Would You Take NFL Hits for an Entire Season for $50k?
When "pay me in Bitcoin" goes wrong, Marijuana money, Wood vs. Buffet, Relatable POTUS, Fitbit for your skull
Good morning!
Yesterday: the Case-Shiller Home Price Index revealed that U.S. home prices rose 18.8% YoY in November, David “Big Papi” Ortiz was (controversially) elected to the National Baseball Hall of Fame, and I learned why mystery novel GOAT Agathie Christie could afford a nanny, but not a car.
Anyway, here are a few knuckleballs to keep you on your toes on this hump day.
→ If you liked Bitcoin at $65k, you’re going to LOVE it at $37k! Odell Beckham Jr. is a talented football player, but I wouldn’t want him on my team. When a player of his caliber signs a 1-year contract there’s usually a reason. In OBJ’s case, I think it’s because he’s just generally a dickhead. Whatever it is, my opinion of OBJ’s decision-making abilities is on par with my opinion of Scott Galloway’s decision-making abilities. This is to say that I think he is a bad decision-maker. On November 12, 2021—after forcing his way out of Cleveland—OBJ signed a 1-year deal with the Rams worth $750k. He announced he’d take his money in Bitcoin. Bitcoin was worth ~$65k at that time. As of this writing, Bitcoin is hanging out around $37k which means OBJ’s $750k is really worth roughly $427k. But wait, there’s more! The Rams play in Los Angeles. Los Angeles is located in California where federal and state taxes (collected on the full $750k) total 50.3%, or +$377k. This means that OBJ will effectively make $50k in exchange for a full season of getting tackled by 300-pound monsters. Assuming Bitcoin does not continue its plunge, of course. Whoops!
→ Two states are now generating more revenue from marijuana than they are from alcohol. So far, 18 states have legalized recreational pot use. A win-win in my book: people can enjoy blunts (just like Gary Chambers) in peace while states collect dollars on the sales instead of wasting dollars trying to enforce ineffective laws prohibiting fun. For the first time, 2 of those states are reporting higher tax revenues from marijuana sales than from alcohol sales. Massachusetts—halfway through its fiscal year—has collected $74.2M in marijuana excise tax vs. $51.3M in alcohol so far. In Illinois, the gap is much bigger: the state brought in $387M in pot revenue from January-November 2021 while collecting only $291M from liquor sales. That’s a difference of nearly $100M, for those keeping score at home. Given my experiences with both of these substances, I like the direction this data is trending in. I wonder when it will start translating into better performance for cannabis companies…
→ The tortoise vs. the hare. Cathie Wood and Warren Buffet are 2 very different investors. Wood has a 5-year target price of $3,000 per share for Tesla (her fund’s largest holding), for example. Buffet likes companies like Bank of America, American Express, Coca-Cola, and Apple. She’s a growth investor. He’s a value investor. She’s doubling down on high-flying stocks. He’s still living in the same house he bought for $31,500 in 1958 (back when he was a mere millionaire). Investors of Cathie Wood’s ARK Innovation Fund ($ARKK) enjoyed a 159% return in 2020 thanks to bets on high-growth companies with rich valuations like Tesla, Zoom, Teladoc, Roku, Coinbase, Unity, Spotify, Square Block, Palantir, Draftkings, Shopify, Crispr, etc. Investors in Warren Buffet’s Berkshire Hathaway, on the other hand, saw shares rise less than 3% in the same time. And yet…
It’s one of the oldest fables in the scroll and it’s playing out in real-time: Berkshire Hathaway is about to overtake ARKK in post-pandemic performance. This image will be printed in textbooks and stock “furu”1 paperbacks for years to come.
P.S. Unrelated, but kind of related.
→ Biden’s best moment as POTUS. Over their first 371 days in office, no U.S. president not named Donald Trump has ever had a lower approval rating than Joe Biden.
A poll of Independent voters showed that 59% disapprove of POTUS’ handling of the jobs and economy, ~75% believe he is a very or somewhat weak leader, 54% think he is not honest and trustworthy, and only 3 in 10 think he cares about the needs of people like them. Not good. Even worse, over 70% don’t think he can unite the country. This week, he did his (accidental) best to make some progress regarding that last point after a hot mic caught him in perhaps his most (read: only) relatable moment ever after a Fox News White House correspondent, Peter Doocy, asked him a pretty dumb question, “Do you think inflation will be a political liability ahead of the midterms?”. The President responded sarcastically, “It’s a great asset. More inflation. What a stupid son of a bitch”.
→ Like a Fitbit, but for your skull. Elon Musk famously owns Tesla and SpaceX, but did you know he owns another company that is working on a way for humans to control things with their minds? Neuralink is “developing ultra high bandwidth brain-machine interfaces to connect humans and computers”. Last February, the company successfully implanted a wireless “Link” into a monkey’s skull that allowed it to play video games with its mind. For real. The ultimate goal is to use these Links to help victims of severe spinal cord injuries by giving them the ability to control computers and mobile devices with their thoughts. In December, Musk told the WSJ that he hoped to implant Links in human brains sometime in 2022. Given Musk’s track record in keeping to the timelines he projects for his endeavors, I’d be inclined to call bullshit, but the company announced last week that it was seeking a clinical trial director, which means it’s at least making some progress towards that end. It’s unclear where Nerualink is at in the FDA approval process, which is another way of saying they don’t have approval yet. They can’t begin clinical trials on humans until they do, so for now, here’s that macaque monkey (named Pager) dominating Pong with his brain:
Thanks for reading!
Like “guru”, but for finance (aka charlatans).
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