Month: July 2018

Dropped Like A Box Of Hammers

I had an interesting conversation a few weeks back with someone who is quite the “techie.” i.e., Not only is their business world based in tech, so too seemed to be their worldview meaning – what is said in and around “The Valley” is their only viewpoint, everyone else: “Just doesn’t get tech.”

This is important from my perspective for many reasons. First: Facebook™ is slated to build a brand new facility (slated to open 2019) in my area of New Albany at a price-tag of $10’s of millions, along with creating many supposed high-end tech jobs, as well as elevating the Columbus Ohio area into the “tech” region for growth. I already see the influx of this in my day-to-day activities. i.e., I’m as easy to be run over crossing an intersection on my daily run by someone texting while driving their Ferrari®, Porsche®, Lamborghini®, or other exotic. And yes, all in the same run!

(Side note: I was at the gas station last year when the person in the Bentley® next to me asked me for help to open the gas door. When I asked “Didn’t they explain this to you when you bought it?” He answered, “Oh, this is just a loaner, my Porsche is in the shop.” i.e., This ain’t your grandfather’s cowtown any more.)

So as we talked it was obvious any similarity related to the prior upheaval known as “the dot-com bust” was falling on deaf ears. The reason was obvious: If they questioned what was happening today with any true reflection and contemplation – their “world” along with “worldview” may come crashing down. And that seems to be a road that will not be traveled, let alone, less, along with a bridge too far.

One of the issues that we discussed was the current “Unicorn – IPO” debacle. I made my points and pointed to past commentary and this was met with the usual “Yeah, but the VC environment, and funding rounds are still blah, blah, blah….” This took place a few weeks back.

I’m not going to list the entire conversation, but I will post a portion of an article I wrote back in April of this year “As goes Facebook So Goes The Entire Fallacy” that sums up pretty much what our conversation revolved around, and where I was coming from. To wit:

Although that is precisely what happened via the mainstream business/financial media. i.e., They ignored exactly what these platforms were actually selling.

Trust me, they knew, they just turned the ultimate blind-eye to it all. For it just didn’t fit the narrative. In other words, headlines like: “Silicon Valley Trep creates platform that connects users around the world and makes $Billions for himself in the process.” makes for much better news stories than: “Silicon Valley harvests and sells all its users data online to the highest bidder, to the tune of $Billions, making themselves filthy rich. All at the cost, and naivety, of their users privacy.” If you think I’m off base? I’ll just remind you of SnapChat’s CEO press coverage and let you make up your own mind.

For a time this all worked like magic, for it was. With the wholesale adoption and implementation of Quantitative Easing (QE) back in 2010 came another form of implementation and adoption for magical thinking. i.e., The “Unicorn for IPO riches” As long as there was QE – there was magic.

Then QE ended, and with it so to went they. The real issue here for all of this was, that if the world of unicorn riches and IPO dreams was now defunct? That meant only one thing.

Facebook would be the last bastion to make (or keep) all those “magical riches” alive. But more importantly: Safe. Hint (paraphrasing the line from Van Halen’s “And the cradle will rock“) “Have you seen Facebook’s stock?” (Cue, Eddie)

Think about it, when was the last time you heard about an IPO? Did you know Dropbox™ had one about a week ago? If you only glanced the headlines during that week, maybe. But as soon as the price fell below the IPO debut? let’s just say – they fell from the headlines and bylines also. To be fair, they have recovered marginally, but there’s no more fanfare for days and weeks on end, any more. “Decacorns?” I’ll just ask “Hows that Uber™ thing working out?” Sorry, too soon? And I won’t even mention Snap™, well, sorry there too.

But Facebook has been the last bastion, as well as last man standing, for the entire “it’s different this time” mentality. After all, if you took your cues from the Silicon Valley aficionado set, coupled with the next-in-rotation fund-manager cabal, peppered with some illustrative “insight” displayed via many of the financial shows, the obvious group-think consensus was, FB, for all intents and purposes, was the obvious winner take all of the social media paradigm.

Or said differently, they tried (and continue) to sweep-under-the-rug all their prior “insights” which resulted in abysmal failures in a quick slight-of-hand move meaning, it’s not that we were wrong per se, it’s just that there can only be one. i.e., FB is social. Period. After all, “Just look at their stock price!”

The reason why I thought the above was needed was, as always, for context. Because, as stated by Rod Stewart, “Every picture tells a story, don’t it?”

Which brings us to today.

Remember how the Dropbox IPO and its initial subsequent losses were completely erased in such a manner as to prove once-and-for-all that all the naysayers were wrong? i.e., “IPO’s are back!”, “Tech is back!”, Silicon Valley riches are back!”, and on and on. Here’s the evidence as far back as just last month (e.g., mid June) to back up their claims. To wit:

(Source)

And here’s the evidence that maybe it ain’t all that. Remember, just one month later Again, to wit:

As I’ve stated ad nauseam, “Isn’t it funny how you don’t hear about any IPO darlings any longer via the mainstream business/financial media?”

There’s also another reason why I’m putting this out, and it’s for this reason:

During our conversation I tried to make a case where caution should be paramount and take nothing for granted. i.e., current market size, building of new offices, whether they’ve already broke ground or not, fully or near complete etc., etc., should not be taken as any surety that it will either be finished, opened, or even be occupied by the ones whom built it in the end.

This argument was received at first as something, “laughable.”

