Disrupters At The Gate

I recently finished reading Disrupters at the Gate by Jeffrey Cole and Harlan Lebo. A very good book but not outstanding because it dragged somewhat in the last few chapters. What let me down was a lack of actionable investment information to help buttress my stock portfolio. That said, throughout the book it gives terrific histories of once stalwart organizations that failed to adapt to changing times. Xerox and Kodak come to mind. One chapter is dedicated to Blockbuster Video and how Netflix dethroned them because they envisioned the future and transitioned to streaming. 

Yesterday, CNBC ran multiple segments on Netflix. They just reported another disappointing earnings report. Although Netflix has a limited slate of NFL games, they don't have enough football on the platform. That's where the action is. Something like 92 of the top 100 television shows are either NFL games or college football. Most of them are NFL. Although the broadcasting rites are expensive to acquire, it's what the American public wants. Netflix stock has been walloped the last few years after being a Wall Street darling for well over a decade even though they carry combat sports and European football. 

Gen Alpha and Gen Z, the preferred advertising demographic for video content, have much shorter attention spans than previous generations. Free services such as YouTube and TikTok are their go to internet destinations for short form video clips, plus social media sites such as Instagram and X are in the mix. Now Netflix is the company being disrupted. Is this a death knell for Netflix? Not at all. It's still a premier streaming service, it's just not the growth company it used to be. Personally, I'm not a subscriber to Netflix although I've been one in the past, twice. They just didn't have enough content offerings that suited my tastes. If they had more NFL or college football games, I would sign up in a heartbeat on the advertising tier. Give me the gridiron or I'm going somewhere else. 

One chapter in Disrupters at the Gate is focused on the personal computer revolution. Most notably Apple and Microsoft. An excerpt of an interview with Bill Gates is included. When asked what kept him up at night, Gates responded, "Two guys in a garage in Silicon Valley.". We're at an inflection point where massive transformation is here because of Artificial Intelligence. Bootstrap organizations that consist of just a few people are making applications for the masses and making millions if not billions of dollars. Although no longer startups, both Anthropic and OpenAI started this way. There's going to be more to come as we get into the second derivative of the AI buildout. 

If we break down the epochs of time, it's BC, AD, PC, WiFi, and currently AI. AI has now morphed into Agentic AI and requires crypto in the form of stablecoins to fully function autonomously. These stablecoins run on blockchains so cryptocurrency is here to stay. According to Matt Hougan, Chief Investment Officer of Bitwise Asset Management, the "Mount Rushmore" of crypto consists of Bitcoin, Ethereum, Solana and Chainlink. These are the foundational blocks in digital assets that will propel institutional adoption and real-world asset tokenization for Decentralized Finance.

I own assets in both Chainlink and Solana via spot-priced ETFs. According to Standard Chartered, the multinational European bank, the bull case for Chainlink  is $200 by 2030. That's almost a twenty-fold increase. Some pundits peg Solana as a seven bagger in the same timespan. We're not even talking about the decade of the 2030s when Blockchain has the potential to be the fundamental driver of the S&P 500 companies. I'm not so sure how high Bitcoin will rise, it's like digital gold. The problem is, at least currently, as Bitcoin goes, so goes the crypto market. That's why I'm rooting for Bitcoin. I'm not sure where this is all going, but AI and crypto are the disrupters now. This is where you're going to make the money. That's what I'm betting on.   

Live Long and Prosper

Otto Von Bismarck is famous for saying: "People never lie so much as after a hunt, during a war, or before an election". Hunting season is upon us, we're in the midst of war with Iran, and the midterm elections are less than two weeks away. As Fleetwood Mac used to sing: Tell me lies, tell me sweet little lies. I don't know who to believe anymore.

To get away from all the noise I've spent the past two months immersed in finance and technology books. Books about boom and bust cycles of yesteryear are a focal point since there's great debate about the current technology revolution as to how much further we have to go. 1929 by Andrew Ross Sorkin is excellent as well as 1873 by Liaqat Ahamed. Most people are familiar with the crash of 1929 and the ensuing Great Depression. The global financial meltdown of 1873, not so much. But just like the Dot Com implosion of 1999-2000 and the Great Recession of 2007-2008, it was the big banks and Wall Street that caused the financial meltdowns by too much speculation, margin trading and greed. 

As an offshoot of my reading, I've been creating a watchlist of equities that I would like to purchase if they get down to my price range. They're primarily Artificial Intelligence stocks, but everything is AI now, at least with Corporate America. Artificial Intelligence permeates the national news. It's coming to take all of our jobs or is coming to wipe out humanity if you believe the hype. The question remains, what type of future do you believe in? The James Cameron version (he wrote and directed The Terminator), or the Gene Roddenberry interpretation (Roddenberry created Star Trek). I tend to be an optimist, so I'm going with Starfleet Command. 

It seems as if the more I read, the less I know. This is especially true with technology. It's evolving at warp speed and it's tough to keep up. As a society, we are captives of the Digerati. One thing that has confused me but was clarified recently is the concept of tokenization, a term that is frequently bandied about. The problem that I had with technology pundits is that they don't specify which tokenization that they're referring to. There's tokenization in AI, and there is tokenization in cryptocurrency. It's like saying Portland but not specifying if it's in Oregon or Maine. Two different cities and two different technology concepts with very little overlap.

