*Investing/Stocks - E-Sports*
My investing philosophy is very simple. I put my money in companies/industries that will be thriving 10 - 20 years from today.
This usually means technology and healthcare. Lately I've been looking into esports. The entire ecosystem is fascinating. You have the companies that produce the video games (EA, Activision etc). Companies that produce hardware/equipment (headphone, mouse etc). And even live streaming platforms that cater to the industry.
So. Many angles you can approach when it comes to investing.
I'm in the middle of my research, and looking to invest bigly in at least 1 company in this market in the coming months.
My takeaway from covid is the importance of discerning long term trends from temporary fads. For instance - pet food businesses (e.g. Chewy) are doing well now but I bet people who bought pets during lockdown will abandon them when the world reopens. (In the much longer term though, the pet industry will only grow as more people in the developed world will be living alone.)
What about gaming? It's the future. Shocking as it is to someone like me who has never played a video game in his life, two-thirds of Gen Z refer to gaming as their number one hobby. A quarter of top 20 Gen Z influencers are gamers. That's where the money lies.
Share more investing thoughts when I have time.
My investing philosophy is very simple. I put my money in companies/industries that will be thriving 10 - 20 years from today.
This usually means technology and healthcare. Lately I've been looking into esports. The entire ecosystem is fascinating. You have the companies that produce the video games (EA, Activision etc). Companies that produce hardware/equipment (headphone, mouse etc). And even live streaming platforms that cater to the industry.
So. Many angles you can approach when it comes to investing.
I'm in the middle of my research, and looking to invest bigly in at least 1 company in this market in the coming months.
My takeaway from covid is the importance of discerning long term trends from temporary fads. For instance - pet food businesses (e.g. Chewy) are doing well now but I bet people who bought pets during lockdown will abandon them when the world reopens. (In the much longer term though, the pet industry will only grow as more people in the developed world will be living alone.)
What about gaming? It's the future. Shocking as it is to someone like me who has never played a video game in his life, two-thirds of Gen Z refer to gaming as their number one hobby. A quarter of top 20 Gen Z influencers are gamers. That's where the money lies.
Share more investing thoughts when I have time.
*How much has Pfizer made from COVID?*
Pfizer is forecasting 26 billion dollars of revenue from selling its Covid-19 vaccine this year alone.
For context - that's almost the total they made from selling their most well-known product, Viagra, in the past 17 years COMBINED (~27 billion dollars in revenue from the sales of Viagra from 2003 to 2019)
Source: statista.com/statistics/264827/pfizers-worldwide-viagra-revenue-since-2003
No surprise Pfizer's stock is up 23% in the past 12 months.
But that's actually nothing compared to BioNTech which is up a whooping 323% over the same period.
Moderna (which has *never* been profitable in their company's history prior to covid) is up 205% as well.
Booster shots every year, anyone? 🤣🤣🤣
-----
Jokes aside - good on those who bet on the success of these companies when their vaccines were still in the development stage.
This covid boost is likely to be a one-off thing. When looking at businesses, I like to see if they produce reliable *recurring revenue*.
Tech companies like Netflix know this - that's why they sell subscriptions.
Similarly, pharma companies know that drugs that treat chronic/ongoing conditions (or consumed repeatedly, like Viagra) are the most profitable long-term.
Pfizer is forecasting 26 billion dollars of revenue from selling its Covid-19 vaccine this year alone.
For context - that's almost the total they made from selling their most well-known product, Viagra, in the past 17 years COMBINED (~27 billion dollars in revenue from the sales of Viagra from 2003 to 2019)
Source: statista.com/statistics/264827/pfizers-worldwide-viagra-revenue-since-2003
No surprise Pfizer's stock is up 23% in the past 12 months.
But that's actually nothing compared to BioNTech which is up a whooping 323% over the same period.
Moderna (which has *never* been profitable in their company's history prior to covid) is up 205% as well.
Booster shots every year, anyone? 🤣🤣🤣
-----
Jokes aside - good on those who bet on the success of these companies when their vaccines were still in the development stage.
This covid boost is likely to be a one-off thing. When looking at businesses, I like to see if they produce reliable *recurring revenue*.
Tech companies like Netflix know this - that's why they sell subscriptions.
Similarly, pharma companies know that drugs that treat chronic/ongoing conditions (or consumed repeatedly, like Viagra) are the most profitable long-term.
*Founders, CEOs, and Leaders*
One of the most important factors to me when picking stocks is looking at the leadership team of a company.
Having a solid founder/CEO is key. Often times, as a company gets bigger - the executives running the company are no longer the original founders. That's fine, as long as they have significant shares in the company (and thus have skin in the game).
I like solid leaders with proven track records. An example would be Dan Schulman who has been CEO at PayPal since 2015 (previously Virgin Mobile and American Express). Absolute world-class guy. When he took over, Visa/Mastercard were threatening to kill off PayPal. One of the first things Schulman did was to take the boss of Visa to dinner, and today all of them are... pals. Haha.
And then you have the extraordinary story of how Howard Schultz returned for his second stint as CEO in 2008 and saved Starbucks. (Apparently he studied Steve Jobs' turnaround to perform his own.)
Stable hands have their place, and often are underrated as the market perfers sexy/exciting/visionary young founders. Some of the young ones (like the Collison brothers of Stripe) are fantastic. But many who took a company from small start-up to a unicorn may not be the best people to lead it in the next stage.
Mark Zuckerberg is one of the rare guys who managed to transform from frat boy CEO to a powerful and seriousdictator leader.
