227 days since a 5% pullback

Quick Hits from GRIT

Happy Friday Everyone 👋

Did you catch Genevieve talking about BUYING THE DIP on Fox Business this week? Keep reading to find out what she said and watch the full video!

SIX things you need to know this week in 60 seconds.

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Hyperledger & Ethereum just got put on notice. A big increase in large blocks being routinely processed has catapulted TAAL onto the blockchain mainstage. BSV now producing more transactions per day than Ethereum and BTC ! They just reported Q2 revenues of $6.7M (almost 7x quarter-to-quarter), and they’re expecting to exceed results again in this quarter*! Transactions per day: Bitcoin SV: 2.3M Ethereum: 1.25M BTC: 264K BCH: 84K, ADA: 75K
*as of 4pm ET, 9/16/21
1. MACRO

Score 1 for Team Transitory

Team Transitory scored a point this week with CPI data showing inflation has taken its foot off the accelerator.

Prices rose 0.3% in August, slower than the 0.5% increase in July. The easing was thanks in large part to drops in auto, hotel, and airline prices.

Things on the way up? Food prices.

In the U.S. they increased 0.4% in August, and globally they are at their highest since the ’70s due to bottlenecks, ridiculous shipping costs, labor shortages, you name it.

But — is food getting pricier, or is the US dollar losing its purchasing power? If you measure the cost of food priced in gold, for example, then food prices haven’t been this low in a very long time!

GRIT’S TAKE: According to the Federal Reserve Bank of New York, consumers worry that inflation will persist at 4% over the next 3 years. On the other hand, 69% of investors surveyed by BofA believe inflation is transitory.

GRIT’S ACTION: The average interest rate for a savings accounts at a bank right now is 0.06% (eye roll). Protecting myself. BUYING STOCKS!

2. DEALS & IPOs

The most valuable startup in the U.S. is finally going public

Stripe is 11-years old and was first declared a unicorn back in 2014. Now, all grown up as one of the biggest startups in the world, they’ve got plans to go public as early as next year. Whether it will be via direct listing or IPO remains TBD.

Back in March, the digital payments company was valued at $95B, but recent insider trading has been considerably more generous, suggesting the uber-unicorn is worth north of $150B.

Similar to Square and Paypal, Stripe is an online payment processor — will it be able to compete?

GRIT’S TAKE: For reference, Square has a market cap of $116B with LTM revenue of $15.9B. Paypal’s LTM revenue is $23.8B with a $333B market cap. Last year, Stripe’s revenue increased 70% to $7.4B.

GRIT’S ACTION:

3. STOCK MARKET

Buy the dip? LOL, next question

September is, on average, the poorest performing month for the stock market. Naturally, after a couple of less-than-stellar weeks, the doomsday chatter is back.

And it’s true — it’s been 227 days since we experienced a 5% pullback. So, the question is: will you be buying the dip? Here are some numbers to consider before you answer.

  • Average recovery time for stock market declines:

    • 5-10% = 1 month

    • 10-20% = 4 months

    • 20-40% = 15 months

    • Over 40% = 58 months

  • The wealthiest 10% own about 85% of stocks in the US, and they aren’t selling. Where else are they going to find the same returns? Crypto isn’t that mainstream yet!

  • The time horizon for Millennials and Gen-Z is 30-50 years (many getting into the stock market for the first time)

  • ‘Buy the dip’ mentality dominates retail investing — in China, retail investors make up 99% of the investor base

  • Since 2006, US equities have outperformed world equities by over 40% (that’s not likely to change any time soon)

GRIT’S TAKE: Check out my full interview on Fox here! I talk with Charles about fitness (Peloton), SPACs, and of course — buying the dip!

GRIT’S ACTION: BTFD

4. COMMODITIES

Uranium at highest prices since 2012

Uranium is making a late-season push for Commodity of the Year, fuelled by a combination of institutional and “smooth brain” buying.

By smooth brains, I’m referring of course to the savants at WallStreetBets who have been pumping uranium stocks for a couple of weeks now. They’ve helped push Australian miners Bannerman Energy and Peninsular Energy up 59% and 63%, this week, respectively. They’ve also made Canada’s Cameco one of the most mentioned tickers on Reddit.

On the other end of the spectrum — Sprott (global investment manager that specializes in metals) launched the Physical Uranium Trust this year which provides exposure without the need to store it in your garage. The fund has been accumulating the metal since mid-August, and now has over 24M pounds of it. I wonder where they keep it.

GRIT’S TAKE: How long the rally will last depends on who you ask, but over the last month uranium prices are up over 60%!

GRIT’S ACTION: Sitting this one out (for now).

5. CRYPTO

“Come in and talk” - SEC to crypto industry (read: Coinbase)

Last week Coinbase CEO Brian Armstrong tweeted a thread that described “some really sketchy behavior coming out of the SEC recently.”

A few days later, SEC Chairman Gary Gensler was quoted saying that crypto exchanges needed to “come in and talk” to regulators. He argued that among the thousands of tokens available on platforms across the industry, there’s bound to be a security or two, and those need to be registered with them. Securities, lest we forget, can be difficult to define for some.

On Tuesday, he testified before the Senate Banking Committee. In response to a comment made by Sen. Patrick Toomey that categorized his regulation on crypto so far as “very objectionable”, Gensler said:

“You’ll find I’m not negative or a minimalist about crypto, I just think it would be best if it’s inside the investor protection regime that Congress laid out.”

GRIT’S TAKE: I see this as a baby step in the right direction for the industry, one that will facilitate crypto’s move into the mainstream. The fact that the SEC wants to sit down with industry leaders to grind out the details of their businesses activities shouldn’t be seen as a threat but as tangible proof of institutional acceptance!

GRIT’S ACTION: Magic internet money is the future!

6. ENTERTAINMENT

“Oh, we can go back outside? No thanks!” - gamers, probably

40 Funniest Video Game Memes (Updated!) | Heavy.com

If you’re a long-time GRIT subscriber, then you know we love this industry! Gaming has become the fastest-growing form of entertainment globally — 3 out of the top 4 most-viewed US sporting events in 2018 were ESPORTS events!

The pandemic last year served as a massive tailwind for the industry, but the momentum hasn’t let up: spending on video game hardware, content, and accessories in August rose 7% compared to the same month last year, putting the year-to-date total at $37.9B.

GRIT’S TAKE: Despite ongoing chip shortages, hardware sales had their 3rd highest month ever, with consumers spending $329M (45% increase from last month).

GRIT’S ACTION: A few months back I invested in a private female focussed gaming company. They are about to do another financing at a significantly higher valuation than the last round. Subscribe to my paid newsletter to find out which one!


Under the Radar
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*SOURCES
1. WSJ, Bloomberg, Bloomberg
2. Bloomberg, WSJ
3. Fox, WUSA, CNN, MSCI, MSCI
4. Bloomberg
5. Markets Insider, Washington Post
6. Bloomberg

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