Thread by @RaoulGMI

Not on holiday yet so I'll allow myself one more thread...

The markets are crazy! NFT are just jpegs! Dog coins! Cat coins! Tesla ! GameStop!

Everyone is going to get burned! Don't they realize about discounted cash flows?!!! These people are ruining everything! Green energy?!

Crypto is a bubble! Tech is a bubble! VC is a bubble! Biotech is a bubble! Passive investing is a bubble! Web 3.0 is a bubble! Green energy is a bubble! The Metaverse is insanity! Cant they see??!! They are all wrong!

No.

They are a new generation of investors. 86 million millennials got financialized in the US last year. They hit their prime investing ages of their 30's.

They have debts, no savings, no hope from the grind. They are poor than any 30 year old in the last 70 years.

They were fucked.

Unlike their parents in their 30's, they didnt get gifted equities with a P/E of 7, bond yields at 13% or real estate at the lows versus income. They got the opposite. Their opportunity set was an expected negative future returns. They didn't want any part of our financial system

They had occupied Wall St and no one gave a shit.

Now they don't give a shit about how you or I think you should invest or run markets. We let them down.

Why the fuck should they care? They were sacrificed to the altar of debts, leverage and greed.

Millennials and Zoomers had nothing to lose. They had nothing.

Then the pandemic hit and everything changed.

We gave them free money and they collective said "fuck it" lets take risk because their stake was free.

If we were given a free stake at the casino, we would do the same.

But they didnt buy our precious gold miners, or our discounted value businesses. Why? Because they don't care about 10% returns. The only way to level the playing field was to take MASSIVE risk.

Risk taking met Robin Hood options in 2020and magic happened...

These younger investors changed the entire fucking game. They armed themselves will the skills of Reddit, Tok Tok and Instagram - communities, virality and memes and stuff that they were told was stupid, like Hertz

... and Gamestop and stuck up their middle finger to the rules and broke them. It was MAGNIFICENT.

If you cant win the game change it.

They took HUGE risks to make BIG rewards. And contrary to US older cynics, they knew the risks but they still wanted to take them. It was fun.

"Loss porn" was celebrated and shared. Gone are the "I never get it wrong" Fintwit people. Gone were the diversification for the long run RIA's.

These young people had been let down by us all. Why should they play by our rules when they could make their own?

Screw active management, screw hedge funds. They wanted to just stick money in the markets as they were told (Hello passive!) and punt the rest.

Crypto resonated. Huge upside, downside of zero. It was a giant options market. Limited losses, exponential upside.

They are right.

I can hear you all, shaking your heads, saying, this time is not different. They will learn the hard way.

Yes they will. And that is good. And they want to learn but they are also blessed with The Exponential Age where growth stocks keep going parabolic over time.

and trade off Metcalfe's Law and, thus dont give a shit about our old Boomer mean-reverting valuation models.

And they are right. Very right.

If they were 20 years younger, they'd be very rich from the same strategy.

We mostly all missed it because we were too cynical and didn't understand that the VC's were right ( I mean, they are insufferable, right?!)

We thought they were mad bubble chasers but we were wrong.

They saw it, we didnt (I include myself here)

They changed to rules to suit them A set of rules where we cant compete. Not the hedge funds, not the regulators, not the wisened old hands. None of us.

Politics will follow suit and change.

All institutional infrastructure will follow (SEC laws too).

Everything will change.

Many will lose lots, many will win HUGE but the world has changed but many elders won't accept it yet because "we know better".

These new investors aren't interested in your love of oil or commodities or 1950's V8's or your Contemporary art of the 1990's and 2000's. Your Jeff Koonz is just a stupid ballon sculpture. It is not their cultural reference. JPEGS are and memes.

This is ALL about culture.

They value different things and there are more of them than you or I.

It gets more extreme when you get to India or the Middle East, when everyone is under 30! Those societies are going to see seismic shifts.

This is what the 4th Turning looks like.

I know many of you love that book but are shocked at what is happening currently. You've lost your frame of reference...

But this IS the prophecy of the 4th Turning....

The politics and world of nostalgia of the 50's are gone.

The world of white picket fencing, muscle cars, factory workers, suits, TV, radio - all of it is in the dustbin of the past...Irrelevant to the harsh realities of being young in the 2020's

The next 10 years is going to have the fastest, great technology change in all human history.

The Exponential Age.

We will all feel left behind, but we have to trust in this younger generation of people under 40 to lead the way and show us new ways. We need to be led.

You may hate it, fight it, complain about it, make chippy comments about it. But it won't make a single piece of difference.

Change is upon us.

Embrace change.

Don't fight it. In change lies all our future.