Does age matter? Generally business leaders peak around their early 40s to mid 50s (Sundar Pichai of Google, Satya Nadella of Microsoft, Jack Dorsey of Square, and Forrest Li of Sea are all around that age range and at their peak now).
If a leader has self-awareness, he will step aside when he knows he no longer has the same drive (example: Jeff Bezos is stepping down at 57. Howard Schultz of Starbucks stepped aside in his early 60s. Dan Schulman and Tim Cook are actually in their 60s now and will be interesting to see how much longer they stay on.)
If the leader is someone in his 90s (there is a famous one out there in Omaha, ahem 🤔), at some point they can no longer keep up with new trends and will miss out on innovation/new tech.
Learn more about the people running the business. Then ask yourself: Does the top management have integrity? Are they competent? Any red flags? The litmus test would be: "If you were to put them in charge of your money, will you be comfortable sleeping at night?"
Final tip: If investing in China, be careful of leaders who are too charismatic/high profile. Eventually the communist party will come after them. 🤣
One of the most important factors to me when picking stocks is looking at the leadership team of a company.
Having a solid founder/CEO is key. Often times, as a company gets bigger - the executives running the company are no longer the original founders. That's fine, as long as they have significant shares in the company (and thus have skin in the game).
I like solid leaders with proven track records. An example would be Dan Schulman who has been CEO at PayPal since 2015 (previously Virgin Mobile and American Express). Absolute world-class guy. When he took over, Visa/Mastercard were threatening to kill off PayPal. One of the first things Schulman did was to take the boss of Visa to dinner, and today all of them are... pals. Haha.
And then you have the extraordinary story of how Howard Schultz returned for his second stint as CEO in 2008 and saved Starbucks. (Apparently he studied Steve Jobs' turnaround to perform his own.)
Stable hands have their place, and often are underrated as the market perfers sexy/exciting/visionary young founders. Some of the young ones (like the Collison brothers of Stripe) are fantastic. But many who took a company from small start-up to a unicorn may not be the best people to lead it in the next stage.
Mark Zuckerberg is one of the rare guys who managed to transform from frat boy CEO to a powerful and serious
Does age matter? Generally business leaders peak around their early 40s to mid 50s (Sundar Pichai of Google, Satya Nadella of Microsoft, Jack Dorsey of Square, and Forrest Li of Sea are all around that age range and at their peak now).
If a leader has self-awareness, he will step aside when he knows he no longer has the same drive (example: Jeff Bezos is stepping down at 57. Howard Schultz of Starbucks stepped aside in his early 60s. Dan Schulman and Tim Cook are actually in their 60s now and will be interesting to see how much longer they stay on.)
If the leader is someone in his 90s (there is a famous one out there in Omaha, ahem 🤔), at some point they can no longer keep up with new trends and will miss out on innovation/new tech.
Learn more about the people running the business. Then ask yourself: Does the top management have integrity? Are they competent? Any red flags? The litmus test would be: "If you were to put them in charge of your money, will you be comfortable sleeping at night?"
Final tip: If investing in China, be careful of leaders who are too charismatic/high profile. Eventually the communist party will come after them. 🤣
*First-Mover Advantage & Branding*
What do Bitcoin, Netflix, Amazon, and PayPal have in common?
Why do VISA/Mastercard still dominate as a duopoly until today?
Why is Viagra still more popular than other (arguably, better) alternatives such as Cialis?
Why is Tinder still the most popular "swipe app" for dating?
-----
The answer is first-mover advantage, which we shouldn't dismiss. Yes, there is one school of thought that says being second-mover is more advantageous as you learn from the mistakes of your predecessors (e.g. Google killed the older search engines, Facebook killed Myspace/Friendster).
Being a first-mover in an industry allows for massive name recognition and branding as a market leader. It literally embeds itself into society's lexicon (e.g. I Uber-ed to the mall today, and tonight I will be busy with Netflix-and-chill).
An example of a pioneer who really took advantage of their first-mover status, never got complacent, and never stopped building on their success & excellence is PayPal.
Despite an ever-increasing number of competitors (Google Pay, Apple Pay), if you look at many of the data points on market share, PayPal is actually expanding instead of conceding market share.
Side note: I'm very optimistic on their future (revenue growing 20-30% every year + CEO with big ambitions). In fact just as a thought experiment, if you force me to choose ONE stock to put all my money into (cannot diversify) and I'm not allowed to sell for the next 10 years, I'd probably go with PayPal over Google/Amazon/Tesla/Netflix/Facebook/Apple etc.
Many investors, however, prefer Jack Dorsey's Square - it's like the younger/sexier brother to PayPal - and tend to dismiss the older PayPal. (I actually like both, SQ/PYPL are two of my favourite stocks.)
Similarly in the crypto space, many people dismiss bitcoin because it is "old" and unsexy. Some people even make fun of BTC, calling it "boomer coin". Think about it - since BTC is the first ever crypto, by definition it will always be "old". So in 2021, BTC is old. But it was also considered "old" in 2020, 2019, or 2018 (relative to the tons of new coins coming out daily). So many people missed out because they thought it was already too old and too overpriced.
Sometimes the best bet is to stick with winners. I like winners and the leaders are the leaders for a reason.
What do Bitcoin, Netflix, Amazon, and PayPal have in common?
Why do VISA/Mastercard still dominate as a duopoly until today?
Why is Viagra still more popular than other (arguably, better) alternatives such as Cialis?
Why is Tinder still the most popular "swipe app" for dating?