That is – until I told the story of something similar that I watched happen in real-time during the fallout of the first “tech boom bust.” The example was called “Genuity™”

From my article, “When New Headquarters Turn Into Real Headaches”

People talk today as if Silicon Valley is, and was, the only place on the planet where technology as well as innovative companies start or started. I would like those of that ilk to remember the Boston area had its own high tech catch phrase such as “America’s Technology Highway” (aka Rte.128/U.S.Rte. 95). Within a 50 mile radius of Boston you had firms such as Wang™, and DEC™, and a host of others. All with new buildings (more like towers) that garnered enough real estate and blacktop to make one think “Silicon who?”  So for some to think “well unless you’re in Silicon Valley – you just don’t get technology.” I would say: “Au contraire!” So much so we here just might see what many there refuse to even consider. Let alone see. i.e., It can all come to a screeching halt faster than one can contemplate kale vs arugula for their corporate catered lunch.

As soon as it seemed the Genuity Campus opened it was learned it was closing being put up for lease as well as for sale. In the blink of an eye of what was deemed “won’t happen” did happen. Suddenly a deal that was thought to be as solid as the foundations built for the new campus complex crumbled. Here’s 2 short paragraphs from an article  “Genuity Faces Bankruptcy As Verizon Ignores an Option” by Seth Schiesel and Simon Romero NYT™ 7/26/02 (funny how this date is also today’s) that shows just how fast things can change:

The campus, as it was known then, was composed of buildings and office towers that were, in many ways, more massive and overarching than almost all the other office parks around it. It’s was staggering. Just the construction (let alone costs) to build entirely new exit and entrance ramps that bridged over it then subsequently connecting to it alone (e.g., a U.S. Interstate highway) was reason enough for pause when watching this park being built.

And before it opened, the company that was to occupy it, was all but gone. They went from supposedly needing the equivalent of millions of square feet of office space – to occupying the corner of one floor, in the back.

I remember empathetic thinking back then about all those people they hired and lured from other companies, all the people who relocated from elsewhere to work in this brand new gleaming “campus” suddenly found they were all unemployed before they even began. Near overnight, something else dropped like a “box of hammers” when the dot-com version of “It’s different this time” fell.

It’s called, “Reality.” And when it drops, many find it’s far heavier than it looked originally.

© 2018 Mark St.Cyr

Strike Three Awaits aka: When “MOMO” Ends

If there’s been one thing prominent behind the headlines today that shows just how myopic, combined with, what appears to be a an outright willingness to jettison any deductive reasoning across most, if not all media outlets. It has been the stated interpretations or reasonings behind not just the Facebook™ share price collapse, but also the confluence of similar out-of-the-blue for either negative, or lack of reaction entirely, to the once darlings of any and all BTFD (buy the f’n dips) worshipers.

These reasonings have bordered from the outright delusional, at best. To forthright indulgence into the land of, baffle’m-with-bullsh*t. It’s been beyond ludicrous, to say the least.

The current myopic view is that the debacle in Facebook (FB), when it comes to its share price falling, is it’s the result of the latest scandal and Wall Street had a hissy over it. However, as they keep pointing out, the business (aka revenues) is booming! i.e., “This company is still generating Billions upon Billions!”

Yes, yes it is, which should be your first clue as to take what happened in its share price as an ominous warning sign for bigger things to come rather, than the myopic reasoning that this is solely just some over-reaction to a mildly disappointing quarter. Hint: It’s not.

To illustrate my point we need to look back over the course of the last year or so for context. For if you don’t, you could miss the larger picture contained within.

It’s also important in other ways, which are just as important to note. One is the standard moniker affixed to many like myself. i.e., “Even a broken clock is right twice a day.” It’s an easy trap to fall into when any calls for caution are continually pummeled under the sledgehammer of an incessantly climbing “market.”

I get it, “price is king” as some will say. Till – price reverses, then all that seemingly, well founded genius of “Buying any and all dips, regardless” gets dropped on its head. Or should I say, crown?

The issue one needs to be very cognizant of is, not only did FB’s share price get dropped, but this time, they came for Twitter™ in unison, with the those same “sledgehammers.” There is an importance here that many are missing.

Twitter, for those whom might not remember, just landed itself within the coveted S&P 500™ index listing. This was the moment that was supposed to prove all the nay-sayers wrong for holding any view other than “it’s different this time.” Now it’s all about the long view, value, etc., etc., etc. (i.e., These are mature or, maturing companies, and our view, along with our evaluations, should also change.)

OK, fair point. so what happened that we can “evaluate” as to help shape any new understandings going forward would be a good question, yes? So how is this playing out, any examples? Yes, yes there were, I’ll let you judge for yourself.

Nearly as soon as it was included, meaning more ETF’s, pension funds, 401K’s et al. would have increased exposure to it – the “sledgehammers” came for the newly ascended bird-on-a-perch. The result? Hint: See any portfolio now containing this once dynamic duo for clues.

The above are the most obvious, but they are far from the only ones that need to be included for perspective.

Netflix™ was hammered in much the same way. Alphabet™ (aka Google™) and Amazon™ are also notable for their lack of reaction, along with their inability to hold much of their lackluster push higher.

This is not the reaction expected to a season of “Great earnings beats!” that is told/sold across much of the business/financial mainstream media.

In fact 10% – 20% downdrafts in a single trading session of not just one, but a couple of the most high-flying names for recommendations across all of Wall Street, along with a sudden vanishing of any BTFD’ers to make them whole again (or appear genius) has suddenly manifested a myriad of facial ticks and psyco-babble across many a next-in-rotation fund manager.

And it’s just a start in my opinion, which brings us to my original headline and why I made it.

