Sometimes we need a reminder… that technology is king. Betting on an idea, a jockey, a story, or somebody’s ego can be disastrous.
- It’s different this time as some of the biggest personalities (SBF, C. Zhao, and the Winklevoss twins) are either (a) going to jail, or (b) following the Adam Neumann (WeWork) career path. Their 15 minutes are history.
- With all crypto’s ugliness and bad news, the technology companies supporting digital assets are approaching multi-year highs.
- Same Shirt – Different Day. When science and math face off against greed and self-promotion – science and math always win.
If you’re trying to reduce risk and DIY’ing it… do the hard part first. That way, if you fail – you will have minimized your time and effort. But if you’re looking for buy-in and commitment from others … do the easy parts first and the hard part last. People love early wins, increased status, and the momentum that comes from success.
Price does NOT have to be a constant race to the bottom. Everybody’s heard about another company’s low-price costing someone a big sales opportunity. Per Seth G: In one camp, sales people are out sharpening their pencils – in hopes of winning the price race to the bottom. In the other camp, sales people are finding the customer’s pain, and reshaping their offering to be a ‘pain-killer’ rather than the lowest cost alternative. Customers will spend more for a better, safer, higher status, and more reliable product / service. Now, you won’t have the time to put the ‘pain killer’ level of effort into every prospect; therefore, you need to say ‘NO’ to the price shoppers – and send those prospects to your previous competition.
The Market:
The investing world is mourning the loss of Charlie Munger… who passed away at age 99. A couple of Charlie’s best investing quotes:
- “Show me the incentives, and I will show you the outcome.”
- “The big money is in the HOLDING … not in the buying or selling.”
- “People calculate too much, and think too little.”
- “A majority of life’s errors are caused by forgetting what you’re really trying to do.”
- “I constantly see people rise who are not the smartest, not the most diligent, but they are learning machines. They go to bed every night a little wiser than when they got up.”
Total US debt hit a record of ~$34T last week… after we hit a record $33T in debt just 60 days ago. That seems unsustainable to me.
Per JC Parets: “The stocks that lead in bull markets are leading once again: Technology, Consumer discretionary, and Industrials. In bull markets, the most defensive areas tend to underperform, and that is holding true with Utilities and Consumer Staples having a hard time keeping up. In past bull markets, Tech has outperformed in virtually every one of them.”
InfoBits:
- Amazon tops UPS and FedEx as the biggest delivery business in the US. A decade ago, Amazon’s competitors doubted its ability to dominate the delivery industry. Amazon doubled down on its in-house logistics approach, operating scores of warehouses, and managing nearly 280,000 delivery drivers worldwide. By not having to rely solely on any other carrier, Amazon’s ability to control the speed of its deliveries is its biggest strength.
- ~80% of Black Friday weekend purchases… came from mobile users.
- ~10% of all U.S. credit accounts are in a ‘persistent debt’ category… where people are paying more in interest and fees each month than principal (going forever deeper in debt).
- European startups will raise 50% LESS money this year… than last.
- Over half (53%) of all new phones purchased in Q3… were iPhones. Global smartphone shipments are set to decline -5% in 2023.
- The avg. American believes that $1.2m will buy you financial happiness.
- Obese patients on Eli Lilly’s Mounjaro… are likely to lose more weight than those on Novo Nordisk’s Ozempic.
- Despite the shopping spree… reports show holiday shoppers still have about half of their holiday shopping left; however, those shoppers will wait for bargains before pulling the trigger.
- Sticker Shock == Tesla’s new steel Cybertruck… because the basic model = $61,000 and the fully loaded Cyberbeast = $100,000. That’s up from $40,000 that Musk promised in 2019.
- OpenAI is giving employees a month to decide… whether they want to sell their shares at an $86B company valuation.
Crypto-Bytes:
- Crypto equities are outperforming Bitcoin by 2X:
o Coinbase (COIN): +263% YTD
o Riot Platforms (RIOT): +274% YTD, and
o Marathon Digital (MARA): +260% YTD.
- The crypto market is up +83% YTD… while BTC is up +127% and ETH +70%.
TW3 (That Was - The Week - That Was):
Friday: Thursday’s massive late day buy program sent prices to the best levels of November, and ended one of the best months for the index in a long time.
- The S&P 500 is ~6% away from its all-time high, the Dow hit a fresh 52-week high, and the Nasdaq posted its best monthly return (11%) since July 2022 – rising 46% in 2023.
- Sentiment is strong, bulls have been in control, and there remains no fear as ~49% of traders are bullish – which is the highest reading since the summer. Bearish sentiment sank to ~20% - the lowest since June 2021. Both of those are usually contra indicators.
- The Volatility Index (VIX) touched its 2nd lowest level YTD.