-----
The answer is first-mover advantage, which we shouldn't dismiss. Yes, there is one school of thought that says being second-mover is more advantageous as you learn from the mistakes of your predecessors (e.g. Google killed the older search engines, Facebook killed Myspace/Friendster).
Being a first-mover in an industry allows for massive name recognition and branding as a market leader. It literally embeds itself into society's lexicon (e.g. I Uber-ed to the mall today, and tonight I will be busy with Netflix-and-chill).
An example of a pioneer who really took advantage of their first-mover status, never got complacent, and never stopped building on their success & excellence is PayPal.
Despite an ever-increasing number of competitors (Google Pay, Apple Pay), if you look at many of the data points on market share, PayPal is actually expanding instead of conceding market share.
Side note: I'm very optimistic on their future (revenue growing 20-30% every year + CEO with big ambitions). In fact just as a thought experiment, if you force me to choose ONE stock to put all my money into (cannot diversify) and I'm not allowed to sell for the next 10 years, I'd probably go with PayPal over Google/Amazon/Tesla/Netflix/Facebook/Apple etc.
Many investors, however, prefer Jack Dorsey's Square - it's like the younger/sexier brother to PayPal - and tend to dismiss the older PayPal. (I actually like both, SQ/PYPL are two of my favourite stocks.)
Similarly in the crypto space, many people dismiss bitcoin because it is "old" and unsexy. Some people even make fun of BTC, calling it "boomer coin". Think about it - since BTC is the first ever crypto, by definition it will always be "old". So in 2021, BTC is old. But it was also considered "old" in 2020, 2019, or 2018 (relative to the tons of new coins coming out daily). So many people missed out because they thought it was already too old and too overpriced.
Sometimes the best bet is to stick with winners. I like winners and the leaders are the leaders for a reason.
*Should you invest in the stock market now OR wait for a crash?*
"S&P 500 Hits New High"
It seems like these days we keep seeing headlines of the stock market making new peaks.
How does this affect us as long-term investors?
As they said, time in market is more important than timing the market. If I have money sitting around and I find an opportunity, I'd pour my money in.
The problem with people predicting crashes all the time is that obviously they will be right one day.
People were calling for a crash since 2016 - but what if you avoided putting your money in the stock market from 2016 onwards? You would have to wait till the March 2020 covid crash.
And even if you were a genius who could time the exact bottom - at the lowest point in March/April 2020, the prices were still higher than in 2016.
So my personal opinion is - no point waiting. Besides, if your money is in solid stocks/companies, there's no need to fret even in a crash since the good ones will always bounce back higher.
If you are consistently putting money into the market (e.g. fixed amount every month or fixed percentage of your income), and assuming you only invest in companies with bright long-term prospects, you will most likely come up tops in the end.
Remember - the only way the stock market stops making new highs is if human civilization stops improving and stops innovating. When that day arrives, we have bigger things to worry about.
From JP Morgan report about investing at all-time highs:
"If you invested in the S&P 500 on any random day since the start of 1988 and reinvested all dividends, your investment made money over the course of the next year 83% of the time. On average, your one year total return was +11.7%.
Now, what do those figures look like if we only consider investments on days when the S&P 500 closed at an all-time high? They’re actually better! Your investment made money over the course of the next year 88% of the time, and your average total return was
+14.6%."
Tune out the short term noise and don't try to time the market.
Finally, consider this - in today's environment, we don't have the luxury of *not* being invested. The wealthy elite have *most* their wealth in assets.
So with asset price inflation, you are getting poorer every year on a relative basis by not owning assets (wealth is a relative game, if you stay still while the rich are getting richer, you are actually falling behind without even knowing).
Next week we will talk about crypto-related stocks with proper recommendations/picks.
"S&P 500 Hits New High"
It seems like these days we keep seeing headlines of the stock market making new peaks.
How does this affect us as long-term investors?
As they said, time in market is more important than timing the market. If I have money sitting around and I find an opportunity, I'd pour my money in.
The problem with people predicting crashes all the time is that obviously they will be right one day.
People were calling for a crash since 2016 - but what if you avoided putting your money in the stock market from 2016 onwards? You would have to wait till the March 2020 covid crash.
And even if you were a genius who could time the exact bottom - at the lowest point in March/April 2020, the prices were still higher than in 2016.
So my personal opinion is - no point waiting. Besides, if your money is in solid stocks/companies, there's no need to fret even in a crash since the good ones will always bounce back higher.
If you are consistently putting money into the market (e.g. fixed amount every month or fixed percentage of your income), and assuming you only invest in companies with bright long-term prospects, you will most likely come up tops in the end.
Remember - the only way the stock market stops making new highs is if human civilization stops improving and stops innovating. When that day arrives, we have bigger things to worry about.
From JP Morgan report about investing at all-time highs:
"If you invested in the S&P 500 on any random day since the start of 1988 and reinvested all dividends, your investment made money over the course of the next year 83% of the time. On average, your one year total return was +11.7%.
Now, what do those figures look like if we only consider investments on days when the S&P 500 closed at an all-time high? They’re actually better! Your investment made money over the course of the next year 88% of the time, and your average total return was
+14.6%."
Tune out the short term noise and don't try to time the market.
Finally, consider this - in today's environment, we don't have the luxury of *not* being invested. The wealthy elite have *most* their wealth in assets.
So with asset price inflation, you are getting poorer every year on a relative basis by not owning assets (wealth is a relative game, if you stay still while the rich are getting richer, you are actually falling behind without even knowing).
Next week we will talk about crypto-related stocks with proper recommendations/picks.
