🍋 UBS Wants Yung Money

Author

Short Squeez
January 27, 2022

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"The most common way people give up their power is by thinking they don’t have any." — Alice Walker

Good Morning! Fed is officially pulling out and tightening monetary policy. Fed indicated it could soon raise interest rates for the first time in more than three years and is also likely halting asset purchases in March. Despite the widely expected move, market turned negative shortly after JPow's announcement. Spotify is standing by Joe Rogan and removing Neil Young's music from its platform after the singer demanded that it be taken down in response to vaccine misinformation being spread by Joe Rogan. Activist investor, Bill Ackman, has acquired 3.1 million shares of Netflix (which is down more than 40% this year) is now among Netflix’s top 20 shareholders. McDonalds has responded to Elon Musk's proposal that he would eat a happy meal on TV if Mcs accepted dogecoin: "Only if @tesla accepts grimacecoin."

Today's sponsor, Polymarket, allows you to trade on real-life events including when Trump's Truth Social will launch.

1. Story of the Day: UBS Wants Yung Money

UBS is not interested in boomer money and is instead going after yung money. On Wednesday, it announced acquisition of robo advisor, Wealthfront for $1.4 billion, which has over $27 billion in assets under management and 470,000 US clients. UBS meanwhile managed $1.7 trillion in wealth assets in America as of Q3.

The move comes as Gen Z and millennials habits around money change. They want quick access apps and tools where they can customize and update their portfolios. Financial advisors have also lost their charm and they prefer algos over a sneaky banker pitching them customized portfolios.

Robo advisors have grown in popularity and managed some $785 billion by end of 2020. Wealthfront and Betterment were the first movers but Vanguard Personal Adviser and Edelman Financial Engines have also taken a significant share of the market.

Wealthfront requires a minimum deposit of $500 but has plenty of users with a bit more money: $250,000+. The acquisition puts UBS in a great position to capture future wealth. Not only as the yung get richer but also the incoming handover of assets from boomers to their children, expected to be one of the biggest wealth transfers of all time.

Short Squeez Takeaway: Besides the shift in money management preferences for younger generations, the pandemic & meme stock frenzy (started this time last year but seems forever ago) also supercharged growth for many investing and trading apps. Despite its recent stock troubles, Robinhood has 20 million+ users, which could all be potential customers for Wealthfront. The $1.4 billion UBS paid for Wealthfront, might seem like a great deal a few years from now.

Source: Bloomberg

2. Markets Rundown

Stocks lower Wednesday after Fed signaled rate hikes are on the way and other monetary policies will tighten.

Movers & Shakers

  • (–) Corning ($GLW) +14% after beating on the top and bottom lines of its quarterly results.

  • (–) Draft Kings ($DKNG) +5% after an upgrade to overweight from equal weight from Morgan Stanley.

  • (–) F5 ($FFIV) -8% following current quarter guidance that fell below analysts’ expectations.

3. Top Reads

  • The ultimate goal: Be a time millionaire (TVM)

  • Tesla now runs the most productive auto factory in America (BB)

  • AccuWeather enters the climate consulting space (Axios)

  • Everything must be paid for twice (Raptitude)

  • You can redraw work boundaries this year—and make them stick (WSJ)

  • What selloff? (TII)

  • Four-day workweeks get rave reviews, but they're not catching on (Axios)

  • Workers care more about flexible hours than remote work (WSJ)

  • How AMC rode the meme stock rally to revitalize its business (CNBC)

A Message from Polymarket: Truth Social to Launch in 3 Weeks?

After being banned from Twitter, former President Donald Trump is launching a social media app. The app, called Truth Social, appears to be launching in February, according to a listing on the iOS App Store.

According to an email obtained by Axios reporters, employees from the holding company of the app are trying to court influencers from other social media platforms. The emails ask the influencers if they’d like to “reserve” their “preferred username for when we launch in late February/early March”.

The iOS App Store listing states that Truth Social is expected to launch on February 21, 2022 – Presidents’ Day in the U.S. However, with the timetable from the leaked email saying “early March,” when will Truth Social be launched?

Will Trump’s Truth Social launch on the iOS app store by February 21st?*

Polymarket traders are currently forecasting only a 21% probability that the app will launch by the expected date. Will it actually happen? Follow the odds now on Polymarket!

4. Book of the Day: The Attention Merchants: The Epic Scramble to Get Inside Our Heads

Feeling attention challenged? Even assaulted? American business depends on it. In nearly every moment of our waking lives, we face a barrage of messaging, advertising enticements, branding, sponsored social media, and other efforts to harvest our attention. Few moments or spaces of our day remain uncultivated by the "attention merchants," contributing to the distracted, unfocused tenor of our times. 

Tim Wu argues that this condition is not simply the byproduct of recent technological innovations but the result of more than a century's growth and expansion in the industries that feed on human attention. From the pre-Madison Avenue birth of advertising to the explosion of the mobile web; from AOL and the invention of email to the attention monopolies of Google and Facebook; from Ed Sullivan to celebrity power brands like Oprah Winfrey, Kim Kardashian and Donald Trump, the basic business model of "attention merchants" has never changed: free diversion in exchange for a moment of your consideration, sold in turn to the highest-bidding advertiser. 

Wu describes the revolts that have risen against the relentless siege of our awareness, from the remote control to the creation of public broadcasting to Apple's ad-blocking OS. But he makes clear that attention merchants are always growing new heads, even as their means of getting inside our heads are changing our very nature--cognitive, social, political and otherwise--in ways unimaginable even a generation ago.

““When an online service is free, you're not the customer. You're the product.”

5. Short Squeez Picks

6. Daily Visual: Tesla Net Income

Source: Axios

7. Daily Acumen: Investing Character

The thing about character is that it cannot be strengthened quickly , but only over time and often through the experience of trial and distress during a crisis.

In fact, character often does not come out as a result of crisis, but in a crisis – like during 2000, 2008, and 2020.

Character also comes out during heady times – like during 1999 and 2007, and then now, when your humility, integrity, and tenacity are tested by the overdose of easy and quick money that you and investors around you are making.

Charlie Chaplin said that a man’s true character comes out when he’s drunk. Well, my advice is to learn your lessons from watching others in the stock market who often get drunk on arrogance, fear, greed, and envy. Then, avoid being like them. Over time, you will end up building a strong character.

8. Crypto Corner

9. Memes of the Day

 

 

*Trading is not available to people or companies who are residents of, or are located, incorporated or have a registered agent in, the United States or a restricted territory.

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