A billionaire breaks down the crazy market rally

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.”

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.

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.

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.”