šæš® What's Next for Netflix?
Hey guys!
This week I was able to sit down for lunch with the CEO of Wealthfront. While his career has been mostly startup and product focused (heās known for coining the term, āproduct-market fitā) heās also an amazing investor in his own right. In our lunch we discussed the markets and what he thought of the increased activity in the past year.
Most retail investors do not beat the market. Most professional managers of funds do not beat the market. And in his opinion, the increased activity of the past year was the fourth āday-tradingā cycle heās lived through, the others being in the 80s, late 90s, the few years before 2008, and then now. Itās generational. Typically, the stock market is a boring topic, and never in the forefront of the average Americanās minds. I know that during 2010-2020, my portfolio stayed consistent and I didnāt find myself checking my Robinhood, Fidelity, or Vanguard apps every single day.
The problem with good investing (which is just averaging into index funds consistently that track the market), is that itās boring. Everyone sees anecdotes of posters on r/wallstreetbets turning $5k into $1mill, or the Dogecoin millionaire, and they all of a sudden believe āif that guy can do it, Iām sure I can too!ā. I even notice this in content creation, video topics on making money always do better than topics on saving money or budgeting. Iām sorry if this is bursting anyoneās bubble, but while the retail investor might ābeatā the market over a one-year span, or maybe even a three-year span, if you really track the retail investors performance relative to the market, most (90%+) do not beat the market over a consistent period of time.
If you do want to mess around and day-trade/swing-trade/options trade, make sure itās a small percentage of your portfolio (5-15%). Personally, Iām looking into re-structuring my portfolio so it follows this model of 80%+ āboring stuffā (which will be consistent over time) versus āplayā money trades, this year itās gotten pretty out of balance - and I must admit I also got caught up in the day-trading hype after the GameStop/AMC events in early January. Good investors also diversify across all asset types, and look for uncorrelated investments.
-Humphrey
In the Markets
Upcoming Earnings
Weekly News Roundup
Netflix Plans to Offer Video Games in Push Beyond Films, TV (BBG)
After hiring former Electronic Arts and Facebook executive, Mike Verdu, Netflix is making an expansion into video games within the next year. Netflix does not plan on charging extra for the content.
HY: As someone who used to work in mobile games, this move into creating games or being a video game studio will take years, not within the next year, as the article/Netflix states. Itās incredibly difficult/time consuming to build a game from scratch. They could integrate 3rd party games or acquire gaming companies, though. I think it is smart, Netflix wants to be the de-facto place for you to spend your free time online. More attention = big win in the new economy.
Inflation Climbs Higher Than Expected in June (CNBC)
Consumer prices increased 5.4% in June, marking the biggest monthly gain since August 2008. Behind the surge is rising used vehicle costs and increased prices in food and energy.
RH: All part of the processā¦ Itās just transitoryā¦ Rightā¦? š
HY: Most of these gains are being pulled higher by the used car market and gasoline - which is up due to things in the US being more open. Hereās a nifty chart below.
Facebook Plans to Pay Creators $1 Billion To Use Its Products (NYT)
The $1B will be allocated among creators of all types, which will give creators incentive to use Facebook to post original content. As of now, the program is invitation-only.
HY: This is cool for me, and anyone who wants to start a creator-type business. Facebook isnāt known for being ācoolā, but youāll be able to reach an older audience with this new rollout. Iām sure creators will follow where the money is.
In Case You Missed It
This week I breakdown Robinhoodās S-1 filing (their plans to go public) and we see if itās worth investing in. TL;DW: sit on the sidelines, too many risk factors outside of Robinhoodās control make this a risky investment IMO.