#92 - How Apple is Holding Back the Creator Economy, Lessons From China's Spotify, Crypto vs. USD, and Alex Danco's Worldbuilding Framework For Antifragility

  
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In this week's episode of Reformed Millennials, Broc and Joel discuss the ongoing antitrust battle that Apple is fighting, Bitcoin and Crypto as a viable USD replacement, and Alex Danco’s fantastic article about Worldbuilding and how we should think of this framework as a business application.

Listen on AppleSpotify, or Google Podcasts.

If you aren’t in the Reformed Millennials Facebook Group join us for daily updates, discussions, and deep dives into the investable trends Millennials should be paying attention to.

👉 For specific investment questions or advice contact Joel @ Gold Investment Management.


📈📊Market Update💵📉

Markets were all over the place yesterday as the Nasdaq ARKK and SPY whipsawed back and forth. This is largely a result of the continued rotation into cashflow positive boomer stocks(value). The culprit is believed to be the fed and it’s continued withdraw of liquidity from the market. Investors can expect stock prices to take a hit if this trend continues…

Especially the NASDAQ.

This liquidity drain and recognition of inflation are causing lockdown darlings and multiple of sales stocks like zoom, snow, lemonade, PTON, and PENN to be rerated at a more modest multiple of sales or revenues.

Here are two charts that offer up some short term and long term perspective of how the ratio between the $QQQ and $SPY is changing right now.

As tech bleeds, a lot of lock-down stocks are starting to look super attractive. A few of interest are reporting earnings this week! Follow along in our Facebook Group to see Joel’s recaps here

  • Zillow

  • Redfin

  • Opendoor

  • Unity

  • Palantir

  • Zoom

  • Snowflake

  • Peloton

  • Autodesk

  • Roblox

It will be interesting to see if these new hot areas of technology will hold up if the $QQQ vs $SPY trade continues to underperform.

Hopefully this gives everyone some perspective on what has been going on, but it is possible that it can get much worse. Stay nimble!


💸Why The Price You Pay Matters!

I want to draw the listener’s and reader’s attention to an example of where an amazing company, arguably one of the greatest ever, returned 0 net of dividends for 16 yrs. Investors can’t just focus on the business being great but also the price they pay for that greatness.

If you were to buy MSFT in 1999 and held it until today. You would have had to wait until 2016! Until you saw a capital gain on the Investment.

For me. If I were to buy MSFT at 9 yrs old I would have had to wait until I was 26 to make money on that investment!

This MSFT example is important for all investors to understand when buying stocks. You can buy literally the best company ever and if you overpay for its equity you could be waiting nearly 2 decades before you make your money back.

Conclusion - The price you pay matters, no matter the quality of the business.


💎Balaji Is Back - Read-Only Economy

From the attached article:

When an heir inherits an institution, it's like inheriting a factory. During normal times the factory continues to operate, the widgets keep coming out, and the career managers appointed by the original founder appear to have everything in hand. Nothing seems amiss. But something important has been silently lost, which is the founder's ability to invent the institution from scratch – or reinvent it in the face of a crisis, like COVID-19. We can also think of this as read-only culture, the ability to repeat what an ancestor has handed down – but not recreate it from first principles.

Read-only culture is similar to partial bilingualism: the ability to understand a language, but not speak or write it, a phenomenon which is common among children of immigrants. If children can't write the scripts of their parents, if their access to ancestral culture is read-only, then that culture won't be replicated. This is a microeconomic explanation for how Idiocracy happens slowly. People think the cultural capacity remains because the artifacts surround them...but the culture producers are actually slowly vanishing, and their descendants can only repeat, not create.

It's the difference between stock and flow. If new books aren't being written in a language, if the new owners of a factory don't understand manufacturing, the flow has been cut off. The culture that surrounds us is then just the stock, and it's being depleted without anyone to replenish it.


The Struggles Of Millennials - 3 Things from Scott Galloway

see link for all 3

  1. The Virgin Homicides - Young men are less likely than young women to graduate from high school (45,000 fewer U.S. boys than girls do so every year) and college, they are twice as likely to overdose, and three times more likely to be arrested. Men die from suicide at a far greater rate than do women — and these disparities are increasing.

It is increasingly difficult for young people to become a viable, consistent provider. Real wage growth has been sluggish for decades, and the boom in asset prices makes it harder to buy a house or build wealth.

Self-perception of success/failure is a function of relativity and proximity. Twenty-somethings today spend three hours a day on social networking apps, and, for the first time in history, a majority of them live with their parents. Young people do not benchmark themselves against peers from other eras or geographies, but against their Instagram feeds and roommates (i.e., parents). These examples set unattainable standards and remind them of their shortcomings, respectively.

For better or worse, men who are perceived as unviable providers do especially poorly when seeking mates. Online dating apps are now the most popular way for people to meet, and they provide unprecedented data on mating preferences. Of course, for both men and women, a small group receives most of the attention. In fact, the inequality of attention is greater than the inequality of income.


🌊Best Links of The Week🔮

  • Apple versus Epic in court from Ben Evans- The Apple/Epic App Store court case started this week. It mostly turns on legal arguments and court precedents around how to define the market, the platform and the payment system, not the facts or any 'smoking gun' emails, and a lot of US antitrust lawyers seem to think Epic's case is pretty weak (🤷🏻‍♂️). The EU has already effectively decided in favor of Spotify, so regardless of this case there are big changes coming.

  • Youtube versus Roku - Connected, 'smart' TV has quietly taken a significant gatekeeping role in the TV business, with platform providers both getting into so-called 'addressable advertising' (see the IAB paper below) and starting to charge for placement (ITV in the UK recently complained that Amazon wanted them to bid against Netflix). Now Roku and Youtube are fighting, accusing each other of lying about the nature of the dispute, and trying to block each other. (Also, note how absent Apple is from these conversions - such strategic failure.) Link

  • Ximalaya, which is the largest online audio platform in China, just filed to go public.

  • A Framework for Vetting Crypto - From the Defiant

  • The Great Online Game - How to Win the Internet from Not Boring

  • Alex Danco - World Building

  • Li Jin - Apple is holding back the creator economy


This blog is presented as a general educational, informational, and entertainment resource. While the author of this blog, Joel Shackleton, is registered as an Associate Advising Representative with Gold Investment Management Ltd., a firm registered as a portfolio manager and located in Edmonton, Alberta, this blog does not provide, and should not be construed as providing, individualized investment advice, nor as containing any recommendation to buy or sell any specific securities or otherwise make any other form of investment or investment decision. Joel Shackleton and Gold Investment Management Ltd. specifically disclaim any reader of this blog from relying on any of its contents as investment advice or as an investment recommendation. The views and opinions expressed herein are the personal views and opinions of the author only and do not necessarily reflect the views or opinions of Gold Investment Management Ltd. or any of its other registered individuals or employees.  For a comprehensive legal disclaimer please visit GIM’s website at https://gold-im.com/legal/