Its not what you know.. Its what the market believes that matters

Blain’s Morning Porridge – March 10 2021:  It’s Not What You Know

“Love is like socks – you got to have two and they have to match.”

This morning: It’s not what you know about value – it’s what the market believes that matters when it comes to price. Will Call My Agent win the streaming wars? And will widespread adoption fuel a massive boom in Socks… just as the shills say has happened in Bitcoin?

Yes, I did write Socks. That was not a typo.

This morning I am very much gratified to the Thunderer of London for pointing out there are now more Trabants on German roads than Teslas. 3000 refurbished Trabbies were (re)registered last year. If you’ve never driven one…. the Trabbie is said to be great fun. (People lie. It’s not.)

There is something of a race underway to be least effective government here in Yoorp. The UK the government has spent £30 odd billion on a test and trace system that does neither (but has made lots of MP’s chums exceedingly rich.) But, at least the Brits have tried. In Brussels they just failed to deliver at all in terms of a vaccine roll out. Which means someone has to accept blame. Which is yet another benefit of Brexit for Yoorp – blame the perfidious Brits! I am willing to take bets on how long before borders are closed…

If anyone has got any definitive data to explain the truth on who is closing their borders to vaccines and who is not, please share. I want to know where vaccines are made and delivered from and who signed what and when in terms of contracts. There is so much noise out there. The EU says the UK won’t share our toys, but we say yes we will.. who is telling porky pies? One rather feels the EU’s relationship with the UK is going same way as Megan Markel’s.

As for markets, well… who knows?

The greatest truth about markets is it’s not what you think you know that matters. It’s what other people collectively think they know that counts. You may be a bone fide financial genius knowing the exact value of everything – but the market is just an enormous calculating machine. It may completely ignore your value and set a very, very different price.

All of which means I can’t really explain why Tech stocks were off on a tear yesterday. Maybe it’s the cheques American’s are about to get through the post as a result of Stimulus Package 1.9? A relief rally? Or short-covering? Time to load up more on my Tesla leveraged short ETF I think.

Or maybe it was GameStop saying it’s going to become an ecommerce business (the whole point being it the company’s insistence on remaining highstreet retailer that attracted all the shorts earlier this year!) I wonder how long before GameStop is taken out by a SPAC?

When it comes to value I’m struggling to know what makes tech stocks – including great names like Apple, Amazon, Microsoft et al – worth so much more today than they were a year ago as Lockdown started to bite? What’s changed? That’s my intellectual contribution to the debate – they are good companies and worth holding, but not at these prices.

But the world does change. One thing I like more and more is Netflix – but that’s largely due to She-Who-is-Mrs-Blain and I having a new top series to watch: “Call My Agent”. It’s a remarkable and genuinely clever French programme that actually makes Parisians seem likable! Of course, we all know the denizens of Paris are the worst people in the world, making New Yorkers and Londoner’s appear calm and reasonable. Until I suddenly worked out last night I care far more about these characters than I ever had on any UK drama. The hook of the programme is having genuine French stars play themselves, often irreverently.

It set me thinking? I am becoming a closet Frogophile? The other great hit of the year has been “Emily in Paris”.  Gosh! I have a sudden urge to learn French and start watch French art-house films. Is it just me?

It’s interesting – a year ago I was a Netflix uber-bear on the basis mounting competition would swamp them. Disney would dominate quality programming, while Apple-TV would be savvy watching. A host of new cheaper entrants from Britbox to Starzplay would eat its lunch. But its not happened. Apart The Boys, Lower Deck, and The Expanse on Prime, Netflix gets most of our viewing. Apple has failed to deliver much. Disney even less so after you’ve watched all the Jeff Goldblum programmes.

For the life of me I can’t work out Telsa.. but hey-ho. Up 20% in a day? Whatever. Whom am I am to argue. I shall use it as a selling opportunity.

Meanwhile… Time to Go Long Socks

Don’t be blindsided (as Harry might say) by yesterday’s gains in Tesla and Bitcoin! Increased Adoption – word of the day – is fuelling a massive rally in socks.