Now that we have the above for some context, let’s move it into the bigger-picture viewpoint and see if we can make any possible assumptions that might be valid, along with deducing any possible conclusions, where one might position themselves or, their business, against possible turmoil or headwinds.

Back to the “broken clock” theory first, for a moment, because it’s relevant.

The “broken clock” theory is based upon the idea that even if something is broken (meaning useless) that it can appear to be correct depending on the circumstances. It’s a double-edged-sword type of analogy when taken in full context. To illustrate this point one can use the idea of “a monkey throwing darts at ticker symbols” proving to be an illustration of the “broken clock.” i.e., even though in reality its a moronic exercise in stock picking, under the right circumstances, it can appear quite genius.

If you think this is hyperbole? Then it’s quite possible you don’t fully understand or appreciate the ramifications the last eight years or so of central bank fueled and rewarded BTFD (buy the f’n dips) “genius” has brought us. Because – that is exactly where we are now, as proved out in another recent Wall Street Journal™ article titled: “Darts Are Beating the Ira Sohn Investing Pros”

Here’s just one line from said article that seems to be trying to summarize where we are now. To wit:

“Once again, investors would have been better off picking companies by throwing darts at stock tables than listening to Wall Street’s geniuses.”

The issue is, to a few of us, this is old news. And, we’ve been stating it for years. (i.e., just one of QE’s ramifications) Here’s just one example back in 2014, again, to wit:

“What we don’t need – nor want – is another bowl of the 2008ish tripe washed down with this years new flavored Kool-aid™.

Here’s what a few of us also know that we are not “wrong” about.

When a monkey throwing darts can outperform most of today’s so-called “best of the best” hedge funds – we’re going to put our money on the monkey, rather than putting it anywhere close to where these people can put their hands on it for their own personal self-serving monkey business.”

Which brings us squarely into what may be “strike three” from a full windup pitcher who has already successfully placed two prior.

“Wait, two prior?” You’re now asking.

Yes, that’s correct. Two 110 mile-an-hour financial curveballs that took the “markets” breath away, yet, has left it remaining in the batters box thinking the next will surely be slower and wider, for no pitcher can sustain anything with such momentum and trajectory three times in a row. After all, 110 mile-an-hour curveballs are supposedly impossible, right?

Well, they are. But so to was the idea of QE – and here we are.

The problem here is this new releif pitcher (e.g., QT) has been sent in to close down the QE show – and there’s only one way to see if there is indeed any “gas” remaining in the tank. And that’s – to test it.

“Strike One” came when the original spigot of QE was officially announced over back in Oct/Nov. of 2014.

I stated over and over, and over again, that if everything I was arguing had any merit, than it should prove itself, with near immediacy, in the fairytale utopian “investing” vehicle built of QE known as “The unicorn and it’s IPO cash-out.” If I were correct it should come to an abrupt death of what was then considered the “darling of investing prowess.”

And it did.

The next came at the beginning of this year, when I stated much along the same as I’ve said before, that “If I’ve been wrong for the right reasons” then the moment the “markets” have confirmation that the Fed’s balance sheet has, indeed, reduced. (i.e., no more reinvestment of prior purchases and actual roll off accordingly) that the “markets” would react not just negatively, but knee-jerkingly so and in dramatic fashion, where thoughts of 2008 panic once again reemerged.

And it did, now known as the “February Scare.”

Yet, that “scare” seems to have been long forgotten, which is just another point in the progression that I’ve been stating should be the result if this QT (quantitative tightening) was to be appreciated in its fullest rather, than what most of the so-called “experts” were touting. i.e., “QT is now a well-known and the market has no real concern over it, blah, blah, blah…

The issue is these recent “market” actions are proving quite the contrary.

As I and a few others have stated since the beginning of the year, is this: If this entire Potemkin Village now known as the “markets” is nothing more than a house-of-cards built upon shifting sand, than the results to back up that premise would become manifest in-and-around the second quarter during the earnings reporting. The reasoning was simple:

After the build up made possible from the tax plan actually getting passed (something I originally doubted, with good reason) that euphoria would wear off once this years earnings began in earnest. It seems to have done just that for we have not since made any across the board new highs as of yet.

First quarter reporting covers the holiday shopping period. Exposure is a must regardless of what one thinks. Money has to be invested for exposure not just for the earnings, but for the new year. And when looking back at all the “beats” for ending 2017 – it didn’t take a genius to assume the “markets” would remain at elevate levels if not even surpass. And the First quarter did just that. But there was just one nagging issue – projections.

The problem here was that these “projections” were now sacrosanct to the last bastion of residual “hot money” left over from all the prior years of QE. i.e., The FAANG family of tech.

If the new religion purveyors of “It’s different this time” dogma demonstrated even-the-slightest of disillusionment to the “growth story?” It would show that it all was truly over with a sudden new-found appreciation for the old lost religion of, “Hurry up and sell!”

And it did just that, digging this once forgotten practice up in-spades. Let’s call it, “Strike Two.”

So now, what is this possible “Strike Three” call I’m making? Good question, and it is this:

There’s only one thing left that is to be tested as to solidify where these “markets” will go next. And it isn’t the results of a trade war per se.

No, this “market” has thrown quite a few pitches over-the-plate since the ending of QE. There have been some that were easily called strikes only to be reversed as called balls by the instant replay team composed of other central bankers. (Hint: James Bullard, or Mario Draghi et al.)

But now the count is full, and the entire series is on the line, with a full count and bases loaded. Which lies at the heart of the dilemma.