Tokenization in AI deals with Large Language Models, how text strings are diced up and put back together like jigsaw puzzles to ensure the most efficient outcome of your prompt. The large chatbots such as Anthropic's Claude, or OpenAI's ChatGPT get charged by token usage. With crypto, tokenization is the digitization of analog assets such as equities, bonds, real estate contracts in order to flow through the blockchain. I'm a big believer in crypto tokenization and that it's the next phase of the plumbing that makes our financial systems operate in a timely manner. In a 24/7 marketplace, blockchain and tokenization is not only the future, but it's the present. It's going mainstream and I've bet on it with investments in Solana and Chainlink.

Two other concepts that were defined in my most recent readings are subsets of Artificial Intelligence: Agentic AI and Artificial General Intelligence. They sound about the same but they aren't. Agentic AI is here and it's growing, and it's putting people out of work. What used to take hours to accomplish manually, takes a matter of seconds. It is and will put white collar workers on the unemployment line. The blacksmiths and wainwrights in the horse and buggy era had to learn to pump gas and fix carburetors with the introduction of the automobile. This is a similar transition. 

When you do a prompt in pedestrian AI, it's reactive. It searches for something based on your query, a set of instructions if you will. With Agentic AI, it's proactive. You state a task and it will reason and plan from inputs of multiple data sources, not just a Large Language Model. This is in real time. For instance, if you want to book a flight, you will prompt the day, price range, and destination. The Agentic AI agent will scour all available data sources available and book your flight. Letting an AI Agent have your credit card number is a dangerous proposition in my opinion. Not enough guardrails in a nascent technology so buyer beware. 

Artificial General Intelligence is a technology for the future. To quote Google, "a hypothetical form of AI that matches or surpasses human capabilities across all cognitive tasks.". Ray Kurzweil has been writing for years about "The Singularity", where machines become humanlike. Sentient Computing is the technical term, where computers have subjective experiences, self-awareness and personal feelings. In The Terminator, a search and destroy cyborg, the T-800 from Cyberdyne Systems, time travels to Earth to complete an assassination. Not only is this the concept of Artificial General Intelligence, but the negative aspects of it, too. 

Elon Musk has transformed Tesla into a robotics company and this is what he envisions in the not too distant future, a company that produces human-like robots. Musk has already manufactured a flying car in the Tesla Roadster, right out of the 1960's era cartoon The Jetsons, or a more modern example is 1997's movie The Fifth Element. He's a brilliant engineer, but overshoots his projections which makes both his companies Tesla and SpaceX extremely expensive to invest in on a valuation basis. They're cult stocks. Musk is a cult figure. They go well together. There's speculation that he's going to merge the two companies which would be a runway to creating Skynet if you're familiar with The Terminator franchise. He'd have the androids and the neural networks. It's a dangerous combination if handled incorrectly. 

You can be a Luddite and do all the protesting you want to do, but you're not going to change anything. You can't fight the future, the future always wins. To use a cliché, you can't put the genie back in the bottle. We're in a race with China for AI dominance and if I'm going to get killed by a rogue cyborg, I'd rather it be American made than manufactured in China. 

ChainLink: The Amazon Web Services Collaboration Could Accelerate Growth

In the two decades that I've been writing about stocks and finance, the main thing that I've learned is that readers just want a hot stock tip. I've also learned that I'm not qualified for dishing out short-term price targets. That's because they don't work for me, or most prognosticators. The only sources that are backed up by successful outcomes in the momentum tranche of investing are Seeking Alpha's Quant Ratings and Investor's Business Daily's CANSLIM method. Both have terrific track records. The caveat with both of these techniques is that you must be tethered to your smartphone or computer to be able to fully capitalize on their investing suggestions. Although the majority of people are online 24/7 these days and may be able to take advantage of these services, I've been schooled in value investing and tend to take a less active approach to my finances.

A few months ago I wrote about cryptocurrency ChainLink (LINK-USD) and how I believed that the depressed price was great for accumulation. Here's a link to that article which covers a lot of background information about the company and crypto in general. The price has hovered around $9 for almost three months and I've been adding to my position in the Grayscale ChainLink Trust ETF (GLNK), a spot price ETF, to dollar cost average down. It was selling for $30 six months ago.

I'm slightly underwater on the investment and lag the S&P 500, but believe that if I'm patient, I'll reap the rewards. At the worst, I'll double my investment in four years which will be better than an investment in the S&P 500 based on historic trends. If the development of WEB 3.0  continues, and the tokenization of everything financial accelerates, then I've got a potential ten bagger on my hands. With the advent of social media forums such as Stocktwits and Reddit's Wall Street Bets (RDDT), ChainLink could even become a meme crypto. It happened five years ago, and lightning could strike once more.

