Timing & trends
A Robinhood spokesman fired back at Berkshire Hathaway Vice Chairman Charlie Munger’s criticisms of the free trading app. Munger had said Robinhood was having a “regrettable” impact on investors who have a “mindset of racetrack bettors.” Robinhood criticized the comments as “disappointing and elitist.”
The longtime business partner of Warren Buffett on Wednesday addressed the running controversy over Robinhood and similar applications, noting dangers from the allure of easy, free trading.
“No one should believe Robinhood trades are free,” Munger, 97, said. “The frenzy is fed by people who are getting commissions and other revenues out of this new bunch of gamblers.”
He added that the app has created “a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors. … It’s a dirty way of making money.”
A statement Thursday from Robinhood spokeswoman Jacqueline Ortiz-Ramsay took sharp exception to the remarks.
“In one fell swoop an entire new generation of investors has been criticized and this commentary overlooks the cultural shift that is taking place in our nation today,” Ortiz-Ramsay said. “Robinhood was created to allow people who don’t have access to generational wealth or the resources that come with it to begin investing in the U.S. stock market. To suggest that new investors have a ‘mindset of racetrack bettors’ is disappointing and elitist.”
Both commentaries referred to a recent groundswell among retail investors who are combining the convenience and free trades of Robinhood with viral platforms provided by social media, particularly the Reddit message boards.
In the most glaring example, investors have piled into GameStop, a heavily shorted stock that has seen its price explode higher in recent weeks amid a surge in Robinhood-based trades that created a massive short squeeze.
Though the speculation has created intense market volatility, Robinhood asserted that its product is providing opportunity.
“It should be celebrated that we are seeing market investors begin to diversify, and that education and awareness about the values of investing are diffusing further into previously untapped generations,” Ortiz-Ramsay said.
Munger isn’t the only Robinhood critic – others have accused it of turning stock trading into a dangerous game, from which it benefits through payment for order flow, or the money that market makers give the company for trading volume.
“No one should believe Robinhood trades are free,” Munger said. “The frenzy is fed by people who are getting commissions and other revenues out of this new bunch of gamblers.”
(Reuters) – Charlie Munger, the longtime business partner of Warren Buffett, on Wednesday warned that the stock market bears signs of a bubble, reflecting a “dangerous” mentality among some investors to gamble on stocks as they would horse races.
Munger, 97, lamented the recent mania for GameStop Corp, in which amateur investors encouraged each other online to buy the gaming retailer on platforms including Robinhood, and caught some hedge funds in a short squeeze.
“It’s really stupid to have a culture which encourages as much gambling in stocks by people who have the mindset of racetrack bettors,” he said.
“A lot of them crowd in to buying stocks on frenzy, frequently on credit, because they see that they’re going up, and of course that’s a very dangerous way to invest.”
Asked if the market resembled the late-1990s dot-com bubble, Munger said: “Yes, I think it must end badly, but I don’t know when.”
Munger was speaking at the annual meeting of Daily Journal Corp, the Los Angeles newspaper publisher he chairs, which was broadcast on Yahoo Finance.
He is better known as vice chairman of Buffett’s conglomerate Berkshire Hathaway Inc since 1978.
Munger said investors should not buy gold or bitcoin, noting the latter was too volatile to become a “medium of exchange for the world.”
He paraphrased author Oscar Wilde’s quotation about fox hunting to describe bitcoin, calling it “the pursuit of the uneatable by the unspeakable.”
Munger also expressed disdain for the surging demand for special purpose acquisition companies, or SPACs, which raise money from investors and then merge with private companies to take them public, in “blank check” arrangements.
“The world would be better off without them,” Munger said.
“This kind of crazy speculation in enterprises not even found or picked out yet is a sign of an irritating bubble,” he said. “It’s just that the investment banking profession will sell shit as long as shit can be sold.”
Facebook will restore news to Australian pages in the next few days after the government agreed to change its landmark media bargaining code that would force the social network and Google to pay for displaying news content.
Last week, Facebook blocked all news on its platform in Australia, and inadvertently blocked information and government pages, including health and emergency services.
The ban on news created shockwaves, with the action viewed as a direct message to the rest of the world against embarking on similar regulation of the technology giant.
The historic banning of news on Australian pages came during escalating tensions over legislation that would force the tech giants to negotiate a fair payment with news publishers for using their content.
The treasurer, Josh Frydenberg, and communications minister Paul Fletcher announced on Tuesday a compromise had been reached at the 11th hour as the legislation was being debated in the Senate.
With so much computing hardware in use around the globe, it is only prudent to use all that hardware in the most efficient way possible, after all, the gear is not free and it all requires space and maintenance, also not free. One way to increase hardware efficiency is to use Virtual Machine (VM) technology, and in a nutshell VM is a way to run a virtual computer within an actual computer.
Virtual Machine(s) are typically files, often called images, that run separately from everything else on the computer. The VM’s can have their own operating system, can be used for beta testing new applications, can be used to inspect and test infected code, and any other operation that benefits from being on its own. VM’s can be “sandboxed” in the host computer, meaning that they cannot interact in any way with any other part of the computer, so there is no code / instruction that can escape to, or tamper with, the host hardware.
It is possible to run several VM’s inside the same computer as long as the hardware is robust enough. For servers, VM’s can run multiple operating systems side-by-side typically using “hypervisor” software to manage them. Desktop computers would typically use the host operating system to run the VM operating system in a program window. Each VM provides its own “virtual” hardware, such as CPU, memory, hard drives, network interfaces etc, and the virtual devices are mapped to the real hardware when it is safe and/or advantageous to do so.