For this pitcher has now shown they are capable of throwing pitches at incredible speeds (think China) along with trajectories needing a degree in quantum physics to evaluate. (Think algo’s and more) And in the batter’s box is one named Jerome Powell.

One who has signaled prior, that when the game is on the line (i.e. markets selling off) he might not swing the Fed’s heavy hitting bat, also known as “more-cowbell,” and take his (i.e., the Fed’s) chances that any assuming market turmoil is nothing more than what will later be discerned as, “a called ball.”

The issue this batter may fail to realize is the extreme that this “market” is built on aka: “The Fed. Put.”

And in doing so this “market” is going to put its final pitch directly down the center-of-the-plate (i.e., roiling markets) where the decision for swinging will be made moot.

In other words: The Fed. will either have to swing-for-the-fences, and take the chances of missing – or not swing at all. Yet, both will have the same effect. e.g., Game over.

But make no mistake – that pitch – is coming.

© 2018 Mark St.Cyr

Dear “It’s Different This Time”: PS…

From yesterdays’ note. To wit:

And that my friends is precisely what I mean when I have stated over and over, and over again “Why being wrong for the right reasons matters rather, than the other way around.” The reasoning is simple:

When it’s over, it’s over.

And for those that thought yesterdays’ Facebook™ plunge was a fluke? Here’s this mornings breaking news via Bloomberg™, again, to wit:

(Source)

© 2018 Mark St.Cyr

Dear, “It’s Different This Time”: You’ve Got Mail!

Over the years I have found myself at the center of many “debates” when it came to the entire social-media phenom and its larger topic of “Silicon Valley” in general.

And during this period I have found myself ( both directly and indirectly i.e., by name or, grouped in as part of the “doom and gloom crew” that shall not be named) many times being used as some virtual piñata.

So much so, that I began applying my own moniker to what I deemed the “aficionado set” as a way to encompass all this so-called “in the know” crowd under one banner.

Primarily this group was composed of the many one would see throughout the mainstream business/financial media whether TV, radio, print, et al. The smugness and arrogance dripped from this crowd like a toddler’s diaper after their fifth sippy-cup. It was, to say the least, pathetic in my view.

To those who haven’t been following my work that long and don’t really understand how the above fits into this context, here’s a screenshot that encapsulates it, which I’ve used over the years when I felt helped make a point. To wit:

Photo credit: Screenshot publicly viewed Twitter™ Feed.

The article they were “discussing” at the time was when I wrote “‘Crying Towels’ Silicon Valley’s Next Big Investment Op” and since that moment nearly all the proposals I put forth have come to pass. What seems to be taking place now is the ramifications when “Being wrong for the right reasons.” begins to be proven as the correct stance.

And for those who’ve wondered why I use the term “as they say in The Valley: pictures” when I post some charts – now you know. And for the others looking at the above wondering, “Who are these people?” Well, at that time, one used to be a near fixture on “Bloomberg™” when it came to everything Silicon Valley and “investing.” But since the Fed. pulled QE he seems to no longer be needed as much. Scheduling conflicts I’m sure, but I digress.

The reason why the above is needed is for context, because, as of late, I’ve been opining about the similarities between AOL™ signaling the end of the “tech boom” and Facebook™ today.

So similar in view have these been playing out that I began using the term “Rhyming with an auto-tuner.” I have been nearly alone in my calls for caution, and when I’ve not been alone it’s been for situations resembling the above. i.e., ridicule, and more. After all , “Look at the stock price!” has been the clarion call-to-arms against anyone daring to say words against the “It’s different this time” truth-sayers.

And then, suddenly: It’s different this time. The problem? Because it’s not. To wit:

(Source: Front-page screenshot Drudge Report™)

And that my friends is precisely what I mean when I have stated over and over, and over again “Why being wrong for the right reasons matters rather, than the other way around.” The reasoning is simple:

When it’s over, it’s over. And everything you believed you learned by being rewarded countless times to just “BTFD” (buy the f’n dip) – suddenly becomes the worst learned habitual trait that you’ll ever need to overcome.

But don’t shed a tear for Mark, because he’s been selling out at prices that may no longer be available again. Ever.

Just ask any prior AOL™ bag-holder stock holder of the prior “Tech bubble.” I’m more than certain they’ll get a chuckle if one says “But it was supposed to be different this time!”

© 2018 Mark St.Cyr

 

Google Me This, Batman…

For those not familiar with the above title, it’s in the theme of one of my favorite characters from the original Batman® series of the sixties known as “The Riddler” played by Frank Gorshin. His questions (or riddles) always started with the phrase, “Riddle me this, Batman!” And it is in this theme one question keeps gnawing at the back of my head as I look over Alphabet’s™(better known as Google™) pleasantly reported earnings beat.

Here’s what I just can’t seem to reconcile:

Paid “Clicks” grew by some +58%. Sounds pretty stellar, does it not? But here’s where something just isn’t squaring up too me, ready?

If paid “clicks” are showing their advertising power to attract with such an increase – then why would there be a need to be discounting them at double-digit (-22%) percentages?

Remember, the accepted metric, or “standard” across all advertising platforms for years, which still continues today – is that it takes on average 1000 viewers to make 1 physical positive action, in this case it would be a click.

This is known as the “Direct Mailing Standard” and also “The Times” metric as was adopted by the NYT™ years back. It’s been a standard and continues as one, because it’s been proven out even when it comes to the web of today. I know this from personal experience, because I’ve seen it work and play out in real-time via my own measurements. And also, I sold advertising earlier in my career, which is why I also know of it.

