• Howie Town
  • Posts
  • Immersed In The Degenerate Economy and Netflix Is NOT Chilling as It Becomes 'Real Time'

Immersed In The Degenerate Economy and Netflix Is NOT Chilling as It Becomes 'Real Time'

Finding Alpha In The Streets of Manhattan

Author

Howard Lindzon
November 20, 2024

Good morning everyone from the upper east side, Manhattan.

I am here this week immersing myself in the subject of ‘The Degenerate Economy’.

My friend Ted Merz sent me this ‘Perplexity AI’ summary of what I mean when i discuss this topic:

Howard Lindzon, an entrepreneur and investor known for his insights into market trends and startup investments, uses the term "degenerate economy" to describe a current economic environment characterized by several key features:

1. Speculation as Entertainment: In this economy, financial activities like trading, investing in meme stocks, cryptocurrencies, and betting on sports are not just financial decisions but also forms of entertainment. People engage in these activities for the thrill, community interaction, and the spectacle of market movements, much like watching a sport or a reality TV show.

2. Accessibility and Democratization of Investing: The rise of platforms like Robinhood, which Lindzon has invested in, has made trading and investing accessible to the masses. This includes not just stocks but also options, crypto, and betting, where even novices can participate in high-stakes financial games with ease. 

3. 24/7 Market Activity: Markets are no longer restricted to traditional trading hours. With international markets, crypto trading, and online betting, financial activity is almost continuous, fostering an environment where quick gains can be pursued at any time.

4. Cultural Shift towards Degeneracy: There's a cultural acceptance or even celebration of what might traditionally be seen as risky or frivolous financial behavior. This includes the rise of meme stocks, NFTs, and the general trend where financial decisions are influenced heavily by social media, memes, and influencer culture rather than traditional financial analysis.

5. Economic Inequality and Discontent: Lindzon also ties this concept to broader economic issues where the divide between the wealthy and the rest becomes more pronounced. While the rich can afford to speculate with large sums of money, the middle and lower classes engage in this economy out of necessity or for a chance at upward mobility, sometimes leading to what he might call the "angry man economy" - where financial discontent fuels political or social unrest.

6. Leverage and High-Risk Investments: There's an increased use of leverage (like margin trading or 3x ETFs like $FAZ mentioned by Lindzon) which amplifies both gains and losses, contributing to the high-stakes nature of this economy.

Lindzon's "degenerate economy" reflects a shift where financial markets become arenas for entertainment, where traditional investment strategies give way to social trends and where the line between investment and gambling blurs. This environment thrives on volatility, accessibility, and the human desire for excitement and quick gains, often at the expense of long-term financial stability or conventional economic wisdom.

I have been running around the city with my partner Tom and have one more full day of meetings. There are a lot of extra fintech and crypto founders in town this week for annual events. The weather has been perfect (until this morning) which has made things much easier.

I get ideas everywhere, it is a blessing and a curse, but the streets of Manhattan are where I find a lot of alpha. This week on the streets I have been overwhelmed with alpha.

So far I have sat down with three of my favorite and best investors ever - Fred Wilson, Howard Morgan, and Roger Ehrenberg and hear them riff on everything from robots to nuclear to crypto. My range was manscaping to fartcoins so i did much less talking!

On Sunday evening I immersed myself in the Multicoin community at their annual event and saw many old ‘crypto’ friends (by old I mean people I have talked with online since 2017). On Monday, I had Ethan from my team cover the Multicoin annual partners meeting. In a sentence, his summary was to me ‘Solana’.

That evening, my friend Jack organized a great steak dinner for 12 at Quality Meats. It was a tradefi/crypto group and my friend Yoni Assia (founder and CEO of Etoro) joined for dessert to share some horrific/hilarious ‘lost’ Bitcoin stories as well as the summer internship of Vitalik Buterin in Tel Aviv - at the age of 16 - where Vitalik coded Ethereum while being paid in Bitcoin as an intern for Etoro. I have heard the story, but it made everyone’s ‘coulda, shoulda’ investing stories seem silly.

Yesterday I joined Yoni’s brother and Etoro co-founder Ronen Assia (two to my left) on stage at the NYSE for his venture firms annual general meeting to talk about ‘Wealthtech, AI and The Degenerate Economy’. Joseph Kaufman (to my left) also joined and he is the CEO of Credit Karma. He took the chaos in stride and the Credit Karma products and services have been a massive positive force in the financial world.

I can trace the beginning of the degenerate economy to April 2020 at the height of COVID lockdowns and this child:

I would not be surprised if we are at a short term peak here.

Why?

Watch this:

There are TWO rules when it comes to the ‘degenerate economy’ especially the mania in memecoins…’there are no rules and don’t get rugged!’

We have entered some silly and euphoric phase in speculation right now.

Bitcoin is racing towards $100,000 because ‘grifter in chief’ Donald Trump is hand picking his own crypto cabinet team and this morning China is rumored to have legalized Bitcoin.

While speculation is raging as a new form of entetainment on top of age old fear and greed, entertainment as entertainment is also at all-time highs and Netlfix, the poster child of entertainment has been rocketing to all time highs as well.

I have been long Netflix for a while and five months ago with the stock at $600 I explained more of the reasons here (watch the first 5 minutes)…

I think the markets are pricing in the fact that Netflix is now a ‘real time’ company. The last ‘real time’ company was Twitter back in 2006 and we know how poorly they have executed on that as a ‘business’. Netflix will not have that problem.

I can’t give away all my secrets and reasons, but the market seems to be unlocking the opportunity as it prices Netflix’s future.

I did force myself into the office of the incredibly talented Connor Schell - who co-created 30 for 30 way back for ESPN to pitch a few financial markets show ideas. He did not have me forcibly removed. Connor now runs ‘Words and Pictures’ and his latest documentary is Superman which he promises me is excellent…

Enough for now…have a great day.

Reply

or to participate.