*How to invest in Crypto without buying crypto*
There are many reasons to want exposure to crypto, without actually being involved in buying crypto itself.
Many people don't want to deal with the hassle of crypto. The solution, thus, is to buy crypto-related stocks.
Broadly speaking there are a few options for indirect exposure.
Crypto Mining Companies
✅Marathon Digital Holdings (MARA)
✅Riot Blockchain (RIOT)
✅HIVE Blockchain (HVBT)
These are companies that mine bitcoin. HIVE is smaller than the other two but I like that they also mine ether.
---
Crypto Hedge Funds/Brokers/Exchanges
✅Coinbase (COIN)
✅Galaxy Digital (GLXY)
✅Voyager Digital (VYGR)
Exchanges/brokers can be seen as the "picks and shovels" of a gold rush.
Meanwhile, there are also hedge funds trying to be the JP Morgan of crypto - companies that invest in up-and-coming blockchain start ups.
---
Companies That Own A Hell Lot Of Bitcoin
✅MicroStrategy (MSTR)
While some other companies like Tesla and Square hold bitcoin as well, currently only MicroStrategy own so much (relative to their company's market cap) that their share price is directly influenced by the price of bitcoin itself.
---
If you follow the recent news, many other crypto companies are going to go public this year (Circle, Bullish etc).
Example:
https://www.cnbc.com/2021/07/09/ex-nyse-president-tom-farleys-spac-to-merge-with-bullish-to-bring-planned-crypto-exchange-public.html
Unfortunately, many of these are blatant money grabs that aren't going to end well. Great example above. Bullish is literally a crypto exchange...... that doesn't exist. And they say it's worth $9 billion. It literally doesn't exist! All they have is a white paper/idea + a famous CEO and off they go to get listed. 🤣
---
Currently, my favourites are the mining companies - specifically MARA/RIOT/HVBT (there are many other mining stocks but these 3 are my picks). I believe they are well positioned to be wildly profitable in the coming years.
The important thing to be aware is that the mining stocks are outperforming bitcoin partly due to the absence of a US bitcoin ETF.
Hence, a large part of the demand is due to the treatment of these stocks as a pseudo-ETF.
US regulators will probably approve crypto ETFs *eventually*. So we have to monitor that development. Why? Just look at Gold. Since Gold ETFs came on the market in 2004, many gold mining companies have *underperformed* gold itself.
A lot also depends on how the miners adapt (competitive ones may use their profits to diversify business models beyond mining).
Word of caution, these mining stocks are very volatile and are high risk/high reward plays. Their market caps of between $1-3 billion classify them as mid-cap stocks, but to be honest they are almost like penny stocks in their price action. They tend to rise more than bitcoin when bitcoin rises, but any drops are also amplified. So be warned!
There are many reasons to want exposure to crypto, without actually being involved in buying crypto itself.
Many people don't want to deal with the hassle of crypto. The solution, thus, is to buy crypto-related stocks.
Broadly speaking there are a few options for indirect exposure.
Crypto Mining Companies
✅Marathon Digital Holdings (MARA)
✅Riot Blockchain (RIOT)
✅HIVE Blockchain (HVBT)
These are companies that mine bitcoin. HIVE is smaller than the other two but I like that they also mine ether.
---
Crypto Hedge Funds/Brokers/Exchanges
✅Coinbase (COIN)
✅Galaxy Digital (GLXY)
✅Voyager Digital (VYGR)
Exchanges/brokers can be seen as the "picks and shovels" of a gold rush.
Meanwhile, there are also hedge funds trying to be the JP Morgan of crypto - companies that invest in up-and-coming blockchain start ups.
---
Companies That Own A Hell Lot Of Bitcoin
✅MicroStrategy (MSTR)
While some other companies like Tesla and Square hold bitcoin as well, currently only MicroStrategy own so much (relative to their company's market cap) that their share price is directly influenced by the price of bitcoin itself.
---
If you follow the recent news, many other crypto companies are going to go public this year (Circle, Bullish etc).
Example:
https://www.cnbc.com/2021/07/09/ex-nyse-president-tom-farleys-spac-to-merge-with-bullish-to-bring-planned-crypto-exchange-public.html
Unfortunately, many of these are blatant money grabs that aren't going to end well. Great example above. Bullish is literally a crypto exchange...... that doesn't exist. And they say it's worth $9 billion. It literally doesn't exist! All they have is a white paper/idea + a famous CEO and off they go to get listed. 🤣
---
Currently, my favourites are the mining companies - specifically MARA/RIOT/HVBT (there are many other mining stocks but these 3 are my picks). I believe they are well positioned to be wildly profitable in the coming years.
The important thing to be aware is that the mining stocks are outperforming bitcoin partly due to the absence of a US bitcoin ETF.
Hence, a large part of the demand is due to the treatment of these stocks as a pseudo-ETF.
US regulators will probably approve crypto ETFs *eventually*. So we have to monitor that development. Why? Just look at Gold. Since Gold ETFs came on the market in 2004, many gold mining companies have *underperformed* gold itself.
A lot also depends on how the miners adapt (competitive ones may use their profits to diversify business models beyond mining).
Word of caution, these mining stocks are very volatile and are high risk/high reward plays. Their market caps of between $1-3 billion classify them as mid-cap stocks, but to be honest they are almost like penny stocks in their price action. They tend to rise more than bitcoin when bitcoin rises, but any drops are also amplified. So be warned!
*INFORMATION OVERLOAD*
CNBC says tech stocks are going to do badly this year.
