The Penguin Market
In a market full of bulls, bears, and apes, we're all forgetting one thing — Mr. Market abides by no rules.
The past two years have been a doozy. Actually, that doesn’t do it justice. The past two years have been fucking madness.
We saw a virus sweep the globe, yet it was only the United States that politicized the event until hell froze over. We saw the economy abruptly shut down for the first time in human history, resulting in a market collapse of epic proportions… for a few weeks. We saw the Federal Reserve take matters into their own hands, giving money out like it were parking tickets — so much so that 30% of all dollars ever printed were done so last year.
We saw markets rally toward all-time ceilings, then blow the roof completely off the building. We saw terrible companies have their stocks squeeze historically high, and perhaps even worse, we saw their “investors” try to rationalize the move. We saw an electric vehicle company roll their truck down a hill and call it good enough, Fortune 100 CEOs have a pissing match in outer space, and the largest property developer on earth rack up $300B in debt, shocking the world once they said they probably can’t pay it off.
We saw crypto become the future, then the past, then the future again. We saw individuals become multi-millionaires by selling some pixels and we saw top government officials make millions by timing the market. We saw inflation be labeled as transitory… then we saw it rise over 6% with threats to push higher, catching everyone completely by surprise. And, most recently, we saw a decentralized autonomous organization collect over $43M in donations during a frantic attempt to buy the U.S. Constitution, only to be outbid by a billionaire geezer.
Can you believe its only been two years? Needless to say, investing has been a bit of a shitshow lately. Some made millions, others lost everything. Amazingly, some lost more than everything.
Investing in 2021 is kinda like if you were at the zoo but the exhibits were merged as one, the pathways were gone, and everyone was locked inside — exciting, terrifying, and one hell of a story to tell. You’re the apex predator until you’re not. This is a lesson that seems can only be learned the hard way. Being a wolf and chasing down mice is all fun and games until a lion strolls in.
Please enjoy some of my thoughts as I reflect on the past couple years in the market.
Nobody Gives a Fuck About Long-Term Investing Anymore
If they do, they must be far from Twitter. I hate it as much as you do, but it’s the truth.
I can’t really blame people for not caring, either. I mean, why should they? We live in the Glory Age of Instant Gratification. Have a question? Google tells you the answer in seconds. Hungry? DoorDash delivers whatever the hell you want straight to your house. Need to get somewhere? Call an Uber. Want groceries? Use Instacart. Want literally anything else? Amazon has it on your doorstep by tomorrow.
So why, in a world where everything is at the tip of your fingertips and available in minutes, should you have to wait for the one thing that controls it all? I’m not saying I agree, but I do see where they’re coming from.
Perhaps people just see the stock market differently. Some see it as an instrument to gradually build and preserve wealth. Others see it as more of a game; one filled with large numbers, seductive charts, and real-world effects. Neither is wrong, but both inherently disagree with the other. It’s interesting how that works.
Once you add social media and other platforms into the mix, everything really goes to hell. You login to Reddit and it’s just utter mayhem. Buy this, sell that. Hold the line. Never sell. We’re going to the fucking moon. Rocket emojis everywhere. Jimmy made 4,000% in seconds on GameStop contracts. Tommy has $5,000,000 in AMC shares. It seems like easy money. Worse yet, it feels like easy money. You start to think you can do it too. Why wouldn’t you?
There’s a fine line between asymmetric bets and complete degeneracy, and WallStreetBets has built a reputation for not knowing what the fuck a line even is. I’d recommend being unwaveringly cognizant of human nature before treading anywhere near that rabbit hole. Then again, what do I know? I didn’t 20x my portfolio in a week like some did.
Twitter is a different phenomenon entirely. It’s not so much people telling you how to invest, rather it’s them leading you to believe you made the decision for yourself. Both are equally scary.
It’s bad enough when celebrities and people of influence join the party and intentionally rustle the masses, but they don’t stop there. The next step in this timeline toward complete disparity is gloating your gains while simultaneously implying that making ridiculous amounts of money is easy as long as you “know what you’re doing” … kinda like this guy.
