4 Feb 2022

Now that is a picture of a toss. I don’t care if you are worth $120 billion, oops I mean $92 billion after todays 26% drop in Meta aka Facebook.

MarketWatch

This week has been quite volatile, Bitcoin started strong and has given up its gains. The SP500 was also strong and I have been selling the strength until its steep selloff last night. A shameless plug for your humble macro strategist with some rare profits, I only post winning days in case you haven’t noticed. Its proved to be a strong year for me so far up 9%.

Coming back to Mark Zuckerberg and the nose dive. I have been trading a long time and this is one of the most vicious selloffs I have ever seen. In fact in terms of the billions of dollars of value wiped out there is no precedent. Frankly I am astounded how little contagion spread to the rest of the market. A -26% down on the day, now that is some gap. To me this a market wanting to dump a lot of their anger on a scapegoat and who better than Zuckerberg. I get irked even by his press releases, when he says “we need to lean in to Reels”, borrowing from his COO Sheryl Sandberg’s book title that has become a commonly used word in business by cool speakers.

The market has been spooked by the fact that Facebook is not growing like it did in the past. We must not forget this company is one of the most profitable companies around. It friggin spits money like few others, amazing how addicted to growth we have all become. I guess that is what happens when you price infinity and beyond. I found it interesting one of its big complaints is that Apple has blocked their predatory behaviour where they suck personal information from unsuspecting users without asking. Now IOS requires customers to opt into the sharing of the info that made FB ads so spot on. They knew stuff we didn’t even consciously know about ourselves. As expected many customers are not agreeing to this forcing them to find new ways to target their ads.

I want to give a shout out to this girl who has been the main Whistleblower on the whole FB culture of profits and growth at all costs. There has been no supervision of these innovative companies where the legislation is playing catchup and is years behind. The main guy behind this behemoth is Zuckerberg and he is not the humanitarian he wishes to portray, or anything of a responsible citizen. This is a guy who wins at all costs. How do I know? I don’t but I just look at the picture I started the post with and who is going to argue with me – LOL.

Gutsy chick.

Money Complex

I am reading way too many stories and hearing too many anecdotes of people demanding and in the large part getting huge salary increases. In the AFR today they wrote about the shortage of skilled CRM programmers who are charging and getting 20%+ increases.

I wrote yesterday how I am feeling conflicted about my views on inflation and perhaps Phillip Lowe from the RBA is the correct one. I walk back those doubts, inflation is becoming intrenched. Everyone is expecting big price rises and are adjusting for it. The consumer is going to get piled on and when the companies cannot pass their cost increases on they are going to have to eat the increases with reduced margins. I am starting to become even more bearish stocks as I think how this will play out over the next few years.

Profit margins are mean reverting and we are at record high margins. This is unsustainable and if you add heavy inflation this is going kill margins.

I need to get on the record that I think this new startup that Commonwealth Bank is investing in is calling the top of the property market. I believe investors into OwnHome are going to get crushed and left holding the bag.

Ask the investors in Zillow how it worked out for them. Its one thing catching the home market wave on the up, but surfing it on the downside is not very nice.

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