- Interest rate hikes are over according to FED Fund futures, which has caused bond yields to fall a whopping -52 bps in November.
- In November, stocks enjoyed a broad rally with 10 of the 11 S&P 500 sectors finishing higher. Only energy finished November lower.
- Unfortunately, this is not natural. We just had the biggest monthly decline in the 10-Yr. Yield since the Great Financial Crisis of 2008 – that’s not normal. When our Treasury is printing this much money this fast, there’s no telling when this madness will end.
- There is a seasonality to funds distributing cash – which often leads to a market draw down. That distribution should still play out, but behind the curtain remain our Treasury and FED.
AMA (Ask Me Anything…)
Who is buying our bonds? Stablecoin issuers are buying US treasuries by the bucketful. They have become the 16th largest holder of treasuries. Other nations (with fiat currencies) have declining interest in our bonds and our dollar. This is a true digital disruption that is misunderstood by most market participants. The future bond buyers are in fact fiat stablecoin issuers. There is a reasonable chance that within the next decade, stablecoin issuers will become the single largest holder of U.S. treasuries in the world. That statement would have been impossible to predict just 5 years ago. Disruption happens fast, and Bill Gates said it best: “We overestimate what we can accomplish in 1 year, but underestimate what we can accomplish in 10.”
Next Week: A Divergence in The Force…
- December historically… tends to be a good month in markets.
o Presidential election years (2024) have also been good.
o Stock markets never predict or price-in recessions.
o Investors are piling into cash, digital cash, and bonds – all the while dumping equities.
- Financials (and not the Mag 7) are holding the S&P together: Both Google and Meta finished the week ~2 standard deviations lower than their expected moves – which is cause for concern. Financials (on the other hand) moved 1.5 standard deviations higher last week, and phenomenally higher during the month of November. All the while, the yield on the 10-Year Note continues to fall. Tip #1: I thought financials only loved rising rate environments… go figure?
- The FED Fund Futures are laughable… as they are pricing in a ~66% chance of a FED rate cut by March – completely ignoring the FED’s ‘higher for longer’ mantra. And if you look toward May, 2024, the market believes that our FED has a 91% chance of cutting rates by 50bps. Tip #2: If any of that comes true, the degree of ‘recession’ required to push through those cuts – would go completely against 50 years of history and logic. When will markets realize that?
- Positioning in a one-sided market (always moving higher)… is very difficult because a Call-Spread is priced ~20% higher than the corresponding Put-Spread – effectively zeroing out any anticipated gains. Look at Boeing (BA), 4 out of the last 5 weeks it has moved higher by ~2 standard deviations per week. That’s is statistically impossible and certainly not tradeable.
- Traders do NOT trust this Market’s Future… and because of that: Tip #3: are buying inexpensive, $10 wide Call Spreads on the VIX out into January 2024 for 85 cents.
- SPX Expected Move (EM):
o Last Week = $46 (5-days) … and we stayed inside the EM.
o Next Week = $57 (5-days)
TIPS:
I love gold and silver, but also realize that they've been artificially suppressed for years. Recently Gold closed out the month above $2,000 / ounce, and although Silver is nowhere near its highs – it also has done quite well. Which begs the question: ‘Are they finally going to be given some room to run?’ Unfortunately, my pessimistic side taps me on the shoulder and says: “We’ve seen this movie before.” But, this time could be different:
1. The longer time goes on, the more ‘precious and rare’ silver ‘n gold become. The current stance on climate change requires an increased use of solar energy by +300% - which means a lot more demand for silver (as it is a main component in a solar panel).
2. I tend to believe that enough of the world has lived through fiat currency depreciation enough to want their money backed by something that has stood the test of time. That explains why so many countries have been buying gold. Unlike our treasury that may default on its debt, gold just kinda sits there. It has zero counter-party risk. It doesn't owe debts and/or derivatives. Gold just hangs out, and has the value placed on it by the currency that buys it.
3. Remember, NO fiat currency has ever lasted forever – as all have gone to zero. Gold ‘n Silver have never been worth nothing, and that says something. Listen to something.
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $2090/oz. & Silver @ $25.9/oz.
- 13-Week Treasuries @ 5.3%
- **Bitcoin (BTC = $39,300 / in at $4,310)
- **Ethereum (ETH = $2,110 / in at $310)
- **ChainLink (LINK = $14.90 / in at $7.78)
- AAPL – Apple = ($191 / in at $181)
- CCJ – Uranium = ($45.4 / in at $33.8)
- COIN – Coinbase = ($134 / in at $125)
- MARA – Marathon Digital = ($13.7 / in at $12)
- RIOT – Riot Platforms = ($13.8 / in at $12.5)
- UEC – Uranium Energy Corp ($6.5 / in at $4.8)
- XLK – Technology ETF ($186 / in at $183)
Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
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