Bloomberg says tech stocks are going to hit much higher this year.
Every "expert" has something to say, and often they all contradict.
Truth is, they all have an agenda. Individual investors like us only get more confused as we are bombarded by a deluge of information in today's internet age.
The hedge fund manager promoting a stock on Bloomberg? He probably just bought the stock himself and is using his 90 seconds on cable news to promote his own stock.
The expert on CNBC calling for a crash? He is probably shorting the market and using his 120 seconds on international TV to induce panic.
So... who do you trust?
The biggest problem we face in the 21st century is INFORMATION OVERLOAD.
The internet has levelled the playing field and democratized many things because now every individual from London to Dubai to Lagos can access the same trove of information at his fingertips.
Unfortunately we have limited time and cannot become an expert in every domain. Are you going to learn everything possible about the different types of covid vaccines before deciding which vaccine to go for? It's not practical to accomplish that in a short amount of time and be as knowledgeable as a scientist who spent decades of his life studying the same thing. Instead, we rely on trusted people to make decisions.
What does this mean? This means that...
The most important skill to master in the 21st century is honing your instinct for which subject matter experts to trust.
The truth is, many people made a lot of money investing in the right tech stocks or crypto... even if they know very little about fintech or blockchain. They just have the right advisors.
[Often, they also have a competitive advantage of some kind - this could be being good with numbers, being good at synthesizing information, or being good at reading people. BUT NOT ALL AT THE SAME TIME!]
Beyond that, it's a matter of cultivating the ability to find good mentors and advisors. Listen to the right people and you will profit. As an example - some IT illiterate "boomers" got rich buying bitcoin in 2013, not because they even understand what a blockchain is, but because they were in the right place at the right time (had someone close to them telling them about it early on).
This is easier said than done and you will probably try and fail many times before you succeed (e.g. listening to a fraud who told you to buy XYZ coin which was supposed to be the next bitcoin but ended up being a ponzi. This is common and even Mark Cuban recently fell for a crypto scam - you should read the story lol.)
---
Takeaways:
✅Know your competitive advantage.
✅Don't try to be an expert in everything.
✅Instead, find out what you excel at and exploit it.
✅Lastly, check the track record of your sources. Does the guy building the next big thing have a record of success (e.g. if Elon Musk or Jack Dorsey starts a new company, you can be sure it has a high chance of succeeding simply because they had many previous successes). Does the guy picking the next big stock have a track record of more hits than misses?
CNBC says tech stocks are going to do badly this year.
Bloomberg says tech stocks are going to hit much higher this year.
Every "expert" has something to say, and often they all contradict.
Truth is, they all have an agenda. Individual investors like us only get more confused as we are bombarded by a deluge of information in today's internet age.
The hedge fund manager promoting a stock on Bloomberg? He probably just bought the stock himself and is using his 90 seconds on cable news to promote his own stock.
The expert on CNBC calling for a crash? He is probably shorting the market and using his 120 seconds on international TV to induce panic.
So... who do you trust?
The biggest problem we face in the 21st century is INFORMATION OVERLOAD.
The internet has levelled the playing field and democratized many things because now every individual from London to Dubai to Lagos can access the same trove of information at his fingertips.
Unfortunately we have limited time and cannot become an expert in every domain. Are you going to learn everything possible about the different types of covid vaccines before deciding which vaccine to go for? It's not practical to accomplish that in a short amount of time and be as knowledgeable as a scientist who spent decades of his life studying the same thing. Instead, we rely on trusted people to make decisions.
What does this mean? This means that...
The most important skill to master in the 21st century is honing your instinct for which subject matter experts to trust.
The truth is, many people made a lot of money investing in the right tech stocks or crypto... even if they know very little about fintech or blockchain. They just have the right advisors.
[Often, they also have a competitive advantage of some kind - this could be being good with numbers, being good at synthesizing information, or being good at reading people. BUT NOT ALL AT THE SAME TIME!]
Beyond that, it's a matter of cultivating the ability to find good mentors and advisors. Listen to the right people and you will profit. As an example - some IT illiterate "boomers" got rich buying bitcoin in 2013, not because they even understand what a blockchain is, but because they were in the right place at the right time (had someone close to them telling them about it early on).
This is easier said than done and you will probably try and fail many times before you succeed (e.g. listening to a fraud who told you to buy XYZ coin which was supposed to be the next bitcoin but ended up being a ponzi. This is common and even Mark Cuban recently fell for a crypto scam - you should read the story lol.)
---
Takeaways:
✅Know your competitive advantage.
✅Don't try to be an expert in everything.
✅Instead, find out what you excel at and exploit it.
✅Lastly, check the track record of your sources. Does the guy building the next big thing have a record of success (e.g. if Elon Musk or Jack Dorsey starts a new company, you can be sure it has a high chance of succeeding simply because they had many previous successes). Does the guy picking the next big stock have a track record of more hits than misses?
*Diego's Approach to Risk*
My approach to risk is the exact opposite of what most people do.
Here is what normal people do:
- Being super risk-averse when their capital is still small.
- If they eventually get rich, they go crazy and take on unnecessary risks, only to lose everything and go back to being poor.
This is the Diego's way:
✅ Take on more risks when still trying to make it.
✅ Become more risk-averse after you've made it.
The rationale is simple. Before you have gotten rich, your capital is still very small (e.g. $1,000 or $10,000). That's not a life-changing amount. Yet, people are afraid of investing in higher risk assets such as tech stocks or crypto at that stage. Think about it - even if you go from $10,000 to $0, does it make a difference in the grand scheme of things? At most you will work an extra year to save up that 10k. So instead of retiring at 65, you now retire at 66. Big deal.
