How To Get Rich, Young Billionaires, and A Marijuana Trade

Tyler here with this week’s Macro Musings.

As always, if you come across something cool during the week, shoot me an email at tyler@macro-ops.com and I’ll share it with the group.

Our June Macro Intelligence Report (MIR) is coming out this weekend! Find out what stocks Alex thinks will skyrocket in the final bull move of this record economical cycle by clicking here. We have a 60-day money-back guarantee, so there’s literally no risk for you to check out our favorite plays. Click here and scroll to the bottom of the page to sign up for the MIR.


Recent Articles/Videos —

India’s Big Boom — AK reviews the S-curve and why India along with commodities are the next huge secular trends.

Scared Trading — It’s the Billions season finale this Sunday! Get more of your Billions fix with AK as he analyzes Ben Kim’s timidness.


Articles I’m reading —

It’s not exactly an article, but this tweet storm from Naval Ravikant called, How to Get Rich (without getting lucky), was my favorite read of the week. It packs the punch of an entire MBA class in only a few hundred words. He discusses status games, thinking long term, utilizing leverage, and many more key concepts related to wealth generation. I highly recommend checking this out because there’s so much wisdom packed into so few words. Huge bang for your buck here.

As for conventional articles, this one caught my eye: How to make money in the art market: top collectors reveal their secrets.

I’ve always been fascinated by the art market because it’s 100% psychology driven, much like gold. There’s no cash flows attached, so traditional valuation anchors don’t exist. And the payoffs are distributed like venture capital. Most art sits in a warehouse and depreciates. But the winners 10x or more. It’s possible to get into the game for relatively low cost as well. You don’t have to buy something for 100 million. One of the collectors in the article started out in the 90s by buying pieces directly from artists for a few thousand bucks. Today those same pieces can be sold for seven figures.


Podcast I’m listening to —

One of the my go-to shows is How I Built This with Guy Raz. It’s an NPR podcast, so you can count on each episode delivering quality.

In this episode, Raz interviews Patrick and John Collison, two brothers from Ireland who founded the online payment processing company Stripe.

Stripe launched publicly in 2011, and in just 5 years both the brothers became self-made billionaires. Today the company is valued at 9 billion.

What stuck with me most was when Patrick Collison talked about how startups never feel easy even if they’re winning. There’s always an impetus to improve. He uses cycling to illustrate his point.

It never gets easier. You just go faster. And I used to kind of cycle quite a bit. And there’s a lot of sort of painful truth to that where as you cycle more, as you practice more, as you get fitter, as you get faster, as your form gets better, sure, you start cycling faster. Your times get better. But the experience of being on the bike never gets easier. The pain that you feel on the first bike ride, that’s the same pain that you’re going to feel on your 500th bike ride. You’ll just be going much faster on the 500th bike ride. And it kind of feels like that in a startup, where every day now the problems and challenges and, you know, visceral pain is just as acute as when we were starting out. The problem is just in a different form. It’s this kind of relentless process of trying to shift what it is that exists and what we’ve collectively managed to create so far into what we all set out to create in the first place. And we still have quite a ways to go there.


Chart I’m looking at —

For anyone trying to time the macro cycle, it’s useful to monitor loan delinquencies. Recessions don’t materialize until people stop paying their debt. Delinquencies are a telltale sign that liquidity has tightened and the short-term debt cycle has turned. I check this loan data about once a quarter.

As you can see, there’s nothing actionable here yet. The loan delinquency rate continues to downtrend and challenge all-time lows. Recession in the US is still a ways off.


Trade I’m looking at —

Marijuana has caught my interest again after I noticed the technical breakout in MJ, a new marijuana ETF.

The marijuana legalization theme has been on the market’s radar since 2014. And although the trend in these stocks has been higher, they have had crypto-like volatility. These names routinely rally 100% and then fall back another 50%.

The first time we wrote about weed was in the December 2016 issue of the MIR.

One of our picks, Aphria Inc. (APHQF) has climbed over 132% since! Sign up here to get our latest picks.

In that issue Alex quoted a Peter Thiel backed private equity firm which expressed their thoughts on how this theme plays out.

This will shake out similar to the alcohol industry or the soft drink industry, where economies of scale are very important… You want to have first-move advantage, and I think it will be aggregated to just a handful of companies.

I agree with this sentiment. A few companies will end up grabbing all the value. That’s why if you want to maximize your chances of getting paid, purchasing an ETF makes a lot of sense. If you take the index approach you maximize the chance of holding the winner at the end of the game.

There’s also a fresh catalyst underway in this space. The Canadian Senate is currently voting on the Cannabis Act, which if passed would legalize recreational marijuana. Canada will become the first large developed country in the world to have legalized adult-use marijuana. This would be a giant win for this “grey area” industry.

If you’ve been curious about the marijuana space, now may be the time to allocate some long-term capital as the rest of the developed nations around the world follow in Canada’s footsteps.


Quote I’m pondering —

…if you always put limits on what you can do, physical or anything else, it’ll spread over into the rest of your life. It’ll spread into your work, into your morality, into your entire being.  ~ Bruce Lee

Achieving greatness begins with the belief that you can.

That’s it for this week’s Macro Musings.

If you’re not already, be sure to follow us on Twitter: @MacroOps and on Stocktwits: @MacroOps. Alex posts his mindless drivel there daily.

Here’s a link to our latest global macro research. And here’s another to our updated macro trading strategy and education.

 

 

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.

AK

Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.