The Investing Diaries - Jan 19, 2021

So yesterday was listening to a Lex Fridman podcast with Diana Walsh and while they were mainly conversing about philosophicy and religion, one thing that I found particularly interesting that they were speaking about was the evolution of humans. The evolution of humans specifically in terms to explain what we may see in alien race but also about biohacking and the creation of meta humans here on Earth due to certain biohacking interventions.

While I listened to them speak about basically how's our species evolutioary future, they brought up the point that maybe things like Twitter or other social networks are affecting our species in differen ways and modifying differently than we can currently comprehend. As an investor that got me thinking about what companies and what technology has changed (or will change) the fundamental actions and behaviors of human beings.

When we're talking about finding 10 beggars and trying to find that one company that you can invest a couple thousand dollars in and will change the value of your portfolio significantly, these are the types of companies and technology that we need to be looking to obain.

What types of technology are we talking about? Think back as far as you want and begin to recognize what actually changed human behavior. Right now we're talking about social media which we can see s changing human behavior in terms of interaction. The advancement of Facebook and what they did has changed social interaction and will continue to evolve it beyond any type of community that we had seen before it.

But to think even simpler than the technological advances of today, let's go back in time. The car changed humans as they could now travel much further, much easier, and connect with people. Even the road, when it was invented, changed people. Now you had wagons that weren't breaking down as easily and travel across miles became much more commonplace. The mobile phone, or even the telephone, are other groundbreaking examples. Then there is the internet, of course, which is one of the biggest advancements in human civilization.

So when we look at companies, with the goal to 10 baggers, we must think a little bit differently. When I was I realized that you really have to think what is going to fundamentally change the way that humans behave? When we look at a company like I was talking about yesterday (Affirm), is this an IPO of a company that you think is going to fundamentally change the way the humans behave? They're not Amazon or Facebook are they? They're more a company that is doing the same thing that's been done just making it easier. Not saying again that they're not a great company, I do like them and what they're doing, but in terms of getting a hundred times return we must find companies that are different from this.

I think something that people don't understand is that there's a lot of investors that are purely looking at it on this basis. Think about SpaceX for a moment. We're talking privatized spaceflight, something that has never been done before. I'm not saying that they're going to own the whole industry, but they are on a path to do that. Part of the reason why Tesla has been one of the better investments is they were one of the first companies to create the brand of EV and make it hip and cool all the while advancing the technology to a point where many thought was unreasonable. Now I wouldn't want to invest in Tesla at this point because I don't think you're going to continue to see that growth and I believe it's completely overvalued, but that's another article.

So where do we see a technology now or are we seeing that could change the face of humankind and change the behaviors of the human race? These type of things are what we all should continue to look for and I will continue to look for to add to my portfolio. Think about the first company that allowed online trading stocks and online investing. This changed the fundamental way that the actual stock market even worked and let the blue collar worker at an everyday job to be able to invest easily and begin to understand the markets. This was something that changed the behaviors of people. Now you see companies like Robin Hood and SoFi leading the charge of trying to make it as simple as possible and bring accounts solely onto smart phones. We have kids that are 19 years old that are pulling out their phones and either trading (which obviously we see a lot) and even smarter kids that are pulling up and starting some IRAs and having significant investments starting at early age. That will change lives by the time the group hits fourty!.

Another company that I think of when we talk about this is a company like Shopify that's making setting up online commerce simple and easy for anyone. They are starting to get integration of apps and they're starting to change the way that online stores conduct business. I was listening to a talk from Charlie Munger, an interviewed not too long ago, where he was talking about how this is fundamentally changing the way that retail space works. What he was saying is that some of this online retail (think Shopify or think things that are coming from China specifically through AliExpress or Alibaba) work is that people basically order things online pay the retailer money. The retailer pays the factory and then the product is made. So everyone along the line actually is paid before they even hold or manufacture the physical product.. This is the real death of retail because there's zero risk to the retailer and on top of this you also have something like a 70 to 80% profit margin. It's an unbelievable sourcing that is changed the game and has changed the ways that retail businesses work.

I know this is a lot of rambling but it really inspired me as we're looking at our investments to think a little bit differently. Remember this doesn't have to be the most technologically advanced thing to change the way human behavior works but the interaction with society has to be there. Anyways that is all I've got for today and I will just leave it there.

Until next time, happy investing.