Genevieve Roch-Decter, CFA Profile picture
May 21, 2021 23 tweets 7 min read Read on X
Fortnite made +$2.4B selling digital costumes…

Talk about a demand for alternative assets!

Do you have enough exposure?

Time for a thread 👇👇👇
60/40 is dead.

Smart money knows this but few talk about it.

That is: 60% of your portfolio in Equities and 40% in Bonds.

But what happens when the risk-reward profile changes?

It gets replaced with 60/20/20 with the introduction of Alternatives!
Today, in <5 minutes, we’ll cover:

Why “digital alternatives” came to exist 👉 change of the old guard, technological advancements
Crypto 👉 Market update and increased adoption
NFTs 👉 What the heck are these things?
1.1/ Why “digital alternatives” came to exist 👉 Change of the old guard, technological advancements

You’d have to be living in a cave to miss the whole trend of cryptocurrencies and NFTs (non-fungible tokens), but why did they come about and why does it matter?
1.2/ 5 ASSET CLASSES

Depending on which business school textbook you crack open, you can traditionally find around 5 different asset classes:

Equities
Fixed Income/Bonds
Currencies
Commodities
Real Estate/ Real Assets (Infrastructure, Farm Land, etc)
1.3/ 1-3

Equities are typically higher risk, higher return when compared to fixed income and bonds that provide stability (generally) and cash flow.

Currency as an asset class involves making macroeconomic calls surrounding relative interest rate policy and GDP growth rates.
1.4/ 4&5

Commodities are cyclical in nature and tend to expand and contract with the overall economy.

Real estate and real assets are historically great protection against inflation (if prices go up, so does the value of real assets).
1.5/ THE GOOD NEWS

ALL these asset classes are now available to regular investors. There is no excuse not to be diversifying.

The idea is to have the right combination of these assets, and this is what the smart money do in order to generate uncorrelated returns.
1.6/ WHY?

Why do we want uncorrelated returns? Because you want to capture returns through all parts of the economic cycle. Different asset classes shine at different times.

Conversely, different asset classes suck at different times.
1.7/

These buckets served well as traditional means to allocate capital towards efficient means of (physical) production.

But what about now? When so much of that “production” has moved online.
1.8/ ENTER CRYPTO & NFTs

Cryptocurrencies are not like traditional currencies because they are not issued by a central bank that can control the monetary supply and interest rates.

It is at the center of the Decentralized Finance movement that is disintermediating banks.
1.9/ NFTs

When you break them down, NFTs are like real assets, except they are not exactly “real.”

These two assets are different and are at the intersection of an asset class revolution and the shift to a digital-first economy. Every Investment Advisor NEEDS TO PAY ATTENTION.
2.1/ Crypto 👉 Market update & increased adoption metrics

The market commentary surrounding BTC & ETH has been characterized as “broadening strength”. This is a terrific indicator. When the “breadth” of a market rally widens, it is indicating overall strength and staying power.
2.2/ MORE COMFORTABLE

This is due to institutions beginning to get more comfortable with the underlying technology.

In early adoption stages there are trailblazers, then when iteration of ideas occurs, the kinks start to get worked out. Shots on net!
2.3/ BRRRRR....

People are now paying attention to this in terms of both institutionalized adoption and as a hedge against inflation, which we know is coming with a massive amount of money printing, as we talked about in my previous newsletters.
2.4/ To me...

BTC & ETH are a store of value, a means of transaction, and building blocks to the new digital economy.

Ideas and constructs are allowed to be different things to different people.

What you can’t really debate is the widespread use and acceptance of this asset.
2.5/ FUNDS!

+$3B in assets from institutions in Canada have flown into Bitcoin closed-end funds and ETFs in order for Investment Advisors to gain exposure in an equity-like vehicle.
2.6/ ENERGY...

Bitcoin currently consumes 0.55% of electricity with +40% being carbon-neutral.

As one of my favourite Bitcoiners said on CNBC:

“Larry Fink better drop the dollar then, cause the dollar is way worse for the environment than bitcoin is.” -@APompliano
3.1/ NFTs 👉 What the heck are these things?

Mentions of NFTs by executives are skyrocketing in 2021.

When you try to google what is an NFT (Non-fungible token), you get some next-level mumbo jumbo.

So let’s just call it what it is:
Unique digital certificate. Much better.
3.2/ AUTHENTIC

Just like when you buy shares in a stock, you get a unique certificate that verifies its authenticity.

NFTs however, exist only in the digital world - so you don’t have to worry about storing it for a price, or worry about the condition deteriorating over time.
3.3/ DIGITAL GOODS!

But when it comes to desirability for differentiation or status signaling, think about how Fortnite made $2.4B in 2018 alone selling digital costumes. So the market for digital goods exists!
3.4/ IMAGINE...

A world where you are provided base customizability in your house and avatar & you pay for upgrades.

In this world, you also own unique digital assets like skins. Unique digital assets can also have utility beyond just aesthetic. This sounds like the metaverse!
4/ GRIT NEWSLETTER

Want more?

Every week I write a newsletter to +28k investors, including hedge funds, billionaires, institutions & retail investors.

