A billionaire breaks down the crazy market rally


August 10, 2020

Plus: Microsoft isn’t the only TikTok suitor in town.
August 10, 2020
The Hustle
TOGETHER WITH
Jamestown Invest

Apple juice or OJ? It was the juiciest debate on Twitter yesterday. Martinelli’s was the apple of the A Team’s eye — one stan called it “CRACK” and another anointed it “the Gucci of apple juice.”

Now that it’s Monday, we’re pulling for green juice and double espresso. Let’s do this thing.

The Big Idea

What’s behind the crazy market rally? A billionaire investor explains

The S&P 500 is up ~50% since its March low, and back near its all-time high.

The mind-blowing rally is taking place as the economy saw its worst quarterly GDP contraction in 70+ years.

WTF is going on?

A popular (but unsatisfactory) answer is: “the Fed is pumping the markets.” 

For a more thorough explanation, the billionaire investor Howard Marks recently published one of his famous “memos.” 

We broke it down

The S&P 500 traditionally trades at a price-to-earnings (P/E) ratio of 16x. But with interest rates near zero, the P/E ratio should trade at a 50% premium (24x) or higher (all things being equal, a higher P/E = higher stock price).

In layman’s terms: the Fed’s interest-rate cuts are boosting stock valuations.

And the FAAMG stocks (Facebook, Amazon, Apple, Microsoft, Google), which make up 15-20% of the entire market, are exceptional, Marks says.

FAAMG is going HAM

On average, the FAAMG stocks are up 36% on the year, but the median S&P 500 stock is down 11%. The bull argument says the giants’ rise can continue because…

  • … they have scale and tech advantages protecting them from the business cycle’s swings.
  • … they benefit from corona-fueled shifts to digital.
  • … they’re growing faster than behemoths of the past. 
  • … they have huge cash piles.

So where does that leave Marks? He’s not totally convinced by the bulls’ argument, but says it has “obvious merit.”

If making sense of the market comeback still doesn’t make sense, Marks says, listen to some Charlie Munger wisdom: “It’s not supposed to be easy. Anyone who finds it easy is stupid.”

Share on Facebook Share on Twitter Send as email to a friend View on our website
Snippets

5 stories to catch you up quick

1️⃣  Microsoft isn’t the only suitor in town: Twitter has had preliminary talks with TikTok about a potential US deal.

2️⃣  Speaking of: TikTok may file a lawsuit against the Trump Administration. 

3️⃣  Toshiba — which made the first IBM-compatible laptop way back in 1985 — is getting out of the laptop business.

4️⃣  A federal court just rolled back a 1940s-era rule that kept film studios from owning movie theaters

5️⃣  $400-per-week unemployment payments and rent assistance: Here’s a look at what is — and isn’t — in this weekend’s executive orders

And 5 more to delight you 

1️⃣  The Big Bang? According to new computer simulations, the universe actually began with the Big Bounce

2️⃣  American Idol has a new recruitment pipeline: TikTok.

3️⃣  An EU-Canada trade deal is at risk of unwinding — all because of halloumi cheese.

4️⃣  The UK’s diplomat cat is retiring after 4 years on the job. In his resignation letter, he said that he wants time “away from the limelight.” (Same.) 

5️⃣  HBO Max and Ava DuVernay are turning the “One Perfect Shot” Twitter account into a TV show

Print it to win it

3D bioprinting could help with COVID research and organ transplants

When a group of researchers didn’t have the budget to buy a 3D bioprinter — a highly specialized machine that prints living tissue — they decided to make their own

They now steer a bioprinter startup called Foldink. Other bioprinters can cost as much as $200k, but Foldink wants to be a low-cost option.

The technology could help surgeons print skin grafts for burn victims or organs for transplant patients.

It’s aliiiiiiiive

Dr. Frankenstein would have been insanely jealous of this tech — no spare body parts or alchemy necessary. 

3D bioprinters use bio-ink, a substance made from live cell cultures, to make stackable, Lego-like units of tissue. 

Currently, researchers are printing teeny-tiny lungs and colons to test COVID-19 drugs.

If you can print tissue, you can print money

Tissue engineering is hot. The global market is expected to see a compound annual growth rate of ~14% annually, reaching ~$30B by 2027.

Share on Facebook Share on Twitter Send as email to a friend View on our website
SPONSORED

The most important word in real estate?

Location, location, location. 

The most important word in investing? Diversify, diversify, diversify.

But how do we actually… well, do it?

3 easy steps in as little as 10 minutes

With nearly $12B in assets and 35+ years of experience, Jamestown Invest makes it easy to diversify your portfolio through real estate.*

The best part? You don’t have to be the Monopoly Man to afford it.

This digital investment platform gives you access to rigorously vetted, institutional quality real estate for as little as $2.5k.

It takes 10 minutes to get started. Why wait?

