Tremendous

An angel investor's take on life and business

  • Texas Is Suing Itself To Stop Mask Mandates As Essential Workers Are Thrown Under the Bus

    The state of Texas lifted its mask mandate recently. As if this dangerous policy weren’t enough, it is now suing the city of Austin for choosing to keep a mandate and protect its citizens:

    The Attorney General for Texas is suing officials in Austin after they refused to enforce an order that ended a statewide mask mandate, he said on Thursday.

    If Austin can’t make a city ordinance to keep its people safe from death in the middle of a pandemic, why does the city government exist? One may as well dissolve it.

    These rules are putting essential workers, many of them poorly paid and from minority groups, in an impossible position. They’re at risk from the virus because they’re exposed to so many people, and now they have to enforce their own store’s mask mandate. But the state law gives cover to anti-maskers who violate the store rules and behave like infants when asked to mask up.

    I find this totally unacceptable. To be frank, it makes me quite angry. I’m only grateful I live far away.

    If the federal government can legally intervene, it should.

    For more posts on COVID, check these out:

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    Photo: “Greg Abbott” by Gage Skidmore is licensed under CC BY-SA 2.0

  • The US Government Is Selling Its Bitcoin

    The US government is selling its bitcoin…all $38,000 worth:

    Tucked away among the Ford, Dodge and Chevy sedans, the 12,000-gallon storage container and the inoperable Caterpillar tractor being auctioned off by the U.S. government is an unusual item: 0.7501 of a Bitcoin.

    The federal government did not reveal the source of its cryptocurrency holdings, but I imagine they were probably seized in a bust of some sort. Indeed, a far larger collection was sold off when the Silk Road was shut down:

    The government doesn’t say where its surplus digital currency came from. And while it’s a far cry from the 30,000 Bitcoins auctioned off by the U.S. Marshals Service in 2014 after they were seized from the Silk Road marketplace, the GSA auction is one more indication of how Bitcoin is becoming more and more mainstream.

    This does make me wonder if eventually states and sovereign wealth funds will buy crypto and hold it. Can the day be far in the future?

    For more on the latest in cryptocurrencies, check out these posts:

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    Photo: “Vice President Joe Biden visit to Israel March 2016” by U.S. Embassy Jerusalem is licensed under CC BY 2.0

  • This New Indicator May Tell You Where Bitcoin Is Headed

    For many years, investors in stocks have been able to see how volatile the market is expected to be by relying on a gauge called the CBOE Volatility Index, or VIX. This measure, often called the “fear gauge,” reads how much volatility investors are expecting based on option prices.

    Nothing like this has ever existed for cryptocurrencies. Until now:

    A bitcoin “fear gauge,” similar to the Cboe Volatility Index (VIX) investors use to gauge volatility in the stock market, saw its first trades on Wednesday.

    The T3i BitVol Index measures the expected 30-day implied volatility in bitcoin derived from tradable bitcoin option prices.

    The index goes two years back so far. Current expected volatility appears higher than normal.

    A high VIX tends to correlate with a drop in stocks. A low VIX tends to predict calm, gradually rising markets. This pattern may hold with Bitcoin as well, giving crypto holders a chance to see a bit into the future.

    For more on the latest in cryptocurrencies, check out these posts:

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    Photo: “Winklevoss Twins – Caricature” by DonkeyHotey is licensed under CC BY-SA 2.0

  • For the Vaccinated, Masks May Be Over

    If you’ve been vaccinated for COVID, can you finally take off the mask? Early data from Israel says yes:

    Pfizer Inc and BioNTech SE said on Wednesday that real-world data from Israel suggests that their COVID-19 vaccine is 94% effective in preventing asymptomatic infections, meaning the vaccine could significantly reduce transmission.

    If you don’t even have an asymptomatic infection, you shouldn’t be able to transmit the disease to others. That said, this data is preliminary and is not yet peer reviewed.

    The problem with real world application of this knowledge is that anyone can say they’re vaccinated. At a grocery store, for example, it would be hard to check everyone given constraints on time and manpower. So, I expect to see masks continue in public places until case rates are very low and everyone who wants a vaccine has had a chance.