VM’s can provide a safe environment for testing and development, trying things out that could be dangerous on an actual, non-sandboxed computer. A good way to perceive development on a VM is “what happens in the sandbox can be kept in the sandbox”. But there are more uses for VM that have significant benefits in the production environments of many businesses. Not everything in a VM has to be confined to the VM if pathways to business operations are developed and implemented carefully.
An example of using VM technology to achieve higher efficiency in computer operations is to dedicate VM’s to specific business operations, such as EMAIL, WEBSITE, and ACCOUNTING. If each of these business functions normally has a dedicated server, there may be unused capacity in each server dedicated to each function. Using VM technology, each of these business functions can be given its own protected space in the available servers, and by dynamically adjusting that space, computing resources can be more efficiently utilized. A certain amount of “intelligence” is built into the VM and host environments to ensure the most efficient deployment of all computing resources.
With VM technology, companies may be able to significantly reduce costs, by having fewer servers and/or desktop machines to get all the work done.
There are several companies making great progress in VM technology, and this market space is poised to experience large growth within the next 12-24 months. We just sent our Trend Disruptors Premium subscribers a new recommendation in the VM space and are offering that recommendation to Money Talks subscribers (see below).
The Trend Disruptors team is currently monitoring another 20+ stocks for potential inclusion in the TD Premium portfolio. The performance of the Trend Disruptors Premium portfolio has been excellent, averaging a 28% gain on all closed positions.
New Recommendation: VMWare Inc (VMW.NYSE)
VMware, Inc. provides software in the areas of hybrid cloud, multi-cloud, modern applications, networking and security, and digital workspaces in the United States and internationally. It offers compute products, including VMware vSphere, a data center platform, which enables users to deploy hypervisor, a layer of software that resides between the operating system and system hardware to enable compute virtualization; and cloud management products for businesses with automated operation, programmable provisioning, and application monitoring solutions. It also provides networking and security products and services that enable customers to connect and operate their network; and storage and availability products, including data storage and protection options. In addition, it offers VMware Cloud Foundation, a platform that combines its compute, storage, and networking technologies with cloud management into an integrated stack and delivers enterprise-ready cloud infrastructure for private and public clouds. Further, it provides hybrid cloud computing solutions, such as VMware Cloud Provider Program, VMware Cloud Foundation, and VMware Cloud Services; computing solutions, such as Workspace ONE that delivers and manages any application on any device by integrating access control, application management, and multi-platform endpoint management; pivotal cloud foundry, pivotal labs, and heptio, as well as pivotal application and pivotal container services; and VMware Carbon Black Cloud platform, AppDefense, and VMware Workspace ONE platform. The company sells its products through distributors, resellers, system vendors, and systems integrators. VMware, Inc. has strategic alliances with Amazon Web Services to build and deliver an integrated hybrid solution; and SNC-Lavalin to provide digital collaboration platform for project delivery. The company was incorporated in 1998 and is headquartered in Palo Alto, California. VMware, Inc. is a subsidiary of Dell Technologies Inc.
The stock of VMWare has been stagnant since December 2018 and the main reason for that stagnation is that Dell Technologies owns over 80% of the company. But come September, we expect Dell to sell its share of VMWare and we want to own shares now because, once the spin-off is announced, we expect the value in VMware to finally be unlocked.
Wall Street projects VMware will grow sales by 8–10% over the next four years. And it has above average gross margins of about 82%. We believe VMWare will surpass Wall Street’s sales and free cash flow estimates.
ACTION: BUY Stop for VMWare (VMW.NYSE) at 145.20 meaning only buy VMW if it trades at 145.20 or higher. If BUY Stop triggered, initial SELL Stop at 131.50.00. Buy up to 152.00
Trend Disruptors is offering Money Talks subscribers a special rate of $399.95 for a 1 year subscription to the TD Premium service, a $200 savings. Click here to take advantage of this offer.
For more information on Trend Disruptors click here.
Yesterday marked the end of the Perseverance rover’s 300m mile journey to Mars and the start of a 687-day mission to better understand whether the planet would make for a nice place to live.
Costs for development and operation of the rover will likely total $2.4B…
… But the benefits on Earth are likely worth far more
Since the 1960s, NASA’s Mars programs have led to countless innovations, including materials for heart surgeries, methane-leak detectors, and — importantly — carbonating beer.
With Perseverance, it’s no different:
- Honeybee Robotics developed drill bits for the rover’s robotic arm that were also commercialized for use with standard drills
- Tempo Automation simulated designs for NASA’s circuit boards and then discovered the technology’s utility in the broader circuit manufacturing process
- Tech in Photon Systems’ spectroscopy tool for Perseverance is being tested for use in pharmaceuticals, food processing, and wastewater management
More and more companies are building for space
For Perseverance, Maxar Technologies built a robotic arm to scoop samples, Northrop Grumman built navigational sensors, and drone company AeroVironment helped build the rover’s onboard helicopter.
Just this week, Axiom Space raised $130m to build the first commercial space station, while SpaceX raised $850m to fund future missions.
As space travel and exploration have become more popular, other companies have specialized in building anything from wrenches for astronauts to zero-gravity espresso machines for the ISS.
But most money is in the ‘space-for-earth’ business
Known as the space-for-earth economy, goods and services sent to space for use on Earth — including for telecommunications, Earth observation, and national security — made up 95% of the $366B in 2019 space sector revenues.
But as costs decrease and successful missions attract new entrants, expect both the space-for-earth and space-for-space economies to scale up.
For now, the Perseverance rover’s clearest immediate impact on Earth is, without a doubt, limited edition Krispy Kreme Mars doughnuts.
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