When I look at the way retail investors are interfacing with both stocks and crypto, it's become clear to me that new investors interface with very little besides volatility and narrative. Also, the ability to add marginal value to user's experience with assets that they own could have outsized effects on capital markets.
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Hey! So all the talk of a rise in the price of NFT’s and collectibles reminded me of a game I played all through high school and for periods after college - Magic: The Gathering. While financial assets have gone up, a select group of rare MTG cards have also seen an equally dramatic price increase in the last 12 months. I’ve noticed a small RV contingent might already be aware of it. Lynn Alden and @Travis Kimmel, I’m looking at you!
I sat down with a friend and investor, Alex Foffonoff to talk about the thriving secondary market in MTG cards, how he approaches investing in the space, and the causes for their post-March spike in value.
This was such a good reminder that you don’t have to own equities in this market to find some alpha (or beta, or revised… get it?). Sometimes the best thing is to invest in what you know.
And because we love charts, below are some charts tracking the price of 3 cards on the ‘reserve list’ that we talk about in the video.
Fellow exchangers, what is an alternative or niche market you are seeing opportunity in? The weirder the better please.
I've been thinking a lot about the disaster narratives that are ever-present in markets these days, how they effect me, and what I'm trying to do to keep a clear head.
In 1987 a young Paul Tudor Jones allowed a PBS documentary crew to follow him around during one of the most pivotal years of his career. What they made is revealing and fascinating peek into the life of one of the most incredible investors in history.
HOWEVER Jones ended up hating how he came off in the doc and has since done everything in his power to bury it. Anyways, here it is, buried in some anonymous hero's vimeo account.
First and foremost, this is a great doc. And if any of you are also interested in investing, you might really dig it. Goes great with a glass of scotch at the end of a quadruple witching day ;)
Is there any precedent for the SEC stepping in to tap the brakes on what's happening in the options market with GME? I know in the past the CFTC has stopped market manipulation in the commodities markets, but since GameStop futures don't really effect our nations grain supply I don't know if there's a framework or political appetite. Seems like something this blatant is asking for someone to do something, but maybe it's just another example of an efficient market.
I have a bit of a running theory right now that the Republicans are setting up a Biden led-economy to absolutely tank in the next month or two (and onward), so l wrote it down and figure I’d let the internet yell at me about it. Here we go:
I’m going to start big and we’ll get where we’re going in due time. First of all, take a look at this chart of Covid cases in Canada after their Thanksgiving celebrations in Mid October. I don't see us dodging this bullet.
The data would suggest that what’s already a bad surge is about to get much worse when families return home and cough over the turkey together. With or without government shut downs it’s effecting behavior. Mobility trends are rolling over quite aggressively. Type in "New Mexico, United States” to see how lock downs are keeping people home, but also in place like "South Carolina, United States” where they’re headed down despite lockdowns. People are modifying their behavior either way.
Try it here:
So I think it can be expected that whether or not there are lockdowns, people will probably stop going out and shopping, or eating in restaurants at the exact time that most businesses are hoping is their last chance to make money this year. This, coupled with the fact that the ban on evictions ends December 31st, and that mortgage forbearance, with an extension will end for most people in February or March (add 12 months to this chart) doesn’t look good for an improving economy.
Anecdotally, I recently did an interview with a business owner who talked about all the debt he’s had to take on to weather this pandemic (I work in media and, believe me, I already hate myself more than you ever could so please hold your judgement). He told me he’s going to be servicing that debt for years. Something tells me a lot of businesses will do the same which does not bode well for hiring back employees, buying new equipment or investing in growth (i.e. re-inflation).
Meanwhile it looks like the Republicans are doing everything possible to pull liquidity out of the market. Mnuchin’s move this week feels pretty obvious. It’s not like the Treasury actually needs the money back or can spend it (it is earmarked as deficit neutral), but they’re weakening the backstops so any shock the the system requires Biden to go to Congress for help, where Republicans have the upper hand.
This is right out the the 2008 playbook, where Mitch McConnell and the republicans stood in the way of more relief after the initial bailout and rallied their base around the Tea Party Movement in the midterms 2 years later. You‘re already hearing republicans test these talking points.
They’re going to kill Biden on slow growth and a weak economy until 2022 where they can hopefully take back the house. The exact same people who are doing this now did this under Obama.
The oncoming crisis in small businesses, household debt (mortgages, student loans, auto loans) and eventually municipal debt seems to be getting more dire and I think may hit an inflection point with another Covid shut down exactly when the Trump administration is incentivized to do nothing and hand off a disaster to Biden. You can hear the right wing talking points as Biden tries to bail out cities who are going bankrupt. Anyone who was in and out of Detroit in 2011 and 2012 can attest to whether or not you think there should be a bail out, this get’s really ugly really fast.
So anyways, I know everyone’s pumped about the vaccine, but it seems to me like the tail risk of the current wave of COVID and the complete lack of a backstop is pretty huge. I keep hearing that they think we’re going to get a stimulus bill after the inauguration and I just don’t see any evidence that Mitch McConnell will let that happen.
There's actually some historical precedent for this looking farther back. When Grover Cleveland beat Harrison in 1892 contentious house and senate made an already bad depression even worse, blamed it on the Democrats and the Republicans won back control the next year. The Democrats didn't control of either house again until 1910. It's not a perfect analogy, but its happened before.
So, with Congress unwilling to do anything, fiscal policy responses are pretty much off the table in any meaningful way. That means the only significant tool a desperate Biden administration is going to have will be monetary policy, so while 6 months ago I didn’t think it was likely we’d see yield curve control I think it’s very possible in 2021 or 2022. Short of negative interest rates, I’m not sure what other options are on the table when we start missing inflation and employment targets.
Anyways this has been on my mind this week as we’ve already started talking about a re-opening rotation and the prospects for a great economy in 2021. Politics aside, we can discuss what should happen, but I currently think this will happen. I think financial journalists especially don’t seem to understand that one of the actors in this game is highly incentivized for Biden's economy to do poorly for the next 2 years. What that looks like, I don’t know, but it’s not as rosy as many think, in my humble opinion.