Which brings me back to my conundrum, which is this:

If you were the vendor or holder of something which showed a +58% increase in demand or its effectiveness – would you then discount it -22%?

Better question might be, “Why would you discount it at all?”

Then again, these “clicks” are set by auction if I’m not mistaken, so that would mean people found them less valuable even though they proved to be 58% more effective? (effective as in getting someone to click on it I have to presume)

To ask it another way: If we propose all things being equal in assumptions for effectiveness via the previous quarter – and the bidding results return with a -22% haircut – what does that signal?

Remember, If we give the assumptive benefit-of-doubt as an advertiser, we would have no idea there would/may be an increase at all. i.e., Meaning our best hoped assumption would be that they would be at least as effective as last time in returning prior results. A very fair assumption, indeed. Especially in advertising. Yet, that assumption, if it worked precisely the same as before, was worth -22% less to those advertisers going in? Are you seeing my point?

Maybe it’s me, but there just seems to be something perplexing in these numbers. However, if we apply Occam’s Razor maybe there’s an answer. Such as:

Is the value of “clicks” going down by double-digit percentages (e.g., -22%) because advertisers are not willing to pay for ads that attract nothing more than a “bots” eye?

Maybe, it’s precisely those “bots” that are now needing to work over time (e.g., +58%) being deployed in ever greater numbers to make up for the loss in revenue?

Again, all conjecture, but I just can’t seem to ratify that conundrum to my satisfaction.

I mean, it’s not like there’s any known problems in advertising when it comes to being plagued by “bots,” right?

Or maybe there is. To wit:

(Source – Non-working screenshot of top result using Bing™ via entering search term “Buy google clicks”)

Probably nothing.

© 2018 Mark St.Cyr

Social Media In Four Words: Lord Of The Flies

There’s hardly a moment that goes by in today’s social media connected world that isn’t filled with the most pustulent, indignant filled outrage.

Regardless of the moment here’s what you’ll find: someone, somewhere is just coming to realize that for no reason other than someone they do not know has decided – they need to be destroyed with the most vile laced hatred, publicly. And in some cases, it’s far worse. i.e., open calls for hands-on violence against their property, family members, employment, and more.

This is what describes social media today. A far cry from the place once described as, “To make connections and keep in touch with family and friends.” of yesterday, is it not?

The reason for the “Lord Of The Flies” reference was in response to a repeated question I’ve been asked of late, coming from quite a few differing sources such as friends and family, as well as other media queries.

It goes something like this: “Do you think social media has become a cesspool? And if so, why don’t you think Zuckerberg, or Dorsey et al. aren’t cleaning it up rather, than seeming to do (as in defend) the opposite?”

Here’s how I usually respond:

Although the first part of your question i.e., “Is it a cesspool?” can be answered with one word, “Yes.” The second part on the, “why?” takes a few more, but in that few more is contained the entire metaphor, or analogy to answer it.

For me, the allegory contained within the story of “Lord Of The Flies” (William Golding, 1954 Faber and Faber™) clearly depicts what is transpiring within these enclaves. i.e., It’s children with no real understanding of right vs wrong, with either a stunted moral understanding, or worse, completely twisted ones.

Primal instincts rule and are enforced, right alongside where the fear of being at the mercy of the group or crowd commands one to invent rationalizations why they must either conform or, join in. Irrespective of how unsavory or, outright dangerous the calls to conform may be. i.e., Join in, conform – or perish.

Only escape from the “island” sort of speak, allows any semblance of back to reality and/or the real-world.

And there lies the issue (in my opinion) that gives one a glimpse as to why the figure heads of these companies seem to defend the indefeasible. But there’s a twist to all that “defending” that many are missing, which I believe helps prove or, at least, help back-up my insinuation.

Let’s use two easily remembered uproars that transpire all the time on Twitter™.

First: Twitter users are routinely and relentlessly calling out Jack Dorsey for “allowing” the President to tweet on demand. The furor over this has been worthy of the term hysterical. And it has not relented. You know what else has not relented? Mr. Dorsey’s tacit approval of his continuation. Again, to the absolute dismay and disgust of its most boisterous users.

Then there’s the other, which is: That same user base will repeat or display the same type of furor at Mr. Dorsey for some other infraction they deem as “unacceptable.” And with near immediacy Mr. Dorsey is back-peddling, apologizing, then openly agreeing with. Case in point: The Chick-fil-A® uproar.

So why the difference or, seemingly double standard toward his user base?

Trick question, there is no difference – if – you look at from the point of business. Here’s what I mean:

The President actively pushes the user base of outrage (which I’ll contend is the majority of all users on the platform) into action. i.e., to use and engage on the platform. If he were to stop or do something to which it would impact the President’s tweeting? The user base and active monthly user clicks would drop precipitously. i.e., Rage and hate is good for the “clicking business.”

And in the social media business – a click, is a click. Human or bot doesn’t matter, as long as that “click” will pass the ever evolving and encroaching terms advertisers will still pay for.

So, Mr. Dorsey offends both Chick-fil-A customers, as well as any business minded person with the sheer hypocrisy of business ethics he demonstrated in his statement. But remember – all those “business people” along with “Chick-fil-A customers” are minuscule in comparison to losing the user base of outrage. (all assumptive, of course)

This is why he seems to stay so steadfast to allowing the President to use the platform as he likes. Why? Because the outrage is good for business. Ban the President in a stance of solidarity with his customers – and the platform tanks. Are you beginning to see my point? If not, let’s move on to Facebook™, for another comparison.

