Week #40:NFTs Implode; "That’s where the Money Is"; The $8 trillion company

Will Emerging Market Ever Emerge?; A Trip to the Metaverse

Today at a Glance:

One Quote: NFTs Implode

One Asset Class: Where the Money Is

One Company: $8 Trillion Ambition

One Prediction: Will Emerging Markets Ever Emerge?

One Interview: A Trip to the Metaverse

One Quote

NFTs Implode

“NFTs are digital real estate, and it is going to be worth a lot more than real estate."

― Anuj Jasani. (Indian Entrepreneur, Philanthropist, Aspiring Author, Speaker, Visionary Indian and Internet Personality.)

The verdict is in.

Jasani was full of BS.

Today, 95% of NFTs are worthless, according to a recent report by dappGambl (whoever that is).

By way of contrast, global real estate is worth $326 trillion.

As a reminder…

An NFT is a digital token that uses blockchain technology to record ownership and prevent duplication of digital items.

Think of NFTs as a digital image with an identification number.

You could use an exchange to create a token for an image of an ape or giraffe or Bozo the Clown.

At the height of the "mother of all bubbles," some people paid tens of millions of dollars for NFTs.

Today, 19 out of 20 NFTs are worthless.

The sale of The First 5000 Days will likely go down in history as the moment the short-lived NFT bubble burst.

On March 11^th, 2021, it sold for $69 million at a Christie's auction.

You can watch a video of the artist Beeple enjoying the auction here:

Here’s an interview with the greater fool – “Metakove”- another Indian internet personality- bragging about his purchase on CNBC.

Don’t tell me I didn’t tell you so.

So, where do NFTs stand today?

Demand for NFTs has evaporated.

NFT experts like James Altucher give keynote speeches at NFT conferences to empty rooms.

Most NFT-related Twitter accounts last posted two years ago.

Second, dappGambl reports that over 195,000 NFT collections today have no owners. The game of musical chairs has ended. The latest "greater fool" has exited the stage right.

Third, the crypto winter has spread to NFT unicorns- companies wanting to make billions from flogging digital BS.

OpenSea- an NFT “business” -was once valued at $13 billion.

It is now seeking fresh capital at a $1.2 billion valuation - down 90% from its peak valuation.

I wouldn’t touch it for 12 cents.

The bottom line?

NFTs were a short-lived fad- a bull market scam. 

They were a symptom of too many people with too much time and too much money.

One Asset Class

"Because that's where the money is."

When asked why he robbed banks, Sutton simply replied, “Because that's where the money is.”

The same applies to microcap stocks.

These small firms with market caps under $500 million make up around half of all publicly traded companies.

Still, many investors ignore them.

Their tiny size means liquidity is limited. Brokers don’t cover them.

But play the game the right way, and microcaps provide the same shot at blockbuster returns that launched the careers of storied investors like Warren Buffett and Peter Lynch.

When Buffett launched his partnership in the late 1950s, he started with just $100,000 - the equivalent of $1 million today.

By the time he closed shop in 1969, Buffett had compounded his investors' money to the tune of $100 million, or around $800 million in today's dollars.

Buffett’s secret?

He focused on microcaps, and delivered outsized annual returns of 31% per year

Peter Lynch launched his Magellan Fund to the public in the early 1980s. He quickly amassed billions under management. But Lynch credited much of his 22% average annual returns record to his early deep dives into microcaps.

Spotting Tomorrow’s Household Names Today.

To read more, visit Microcap Moonshots.

One Company

Boundless Ambition

Companies rise and fall, often in unpredictable ways.

Few stories better illustrate this better than the fate of the British East India Company in 18th-century Bengal.

This corporate behemoth grew into a powerful force that challenged even nations. At the height of its stock bubble, its value hit about $8 trillion in today’s dollars.

That’s equal to the market capitalization of Apple (AAPL), Microsoft (MSFT), Google (GOOGL), and Amazon (AMZN) - combined.

Inevitably, the East India Company overextended itself through greed and hubris.

The dramatic arc of its rise and fall offers timeless lessons on power and its limits that still resonate today.

Our tale begins in 1600. That was the year Queen Elizabeth I granted a corporate charter to the British East India Company.

It would become the world’s first multinational corporation. It came to control both trade and territories in India as well as a trade monopoly with China.

For more, visit The Bubble Blog

One Prediction

Will Emerging Market Ever Emerge?

Global equity markets have ballooned to an astonishing $109 trillion.

But how is this capital divided, and what does it mean for investors?

Let's break down the data.

First, America still dominates, accounting for 42.5% of the global equity share. Since 1990, U.S. stocks have dramatically outperformed developed peers. The U.S. market turned a $100 investment in 1990 into $2,000 today.

Size and past returns cement the U.S. as the heavyweight champion.

Second, emerging giants like China and India are rapidly gaining ground.

The second-largest equity market is the European Union, at 11.1% of the global share. But China's share sits at 10.6%.

In the last 20 years, China's economy has increased by roughly 12-fold, reaching $19.4 trillion this year. China's equity markets have soared since incorporating Chinese domestic stocks into the MSCI Emerging Market Index in 2018.

India will rise the fastest globally. By 2030, Goldman projects that it could account for 4.1% of the global equity market cap. Emerging markets will reach 35% by 2030. They will surpass the U.S. by 2050.

Finally, the U.S. pie is shrinking. Structural shifts tied to demographics point to outsized opportunities outside U.S. borders. Conventional wisdom suggests we all need to become global investors.

But is that so?

I earned my investment spurs investing in emerging markets. So, I have a far more skeptical take.

Yes, emerging markets are getting bigger. That alone does not make them good investments.

A decade ago, investors fell all over themselves to invest in the China Miracle.

In 2023, India is the flavor of the day.

Successful stock markets are a function of a country’s culture.

Just because investment theory assumes culture away, it does not mean it doesn't exist.

Brazil, Argentina, and Turkey have great potential on paper. But South Korea, Poland and Estonia have fared much better. You only need to visit India to see that the reality is far more complex than superficial financial headlines suggest.

One Interview

A Visit to the Metaverse

Conventional wisdom has it that Facebook's rebranding to Meta has been a flop.

The schadenfreude among the investment community was palpable

Sure enough, Meta’s stock price got hammered.

That all changed last Friday.

That was the day that Meta released a demonstration of its latest version of the metaverse.

It was nothing short of mind-blowing.

It took the form of an interview with Mark Zuckerberg conducted by Lex Fridman on his popular podcast.

The YouTube video depicts both Fridman and Zuckerberg as remarkably realistic avatars.

Physically, Fridman and Zuckerberg were sitting in dark rooms separated by thousands of miles from each other.

Yet they felt as if they were speaking to each other in person.

The digital avatars were the product of a 10-hour detailed scanning process.

So, this technology will have to wait a long time before it gets to your cell phone.

Still, the realism is astonishing.  You can see how this would nudge investors back aboard the metaverse train.

You can watch excerpts of the interview at the following link