🍋 Wood's Diamond Hands

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"[The diamonds] are definitely real. I make too much money to have fake ones." — Joe Burrow

Good morning! Hope y'all had great weekends. Congrats to the Rams for winning their 2nd Super Bowl. Coinbase's bouncing QR code Super Bowl ad was so popular, it crashed the app. Coinbase apparently spent $14 million on the ad and $0 to make sure that the website doesn't crash 10 seconds after it airs. The most entertaining play of the game arguably came in the halftime show as Dr. Dre, Kendrick Lamar, Snoop Dogg, Mary J. Blige and Eminem threw it back big time. If you're looking for a second income stream, the FBI is offering a $10,000 reward to anyone who can help them find serial bank robber the "Route 91 Bandit." Russia and Ukraine tension is reaching a tipping point as Ukrainian defense minister says their military is "absolutely ready to fight back." Rumor going around the internet that the Moderna CEO Stephane Bancel dumped $400 million isn't accurate.

Today's sponsor M1, a Finance Super App, allows hassle-free, distraction-free, and management fee-free way to easily invest, borrow, and spend your money. All you have to do is decide on a strategy, then go on livin’ your life while M1 takes care of the day-to-day. 

1. Story of the Day: Cathie Wood's Diamond Hands

ARK Investment Management, led by Cathie Wood, is taking a page out of the meme stock playbook and staying committed to their theses, buying even more shares of unprofitable companies.

In the past few weeks, the Ark Innovation ETF purchased more than $400 million of high growth tech stocks including shares of Roblox, Block, and Robinhood. Wood says these companies have the potential to change the world, which may be true, but she could lose a lot of money on the way to being proven right.

Stock prices of those companies are down at least 25% each since the beginning of 2022. The rest of the positions in the ETF aren't doing that much better, with more than half of the stocks down 20% or more this year according to FactSet. The entire ETF is also down 24% this year, which is equal to its 2021 decline.

The flagship fund was a breakout success during the pandemic thanks to a low interest rate environment and major government stimulus. Moving forward, the outlook isn't pretty as a rising rate market profile doesn't bode well for unprofitable companies, or those that may be overvalued.

Investors are actually appreciating ARK's doubling down approach. ARK got $351 million of net inflows over the past week and more than $300 million on Thursday, its biggest single-day inflow since June.

Short Squeez Takeaway: Bets against the ETF account for nearly 16% of the fund's shares. With major positions like Tesla, Roku, and Teladoc all down at least 19% this year, investors in the ETF would probably want to see Wood's diamond hands soften up a little bit but maybe Mama Cathie knows what she's doing. “I think history tells us not to bet against innovation,” says a confident Cathie Wood. Only time will tell if she's right.

Source: WSJ

2. Markets Rundown

Interest rate uncertainty creating headwinds for all markets.

Movers & Shakers

  • (+) Vimeo ($VMEO) +15% rebounding after revenue outlook fell short of expectations.

  • (+) Zillow ($Z) +14% rallies from devastating news of $881 million loss in 2021.

  • (–) Goodyear ($GT) -27% with analysts worried about higher costs penetrating the business.

3. Top Reads

  • Is good old fashioned dividend investing underrated? (FDS)

  • Dreams of buying your first car might remain dreams (WSJ)

  • Congressional trading ban might be closer than you think (NPR)

  • History is dynamic (WSJ)

  • People aren't giving their parents the grandkids they want so badly (Marginal Revolution)

  • More artists are selling the musical back catalogs (NYT)

  • The rich get even richer (Ritholtz)

  • There's a supply chain issue in wind (Bloomberg)

  • What's going to happen to all the gas stations? (Axios)

A Message from M1 Finance: Time in the Market > Timing the Market

These days, there’s a lot of hype around day trading. But sometimes, identifying and committing to a good old fashioned long-term strategy is one of the best ways to build wealth. 

So says M1, the Finance Super App that was built with your financial well-being top of mind. 

M1 doesn’t believe that speculating and day trading is a viable path to building long-term wealth, so they built a hassle-free, distraction-free, and management fee-free app to easily invest, borrow, and spend. 

All you have to do is settle on a strategy, automate it, and then go on livin’ your life while M1 takes care of the day-to-day. 

Investing involves risk, including the risk of loss. M1 Finance LLC, member FINRA/SIPC.

4. Book of the Day: The Power of Regret: How Looking Backward Moves Us Forward 

Everybody has regrets, Daniel H. Pink explains in The Power of Regret. They’re a universal and healthy part of being human. And understanding how regret works can help us make smarter decisions, perform better at work and school, and bring greater meaning to our lives.

Drawing on research in social psychology, neuroscience, and biology, Pink debunks the myth of the “no regrets” philosophy of life. And using the largest sampling of American attitudes about regret ever conducted as well as his own World Regret Survey—which has collected regrets from more than 15,000 people in 105 countries—he lays out the four core regrets that each of us has. These deep regrets offer compelling insights into how we live and how we can find a better path forward.

As he did in his bestsellers Drive, When, and A Whole New Mind, Pink lays out a dynamic new way of thinking about regret and frames his ideas in ways that are clear, accessible, and pragmatic. Packed with true stories of people's regrets as well as practical takeaways for reimagining regret as a positive force, The Power of Regret shows how we can live richer, more engaged lives.

“I'd rather regret the things I've done than regret the things I haven't done.”

5. Short Squeez Picks

6. Daily Visual: Hawaii leads US in Life Expectancy

Estimated life expectancy at birth, 2019

Source: Axios

7. Daily Acumen: On Reading

Berkshire Hathaway’s Charlie Munger said that he really liked Albert Einstein’s point that “success comes from curiosity, concentration, perseverance and self-criticism. And by self-criticism, he meant the ability to change his mind so that he destroyed his own best-loved ideas.”

Reading is an activity that tends to foster all of those qualities. Great investors generally practice a few habits with regard to their reading.

First, they allocate time to it. Warren Buffett has suggested that he dedicates 80 percent of his working day to reading. Note that if you are spending time reading, you are not doing something else. There are trade-offs. But many successful people are willing to make reading a high priority.

Second, good readers tend to take on material across a wide spectrum of disciplines. Don’t just read in business or finance. Expand the scope into new domains or fields. Follow your curiosity. It is hard to know when an idea from an apparently disparate field may come in handy.

Finally, make a point of reading the material you do not necessarily agree with. Find a thoughtful person who holds a view different than yours, and then read his or her case carefully. This contributes to being actively open-minded.

8. Crypto Corner

9. Memes of the Day

 

 

 

 

 

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