The normal person also go crazy if they somehow manage to get rich or made a *life-changing amount*. They take risky bets because they think they are geniuses and end up losing everything. That's the exact opposite of what you should do. After getting rich (e.g. a few million dollars in net worth), you want to become *more* cautious. Because you don't want to go back to being poor. Your goal should shift to preserving what you have made.
---
One way you can think about risk/reward is looking at market caps.
From least risky to most risky:
Level 1: Diversified Index Funds/ETFs, basically "buying the market" so your returns will be average i.e. mirror that of the S&P500 etc
Level 2: Large cap companies, which are quite big but still have 5-10X potential over the next decade (think those currently worth around 100BN)
Level 3: Small/Mid cap companies, getting into speculation territory, where you hope to be lucky enough to hit the jackpot and maybe get a 20-50X return with 1 of your picks (think those currently worth around 1BN)
An example of a Level 2 home run would be buying Apple 10 years ago [from 200BN to 2T].
An example of a Level 3 home run would be buying Netflix 10 years ago [from 4BN to 200BN].
In between levels 2 and 3 there is of course a wide range - I merely simplified it.
---
So if you look at my personal portfolio, you will find stocks of all 3 levels.
But that doesn't mean everyone should just copy my portfolio. For most people, I wouldn't recommend bothering with index funds until your portfolio grows large enough (say 6-figures). Unless you have an extreme low tolerance for risks and the type who would panic sell everything at a loss if you see your portfolio drop 10% overnight - then sure, go ahead and buy index funds for 50% of your portfolio for the stabilizing effect.
Personally, I only bother with index funds when my net worth crossed 7-figures but then I'm a young dude with huge risk appetite. Just remember - after you've made it, you don't want to lose everything and go back to square one.
Do the opposite of what normal people do.
Mainstream financial advice tells you "diversification is the way to get rich". TOTALLY WRONG! The accurate saying would be: "Diversification is the way to get rich IF you don't mind waiting 50 years to become a millionaire."
Almost every single person who got rich in a relatively short amount of time did it through *concentration*. Either 1 of the 2 scenarios below:
✅ They focused all their energy on building a business, which was then sold for millions of dollars. (Probably more common having your start-up acquired by a bigger company than going to get listed as a public company.)
✅ They made a regular income but invested all their savings into *a few* quality investments. (For many in the older generation, this was likely real estate. For today's nouveau riche, chances are they made it in stocks/crypto.)
Diversification is for you to *protect* your wealth AFTER you become rich.
My approach to risk is the exact opposite of what most people do.
Here is what normal people do:
- Being super risk-averse when their capital is still small.
- If they eventually get rich, they go crazy and take on unnecessary risks, only to lose everything and go back to being poor.
This is the Diego's way:
✅ Take on more risks when still trying to make it.
✅ Become more risk-averse after you've made it.
The rationale is simple. Before you have gotten rich, your capital is still very small (e.g. $1,000 or $10,000). That's not a life-changing amount. Yet, people are afraid of investing in higher risk assets such as tech stocks or crypto at that stage. Think about it - even if you go from $10,000 to $0, does it make a difference in the grand scheme of things? At most you will work an extra year to save up that 10k. So instead of retiring at 65, you now retire at 66. Big deal.
The normal person also go crazy if they somehow manage to get rich or made a *life-changing amount*. They take risky bets because they think they are geniuses and end up losing everything. That's the exact opposite of what you should do. After getting rich (e.g. a few million dollars in net worth), you want to become *more* cautious. Because you don't want to go back to being poor. Your goal should shift to preserving what you have made.
---
One way you can think about risk/reward is looking at market caps.
From least risky to most risky:
Level 1: Diversified Index Funds/ETFs, basically "buying the market" so your returns will be average i.e. mirror that of the S&P500 etc
Level 2: Large cap companies, which are quite big but still have 5-10X potential over the next decade (think those currently worth around 100BN)
Level 3: Small/Mid cap companies, getting into speculation territory, where you hope to be lucky enough to hit the jackpot and maybe get a 20-50X return with 1 of your picks (think those currently worth around 1BN)
An example of a Level 2 home run would be buying Apple 10 years ago [from 200BN to 2T].
An example of a Level 3 home run would be buying Netflix 10 years ago [from 4BN to 200BN].
In between levels 2 and 3 there is of course a wide range - I merely simplified it.
---
So if you look at my personal portfolio, you will find stocks of all 3 levels.
But that doesn't mean everyone should just copy my portfolio. For most people, I wouldn't recommend bothering with index funds until your portfolio grows large enough (say 6-figures). Unless you have an extreme low tolerance for risks and the type who would panic sell everything at a loss if you see your portfolio drop 10% overnight - then sure, go ahead and buy index funds for 50% of your portfolio for the stabilizing effect.
Personally, I only bother with index funds when my net worth crossed 7-figures but then I'm a young dude with huge risk appetite. Just remember - after you've made it, you don't want to lose everything and go back to square one.
Do the opposite of what normal people do.
Mainstream financial advice tells you "diversification is the way to get rich". TOTALLY WRONG! The accurate saying would be: "Diversification is the way to get rich IF you don't mind waiting 50 years to become a millionaire."
Almost every single person who got rich in a relatively short amount of time did it through *concentration*. Either 1 of the 2 scenarios below:
✅ They focused all their energy on building a business, which was then sold for millions of dollars. (Probably more common having your start-up acquired by a bigger company than going to get listed as a public company.)