Speaking of celebrities on Twitter, let’s not forget Elon Musk took Dogecoin from less than a penny to over seventy cents in a few months just by tweeting random bullshit, effectively leading everyone on the planet to ape in at all-time highs. At Dogecoin’s peak, it valuation was larger than Coinbase. I’ll let that settle.
I guess I just wonder whether this is forever. Will people be satisfied buying and holding great companies and index funds again? Can they sacrifice years of grinding and saving now in return for financial freedom twenty years down the road? Is that too lame?
I’d like to think this revolution is temporary, but I just don’t know. Will the market ever return to normalcy? Can I go long on investing reverting to the mean? Is shorting bullshit just because it’s bullshit a viable thesis? Maybe, maybe not. Perhaps I can do both.
Worse case, I go long then delete the tweet and announce I’m fully hedged.
It’s Not All Cupcakes & Rainbows
This much is clear. This week has been the icing on the cake.
Last year was a freebie — if you were invested in any tech at all, you made a killing. This year is different. There aren’t as many handouts as there were a year ago and many of this year’s winners have experienced violent drawbacks. In this market, it takes a strong stomach and balls of steel to be a stock picker. You damn well better know what you own or your life will be made a whole lot harder.
That being said, there are more ways to invest than ever before. As such, there are more ways to lose money than ever before. You think those who bought GameStop and AMC at the top are having fun this year? Assuredly not. Those who took the options route have had $0 to their name for months now. Those who went on margin are probably in prison.
Likewise, how about those who bought Dogecoin before Elon’s SNL appearance? Those who minted the Raccoon Secret Society? Those who bought the Squid Game currency?
As if you needed more proof, there’s a sharp difference between investing and gambling. Oddly enough, those who gamble in their investments still refer to it as investing. Perhaps it’s easier to cope this way.
On the bright side, if it wasn’t for these “investors” we wouldn’t have the glorious symphony that is loss porn. If you’re unfamiliar with loss porn, this is the spectacle where individuals share their losses online so that others may make fun of them. I understand the theory behind the madness perfectly — laughing at your mistakes make them hurt less. There’s simplicity in the genius.
That said, when your day of fame blows over, you alone stand to face your consequences… that includes the shame, embarrassment, and debt that comes with them. Everyone else goes back to not giving a shit because it wasn’t their money. Seems like a pretty large price to pay for a few laughs.
Doesn’t Anyone Sleep Anymore?
It sure doesn’t feel like it.
The days of regular trading hours are officially a thing of the past and it feels like we are gradually getting closer to 24/7 trading. This would almost undoubtedly cause more damage than good. Nothing good ever happens past midnight. But then again, who knows? If we do move to a nonstop trading schedule and it goes terribly wrong, I only know one thing for certain: we will take entirely too long for the decision to be made to revert back.
Robinhood changed the game forever with commission free trading. Webull doubled down, coupling this with pre-market and post-market trading. You can now trade for over half the day, if you wish to put yourself through such stress. Oh, did I mention you can also buy fractional shares, create your own miniature ETFs, and trade on margin regardless of your experience? Yeah, you can do all that too.
Thanks in part to Robinhood’s “gamified” mobile app, you can also trade anywhere you get a WiFi signal. This way you can access your portfolio, panic buy and sell, and search for your next losing trade from just about anywhere. Better yet, you can show off your trading skills to girls at the bars — the same girls who have seen you throw up in the urinal while taking a piss and know you can’t do basic division without a calculator.
Naturally, trading in the stock market doesn’t hold a candle to those brave enough to sniff the crypto psychosphere. Anything goes in crypto, and it goes nonstop. There is 24/7 trading, little regulation, and unlimited opportunities. If you can get over the deposit, transfer, withdrawal, conversion, swapping, staking, and gas fees, it’s a gold mine. That is, unless you get rug pulled… or the founders abandon the project… or you unknowingly “sign” a contract preventing you from selling the coin for three years.