SUBSCRIBE (it's Free!) 👇👇👇
gritcapital.substack.com/welcome

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Genevieve Roch-Decter, CFA

Genevieve Roch-Decter, CFA Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @GRDecter

Aug 8
LAST WEEK JEROME POWELL SAID DOWNSIDE RISK TO EMPLOYMENT ARE “REAL NOW”

WITH THE U.S IN A RECESSION ACCORDING TO SAHM RULE...

TIME FOR A 🧵
1/UNEMPLOYMENT RISING:

Up 4 straight months, now at 3-year high of 4.3% Image
2/JOB OPENINGS DECLINE:

As the economy bounced back from COVID, employers scrambled to hire enough workers.

But that’s flipped fast:

- March 2022: 2 job openings per unemployed worker
- Today: Just 1 Image
Read 11 tweets
Aug 4
I've been investing in the stock market for 18 years.

Here are 10 things I do when there's a correction and I feel like dumping my entire portfolio...

Time for a 🧵
1. Drink a Cherry Coke and ask myself WWWBD: What Would Warren Buffett Do?
2. Look at charts upside down
Read 11 tweets
Dec 19, 2023
📈EVERY Major "2024 Outlook" from the World's Top Banks, Asset Managers, Private Equity & Consulting Firms

Credit and thank you to Anthony Cheung for posting on Linkedin.

Let's dive in!

BANKS (US):

J.P. Morgan

J.P. Morgan Private Bank

Goldman Sachs

Goldman Sachs Asset Management

Morgan Stanley

Bank of America

Bank of America Private Bank

Citi

Wells Fargo

BNY Mellon

State Street

Lazard

T. Rowe Price.

TD Securities

Charles Schwab

RBC Capital Markets shorturl.at/eltPT
shorturl.at/eyzHK
shorturl.at/gqLX2
shorturl.at/mCSW1
shorturl.at/jlmzA
shorturl.at/iuxyF
shorturl.at/ajsv7
shorturl.at/puW07
t.ly/2bF1E
t.ly/BCLLT
t.ly/p47tE
t.ly/ZkkUm
t.ly/e9b3d
rb.gy/nnjx81
rb.gy/lzcgh4
rb.gy/0guz6uImage
ASSET MANAGERS:

BlackRock

Amundi

M&G plc

Man Group

Wellington Management

Invesco US

Legal & General Investment Management (LGIM)

Schroders

Deutsche Bank (Wealth)

Allianz

AXA IM

PIMCO

Capital Group

Julius Baer (secular outlook)

Pictet

Vanguard

Fidelity

Cambridge Associates lnkd.in/eSxDA_bR
lnkd.in/ei6QXd7n
lnkd.in/e_PaFDwR
lnkd.in/edXtr7NP
lnkd.in/exnzD8_E
lnkd.in/egzQrPAu
lnkd.in/e7hjAkx6
lnkd.in/ewiRsg-t
lnkd.in/efw_cwRd
lnkd.in/ehuSey7i
lnkd.in/e4iDZ9_M
lnkd.in/eKA7hdBB
lnkd.in/ehH2jW3a
lnkd.in/eaN5EfJV
lnkd.in/eziFnGU8
lnkd.in/e8Fnrs2C
lnkd.in/eB6tJZb4
lnkd.in/eTHqAe4w
PRIVATE EQUITY:

KKR

Apollo Global Management

Blackstone

BlackRock (Private Markets) lnkd.in/e_m6UE5F
lnkd.in/eCHMuRvV
lnkd.in/edyFqR63
lnkd.in/eiGcGCfy
Read 6 tweets
Nov 7, 2023
Buffett, Ackman, Dalio, Cohen, Griffin...

BULL or BEAR?

What are the world’s wealthiest investors doing with their money right now?

Let's find out👇 Image
1. Ray Dalio: MILD BEAR.

“I don’t want to own debt, you know, bonds and those kinds of things…Temporarily right now, cash I think is good.” Image
2. Steve Cohen: BULL.

Says the US economy may fall into a short-lived recession this year before rebounding in the first quarter of next year.

He expects economic growth to jump next year and equity markets to rally 3% to 5%. Image
Read 12 tweets
Sep 12, 2023
“We’ve been spending money like drunken sailors”

JPMorgan CEO at Barclay's conference in NYC.

5 things you need to know 👇 Image
1. Quantitative Tightening is Coming.

"I just think people make a mistake to look at real-time numbers and not look at the future. And the future has quantitative tightening,"
2. Consumer is not alright.

“To say the consumer is strong today, meaning you got to have a booming environment for years is a huge mistake,"
Read 7 tweets
Jul 26, 2023
The Fed just raised rates by 0.25% - again

That’s the 11th rate increase in less than 2 years

Here’s what you should know 👇
The Federal Open Market Committee made a move that was expected by financial markets:

They raised the funds rate by a quarter percentage point.
The new target range now stands at 5.25%-5.5%, with the midpoint reaching levels unseen since early 2001.

The Fed Funds Rate was never this high in the years leading up to the 2008 Financial Crisis.

Read 11 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(