There is probably no CEO of a major concern that appears to be more disingenuous every-time he speaks than Mark Zuckerberg. Regardless of the venue (think  U.S. Congress and the European Commission for just the two latest) people are always perplexed as to what he actually means when he makes statements or, trying to square up his actions with his prior words when it comes to Facebook’s policies.

Again, it’s as easy to see as the pillow he uses to prop himself up: Policy is driven by the user of outrage, whether it’s human or bots. All is theatrics as to not allow any disruption or, any tamping down of this user base. All others are expendable. Case in point:

Conservative views? Banned, shadow banned, or whatever else it’s called.

Remember when “Zuck and Crew” were so concerned over this set of users and publishers back not all that long ago? Remember there came a meeting where Mark stated as much as (paraphrasing) “We can’t even do what you’re accusing us of, nor do we want to.” Only to suddenly find the user base so outraged that it suddenly near overnight they openly admitted, “Oh yeah, by the way, umm… yeah we’re doing that.”

Today? It’s even worse. But (and it’s a very big but) then again, that depends on which user group you ask.

If one remembers back then, they openly affirmed that not only were they going to continue this process, but they would double, if not and triple down on it. And they have done just that. So much so that now the words contained in “The Declaration of Independence” have been flagged as “hate speech.”

Think that through for a moment, and as you do I want to ask you a question: “Where was the outrage of such from Facebook’s leadership, never mind just Mr. Zuckerberg?” Hint: __________(insert crickets here) Now, as you try to reconcile that bemusement let me ask you the “Why?” for this latest public defense. To wit:

Via Re-Code™: “Mark Zuckerberg clarifies: ‘I personally find Holocaust denial deeply offensive, and I absolutely didn’t intend to defend the intent of people who deny that.’”

It seems that the allowance or defense of the indefensible caused Mark to have to come out and clarify that although he finds it “offensive,” defending (or the allowing for publishing on his platform) this viewpoint is defensible.

So let’s see, the document that allows for this is hate speech, is what is considered the true hate speech, and is not worthy of defending in-kind or, in a manner so prominent, as what Mark rushed to the defense of what most consider truly offensive. Got that?

Oh, and just to clarify again – he finds it all, “deeply offensive.” But as  for the Declaration of Independence? I guess he and the crew had other more pressing engagements.

The reasoning is as clear, as it is simple:

Holocaust deniers are good for business. People defending the Declaration of Independence along with the Constitution? Not so much. i.e., They’ve left the “island” long ago, and those still remaining are no longer engaging or, just waiting for another platform or “ship” to come along. So, when it comes to this crowd or, group of users? “Zuck and Crew” could give less than two sh-ts. Those “clicks” are again probably minuscule in comparison to the clicking of bots and more of “outrage.” And “Zuck and Crew’s”  actions (or lack of) seem to prove this out.

As I iterated earlier, using a business lens – it all begins to make sense, does it not?

The other similarity between the analogy of the book and social is what transpires at the end – and I do believe we are witnessing just that.

For as the mob goes from publicly ridiculing and antagonizing those deemed “not with them” to finally taking up arms and hunting down their perceived adversaries – they begin to burn the entire island down, setting everything ablaze.

I believe that’s precisely where all of social media currently is. i.e., In the final stages of a woeful tale.

© 2018 Mark St.Cyr

Welcome Back To The “Dirty Harry Market”

In a “market” that rewards BTFD (buying the f’n dip) of reckless abandonment. I believe we are, once again, at that moment in time said none better than Harry Callahan (Clint Eastwood) in, “Dirty Harry” (1971, Warner Bros.™) “…you’ve got to ask yourself one question: Do I feel lucky?”

I’ll just add – “Still?”

I want to propose why you may just want to really reflect on the above, because there are happenings taking place on the other side of the globe that could have more impact to one’s business, never-mind portfolio, than if Harry still had one left. Hint: The Chinese Yuan.

There are many competing scenarios of what is taking place in China, in regards to “trade war” scenarios. The one that appears to be the most overlooked by the mainstream business/financial media is the happenings in the Yuan.

On July 3rd when the Yuan approached and briefly broke above the $6.70 level of the USD/CNY cross rate, the PBoC (China’s central bank) demonstrated that this level was a demarcation point that would be defended via the approval of the politburo. The result was clear – the currency strengthened and the cross rate fell by what many consider noteworthy points. i.e., Message – “Short it and we’ll decimate you into oblivion” – Love, The PBoC.

However, since that point there’s been some rather odd movements within for interpretation, because if they are defending, they seem to not be doing such a good job also, if they’re allowing it to devalue with their blessing, then they seem to be spending quite a bit of resources to accomplish the opposite.

Is there a third option? I believe there is, and if I’m correct – it’s may be one for the ages. So let’s look at what’s caught my eye, yet seems oblivious to most of the mainstream press. To wit:

 

(Source)

The above chart is of the USD/CNY cross rate as of this writing for this month of July. I have annotated it with what clearly appears to be the PBoC intervening to slam the cross rate down keeping it “stable,” as they say.

However, with every intervention has come a response just as powerful – and it appears to be gaining strength.

If I’m correct, what the above may be showing is that the PBoC, along with the politburo, is desperately trying (i.e., not some grand plan) to control the Yuan from collapsing sending a wave of capital flight it will not be able to control, all while trying to use current gyrations as a way to insinuate that the reason for this devalue may be what the politburo has designed and implemented as to demonstrate it also has, under its control, its own weapon of financial mass-destruction should it want to implement it in response to tariffs and more.