In the altcoin bull market five years ago, it was all crypto hype. Now we're talking about real world use cases. Two weeks ago, Amazon Web Services "AWS" (AMZN) adopted ChainLink for their cloud service. Although many small and bootstrap organizations utilize AWS, it's the corporate behemoths that are the big game for ChainLink. The partnership legitimizes DeFi applications much the same way that AOL's purchase of Time Warner in the 1990s solidified the Internet era. It's not an apples to apples comparison, but you get the drift. 

Industry experts believe that other hyperscalers such as Google Cloud (GOOG) and Microsoft's Azure (MSFT) will offer similar decentralized data solutions. This could propel market wide adoption of Decentralized Finance. It's only good news for ChainLink. ChainLink is secure. AWS is secure. It's a nice combination. It's also primarily what the Fortune 500 looks for when deciding on a software package. I am not alone in my belief in this, but we are in the midst of the fourth industrial revolution. The current era amalgamates  A.I., robotics and Web 3.0 which is the tokenization of all things analog to digital. ChainLink is the bridge that converts off-chain assets into digital assets. Stocks, bonds, options and real estate are all becoming tokenized at an accelerating rate. 

The graph above (provided by Wiseway Tec), gives you a ballpark figure of the type of growth we are dealing with. If you search for tokenization of real world assets, the Internet is rife with charts and graphs all coming to the same conclusions - this is where the action is going to be for growth investors. Right now, we have a unique opportunity to buy ChainLink as a token or as a spot-price ETF as a value investment. Value investments tend to sit, then run. Currently, ChainLink is in neutral. I'm taking a page from the Warren Buffett playbook and accumulating while the price is down. It's a Mr. Market situation if you follow the teachings of Benjamin Graham. Prices are low right now so Mr. Market is in a bad mood and gives a great price to purchase the shares. I don't think it will take more than a year for ChainLink to get in gear. It's not if, it's when. I'm prepared to wait. 

Under the Bridge

There's an old Rodney Dangerfield routine that goes something like this:  "He worked for the bank for 30 years, Vice President - very adjusted man...church goer, never smokes, drinks or, gambles. Then you read about these guys. One day they pick up an axe, and wipe out the whole family. The next day the cops come around, 'What happened here? What kinda man was he?' 'He was a quiet man, a very quiet man'."

Because of the political dichotomy in the country, the majority of Americans stay silent, yet boil under the surface, ready to explode. We're in an environment where the preponderance of people can't say anything anymore without getting shouted down by the fringe minorities of both sides. The politically correct Left will shut you down if you aren't woke enough. The MAGA (Make America Great Again) Right acts like guests on the defunct Jerry Springer Show. Although many members of the GOP aren't "deplorables" as Hillary Clinton referred to them, some MAGA are. The same could be said about ANTIFA. Both sides are confrontational with no room for discourse, in person or online. It also seems as if everyone talks relentlessly about politics these days which is much different than thirty years ago. It puts me on the defensive. 

If somebody tells me that they're a Democrat, I wonder if they vote for candidates that represent the Squad's values. Alexandria Ocasio-Cortez is the shining light of the movement. She doesn't characterize my values nor does Bernie Sanders, although they have some good ideas such as Universal Health Care and make the billionaires pay their fair share of taxes. They are Socialists. It says so on Bernie's party affiliation. Conversely, if somebody tells me that they're a member of the GOP, I wonder if they're RINOs (Republican In Name Only), or, MAGA. Either or, it doesn't make me happy that out of over 300 million people, we can't get better candidates running for higher office. Like the presidency. 

I hated the 1990s. I was in my thirties for most of it, and as the country went through radical transformation culturally, so did I personally. As the dominance of three media networks with all of their influence on society eroded into the niche broadcasting environment we have today, I too was morphing from early adulthood to something that was supposed to be more mature. At almost 70, except for the aches and pains, I still feel like I'm in my teens mentally. But in my thirties, I was tired of myself, especially my career as a scribe, and needed a break. If you didn't live through the 1990s, or want a retrospective of it, look no further than Chuck Klosterman's The Nineties. It's an outstanding book. 

Bill Clinton was the 42nd President from 1993-2001. Except for a few peccadillos, I thought he was an excellent Commander in Chief. Especially the way in which he balanced the budget. He was a fiscal conservative while ushering in a centrist political agenda. In the early part of the decade, MTV in the classic music video format was dying. So was I from self-inflicted psychological and financial wounds. My friends were moving on and I wasn't because of poor choices. What always kept me going was listening to music. A year before Bill and Hillary moved into The White House,  Red Hot Chili Peppers released their fifth studio album, Blood Sugar Sex Magik. I had the Compact Disk and used to listen to it while on the Stairmaster.

One track on the album is "Under the Bridge", written by frontman Anthony Kiedis. It's a song about loneliness, homelessness and drug abuse. Despite its dour subject matter, it's a great song. Kiedis has been significantly influenced by writer Charles Bukowski, and I don't know this for a fact, but he may have created the song title from a Bukowski line from his novel Women: "Many a good man has been put under the bridge by a woman." It sounds like something "Slick Willie" should have written. Although I liked President Obama, I preferred the leadership of Clinton. I didn't mind Bush the Elder either, but never voted for him. I've never voted for a Republican, and the way things are going, I doubt I ever will.