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Investing and The Triumph of Optimism…And What’s Next?

February has been a good one for US Markets. The January ‘dip’ was bought. The cherry was last week’s mind expanding, valuation myth busting Facebook acquisition of Whatsapp for $19 billion. Hoohah!

The shortsellers are talking to themselves and bumping into walls. They point to silly valuations, margin debt levels, poor Government policy, The Ukraine, Putin, Venezuela and Justin Bieber.

I think it’s just pretty clear that – you can’t profit unless you invest.

I have never been one to ask a lot of questions. I trust first, but I am also quick to be a cynic. The trust first instinct has served me well so far as an angel investor and the quick to be cycnical habit has served me well in the last 10 years in the public markets.

The trust first has also helped me enjoy the business of ‘Angel Investing’. I am making huge leaps of faith writing checks with my money and money trusted to me by partners. I am prepared for frightening calls and emails from all the founders, but have also gotten so much joy from the great ones.

I believe optimism opens the eyes to opportunities. The markets are always speaking or whispering if you know how to listen.

I urge all investors get a copy of this book – The Triumph of Optimists – 101 Years of Global Investment Returns‘. Give a copy to your skeptical friends.

So what comes next? If we are not crashing, how does this boom play out?

Nick Denton says we get more of the same. I don’t read Nick, but Fred summarized a recent interview for us. Specifically:

But, as Nick points out, these are not the “next things”. These are just the ongoing evolution of the Internet and all that it opens up in terms of innovation. And Nick goes on to suggest that the way our society will solve cancer, space travel, and environmental issues is “intelligence connected to human beings”. Collective intelligence at work. That’s a big assertion but he may well be right.

If the boom is just more of the same, the threat to our markets would be ‘bandwith wars/restrictions’. We should keep an eye on the Government, Net Neutrality, Verizon and AT&T. They are the biggest potential pigs at our trough.

I think this article from Kevin Roose is also fantastic. I have been investing in the future of the financial web since 2006 (Follow Kevin on Twitter). Here are some great statistics:

Roughly 31,000 people moved from New York to California in 2012, according to census statistics—the largest one-year migration since 2006. It’s impossible to know how many of those were Wall Street transplants, but a perusal of data provided by employees of tech firms suggests that it was a substantial chunk. More than 1,200 of Google’s 47,500 current employees formerly worked for one of the top 10 global investment banks, according to LinkedIn. The top banks also incubated at least 750 current Apple employees, 175 Facebook employees, and 260 Yahoo employees. Travis Kalanick, chief executive officer of the ferociously expanding Uber, has said that between 10 and 15 percent of his hires come from the financial services industry, with a full 5 percent coming from Goldman Sachs alone.

and this:

What’s more surprising, now that Wall Street has recovered much of its steam and the stock markets are near an all-time high, is that workers are still choosing tech over finance. Some of this is simply because that’s where the jobs are. In the next three years American tech firms are expected to hire 504,000 new workers. By comparison, finance and insurance companies will add only 370,000 new jobs.

Don’t write off the financial sector. It’s just evolving. The best performing bank in the world is Silicon Valley Bank ($SIVB, no TARP, and a warrant on all of Silicon Valley) and San Diego’s own Bank of the Internet ($BOFI).

I have invested in a bunch of financial startups with Google Ventures. Google Capital is now showing their hand as they move up the food chain with their large pool of profits and capital.

I will just continue to follow the money. The signals have never been better if you know what to look for and ‘who’ to follow. Take a good look at the picture below…be the pilot fish. You might not get recognized in the streets, but you will thrive as an investor.

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