I believe that is not the case. I’m of the opinion they are trying desperately to stay one step ahead of an already developing, unstable situation, and are using the current “trade war” narrative as something to help disguise what’s truly happening underneath. i.e., As far as the currency is concerned: It’s all coming apart.

Again, if the PBoC, with the blessing of the politburo, was allowing the Yuan to devalue – then why throw so much resources (as in intervention) to keep it down? If this was the original intent, then one would be reasonable to assume, that the reactions for falling would be muted, if not relatively flat, during such a short time frame. i.e., two and a half weeks.

But what has been the response? Looking at the above chart, if it’s to be believed, shows what is commonly known in trading as the “beach ball effect.” i.e., unless you forcefully keep it underwater, the moment you release it, it’s coming back up.

The above seems to be inferring just that. Yet, here’s the issue if that observation is correct: That means they’ve lost control. And if so, that means everything one now takes for granted, and by that I mean just that – everything changes.

So where does the above fit in to a bigger picture? Here’s a hint, again, to wit:

The only thing that portends things could get even worse should the above have any relative truth as to what is currently happening may be this:

It may end up that The Fed. may be the one who is out-of-bullets, just when they need them most. But make no mistake, the “market” is surely going to ask that other question should these markets begin roiling into chaos. That other question?

“I gots to know!”

Heaven help these “markets” should Mr. Powell need to step up to a podium and all the “market” hears is a “click!”

© 2018 Mark St.Cyr

Rhyming In The Key Of: “It’s Different This Time”

For those of you looking at the current “market” action while singing the praises of, “It’s different this time?” May I just make the observation that this new “tune” you’re singing, is actually a remix of a prior 20 year old “one hit wonder” period known as the 90’s “tech bubble.”

Yes, maybe too you, this new slamming sound emanating out of your E-Trade™ account terminal sounds all new and fresh, with a real techno beat, but for someone who was actually there when the original was playing, it’s the same old song and dance rhyming with an auto-tuner.

I made this case a while back using Facebook™ as the example, comparing it to AOL™ of that period, while also pulling today’s cash-burn darlings into focus. Here’s what I said…

For the last 7 years or so one thing has been certain: don’t you dare compare anything “tech” today to back then. What is “back then?’ Hint: the dot-com crash.

Why? Because: “It’s different this time!” Well, my answer to that remains the same: “Sure it is.”

I have been making that case to the screams and howls of many of today’s Silicon Valley aficionados. And for a prominent example, I’ve used none other than the most idolized company of tech today to compare it against the same of the 90’s e.g., Facebook™ and AOL™.

In doing so I have received more vitriolic disdain than if I had tried to openly explain the value of religion at an atheist convention. The only comparison that may top both is trying to explain Business-101 to Ph.D economists. But I digress.

In trying to make the case using true business metrics, as opposed to unicorn and rainbows, fundamental business metrics, and principles, have always fell short for only one reason: The stock price.

When a company has nothing more fundamental than a burn-rate, as opposed to a fundamental such as making net profits? The rising value of the stock price (regardless of its multiple) is nothing more than the fundamental business phenom known as – the greater fool theory. Period.

Then, just like I implied, unicorns have all but vanished from the headlines. And Cash-burners? Let me ask it this way, “How comfortable does one feel about their latest Netflix™ earnings report?”

Now, I know Facebook’s stock price is still skyrocketing, yet, how is your viewpoint of the company as of today, compared to a year ago? Hmmm? Sure, the stock price surges higher every day, so surely I must have changed my own viewpoint since, right?

Actually, I am still of that same viewpoint. As a matter of fact, I hold that view even firmer today than I did back then, the reasoning is simple: Facebook, today, much like AOL back then, is just going through the last phases of stock price euphoria for having achieved last-man-standing status.

When it’ll end? Who knows, but it isn’t like there’s no cracks in the once impenetrable facade for use growth, regulatory hurdles, user revolts, publisher revolts, and more that were once not even a consideration. But now? Stock momentum solves all – till it doesn’t. Just like it did for AOL.

So with that said, I can hear right through my monitors the shouts of, “Ha! You just don’t get tech! And Facebook’s super-powering share price shows just that.”

It’s a fair accusation, but it would also show that one seems to not look back at history and see if there are any similarities that happened prior that may just be showing signs that warrant, at the least, caution today.

What would something like that be, you ask? Great question, let’s look at another that happened in-and-around the same time, when AOL was dominating everything, shall we?

Via the New York Times™ today July 18, 2018: “E.U. Fines Google $5.1 Billion in Android Antitrust Case”

“Google has used Android as a vehicle to cement the dominance of its search engine,” said Margrethe Vestager, Europe’s antitrust chief. “These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere.”

As Mark Twain famously quipped, (paraphrasing) “History may not repeat, but sure does rhyme.”

Via Wikipedia™: “United States vs. Microsoft Corp.”

The suit began on May 18, 1998, with the U.S. Department of Justice and the Attorneys General of twenty U.S. states (and the District of Columbia) suing Microsoft for illegally thwarting competition in order to protect and extend its software monopoly. In October 1998, the U.S. Department of Justice also sued Microsoft for violating a 1994 consent decree by forcing computer makers to include its Internet browser as a part of the installation of Windows software.

Does anyone care to remember what happened not that long after?

Or, maybe it’s just better if we all keep whistling past this graveyard of forgotten classics, right? After-all, just keep BTFD (buying the f’n dip) because…

It’s different this time.

