🍋 Citadel Keeps Winning

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“Insomnia is my greatest inspiration" – Jon Stewart

Good morning! Stocks bounced back yesterday after JPow's testimony. Goldman is expecting the Fed to hike interest rates 4 times this year and begin running down its balance sheet by July. In "shocking" news of the day, politicians had massive gains in the stock market last year and most of them outperformed the S&P 500 (and most hedge fund managers). 

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1. Story of the Day: Citadel Keeps Winning

After a rough start to 2021, Ken Griffin keeps winning. Ken Griffin took a $1.15 billion investment in his firm, Citadel Securities from Sequoia Capital and Paradigm, valuing the firm at approximately $22 billion. Griffin owns 80% of the trading business, and his stake is valued at ~$17.5 billion.

Citadel Securities has become a powerhouse on Wall Street in recent years and is responsible for Griffin’s $20 billion increase in wealth over the last 3 years. Citadel Securities did $6.7 billion in revenue in 2020, double its previous high in 2018, and in 2021 its revenue was even higher. 

Citadel Securities new increased valuation raises Griffin’s wealth by $6.5 billion to $27.6 billion. The remainder of his wealth comes from his stake in Citadel’s hedge fund business. (Citadel Securities is separate from Citadel, the $43 billion hedge fund.)

Griffin also has a big art collection. In 2020, he bought a Basquiat painting for more than $100 million. His most recent art purchase was a copy of the US Constitution for $43.2 million. He infamously outbid the ConstitutionDAO because…. his son told him to do so and because he wanted to rub into the poors' faces (18,000 members of the ConstitutionDAO).

Short Squeez Takeaway: Hedge fund managers are typically not known to be entrepreneurial. They make money trading stocks not building companies. Kudos to Ken Griffin for using his wealth, power, and influence to create a giant like Citadel Securities, which handles about 27% of the shares that change hands in the US stock market each day. We hope Ken Griffin is feeling slightly better than when he wrote these tweets.

Source: Bloomberg, WSJ

2. Markets Rundown

US stocks staged a comeback yesterday, led by a tech bounce back, after Jerome Powell's testimony. 

  • (+) Illumina ($ILMN) +17% after issuing a 2022 revenue outlook that topped consensus expectations.

  • (+) Las Vegas Sands ($LVS) +7after an upgrade from JPMorgan to overweight from neutral

  • (–) IBM ($IBM) -2% after UBS downgraded it to sell from neutral.

3. Top Reads

  • Weather disasters caused $145 billion in damage last year in the US (CNBC)

  • Gary Gensler faces union fight over pay as he moves ahead with his agenda (BB)

  • Cathie Wood is expecting a ‘bloodbath’ in this segment of the market (MW)

  • United cuts flights as about 3,000 workers call out sick from Covid (CNBC)

  • Jamie Dimon sees ‘huge pressure’ on wages for first time in his life (BB)

  • Fed Chair Powell says rate hikes, tighter policy will be needed to control inflation (CNBC)

  • World Bank warns global economy faces grim outlook (BBC)

  • Empty grocery shelves return as sick employees, supply chain delays collide (CNBC)

  • Ikea cuts sick pay for unvaccinated staff forced to self-isolate (BBC)

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4. Book of the Day: How to Talk to Anyone About Anything

No doubt you’ve had to endure a painfully awkward conversation, more than once in your life. Maybe it was a stranger, a colleague, a date. Maybe it was a group discussion. You found yourself breaking a sweat, not knowing what to say. The more time passed, the more tense you became.

You thought about all the communication books you’ve read in your life and wished you had them with you… To knock yourself unconscious as a way out of the conversation. The best thing about the whole situation was the moment it ended. Now, you also came across people in your life who effortlessly led you through a conversation. They were charming, fun, and made you feel comfortable. You enjoyed it so much and felt uplifted afterwards.

This is the book that will teach you to be that person. By the time you finish reading, you’ll know how to talk to anyone about anything. Literally. You’ll be that person. The one that can lead a conversation with the charm and authority of Morgan Freeman. The person that can glide through social interactions with ease. The person that can communicate with everybody; from a stranger at a party, to a CEO of a huge firm.

“Keep your differences a secret and celebrate your similarities instead.”

5. Short Squeez Picks

  • Own shares in a $35B industry with a company applying to list on NASDAQ. Learn more 🍄

  • How do households adjust their earnings, saving, and consumption after children leave?

  • What do mutual fund investors really care about?

Medium of the Day: The Daily Upside Newsletter

If Mark Zuckerberg and Tim Cook agreed on something, it would be this business newsletter.

Founded by investment bankers, The Daily Upside is our favorite source for premium business news that’s actually worth reading.

The Daily Upside is jam-packed with equal doses of charisma and insight:

Want to know why America's billionaires are cashing out their stock like never before?

Or why Tesla is ditching its strategy of placing showrooms in luxury malls?

The Daily Upside goes a level deeper to instantly boost your business IQ and upgrade your investing know-how. Simply put, we love it.

6. Daily Visual: US Power Generation by Energy Source

Source: Axios

7. Daily Acumen: Algebra of Wealth

Focus - People conflate a lack of focus with a lack of talent. Intelligence and talent are correlated with success, but the strongest signal of future success is your perseverance and resilience.

Stoicism - Billions of dollars are spent every year on schemes to manipulate our natural impulses into spending more money, consuming more fat, and believing everyone around us is more successful than we are. The most powerful forward-looking indicator of your financial freedom is not how much you earn, but how much you save.

Time - Time is the most powerful force in the universe so let compounding do its magic. 

Diversification - Investing over the long-term pays out, but there are always dips along the way. Diversification is the kevlar that protects you — with it, bad decisions will still hurt, but they won’t prove fatal. Diversification, in other words, is your bulletproof vest.  

Source: ProfGalloway

8. Crypto Corner

9. Memes of the Day

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