I suspect many in the market might be missing the equally spectacular gains we predict in Socks. Following yesterday’s announcement from PayPal reminding us it accepts payments for Socks, the whole Sock sector is set to surge on increasing adoption and transactional ease.

The widespread adoption of foot apparel by leading bankers, investors and hedge fund managers, and now leading internet payment systems, is driving massive new demand. Although the sock market crashed during last summer’s sock-meltdown, analysts say that was a simple seasonal factor – caused by an unusual warm spell in Cornwall, and leading to many well known financial influencers being seen not wearing socks.

Now it’s increasing Sock adoption that’s driving the market. Analysts at the Sockcoin.com, the leading Sock Exchange, are predicting Socks will hit $1 million by May on the back of increasing adoption by major players across markets. Ralph Axeminster-Twill, COE of Sock.com, “socks are no longer on the periphery, but are increasingly being adopted as a valid investment thesis. With major financial players expected to return to offices from April, we expect to see even faster adoption, and in many cases the favouring of socks as a core investment and even fashion statement. We are seeing many Gen X,Y and Z customers putting a portion of their total wardrobe into Socks. Socks have gone mainstream on the back of increased adoption.”

Cathy Topshop of Threadbare Capital explained her decision to go long socks during the summer proved an inspired one; “We were on holiday but one day it was quite chilly so we went to something called a car boot sale and since the vendor could not change my £50 note, I bought his whole stock. Since then we’ve analysed the Sock market from toe to heel, and concluded it absolutely meets our Disruptive Innovation investment parameters. Our investments across Sock markets and driven returns on our AFF fund by 150%.”

Topshop’s Alternative Footwear Fund “AAF” has seen its 10% position in Sockscale Capital Trust, a fund entirely invested in Socks, cause some issues. The NAV of the Trust has turned negative, raising doubts on Threadbare’s ability to meet margin calls when Sock prices dipped last week. However, leading bank in New York and London have now agreed to provide sock clearing facilities – again accelerating the adoption of Socks across the investment community.

Perhaps the most exciting moment in the Sock expansion was last weeks $2bln SPAC of venerable 250 year loom-using Yorkshire sock-makers Paget and Son by SPAC Thatcher IV. Described as a: “high-tech opportunity to monetise the intrinsic value of craft socks through algorithms, difficult sums and 2 hour drone-delivery to anywhere in the country”, the merged firm rose 20% on Monday, crashed 40% on Tuesday and rose another 60% on Wednesday as Reddit Investors piled into the Sock Narrative.

However, a number of observers believe the Sock market is turning into a bubble. “The problem is the lack of duration”, said Noel Partington, the market’s harshest critic. “People find they fade in the wash, and there is little security. Sock gnomes are always nicking them, leaving single socks, and until that systemic weakness can be addressed, its difficult to be certain of the market and sock wallets.’

Other issues, including the multiplicity of Sock offerings is an issue. “The whole sock market was invented by Rukymoto Sockatoshi in his critical 2010 paper on the digitisation of the shoe/foot interface, but alternative sock offerings like the slipper sock and tights are triggering heresy in the market”, said some bloke on a market stall.

Another view comes from Bill Blain of Shard Capital who reckons there is room for both proper socks to go walking, and a nice pair of deck shoes sans socks in the summer. He advocates a balanced neutral position neither pro or anti sock.

Meanwhile, proponents of Cryptocurrency Buttcoin are peeved that Sock marketing scams have been using their line about the INCREASING ADOPTION of cryptocurrencies as just about the only argument to buy them. They dismiss Socks as a scam no one will ever need with no logical underpinning.

Hmm.. Unlike Buttcoin.. I think Socks are here to stay…

Five Things To Read Today

Capex – Will Deliveroo’s IPO bring home the bacon?

FT – Greenwashing in Finance: Europe’s push to police ESG investing

Epsilon Theory – Greensill – The Best Way to Rob a Bank

BBerg – Greensill-Apollo Talks Derailed as Lenders Support Taulia

WSJ – Vol Hits Sizzling SPAC Market

Out of time, back to day job and off to buy some socks

Bill Blain

Shard Capital