✅ They made a regular income but invested all their savings into *a few* quality investments. (For many in the older generation, this was likely real estate. For today's nouveau riche, chances are they made it in stocks/crypto.)
Diversification is for you to *protect* your wealth AFTER you become rich.
*Short-term speculative trade*
Novavax (NASDAQ: NVAX) fell 19.6% on Friday due to a delay in seeking US authorization for their covid vaccine.
Great time to buy and I'm going to do just that next week.
This is purely a short-term play as the company's fundementals are questionable (if you look at their track record of not accomplishing anything, I think they might even have trouble spelling the word 'vaccine' without making a mistake).
The good news is that you can profit from NVAX even if they don't actually accomplish anything. As an example, I actually bought in a week ago in anticipation of some kind of positive news. Sold the stock when it went up over 20% after they announced the EU deal. There are questions on whether they can actually deliver on the 200 million doses the EU purchased. 🤣
And then just a day later came the US delay and it's back down. Gonna buy in again.
We are expecting the next positive catalyst to be news of Novavax finally seeking US authorization (hopefully by year end) and we can flip the stock again for another quick profit.
*Note that risk for such a trade is on the higher side*
Current Price: $189.89
Novavax (NASDAQ: NVAX) fell 19.6% on Friday due to a delay in seeking US authorization for their covid vaccine.
Great time to buy and I'm going to do just that next week.
This is purely a short-term play as the company's fundementals are questionable (if you look at their track record of not accomplishing anything, I think they might even have trouble spelling the word 'vaccine' without making a mistake).
The good news is that you can profit from NVAX even if they don't actually accomplish anything. As an example, I actually bought in a week ago in anticipation of some kind of positive news. Sold the stock when it went up over 20% after they announced the EU deal. There are questions on whether they can actually deliver on the 200 million doses the EU purchased. 🤣
And then just a day later came the US delay and it's back down. Gonna buy in again.
We are expecting the next positive catalyst to be news of Novavax finally seeking US authorization (hopefully by year end) and we can flip the stock again for another quick profit.
*Note that risk for such a trade is on the higher side*
Current Price: $189.89
Update:
Still holding.
Novavax recently announced some new hires to their management team that look promising. Will keep a close eye on this stock. If they can turn things around, the price now is still very undervalued (forward price to sales ratio).
At 16B market cap now, can they do a 2.5X and be valued at 40B? I think so. (Moderna is at 150B now)
Still holding.
Novavax recently announced some new hires to their management team that look promising. Will keep a close eye on this stock. If they can turn things around, the price now is still very undervalued (forward price to sales ratio).
At 16B market cap now, can they do a 2.5X and be valued at 40B? I think so. (Moderna is at 150B now)
*RE-BALANCING*
In the midst of rebalancing my investments. Hence, the higher than usual amount of cash in my bank account temporarily. Usually Diego is poor man: ain't got no money, no baby 🤣
My advice is to strike a balance. You want a good amount of cash in the bank, ready to take advantage of any good opportunity that may suddenly come up. But yet, not too much cash sitting around being useless bums.
Talking about rebalancing, doing some reorganization to our crypto program. Will be transformed into the world's first stocks & crypto picks program - with more accessible/lower pricing.
Doing up a blog post explaining exactly what is our recommended allocation to stocks/crypto respectively. As well as where short term bets (such as the NVAX call we issued earlier this month) fit in...
DETAILS OUT IN SEPTEMBER.
In the midst of rebalancing my investments. Hence, the higher than usual amount of cash in my bank account temporarily. Usually Diego is poor man: ain't got no money, no baby 🤣
My advice is to strike a balance. You want a good amount of cash in the bank, ready to take advantage of any good opportunity that may suddenly come up. But yet, not too much cash sitting around being useless bums.
Talking about rebalancing, doing some reorganization to our crypto program. Will be transformed into the world's first stocks & crypto picks program - with more accessible/lower pricing.
Doing up a blog post explaining exactly what is our recommended allocation to stocks/crypto respectively. As well as where short term bets (such as the NVAX call we issued earlier this month) fit in...
DETAILS OUT IN SEPTEMBER.
Elite Investing Club by Diego pinned «*Short-term speculative trade* Novavax (NASDAQ: NVAX) fell 19.6% on Friday due to a delay in seeking US authorization for their covid vaccine. Great time to buy and I'm going to do just that next week. This is purely a short-term play as the company's fundementals…»
RESOURCES⬇️
How to join EIC:
https://jkdgo.com/join-team-diego (scroll down)
If you are NEW, read first:
https://jkdgo.com/elite-investing-club
-----
Our other channel:
https://t.me/teamdiego
How to join EIC:
https://jkdgo.com/join-team-diego (scroll down)
If you are NEW, read first:
https://jkdgo.com/elite-investing-club
-----
Our other channel:
https://t.me/teamdiego
Our long-awaited Elite Investing Club has finally reopened its doors...
https://jkdgo.com/elite-investing-club
Get in now with our promotional launch for first 50 sign ups.
Fun fact: If you put just $1,000 into our free Novavax pick last month, your profits already cover the joining fee for the next one year.
Will never do it at this price ever again (those who are long time members of my other programs know this).
Have fun and Stay Elite!
https://jkdgo.com/elite-investing-club
Get in now with our promotional launch for first 50 sign ups.
Fun fact: If you put just $1,000 into our free Novavax pick last month, your profits already cover the joining fee for the next one year.
Will never do it at this price ever again (those who are long time members of my other programs know this).
