Today’s topic about sharing my thoughts about the market. Please be advised these are not any financial advice.
The whole email is about what I think has been happening for the last couple of years and whats going to happen next.
Its going to take you 3 mins to read.
“No, if you show revenue, people will ask ‘How much?’ and it will never be enough. The company that was the 100xer, the 1,000xer, becomes the 2x dog. But if you have no revenue, you can say you’re pre-revenue. You’re a potential pure-play. It’s not about how much you earn. It’s about how much you’re worth. And who’s worth the most? Companies that lose money.”
Hence today’s topic about financial freedom:
If your asset doesn’t do anything, it can be anything you want it to be.
For the last two years, market participants have been playing a fun game called “red line , green line.”
The rules of this game are pretty simple:
- Buy stuff when its red.
- Watch the line goes to green.
- Make money.
- Repeat.
Which lines went up the most? Growth stocks. Meme stocks. Crypto. NFTs etc. The more ridiculous the valuation, the wilder the story, the higher the line went.
After all, commission-free trading + historically low interest rates + fastest market crash in history + pandemic-induced lockdowns + trillions in quantitative easing + millions of bored people turning to the market for entertainment created one hell of a financial cocktail.
When there are trillions of dollars sloshing around, why wouldn’t you throw money at anything and everything? Right? Right? It’s like a giant game of hot potato – only with real money.
Just like any other game, as the game progressed , the pieces evolved. As more and more people started playing Red line , green line, the game grew more insane.
People were paying $500k for a JPEG? That doesn’t even make sense.
But like all other games, there is an endgame. The problem is, most players did not realize they were all a part of the game. They thought it was investing.
They assumed that good stories are making the line goes green, that their assets are growing more valuable. But this assumption isn’t true.
The stories didn’t make the assets more valuable. The stories gave others a contagious case of FOMO. And when other people who were not playing red line , green line they fomod in for fun because no one wants their friends to get rich without them. The more people fomod in , the line went green, the people who were playing the game , they sold some of their assets for a profit, hence the line became red.
So now half of the players thought their assets are valuable, and the other half felt like they were missing out. And this cycle went on for a while, especially when everyone had money to blow.
But what happens when that money starts to disappear?
For the past few years, it’s felt like everything has been going to the moon. Stock prices were skyrocketing, crypto was booming, and everyone wanted a piece in it.
Fast forward to May 2022.
Prices are crashing, inflation is real, gas is expensive, and layoffs are becoming more common.
In times like these, people have to make tough decisions with their money. And for the players who thought they were investing in something real, it’s a harsh reality check. They’re learning that their “assets” weren’t nearly as valuable as they thought. But for the players who knew it was all a game, they’re already planning their next move.
You can explain the potential use cases, road maps, and pitch decks all you want, but if it comes down to putting food on your table or NFTs in your wallet, you are going to choose the former so that your family can eat.
The internet is a funny place. It’s a place where you can be anyone you want to be, and where you can do anything you want to do. It’s a place where you can build entire worlds from scratch, and where you can destroy those same worlds with a few clicks of a button. It’s a place where fantasy and reality collide, and where anything is possible.
So what comes next? That’s the million dollar question. Most likely we’ll see a lot of consolidation and contraction in the industry as people realize that they can’t keep up the charade any longer. But there will also be opportunities for those who are smart and nimble enough to take advantage of them.
So whatever you do, don’t panic. This too shall pass. And when it does, those who are prepared will be ready to profit.