© 2018 Mark St.Cyr

Is It or Isn’t It?

I was asked for my view on the current “market” reactions to both Netflix™ in particular, and what is now referred to as “FAANG.” i.e., The grouping of Facebook™, Apple™, Amazon™, Netflix, and Google™ aka Alphabet™. Here’s my reply:

Rather than trying to answer your question with words, for it would take more digital ink than I have at the moment. Let me make a case using what is known in Silicon Valley as a “picture” aka chart and let you decide. Because after all, it’s not what I think that matters rather, it’s what it all means too you. So here’s where you need to decide for yourself. To wit:

(Source)

The above charts are of two entirely different entities, and yet, there’s something very similar in appearance, don’t you agree? But here’s a very simple description that separates the two:

On the left is what is now referred to as “one of the greatest bubbles in human history.” The other, on the rights’ story is, “One the greatest investments and companies of our lifetime.” However, they do have one thing in common – they both represent “investing” during the glory period of central bank intervention. Can you guess who they are?

Here’s a hint, again to wit:

The left is Bitcoin™, on the right is Amazon. The only difference between the two (excluding the timeline) is that Amazon’s height is as of this writing. So, with that said, if the past can be prologue, let’s see how that whole “unstoppable” Bitcoin bubble went once the so-called “thrill was gone,” shall we?

Here’s another “picture” to remember it by. But I caution you, it may bring back some very painful memories, so again, to wit:

As I said, what it all means is entirely up to the way one wants to interpret the above, for it’s all a matter of ones own perspective, or wallet.

However, if I may say one thing, I will say this:

I remember vividly just how vehemently the idea that “Bitcoin” was no way in any form of bubble also, to bolster that claim the defense was, it was going to triple that peak by this years end, if not even more!

“How’s that all been working out?” is all I’ll ask.

But with a stock market valuation such as that in Amazon or Netflix, one is still being told/sold still: “it’s different this time.”

Maybe it is, and maybe its not. But if not? Let’s just assume this:

If one thought there was pain to be had HODL (holding on for dear life) in Bitcoin?

Pain is going to have quite a few variants of measure (i.e., such as severe, extreme, et cetera) should this FAANG family of stocks decide to turn around and suddenly take-a bite out of their masters 401K balance, without any warning, yes?

For clues, just ask any former Bitcoin millionaire.

© 2018 Mark St.Cyr

The Value Of Being An “Influencer”

Over the years I have made the argument that most, if not all of the so-called “Thought Leadership” espoused across social-media was either useless, recycled platitudes, or worse: convoluted, confusing, banal anecdotes.

I have also asserted that much of this “leadership” was being promoted, then held up as “real,” by nothing more than these so-called “influencers” playing an easily manipulated numbers game, that was easily gamed (and also purchased for very cheap money) as to make one appear as if people were “tuning in” to every thought these people may have.

“Millions of followers,” “Millions of subscribers,” across all the platforms was a vaunted metric. Allowing for comments were a key in the score game, commenting yourself on others sites and platforms were another, and on and on. And if you were not one following this dogma? “You just don’t get tech!”

To make sense of all this, there appeared what many inferred as a final arbiter of truth as to judge just how much “influence” these so-called “influencers” were having across the social media space. Remember when everyone was touting or worried about their “Klout® rating?”

The main stream media, for a while, was using this as some form of gauge as to rate whether a guest, for one reason or another, was either worth having, writing, or even addressing for their “insight” or opinion on the matters of the day. “What’s your Klout score?” was a question asked far more often than not for a while. And if you dared answered, “What’s a Klout score?” Either the phone line suddenly went dead, or your email was never returned – ever again.

So it was with great humor (and a bit of satisfaction) when I was asked about whether or not I would give a talk about the current social media climate and how it is, or is not delivering what it seemed was promised for businesses over the last decade. It was here when I was asked a question, then returned my answer, that this person seemed to question whether or not I had as good of an understanding of social media today since I don’t use it. Especially since this person was looking for a “thought leader” or “Influencer” that his audience would find credible.

It was here that I asked (knowing full well ahead of time) “So what you seem to be asking me is if I have some type of ‘Klout’ score or something that would make you feel better in your appraisal, do I have that somewhat correct?”

The reply, “Exactly, something like that would be perfect!”

That’s when I silently smiled inside and asked one last question which was this, “So what would it show you if I had a high-ranking score?”

Reply, “I guess it would help back up your credibility and your assertions for what is important, and what is not, on the web today.”

Then I replied, “Then we’ll let Klout speak for itself, I just so happen to have a link and a screenshot of what the latest ratings are showing, would you like me to forward them to you?”

The reply, “That would be great.”

“Fair enough,” I said, “Just give me a moment.” And here’s what I sent.

(Screenshot, source)

I’ve had the above screenshot in my files since it took place, When the above discussion was transpiring I kept thinking to myself, “How I could use it? “Then, the moment came.

Here was my included note in the reply. To wit:

“If for any reason you think my fee may be too high, I’m pretty sure the ‘influencers’ that are being told to ‘keep influencing’ with any prior high scores will be more than happy and possibly quite available to be hired for your event, probably for far less. maybe even free. But as far as my score is concerned, I don’t have one, nor ever tried to. As always the decision is yours. Let me know if you want to proceed any further.”

It appears my directness influenced a true buyer, which is truly all that matters. But as I always say:

“Until a check clears, it’s only a possibility.”

© 2018 Mark St.Cyr