Silver Bulletin #1
November 6th 2020
THE SILVER BULLETIN #1
A weekly(-ish) newletter on tech, investments and living better by Hitesh Suresh.
#FUN FIND OF THE WEEK
Everything went on a tear on Wednesday night (thank you Biden, I think)
Google, Facebook and Amazon spiked over 6% each. Perhaps investors believe a democratic presidency and a gridlocked house & senate will be kinder to big tech. Especially around monopoly & anti-trust lawsuits. (several cases for which are pending)
Despite talks of a tech bubble, I’m still really bullish on tech stocks. Earnings were just announced. Google’s revenue was up 20% YOY. Facebook 22% YOY. Amazon’s net sales up 37% YOY. Shopify’s GMV is up 75% YOY.
These are already billion dollar companies. To see them grow at these rates is unprecedented. It really feels like it’s tech’s moment right now.
Tech firm P/E numbers still look outta whack but I do think it’s deceptive. Many of these tech firms are burning huge amounts of cash on expansion. If you were to take away 90% of Google’s engineers this year, I’m confident they’ll still hit exactly the same profit numbers in 2021.
Some of Buffet’s old shareholder letters speak about required annual business CAPEX – how much do I need to reinvest in the business to keep it running at the same level. For tech, that number is pretty close to zero. The issue though is that tech income statements are incredibly muddled (google’s cloud business still isn’t reported in a separate line on the income statement). It’s impossible to figure out what their minimum CAPEX is and just how profitable these businesses actually are.
Tech companies are a different beast from anything we’ve seen before. All investors, including me, are having to learn new models for valuing their cashflows.
Packy McCormick of Not Boring recently speculated that stocks are being treated as Veblen goods — where demand increases with price (like luxury goods).
COVID-19 hasn’t impacted most white collar workers. If anything, most knowledge based businesses (including ours) are up YOY.
With no travel or dining to spend money on, these white collar workers are saving more than ever. With savings interest rates at rock bottom, perhaps they’re feeling flush and starting to speculate in stocks a lot more.
Regardless of whether this hypothesis holds true, I’m confident Modern Monetary Theory (MMT) is going to send all asset classes higher and higher. MMT doesn’t make any sense to me. Surely it’s a giant house of cards. But hey, so is the US dollar. To get returns, we gotta ride the dragon and hope we don’t get burnt.
If I had it my way, I’d be outta the public markets completely and own only profitable small companies. (if you know any small business owner who wants to sell out, speak to me! We’re interested to make an offer!)
Running a portfolio of small businesses just seems like a much more fun, and less stressful way to grow wealth. Ultimately, money is nothing more than an enabler. It shouldn’t be sapping us of our zest for life.
I’d rather have a stress free portfolio growing at 30%/year and be out sailing everyday than to have a 50%/year portfolio that I’m constantly stressing over and having to rebalance.
Eightfold raised 125M at 1B valuation
I work in recruitment and I hate it. Everything about recruitment is so broken. It’s so awesome to see startups tackling this space with actual disruptive tech as opposed to fancy ERP-esque tools which don’t fix any of the root issues (looking at you, workday)
It’s super hard to recruit well. But every time we’ve put in the effort, it’s paid off 10-fold. I recently wrote a detailed blogpost about how to recruit well over here.
A company is nothing more than a group of people. (more so for a white-collar knowledge based company). If I had more time & resources, I’d work hard at building a recruitment solution similar to eightfold. The market is huge. There’s space for several players.
Definitely going to be watching this company very closely.
One realisation I’ve had in the last few years is this:
- Money can buy happiness, but it’s temporary. Soon you’ll adapt to your shiny new purchase.
- Spending money to buy away unhappiness though, is permanent. You’ll never be irked by that little irritation ever again.
- On the net, to increase happiness, it’s much easier to buy away unhappiness.
I’ve recently been bothered by holes in some of my old socks. Every morning, as I’m leaving my house, I’ll put on my shoes and be reminded of how crappy my socks are. So this week, I bought 6 new pairs from uniqlo and threw out all my hole-y old socks.
I wouldn’t go as far as saying that putting on these new socks everyday now brings me immense joy. Hell no. It’s fucking socks. But it’s no longer an irritation. And that’s a good net improvement.
Fantastic happiness ROI on my 20 dollar spend 🙂
#WORD OF THE WEEK
A Latin word that’s roughly translated as leisure. But it’s not the American kind where you sit around and do nothing. It’s the Roman kind where you play sports, contemplate life, and consume great art.
May you enjoy a lovely weekend of Optium, my friends 🙂