Have fun and Stay Elite!
Elite Investing Club by Diego pinned «RESOURCES⬇️ How to join EIC: https://jkdgo.com/join-team-diego (scroll down) If you are NEW, read first: https://jkdgo.com/elite-investing-club ----- Our other channel: https://t.me/teamdiego»
A couple interesting readings below that we've come across lately.
These are more "macro" stuff.
-----
ESG as source of inflation ⬇️
https://am.vontobel.com/en/insights/esg-is-inflationary
---
Effect of energy transition on commodities ⬇️
https://www.woodmac.com/press-releases/next-commodities-supercycle-will-be-driven-by-global-energy-transition
These are more "macro" stuff.
-----
ESG as source of inflation ⬇️
https://am.vontobel.com/en/insights/esg-is-inflationary
---
Effect of energy transition on commodities ⬇️
https://www.woodmac.com/press-releases/next-commodities-supercycle-will-be-driven-by-global-energy-transition
*Updates on our free pick and EIC subscription*
Slots for our promotional launch are almost 50% filled.
Annual fee to join will go up to 350 USD once they are filled.
$NVAX went up as much as 40% to $270 since we first posted the buy signal here at $190 (it has corrected back down and currently fluctuating between $200-$250, which we feel is fair value given there has been no major development yet).
So far we have heard minor positive news coming out of Japan (regarding vaccine purchase) and New Zealand (discussions about being used as booster). All these are extremely minor news compared to the big ones we are expecting - filing for authorization in the UK/EU/USA. Now imagine how high NVAX could go...
How are we confident of Novavax if they haven't launched a commercial product in their 34 years of existence? It's a calculated bet based on signs we have seen. US regulator has said trial participants of Novavax's vaccine can be considered as fully vaccinated. Booster trial in the UK has selected Novavax's vaccine as one of 3 final candidates for booster shots (they started with 7 candidates and narrowed down to 3).
If in the end we realize they are taking everyone for a ride, this will be a more epic story than Elizabeth Holmes.
We feel it's just a matter of time before they deliver.
Of course, besides vaccine stocks you can also bet on other areas - e.g. diagnostic companies (makers of covid test kits). There are many other areas you can think of and we have already looked into them.
But we only want to recommend stocks/crypto that we are confident enough to PUT OUR OWN MONEY IN. As you saw from my previous posts - unlike armchair commentators on the sometimes-real-often-fake news, I have full skin in the game (went in with a multiple 6-figure sum on $NVAX).
Quality over quantity - so instead of charging $2,000 annual fee and giving you 100 bullshit picks, I prefer our approach.
To be first to find out when Diego sells his NVAX, as well as get hold of his long-term picks --- join our exclusive club ⬇️
https://jkdgo.com/elite-investing-club
Slots for our promotional launch are almost 50% filled.
Annual fee to join will go up to 350 USD once they are filled.
$NVAX went up as much as 40% to $270 since we first posted the buy signal here at $190 (it has corrected back down and currently fluctuating between $200-$250, which we feel is fair value given there has been no major development yet).
So far we have heard minor positive news coming out of Japan (regarding vaccine purchase) and New Zealand (discussions about being used as booster). All these are extremely minor news compared to the big ones we are expecting - filing for authorization in the UK/EU/USA. Now imagine how high NVAX could go...
How are we confident of Novavax if they haven't launched a commercial product in their 34 years of existence? It's a calculated bet based on signs we have seen. US regulator has said trial participants of Novavax's vaccine can be considered as fully vaccinated. Booster trial in the UK has selected Novavax's vaccine as one of 3 final candidates for booster shots (they started with 7 candidates and narrowed down to 3).
If in the end we realize they are taking everyone for a ride, this will be a more epic story than Elizabeth Holmes.
We feel it's just a matter of time before they deliver.
Of course, besides vaccine stocks you can also bet on other areas - e.g. diagnostic companies (makers of covid test kits). There are many other areas you can think of and we have already looked into them.
But we only want to recommend stocks/crypto that we are confident enough to PUT OUR OWN MONEY IN. As you saw from my previous posts - unlike armchair commentators on the sometimes-real-often-fake news, I have full skin in the game (went in with a multiple 6-figure sum on $NVAX).
Quality over quantity - so instead of charging $2,000 annual fee and giving you 100 bullshit picks, I prefer our approach.
To be first to find out when Diego sells his NVAX, as well as get hold of his long-term picks --- join our exclusive club ⬇️
https://jkdgo.com/elite-investing-club
EIC returns
(Sep to Nov 2021)
Elite Starter Pack (ESP)
⚀Stocks in our Elite Starter Pack have seen a return of -6.6% on average
⚃Crypto in our Elite Starter Pack have seen a return of +35% on average
Monthly Top Picks
⚀Sep's Picks have seen a return of -11.4% on average
⚃Oct's Picks have seen a return of +10.9% on average
-----
Join EIC:
https://jkdgo.com/join-team-diego (scroll down to second item)
Program Info:
https://jkdgo.com/elite-investing-club
(Sep to Nov 2021)
Elite Starter Pack (ESP)
⚀Stocks in our Elite Starter Pack have seen a return of -6.6% on average
⚃Crypto in our Elite Starter Pack have seen a return of +35% on average
Monthly Top Picks
⚀Sep's Picks have seen a return of -11.4% on average
⚃Oct's Picks have seen a return of +10.9% on average
-----
Join EIC:
https://jkdgo.com/join-team-diego (scroll down to second item)
Program Info:
https://jkdgo.com/elite-investing-club