Regardless, my point has been made. In a world where everything needs to calm the fuck down, trading intensifies. I’m sure some love it, but it’s not my style. God speed to those who dabble.
Companies Are Selling Hopes & Dreams… And We’re Buying Them
Do we really think General Motors can even come close to catching Tesla’s market share by 2025? Do we really think Rivian will go from producing zero cars to over 150,000 in two years? Do we really think Skillz will forever change the trajectory of mobile gaming and Fubo will be the biggest sportsbook in the United States?
I am sick and tired of companies making broken promises without any repercussions and saying one thing while doing another. Likewise, I am sick and tired of executives worrying more about their stock price than the business.
Contrarily, I am all for companies setting lofty goals and doing all they can to reach them. I am all for companies acting on change and setting the record straight, and I’m definitely all for executives caring about their investors.
There is a difference. The line is dotted and becoming increasingly blurred, which makes recognizing this difference all the more important. When an executive speaks, it shouldn’t be manipulatively propitious, deliberately vague, or up for interpretation. Their intent should be completely understood and their vision should be crystal clear. I don’t see why it is so hard to call a rock a rock.
It’s Not Illegal, It’s Frowned Upon…
I’m beginning to think nothing is regulated. The SEC may as well be powered by a hamster wheel.
What kind of event must occur for the SEC to actually take action? What if government officials traded on insider knowledge and profited millions right in their teeth? Oops, Pelosi has that under control. Maybe some dude on Twitter sharing any ticker of his choosing to his half a million followers who blindly follow him into any trade would cause a stir? Oops, Zack Morris exists. How about if an expert investor went on national television and said to buy a stock that he doesn’t know shit about? Would that get the SEC up and moving? Oops…
There is no standard. There are no individuals being made into examples. We are waiting for a precedent to be set by a commission that has no urgency. If the people with the most influence and power in the entire country can do as they please, why the fuck can’t we?
The New SaaS: Speculation-as-a-Service
People are making up industries now. Hell, they’re making up entire asset classes now.
I have no doubt that eventually these new industries and assets will be applicable and provide some form of utility, but I’m not sure that time is now. To be honest, I don’t even know what a Drone-as-a-Service is, nevertheless seen one in action. Like, ever. The same can be said for personal eVTOLs.
Albeit, aside from a handful of special situations, the stock market has remained relatively unscathed in terms of impossibly hard to understand concepts. Now, as is the trend, the land of NFTs is where shit really hits the fan. I’m gonna paint a quick picture, try to follow along as best you can.
There is an NFT project known as Cyber Kongz. The original Cyber Kongz are known as Genesis Kongz. By staking a Genesis Kong via an Ethereum smart contract, owners receive 10 BANANA tokens per day. With 600 BANANA tokens, you can “breed” two Genesis Kongz to receive a Baby Kong and a VX Kong. Baby Kongz are essentially just another 2D NFT, which the owner may sell on a platform like OpenSea. VX Kongz are 3D Cyber Kongz, which the owner may use as an avatar within a decentralized metaverse, like The Sandbox. Then the Genesis Kong owner goes back to passively earning BANANA tokens and the cycle continues.
Do you realize how fucking insane this sounds? If you were to read me that paragraph four years ago I would have assumed you were smoking crack.
In any sense, I’ll be the first to admit that some of these ideas coming to life are cool as shit, I just don’t necessarily understand what the hell is going on quite yet. Maybe this is a case of adapt and overcome or be left behind for good, but that is to be determined and survivorship bias is very strong. It’s certainly possible I am being overly pessimistic and haven’t dedicated the time needed to grasp the complexity of everything unveiling around me. I guess I will find out.
From my eyes, it just feels like a bit of a fad… kinda like a gold rush without any gold.
Don’t Be Contrarian Just For The Sake of Being Contrarian
I said this in a tweet the other day and meant what I said. Being contrarian just for the hell of it is a loser’s game.
Thinking contrarily is necessary and vital within the world of investing, but there must be some ground behind it. Watching a stock tank and buying in as others are fleeing the scene isn’t necessarily a thesis. Hating a stock because sentiment is overwhelmingly positive and “everyone loves it” is the worst excuse I have ever heard of.