    That said, this data can inform our actions in private settings. I look forward to being able to wear one less frequently!

    For more posts on COVID, check these out:

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    Photo:

  • Why NFT’s Aren’t BS

    On November 15, 2017, the painting Salvator Mundi by Leonardo da Vinci sold for a $450,312,500, the highest price ever paid for a painting. It is currently believed to be aboard a yacht in the Red Sea owned by Saudi Crown Prince Mohammed bin Salman.

    We are used to sky high prices for physical pieces of art. But until recently, digital art had almost no value. It could be reproduced infinitely, so how could anyone sell or own it?

    Enter Non-Fungible Tokens (NFT’s). These tokens are pieces of art, videos, etc. that have a unique digital key. Their one and only owner is recorded on the blockchain, just like the ownership of cryptocurrencies like bitcoin.

    The NFT market is exploding (see the March 8th post here):

    The 10 largest NFTs have leapt by between 60% and 900% so far this year, according to crypto data provider Messari. In turn, sales of the tokens footed to more than $60 million in February per Bloomberg, up from $250,000 a year ago.

    Beeple, a major digital artist, has done very well in the NFT market:

    Beeple, who made his first foray into NFT’s in October, generated $3.5 million in proceeds from a 20-work digital art collection two months later.

    NPR just put out an interesting, brief interview with Beeple here.

    Monetizing digital art is no less legitimate than monetizing physical art, in my view. Why should art made of pixels be worth nothing while art made of paint and canvas be worth hundreds of millions? The medium doesn’t make something art or not art.

    The global art market clocks in at $67 billion in sales, while the NFT market is only worth about $250 million. I expect to see that figure expand exponentially in the future, especially with the entry of blue chip art names like Christie’s.

    Does that mean there is no NFT bubble? No. Some tokens may be overvalued and some people are probably speculating on quick price increases. But my view is that this market is legitimate and here to stay.

    For more on the blockchain and cryptocurrencies, check out these posts:

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    Photo: “Mike Winkelmann – Beeple at Expanded Animation – OUT OF THE BOX, POSTCITY” by Ars Electronica is licensed under CC BY-NC-ND 2.0

  • New Stimulus Checks Could Set GameStop Off Like Never Before

    With the House about to approve another $1.9 trillion in stimulus, the final hurdle before the legislation is signed by President Biden, I found myself wondering what this means for shares in GameStop and other meme stocks.

    Those stocks took off big time in January, as personal income increased 10% month over month. Most Americans received a $600 stimulus check in December of 2020. A couple weeks later, shares in GameStop, AMC and others took off.

    That stimulus is dwarfed by the new one, which will mean $1,400 checks for most Americans along with expanded unemployment, child tax credits, and other benefits. If a $600 check set meme stocks on a tear, what will $1,400 do?

    Indeed, the expectation of stimulus payments may already be boosting GameStop shares, and may continue to do so in the future:

    Market strategists have said tens of billions of dollars of U.S. President Joe Biden’s coronavirus relief package could indirectly find their way into shares, possibly boosting “meme stocks” that are heavily promoted by retail traders in online social media forums such as Reddit’s popular WallStreetBets.

    My view of this company is that it’s lacking in fundamental value and should be avoided. However, it definitely wouldn’t surprise me if the stimulus gave the shares a short-term pop. The question is, how long will it last? You don’t want to be left without a chair when the music stops.

    For more on GameStop and other meme stocks, check out these posts:

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    Photo: “Money!” by ToGa Wanderings is licensed under CC BY 2.0

  • Will A Massive Uprising in North Korea Mean the End of Kim Jong-un?

    North Korean defector and Youtuber Yeonmi Park is reporting a massive uprising in Musan, North Korea. The uprising began when police cracked down on a market selling Chinese products, which is illegal in North Korea despite them being the only goods available.

    Farmers took their farm implements and attacked the police. The backdrop for this is an increasingly hungry population with little to lose. Indeed, the situation is so dire that even Russian diplomats are fleeing the country by railroad handcart, appalled at the lack of basic food and goods.

    I haven’t been able to find independent corroboration of this uprising, and Park is unclear on what her sources are, but I assume she is still in contact with people inside North Korea.

    Her discussion of the uprising begins here.

