Hola friends – I missed the February update due to a potent combination of holidays in China & a health issue that had me on the couch for a couple of weeks.
Luckily, other than watching my portfolio get absolutely wrecked, I had little else to do in the markets during the worst-ever January & a flat-to-sad February.
I believe that we’ve probably bottomed out in the severely-beaten down tech stocks. I will continue to dollar cost average in over the next 4-6 weeks as I have cash available.
Here’s what I’m buying (other than crypto mining stocks):
$SQ – Square/Block has undergone a massive pullback but it was up 20%+ after their recent earnings. I think they’re still relatively cheap.
$ZM Zoom – Also had a massive pullback but the hybrid office is here to stay. Here’s the bull case for Zoom from Ark as a Twitter thread.
$ABNB Airbnb – Uniquely well-positioned as travel rebounds.
$COIN Coinbase – They’re making a ton of money, have an amazing venture pipeline & will soon launch their own NFT platform, accepting Mastercard directly for purchases. Long-term bullish.
$SHOP – Shopify still has amazing growth potential. I had been waiting a very long time to buy more and this 57% pullback from all-time highs has finally given me a shot. They’ve partnered with JD in China and their CEO has joined Coinbase’s board. Crypto & NFTs will come to Shopify.
Now where did this cash come from? Here are some names I trimmed.
$AMZN Amazon – I’m less excited now that Jeff Bezos has left. They are still very strong with AWS & their ad business growing but I felt crypto stocks could grow faster.
$SPOT Spotify – I had bought more ahead of the Covid crash but I see them threatened by Web3 music businesses & Tidal/$SQ (see below).
$VOO Vanguard S&P500 – I felt the tech stocks who still had value left to lose were the big names like $AAPL Apple & $MSFT Microsoft. I reduced exposure directly in those names as well as reducing VOO itself.
And who are the losers that I used to like but now I’m just holding? Sad.
$LMND Lemonade – has a great service but the growth isn’t strong & they’re spending a lot of money. Hopefully they can turn it around.
$PTON Peloton – Basically the same rationale as Lemonade, plus the whole fiasco of firing the founder & many employees to try to get back on track. Sad & sadder.
$DKNG/$PENN – The market has turned against these names and it feels like the sports betting fever has worn off. It may end up being that the winner is whoever outlasts the others or has better retention.
$BABA/$JD/$NIO – I’m not selling these names but the market still doesn’t trust China stocks stocks & Alibaba’s growth has slowed down.
Here’s what I found interesting or notable over the past couple months in fintech & crypto.
SoFi is buying banking technology rails
SoFi has become a national bank already and this new acquisition means that $SOFI will be able to offer more banking products, faster, to their customers.
If you believe that there will be profit from being a true one-stop shop for mobile banking, lending & trading then this is a positive development.
Affirm is still looking good
Despite their stock price getting wrecked, $AFRM still has a bright future ahead of it. You can catch up on the latest earnings call result in this interview with CEO Max Levchin.
Crypto going mainstream
If you’re still a crypto skeptic then, well, you either need to go deeper and learn about the potential of the technology or unsubscribe. I can’t stop talking about it even if I tried.
All the stories below are just meant to show how much the narrative has changed over the past year. I expect we’re going to see even more of these stories as we get closer to the mid-term elections in the U.S. where every politician will be scrambling to get the money & votes that crypto can offer.
Colorado will begin accepting Bitcoin this summer
It’s mostly just a symbolic move as the state will convert the Bitcoin to dollars after you send it to them. But it is still a step in the right direction. And there’s a Bitcoin bill in Arizona to make it legal tender, which probably won’t pass but it is still interesting to see it getting so much support at the state level.
KPMG Canada is buying Bitcoin & Ethereum
KPMG is one of the “big four” accounting firms worldwide. They reported $32.13 Billion in revenue globally and have invested $5 billion in technology. While this news item is only about KPMG Canada, it is still significant as it shows just how seriously crypto is becoming for corporate balance sheets.
NFTs are also driving corporations to put crypto on the books
A related development is that more and more businesses are engaging companies such as Coinbase $COIN to help them utilize crypto in their business. Some of this increased demand is coming as companies are looking to utilize NFTs in their businesses and need crypto to do it.
Banks to offer crypto exchanges
The Singapore bank DBS is planning to launch retail crypto trading services by the end of 2022. This is a significant bank entering the space. Their market cap is ~$64.44 Billion. LFG. This also comes on the back of news that ~300 US banks will begin offering Bitcoin $BTC trading this year, according to the American Bankers Association.
Brokerage houses are getting into it as well
Charles Schwab $SCHW wants to offer crypto to their clients. And Fidelity is frequently writing about the important properties of Bitcoin $BTC as part of a diversified portfolio. Next stop 401k? Probably not anytime soon.
Tidal will stream bitcoin to artists
I completely missed this connection when $SQ Square initially announced that they were acquiring Tidal. At the time, the narrative was that Tidal could be a customer acquisition tool to get young people into the Cash app ecosystem.
But now that Jack Dorsey, CEO of Block, has gone all-in on Bitcoin, this could end up disrupting Spotify if they can get the best artists making the most money on their platform. (This is part of the reason I was buying $SQ & trimming Spotify $SPOT)
Social media adopting NFTs
Twitter $TWTR, almost immediately after Jack left, adopted Ethereum $ETH based NFTs and allowed users to link their profile photos to Opensea, the eBay of jpgs. This integration of NFTs to social media profiles is now spreading to Facebook and Instagram where you can also create & sell NFTs.
GameStop launching NFT marketplace
Everybody’s favorite short squeeze GameStop $GME is partnering with an Ethereum layer 2 scaling solution ImmutableX $IMX to build a marketplace for in-game assets. Think of it like an eBay for game items that players own & can resell.
Listen to this episode of the Bankless podcast where they discuss the partnership.
BTW, if you want to try out an NFT game, I've recently started playing Gods Unchained, also based on ImmutableX. It's a free-to-play collectible card game like Magic the Gathering or Hearthstone. As you play & win, you can earn NFT cards that you can resell to others.
Disney is hiring an NFT expert
Look out, the undisputed kind of IP, Disney $DIS, is coming to NFTs. They have an amazing historical library to pull from, of course, and a monster fan bases in the Marvel & Star Wars franchises. About time. I hope they execute it well.
Let's hope the next few months are better than January & February have been. Oof.
-B