🍋 The Bling Boom and Bust

Short Squeez
September 12, 2022

Together With

"The single greatest edge an investor can have is a long-term orientation." — Seth Klarman

Good Morning! Hope you had a nice weekend. Congrats to Carlos Alcaraz and Iga Swiatek on winning the Men's and Women's US Open Championships! Also in New York, co-founder of Apollo Global Management, Josh Harris, launched a new asset management firm called 26North, a next-gen alternative asset manager.

In another firm update, Sam Bankman-Fried's FTX Ventures bought a 30% stake in Anthony Scaramucci's SkyBridge Capital. China is heading to the sky, and the moon, as it plans more lunar missions after discovering a new lunar mineral that contains helium-3, speculated as a future energy source.

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1. Story of the Day: The Bling Boom and Bust

The luxury watch market has not been sheltered from the volatility affecting all sorts of assets this year. It seems as though these goods are actually seeing some sort of bottom though, which can't really be said for other investments.

Consulting company, WatchCharts, has an index for Rolex resale prices, which fell 1.84% in September. That's not great, but it's better than the summer rate of at least double that.

Another index, the Subdial50, tracking prices of the 50 most traded luxury watches, was up 1.2% in the 30 days leading up to September 7th. The company said in a post this is "hinting at a bottoming out of prices in the world's most popular luxury watch references."

Since the secondary market peaked in the spring, it's been a quick fall back to earth. Some investors believe there is a correlation to the collapse in cryptocurrency values, while others believe dealers were trying to get rid of overstock.

Stimulus cash and gains in other asset classes fueled a "bling boom" earlier this year, sending the WatchCharts Rolex index up 35% YoY. However, as the markets have hit some turbulence, so have the trading and values of these nontraditional investments.

"It was almost a sense of euphoria in the market," said Austen CU, founder and CEO of Wristcheck. When will people learn nothing only goes up? In the steepest MoM drop, the Rolex index fell 5.9% in June, 3.5% in July, and 5.1% in August.

Short Squeez Takeaway: I wonder how much crypto values actually played a role in all this, purely because I think that's a pretty funny juxtaposition. Crypto hardos being all about the future of investing, trashing traditional stores of value like cash, while at the same time buying analog watches that are classic symbols of wealth.

2. Markets Rundown

All markets were up, in thanks to relatively modest Chinese inflation data and easing European natural gas prices lifting investor sentiment.

Movers & Shakers

(+) Zscaler ($ZS) +22% thanks to a strong earnings report for the last quarter.
(+) DocuSign ($DOCU) +11% because quarterly numbers topped analyst expectations.
(–) Virgin Galactic ($SPCE) -4% after Bernstein downgraded the stock to underperform from market perform.

Private Dealmaking

Tech private equity vets raise $3 billion for Silver Lake, a digitalization fund
Alphabet’s Verily raises $1 billion in funding
Bolt’s $1.5 billion deal to buy Wyre dies
Photys Therapeutics, a biotech startup, raised $75 million
Mesh Payments, an automation spending platform, raised $60 million
Taranis, a crop intelligence platform, raised $40 million

3. Top Reads

Fed’s Waller sees significant rake hike this month (CNBC)
King Charles III surrenders hereditary revenues in exchange for sovereign grant funding (Fox)
Big banks to rake in record profits from commodities this year (Reuters)
Quiet quitting threat elevates signifigance of middle managers (Axios)
Disney CEO rejects investor calls to spin off ESPN (Fox)
Apple’s new products will boost its bottom line (YF)
How Ukraine’s surprising comeback could give markets a boost (CNN)
The problem of indolent retail shareholders (Axios)
Shipping rates plunge on major trade routes (YF)

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4. Book of the Day: Retire Before Mom and Dad

Personal finance and investing don’t have to be complicated, intimidating or boring. Imagine having a guide to walk you through everything you need to chart a path to financial freedom.

Forbes Deputy Editor Rob Berger has written your guide. Find everything you need to get out of debt, control spending without painful budgets, manage multiple financial goals, and start investing for retirement.

And yes, you’ll even learn how to retire early if FIRE (Financial Independence, Retire Early) is your goal. Here are just a few of the topics covered:

· The Money Audit: Learn how to save money without sacrifice. This step-by-step plan walks you through how to reduce your spending without changing your lifestyle.

· FIRE Math: You’ll master the simple math behind early retirement. You’ll also be able to determine how your daily, weekly and monthly decisions affect your journey to financial independence.

· Simple Investing: The days of being intimidated by mutual funds or the stock market are over. This book provides everything you need to build a simple investment portfolio that you can actually understand.

· Retirement Accounts: From 401(k) and 403(b) accounts to a Roth IRA and HSA (Health Spending Account), you’ll learn how these accounts work. You’ll also get a simple plan you can follow to decide which accounts are best for you.

· Get Out of Debt: Debt doesn’t have to hold you back from your financial goals. The book walks through a simple way to pay off your debt in a sensible way while still saving, investing, and pursuing other financial goals.

· Life Experiments: Learn how your daily habits are affecting your finances and how you can master those habits by asking “what if” questions and running 21-day experiments.

The book is designed for anybody wanting to master their money, but is tired of all the complicated jargon.

“There’s nothing more deceptive than an obvious fact.”

5. Short Squeez Picks

9 new iPhone software update features that will change everything
How to argue well
When ‘quiet quitting’ is a trap
Why emotions aren’t the enemy of good decision-making
11 habits that can save your life
Penn Station plan makes a high-stakes bet on the future of work

What Else To Read

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The Daily Upside, founded by a team of bankers and journalists, is another great newsletter for big-brained readers. Built with investors in mind, The Daily Upside is packed with heavy-hitting analysis and stories you simply won’t find elsewhere.

It’s the perfect addition to your media diet, striking that elusive balance of gravitas and wit. There’s a reason 700,000+ readers start their days with The Daily Upside.

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6. Daily Visual: Bonds Heading into Bear Market Territory

Return US and Global bonds

Source: Axios

7. Daily Acumen: Simplicity

IKEA founder Ingvar Kamprad on simplicity:

"There have to be rules to enable a lot of people to function together in a community or a company. But the more complicated the rules are, the harder they are to comply with. Complicated rules paralyze!

Historical baggage, fear and unwillingness to take responsibility are the breeding ground for bureaucracy.

Indecisiveness generates more statistics, more studies, more committees, more bureaucracy. Bureaucracy complicates and paralyses! Planning is often synonymous with bureaucracy.

Planning is, of course, needed to lay out guidelines for your work and to enable a company to function in the long term. But do not forget that exaggerated planning is the most common cause of corporate death.

Exaggerated planning constrains your freedom of action and leaves you less time to get things done. Complicated planning paralyses. So let simplicity and common sense guide your planning.

Simplicity is a fine tradition among us. Simple routines mean greater impact. Simplicity in our behavior gives us strength.

Simplicity and humbleness characterize us in our relations with each other, with our suppliers and with our customers.

It is not just to cut costs that we avoid luxury hotels. We do not need fancy cars, posh titles, tailor-made uniforms or other status symbols. We rely on our own strength and our own will!"

Source: Farnam Street

8. Crypto Corner

SEC Chair wants to police crypto, but calls for cooperation
The common Ethereum merge myths that could trip up investors
Selling out an NFT collection is only the beginning
U.S. SEC creates new office for crypto filings
How Bitcoin bombed in El Salvador
Ethereum merge disrupting crypto trading and lending

9. Memes of the Day

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