Founder of Real Vision: Encrypted Assets Are Not a Bubble, They Are the Hope of Today's Young Generation

Written by: Raoul Pal, Former Goldman Sachs Executive, Founder and CEO of Real Vision and Global Macro Investor

Compiler: Perry Wang

1/ The market is crazy! NFTs are nothing more than jpeg images! Dogecoin! Cat coins! Tesla! GameStop (stock skyrocketing)!

Everyone ends up smashed to pieces! Don't they realize discounted cash flow? ! ! ! These people are ruining everything! Green energy? !

2/ Crypto is a bubble! Technology is a bubble! Venture capital (VC) is a bubble! Biotech is a bubble! Passive investing is a bubble! Web 3.0 is a bubble! Green energy is a bubble! The metaverse is crazy! Can't they see it? ? ! ! They are all wrong!

3/ No, the above statement is wrong.

They are a new generation of investors. Last year, 86 million millennials in the US received financial services. They have reached the golden investment age of their 30s.

In reality, they are heavily in debt, have no savings, and have no hope. They are poorer than 30-year-olds in any era in the past 70 years.

4/ They are ruined!

5/ Their parents weren't like that in their 30s, when stocks had a price-to-earnings (P/E) ratio of 7, bond yields were high at 13%, and real estate price-to-income ratios were relatively low. Today's young people face a completely different world. They are faced with the prospect of negative returns on their investments in the future. They have no interest in any part of our financial system.

6/ They started Occupy Wall Street, but no one cared.

Now they don't give a damn about how you or I think you should invest or manage the market. We let them down.

Why the hell should they care? They were sent to the altar of debt, leverage and greed.

7/ Millennials and Gen Z have nothing to lose. They have nothing.

Then the global pandemic hit and everything changed.

We send them free money and they collectively say "fuck it" let's take a chance! Because their stake is free.

8/ If we get a free stake at the casino, we do it too.

But they didn't buy our precious gold, or our discounted stock. Why? Because they don't care about a 10% return. The only way to level the playing field is to take huge risks.

9/ Risky Action meets Robinhood Options in 2020, and a miracle happens…

These young investors changed the whole fucking investing game. Armed with the skills they learned on Reddit, TikTok, and Instagram—community, virality, and memes—and what they were told about stupid investments like Hertz and Gamestop stocks, they gave the rule the middle finger and broke these rules. marvelous.

If you can't win the game, change the rules of the game.

They take big risks for big rewards. Contrary to America's older cynics, these young people know there are risks involved, but they still want to take them. Because it's fun.

10/ The "Loss porn" meme was celebrated and spread everywhere. Gone are the "I'm never wrong" financial Twitter influencers. In the long run, the days of diversification with the long-standing Registered Investment Adviser (RIA) are long gone.

These young people have been let down by us. Why should they play by our rules when they can make their own?

11/ To his active money management, to his hedge funds. They just want to put their money firmly in a market they've been told will make money (hello, passive investing!), and throw the rest of their cards away.

Encryption struck a chord. Huge upside has been achieved with zero downside. This is a huge options market. Losses are limited, exponential gains.

They are right.

12/ I can hear you all shaking your heads and saying, this time is no exception. They will suffer badly.

Yes they will. This is good. They want to learn, but they're also lucky enough to have an era of exponential growth, where growth stocks go parabolic over time.

13/ Weigh in on Metcalfe's Law again, so forget about the old baby boomer old mean reversion valuation models.

They are right. That's right.

If they were 20 years younger, they would have gotten very rich through the same strategy.

14/ We all pretty much miss out on those instant riches because we’re too cynical to understand that VCs are right (I mean, they’re unbearable, right?!)

We thought VCs were crazy bubble chasers, but we were wrong.

VCs see an opportunity in it, we don't (myself included here).

15/ VC changed the rules to fit their set of rules that we can't compete with. Not hedge funds, not regulators, not smart investing veterans. All of us are missing out.

16/ Politics will change accordingly.

All institutional infrastructure will follow (as will SEC/SEC regulations).

Everything changes.

Many people will lose a lot, many people will gain a lot, but the world has changed, but many elders will not accept it because "we understand the world better".

17/ Your love of oil or commodities, or V8s of the 1950s, or contemporary art of the 1990s and 2000s, is of no interest to these new investors. Your collection of Jeff Koonz (whose "Orange Balloon Dog" fetched $58.4 million in 2013) is just a silly balloon sculpture. It's not their cultural reference. And JPEGS and memes are.

It's all about culture.

18/ They value different things, and more than you or I.

If you go to India or the Middle East, it's even more extreme when everyone is under 30! These societies will change dramatically.

19/ This is what the 4th inflection point of history looks like.

I know many of you loved that book but are appalled by what's going on. You lose your frame of reference...

But this is the prophecy of the 4th inflection point of history...

Gone is the world of politics and nostalgia of the 50-year-old generation.

20/ The world of white picket fences, muscle cars, factory workers, suits, TV, radio - all have been swept into the dustbin of history... and the harsh realities of 2020s youth completely irrelevant.

21/ The next 10 years will be the fastest and greatest technological change in human history.

The era of exponential growth.

We will all feel left behind, but we have to trust that the current generation under 40 will lead the way and show us a whole new way. We need to be guided.

22/ You may hate it, fight it, complain about it, comment harshly on it. But it has no effect on it.

Change happens to us.

Embrace change.

Don't fight it. Our future depends on change.

Source link: twitter.com

This article is reproduced from Lianwen