Rather, I encourage everyone to develop their own thesis and run with it. If it happens to be contrarian, then congratulations, you can call yourself a contrarian. Think outside the box, try to see what others can’t, and read the book from back to front. Sometimes I wonder if I would be a better investor if I wasn’t constantly barraged with investment ideas. Social media and investing perform an indeterminate ballet — the discovery is great, the research is good, the sentiment is poor, and the groupthink is impossible to ignore.
Don’t be afraid to go against the grain, but do it for your own prosperity, not for Internet points. Fortune favors the brave, but the brave are those who have the clearest vision.
When It Rains, It Pours
As is the case with everything in life, it seems. The market is no different. Every tsunami started as a ripple.
I firmly believe that everything in life happens in cycles. If you trust yourself and face failure head on with every intention of success, you will make the applicable changes necessary to thrive whether you actively realize it or not.
In investing, there is this theory known as The Valley of Despair. In essence, it shows the personality changes that come with the peaks and troughs of the investing cycle.
We will all experience this. I have multiple times. There’s really no denying it… it sucks. And it hurts. And it makes you feel like shit. And you wonder if you will ever overcome it.
You will. If you dedicate yourself to practice, you will overcome anything you want to. If you sulk in your misery and feel sorry for yourself, you won’t. It’s really that simple. Investing is difficult, intensive, and unforgiving. But, with enough patience, self-awareness, and consistency, investing can be much more beautiful. It can be more than beautiful. It can be freedom and knowledge. It can be mesmerizing, life-changing, and gift-giving. It can be memories, reflections, and stories to tell. Above all else, it can be unimaginably rewarding.
Don’t feel sorry for yourself, don’t dwell in the past, and don’t be afraid to change your strategy. Recognize when a loser is a loser, and recognize when you’re in an echo-chamber.
You’re gonna make it, trust me.
It’s a penguin market.
Penguins are birds condemned to live out their days on the ground. Unable to fly, their excess energy has no outlet save their creative talents and emotional outbursts. Penguins are social, optimistic, and intellectually gifted, but tend to give up on tasks they were otherwise capable of and are frequently disappointed with their performance. If unable to channel their impulses in a positive way, the resulting turmoil proves damaging to their relationships and careers.
Investors are excited, frustrated, overwhelmed with options, and full of energy. It’s against human nature to be stagnant, but sometimes complacency is the best decision. You don’t need to furiously chase investments and you certainly shouldn’t compare your performance to others. Comparison is the enemy of success and the catalyst of impulsiveness. The opinion that matters most is and always be will be your own. Don’t dwell in the past and never rise too high or fall too low. We all make mistakes — rather than frantically playing speculation to get where you were, try focusing on where you are. Perhaps now more than ever, opportunities are wildly abundant. It’s never too late until it is. Find the beauty in a world full of demise.
Despite everything, these past two years have been the best in my life. I’ve learned more than I ever imagined I would, and I enjoyed the hell out of the journey. I’ve met some incredible people along the way — people who have given me unwavering support, treated me with the utmost respect and kindness, and, above all else, didn’t discriminate upon my lack of experience. I am forever grateful for crossing their path and truly appreciative of their friendship.
I’ve made some drastic life changes, overcome some hefty obstacles, and formed some great habits. I’m in a great place physically, mentally, emotionally, and spiritually. I have become a better man throughout the process — I can confidently say that I would run circles around the man I was a year ago. I think that speaks volumes on the state of my well-being, which is the most important state of all.
It’s been one hell of a trip and I’ve still got plenty gas left in the tank. I hope you’ll join me.
— Nick
Thank you for reading.
This article was a reflection unlike anything I have ever written before. I was nervous to release it to the public and am incredibly anxious to hear the response. The Internet is forever.
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That’s all I have for now. I appreciate each and every one of you. I can’t wait to continue this journey together.
The sun will rise.
Nick,Thank you for this amazing article.
I had a similar investing journey.
Wow, amazing read. Thank you Nick!