Tyler here with this week’s Macro Musings.
As always, if you come across something cool during the week, shoot me an email at tyler@macro-ops.com and I’ll share it with the group.
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Q1 hedge fund letters, conference, scoops etc, Also read Lear Capital: Financial Products You Should Avoid?
Our June Macro Intelligence Report (MIR) is coming out this weekend! Find out what stocks Alex thinks will skyrocket in the final bull move of this record economical cycle by clicking here. We have a 60-day money-back guarantee, so there’s literally no risk for you to check out our favorite plays. Click here and scroll to the bottom of the page to sign up for the MIR.
Recent Articles/Videos —
India’s Big Boom — AK reviews the S-curve and why India along with commodities are the next huge secular trends.
Scared Trading — It’s the Billions season finale this Sunday! Get more of your Billions fix with AK as he analyzes Ben Kim’s timidness.
Articles I’m reading —
It’s not exactly an article, but this tweet storm from Naval Ravikant called, How to Get Rich (without getting lucky), was my favorite read of the week. It packs the punch of an entire MBA class in only a few hundred words. He discusses status games, thinking long term, utilizing leverage, and many more key concepts related to wealth generation. I highly recommend checking this out because there’s so much wisdom packed into so few words. Huge bang for your buck here.
As for conventional articles, this one caught my eye: How to make money in the art market: top collectors reveal their secrets.
I’ve always been fascinated by the art market because it’s 100% psychology driven, much like gold. There’s no cash flows attached, so traditional valuation anchors don’t exist. And the payoffs are distributed like venture capital. Most art sits in a warehouse and depreciates. But the winners 10x or more. It’s possible to get into the game for relatively low cost as well. You don’t have to buy something for 100 million. One of the collectors in the article started out in the 90s by buying pieces directly from artists for a few thousand bucks. Today those same pieces can be sold for seven figures.
Podcast I’m listening to —
One of the my go-to shows is How I Built This with Guy Raz. It’s an NPR podcast, so you can count on each episode delivering quality.
In this episode, Raz interviews Patrick and John Collison, two brothers from Ireland who founded the online payment processing company Stripe.
Stripe launched publicly in 2011, and in just 5 years both the brothers became self-made billionaires. Today the company is valued at 9 billion.
What stuck with me most was when Patrick Collison talked about how startups never feel easy even if they’re winning. There’s always an impetus to improve. He uses cycling to illustrate his point.
It never gets easier. You just go faster. And I used to kind of cycle quite a bit. And there’s a lot of sort of painful truth to that where as you cycle more, as you practice more, as you get fitter, as you get faster, as your form gets better, sure, you start cycling faster. Your times get better. But the experience of being on the bike never gets easier. The pain that you feel on the first bike ride, that’s the same pain that you’re going to feel on your 500th bike ride. You’ll just be going much faster on the 500th bike ride. And it kind of feels like that in a startup, where every day now the problems and challenges and, you know, visceral pain is just as acute as when we were starting out. The problem is just in a different form. It’s this kind of relentless process of trying to shift what it is that exists and what we’ve collectively managed to create so far into what we all set out to create in the first place. And we still have quite a ways to go there.
Chart I’m looking at —
For anyone trying to time the macro cycle, it’s useful to monitor loan delinquencies. Recessions don’t materialize until people stop paying their debt. Delinquencies are a telltale sign that liquidity has tightened and the short-term debt cycle has turned. I check this loan data about once a quarter.
As you can see, there’s nothing actionable here yet. The loan delinquency rate continues to downtrend and challenge all-time lows. Recession in the US is still a ways off.
Trade I’m looking at —
Marijuana has caught my interest again after I noticed the technical breakout in MJ, a new marijuana ETF.
The marijuana legalization theme has been on the market’s radar since 2014. And although the trend in these stocks has been higher, they have had crypto-like volatility. These names routinely rally 100% and then fall back another 50%.
The first time we wrote about weed was in the December 2016 issue of the MIR.
One of our picks, Aphria Inc. (APHQF) has climbed over 132% since! Sign up here to get our latest picks.
In that issue Alex quoted a Peter Thiel backed private equity firm which expressed their thoughts on how this theme plays out.
This will shake out similar to the alcohol industry or the soft drink industry, where economies of scale are very important… You want to have first-move advantage, and I think it will be aggregated to just a handful of companies.
I agree with this sentiment. A few companies will end up grabbing all the value. That’s why if you want to maximize your chances of getting paid, purchasing an ETF makes a lot of sense. If you take the index approach you maximize the chance of holding the winner at the end of the game.
There’s also a fresh catalyst underway in this space. The Canadian Senate is currently voting on the Cannabis Act, which if passed would legalize recreational marijuana. Canada will become the first large developed country in the world to have legalized adult-use marijuana. This would be a giant win for this “grey area” industry.
If you’ve been curious about the marijuana space, now may be the time to allocate some long-term capital as the rest of the developed nations around the world follow in Canada’s footsteps.
Quote I’m pondering —
…if you always put limits on what you can do, physical or anything else, it’ll spread over into the rest of your life. It’ll spread into your work, into your morality, into your entire being. ~ Bruce Lee
Achieving greatness begins with the belief that you can.
That’s it for this week’s Macro Musings.
If you’re not already, be sure to follow us on Twitter: @MacroOps and on Stocktwits: @MacroOps. Alex posts his mindless drivel there daily.
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Article by Alex, Macro Ops
