperforming, Aussie/Yen is rolling over and Small-caps, Micro-caps, and Mid-caps are below their February highs, it’s our Defense that’s on the field.
🦍MR. BEAST!! - The Most Genuine VC on earth🐲
🔑Most Important Business To North America🔬
It used to be oil. IT ISN'T ANYMORE.
I don’t want to replicate work where it isn’t needed, and I found that Ben Thompson's free break down really summarized everything well. (see link below)
I won’t offer much commentary on Intel besides that the boldness is what is needed, and that despite my excitement it is going to be a long road of execution (Pat said Grovian execution for a reason) before we can seriously believe the turnaround at Intel.
Skepticism is warranted, but we should still be cheering on “Intel unleashed”. The world needs a healthy semiconductor ecosystem, and America needs a domestic fab.
from the WSJ
Intel Corp.’s chief executive is fast-tracking efforts to revive the semiconductor giant with a broad plan that mixes increased outsourcing with a commitment to spend $20 billion on new factories that could help address a chip shortage.
New CEO Pat Gelsinger said Tuesday that Intel would rely more heavily on third-party chip-making partners, including for some of its most cutting-edge processors, starting in 2023. But Mr. Gelsinger, on the job a little more than a month, said Intel wasn’t abandoning its historic roots of being both a designer and manufacturer of chips and would retain most production in-house. The company, he said, also is renewing efforts to make chips for others and targeting customers such as Apple Inc. and chip rival Qualcomm Inc.
Ben thompson break down - https://stratechery.com/.../intel-unleashed-gelsinger-on.../
RM Prediction - This is going to push MSFT back to the most valuable company on earth adding 500b in market cap.
taps into dispersion of revenues - similar to Roblox but also is a beautiful add on to Xbox.
MSFT would now have 2 of the top 10 rundles on earth with Microsoft suite which 99% of businesses >10 employees and Xbox + Discord
Discord gives Microsoft access to a growing list of more than 140 million monthly active users that includes thousands of top YouTubers, creators, and gamers. Microsoft wants its own community.
“Creation, creation, creation — the next 10 years is going to be as much about creation as it is about consumption and about the community around it, so it’s not creating alone,” said Microsoft CEO Satya Nadella in an interview with Bloomberg last month. “If the last 10 years has been about consumption — we’re shopping more, we’re browsing more, we’re binge-watching more — there is creation behind every one of those.”
Nadella was quick to focus on creators and communities in the first year of being CEO at Microsoft. One of his first big acquisitions was Mojang, the studio behind Minecraft with its millions of devoted fans. Nadella has also spent big to acquire other communities, with LinkedIn costing $26.2 billion and GitHub for $7.5 billion. GitHub was a key target to buy developer love and a huge community, and LinkedIn connected Microsoft more deeply to businesses and provided access to a significant professional social graph.
🌊Best Links of The Week☔
🖼 Diana Picasso Explains Her Grandfather, Pablo Picasso’s Favorite Paintings
Intel Keynote!! See here
A record flight of capital — $43.6 billion — from Hong Kong to Canada as China cracks down - see here
Semiconductor Wars! - the best explainer video we’ve seen!
“The power of compounding for these platforms is so huge that, if you invest in an Amazon or whatever, the hardest thing to do is close your eyes and forget it. And the only thing analysis is going to cause you to do is sell the stock." - Bill Gurley
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