Get started →
Talk About Renaissance

Drink like Da Vinci: Italy is bringing back its 17th-century ‘wine windows’

Want to buy an aperol spritz or a gelato without stepping indoors? The holes in the wall have you covered.

Because of the coronavirus, shops in Tuscany are reviving a centuries-old sales trick — arched, stone hatches called “wine windows.”

It’s like medieval drive-thru: Call out your order through the buchette del vino, and a phantom hand will serve you.

Where did these things come from?

17th-century Italian aristocrats wanted to run wine businesses, but they weren’t so keen on paying taxes. 

So they carved up slits in their cellar walls to sell vino on the DL. 

Then the bubonic plague hit 

Wine windows became a safe way to do business. A recent survey found ~300 still exist.

Now you can pay by credit card — but back in the day, you dropped coins into a metal holder, and the seller disinfected them with vinegar.

Contactless tech? That’s so 1600s.

Share on Facebook Share on Twitter Send as email to a friend View on our website
$4k

Month
THE BIG NUMBER

Turns out even farmers are raking in that sweet, sweet influencer cash.

Running a small farm has become less profitable over the years. To supplement their income, some growers are chronicling their slip-ups on YouTube and Instagram. 

One Vermont farmer, Morgan Gold, earns $2.5k to $4k a month in ad revenue — about 8x what he makes from selling produce and other goods.

(Source: The New York Times)

TRENDS

Knock Your Customer Acquisition Costs (CAC) Out Cold

With the MLB and NBA back in action, the Trends team wanted to bring you insights from leading sports minds. 

Enter Playline

Co-founded by UFC Champ Micahel Bisping and NBA all-star Roy Hibbert, this sports gaming platform has partnered with major sports leagues, attained 300k registered users and reached $17m in gross revenues in just two short years.

Playline achieved this rapid growth by owning and operating (in partnership with Mark Cuban) some of the most highly-engaged, sports-focused communities across social media. 

This strategy is key in helping the company achieve the lowest customer acquisition costs (CAC) in the industry. 

Join Bisping — and Playline co-founder Aaron Avruskin — as they walk through the Playline playbook and reveal growth hack secrets to lowering your CAC including: 

  • How to take ownership in your funnel for customer acquisition 
  • How to turn CAC into a positive revenue generating line item
  • How to structure deals with ad partners 
  • How to ensure the greatest ROI possible in digital media

These sessions are normally gated for Trends subscribers only. This week, we’re opening up the ring to all Hustle subscribers. Join us on Thursday 8/13, at 3pm ET (12pm PT).

Grab your spot →
About Face

Brands and influencers have the acne-positivity movement popping

Condolences to everyone who put toothpaste on their forehead in middle school. Acne is cool now.

Slate says Instagram influencers are embracing pimple positivity — busting a major source of teenage angst as ruthlessly as Dr. Pimple Popper.

It’s a new spin on a serious issue

More than 70% of teens said their acne makes them less attractive, according to a survey by a pharmaceutical company. Medical experts say people with acne are at risk of developing anxiety and depression

Treatments are a multibillion-dollar industry. These days, brands sell flower and star-shaped patches that help heal pimples.

Your Accu-pain is over 

Sofia Grahn is at the forefront of the acne-positive movement, sharing her traumatic Accutane experience (you’re not alone, sis) with 84k Instagram followers.

Kadeeja Sel Khan, a skincare influencer, went viral on Instagram after posting an unfiltered makeup tutorial featuring her bare skin.

“I was tired of pretending I’m this ‘perfect’ person when in reality no one is,” she told British Vogue. “I never in my life thought I’d feel so happy in my body and myself as I do now.”

Share on Facebook Share on Twitter Send as email to a friend View on our website
SPONSORED
Let’s do this →
SHARE THE HUSTLE
Ambassador Rewards

Refer coworkers, get exclusive Hustle gear

Step 1: Peek our sweet, sweet rewards

Step 2: Copy your referral link below

Step 3: Share your link across social media and beyond

Step 4: Collect rewards, rinse & repeat

Share The Hustle →
How did you like today’s email?

hate it

meh

love it
Today’s email was brought to you by Michael Waters, Caroline Dohack, Trung Phan, Belle Long, and Bobby Durben.
Editing by: Nick “Out of Ink” DeSantis, Denise Hoyt (Staff Orthopedist).

PODCAST JOBS ADVERTISE CONTACT US
Facebook Youtube Instagram Trends
251 KEARNY ST. STE 300, SAN FRANCISCO, CA 94108, UNITED STATES • 415.506.7210 Never want to hear from us again? Break our hearts and unsubscribe
The Hustle
*As of 3/31/2020. Visit www.jamestowninvest.com/OC to review the offering circular. Securities offered through North Capital Private Securities member FINRA/SIPC.

Daily briefings, straight to your inbox

Business and tech news in 5 minutes or less

Join over 1 million people who read The Hustle

Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.