'Watch what I do, not what I say'
That's the lesson that you see over and over again.
What happened in November and December? Elon Musk sold over $10B of Tesla stock. Satya Nadella sold half of his Microsoft stock. Insiders mostly sold.
Over the last month, and particularly this week, we've seen asset prices drop across the board. What's interesting to me is that this has happened despite the Fed not increasing interest rates (yet). All we have now is a suggestion that they will. What will happen when they actually do? Is it possible that the multiple contraction isn't priced in yet and instead most of the movement is from the realization that growth numbers are not as robust going forward as they were pre-pandemic? I don't know.
Accounting irregularities? Remember all those special adjusted EBITDA numbers? Remember when the tech companies told the market that stock-based compensation was not a cost? I predict that in the coming months, people will begin to dig into accounting details again.
Crypto/web3/whatever
Yes, prices are down. How a 'hodler' feels right now is almost surely dependent on their cost basis and the gains locked in before prices slide. I have not been too concerned because my cost basis is low and I took my principal and modest gains off a while ago. And I don't get compensated in crypto. Yet most of the market and many players are going to react differently depending on their situation.
Is it a buying opportunity? I don't know. Maybe. Not yet, is my sense. I have not bought, nor have I sold (with the exception of a few random coins that I just bought for the fun of it).
Is this a tulip bubble and will the air be let out slowly?
I give the scenario that all of crypto will resemble the tulip bubble at less than 20% likelihood. So, still reasonably possible. However, there is a lot of variation between crypto assets. I wouldn't want to be holding $SHIB or $DOGE. But the underlying tech is here to stay, and the use case behind the speculative veneer of Coinbase trading is real.
I spent time over the last two weeks going deeper into two ecosystems: Algorand ($ALGO) and Cosmos ($ATOM). There are truly interesting and transformative ways to use theit technology. They will take longer and be less speculative than the coins, but more enduring.
Cathie Wood and Warren Buffett
If you take Berkshire Hathaway as a proxy for Value Investing and Cathie Wood / ARKK has a proxy for Growth Investing, a chart like the one below makes the case that if you invested in each 2 years ago - and held - you'd be at the same return. Of course, it is timely that Howard Marks' latest memo is titled, When to Sell.
If you've been reading for a while, you know my views on Ark and Cathie Wood. The thesis that disruptive technologies and innovation will be large opportunities in the long-run is one I agree with. The short-term pumping of securities with limited revenues and sometimes questionable management is ridiculous. It was clear that this trend could not continue indefinitely.
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