    For more on breaking news, check out these posts:

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    Photo: “Kim Jong-un visiting Berlin.” by driver Photographer is licensed under CC BY-SA 2.0

  • Has Merck Found the Cure for COVID?

    Merck has come out with great results from a new drug for COVID:

    Over the weekend, the Big Pharma and its biotech partner Ridgeback announced their drug, molnupiravir, hit one of its secondary objectives from a new trial, namely to reduce time to negativity of infectious SARS-CoV-2 virus isolation from swabs in patients with symptomatic COVID-19.

    The data show that, at Day 5, there was a reduction in positive viral culture in subjects who received molnupiravir (all doses) compared to placebo: 0% (0/47) for molnupiravir and 24% (6/25) for placebo.

    These findings are preliminary, and more data will come out soon:

    This is just a peek, with primary endpoints and more secondaries “to be presented at an upcoming medical meeting,” which will show a much clearer picture of how well this drug may be working.

    We should know a lot more within the next few weeks:

    Data from the phase 2/3 pivotal studies of the med are expected this quarter.

    This drug could be great for people who are hesitant to get a vaccine, who haven’t been able to get one yet, or for whom the vaccine did not prevent infection (rare but possible). Good news!

    For more on COVID drugs and vaccines, check out these posts:

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    Photo: Merck CEO Kenneth Frazier, “File:Kenneth C. Frazier.jpg” by Merck (www. Merck.com) is licensed under CC BY-SA 3.0

  • Why Someone Dying After Getting Vaccinated Doesn’t Mean Anything

    We keep hearing scary stories about people getting sick or dying shortly after getting a COVID vaccine. But we shouldn’t confuse correlation with causation. From the mathematician Gary Cornell’s excellent blog:

    For example, within one week after vaccinating 10,000,000 people, you will likely have around 98 people keel over and die for no apparent reason and if all of them were pregnant women, almost 27,800 miscarriages.

    In this post, he has a table with the expected rate of many diseases we often hear are associated with vaccines, such as Guillain-Barre syndrome. It turns out, a substantial number of people are going to get those illnesses anyway, with or without a vaccine.

    My wife made an excellent analogy on this subject recently. “Someone might have drank tea and had a stroke in the same day. But it probably wasn’t the tea.”

    Same idea here. And with the US having given out over 90 million shots, mostly to the elderly and frail, the fact is some people are going to die shortly thereafter. But it doesn’t say anything about the vaccine.

    The clinical trials carefully compared the vaccinated and unvaccinated groups in the trial and found no higher rate of complications amongst the vaccinated. And that’s the data to act on.

    Photo: Me getting the Moderna vaccine on February 22. I am alive and well as of this writing.

    For more on COVID and vaccines, check out these posts:

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  • GameStop May Go Broke Before It Can Reinvent Itself

    GameStop shares are surging again today, even as the company is losing hundreds of millions of dollars a year.

    The stock is reacting to Chewy founder Ryan Cohen beginning a push to transform GameStop into an e-commerce business. But it still has 5,000 stores that were losing a fortune even before COVID. And they won’t be easy to get rid of.

    Commercial leases typically last for several years, unlike residential ones. But what exact terms is GameStop bound by? This morning, I made it my mission to find out.

    The most recent info I could find was from their 2018 annual report:

    Store leases typically provide for a lease term of one to five years, plus renewal options

    That means this store-centric business model that is losing a fortune is locked in for years. Whatever Mr. Cohen does, it won’t take effect for quite some time, and the company could be out of cash by the time it happens.

    GameStop lost $300 million in the first 9 months of 2020 and had only $600 million in cash left. They could be out of money 18 months hence at that rate, or about 1 year from now. That’s long before these money-losing leases expire and free them to pursue a better business model.

    Their best course of action is to take advantage of their high-flying stock and issue a lot more shares. That war chest should be used to wind down all physical stores and completely focus on their e-commerce business, which is actually growing very quickly.

    Such a plan would dilute existing shareholders significantly though, so for current GameStop shareholders, it’s hard to see a happy ending to this story.

    For more on GameStop, check out these posts:

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    Photo: “GameStop” by JeepersMedia is licensed under CC BY 2.0