Hey everyone!
We have big news today: We’re rebranding.
Our new name is Alts
This is more than just a domain change. We have some really exciting stuff happening right now on all fronts.
But rather than have this issue feel like a marketing flyer, I figured I’d take the opportunity to do a 2021 recap. To talk about our company and what this name change represents.
The timing is good, too. We just had a fantastic writeup in money.com. The author Julia did a terrific job explaining the landscape and our company philosophy. Check it out.
There’s lots to discuss right now, both with our company and the broader world of alts.
Let’s go.
Table of Contents
Why the name change?
While the name ‘Alternative Assets’ is a pleasant alliteration, it also has some big drawbacks.
First of all, it’s long. Let’s face it: “alternative assets dot club” is a mouthful. And a confusing one at times. “Hang on, are you talking about alternative assets, the company, or the assets themselves?” is a question that has come up more than once in conversation.
But ultimately, we felt the old name was too generic, and not quite the right name we wanted for the long-term. We wanted something shorter and snappier. More colloquial. More brandable.
We whittled down a list of 10 names we liked. After considering “The Alts” (hah, jk) we landed on simply, Alts.
Short, simple, and clean. Not jarring. And it nicely blends the old with the new.
Getting the alts.co domain
Finding & buying a new domain is always a wrestling match between what you want, and what’s obtainable in the market.
One of our partners (Corey from here.co) just went through his own rebranding , and introduced us to a fantastic domain broker who helped us get the domain we wanted.
The process of acquiring the domain was exciting — so much that we’ll be doing a podcast next month with our broker. He’s been in the game for years and is a wealth of knowledge. Keep an eye out.
What does this mean for me?
Everything on the site should be working as expected. All accounts and pages have been successfully migrated over.
Emails will still come from [email protected] and [email protected] for the time being. Switching these over involves lots of boring behind-the-scenes work.
There is only one known issue: Insiders will need to log in again. Otherwise, it should be a pretty clean switch. But let me know if you have any problems or notice anything funky.
What does this mean for you guys?
For us, it’s refreshing to have the clean, crisp domain we wanted.
But this is about more than just a domain change. This signals our commitment to the world of alts and bringing some exciting stuff to market early next year.
But we’ll get to that soon. First, I’d like to do a recap of this fascinating year through the lens of our company.
I’d also like to share some thoughts about the alternative investing landscape, and discuss six financial megatrends.
2021 Recap
I’ll be frank: This has been a massive year for us. We’ve come a long way in the past 12 months.
One year ago this week, I was sitting on the balcony of my vacation rental in the lovely Port Elliot, South Australia. I was finishing up a 6-month recap issue of the Alternative Assets Newsletter that went out to 840 of you, when I had a phone chat with Wyatt.
At the time, Wyatt had a Substack newsletter called Fractional. It was forward-thinking and experimental, with honest writing and fantastic analysis. Precisely what I love. It didn’t take long to realize this was something extraordinary. I called him up one day and asked if he wanted to join forces.
Fast-forward to a year later, we’re approaching 20,000 members and one million emails received
We’ve hired a phenomenal team of financial specialists, researchers & sharp analysts. We’ve written over 350 articles, produced 12 podcasts, spun up our Discord, created Insider, bought the Ark Watcher newsletter, and more.
We’ve forged partnerships, made new friends, and even raised funds through our community. (Click here if you’d like to receive investor updates)
Oh, and despite working together for the past year, Wyatt and I live on opposite sides of the planet, and still have never actually met in person! That will change in 2022, but it’s still pretty wild when you think about it… Cheers to the future (err, present) of remote work!
But the biggest story of the year is, of course, the macro story.
New Financial Megatrends
What’s been happening across financial investment markets lately is fascinating.
It feels like nothing less than a historical movement, fueled by cheap money, expanded access, and new technology, which has now taken on a life of its own.
This macro movement is more significant than I think many people realize, and includes some of the biggest financial trends of our lifetime.
It seems like every wise adage we used to have about investing is turning out to be wrong. “Be fearful when others are greedy, and be greedy when others are fearful.”
Yeah, nah, not anymore. Now it’s about catching waves before they break. It’s betting on buzz and pumping anything that looks remotely like a ripple in the hopes of riding the next big wave.
If value investing was dying before 2021, it’s now effectively dead in many markets — especially with younger generations, who have an entirely different concept of value.
2021 was the year of meme stock, and meme coins. It was the year crypto felt like it was legitimized into the mainstream, with Coinbase going public (via direct listing), record-setting artwork, new crypto trading platforms, and institutional capital starting to pour in.
It was the year of NFTs, PFPs and DAOs and a dozen other acronyms; entirely new markets were seemingly created out of thin air and are already worth $7 billion.
To be clear, I don’t necessarily believe this is all a good thing. But I think it’s important to understand the convergence of trends that have created what I believe is the most interesting year in finance since 2008.
Because whether you love it or hate it, whether you think it’s all signal or all noise, we’ve probably hit critical mass. The genie is out of the bottle, and I just can’t see how it ever goes back in again.
Trend 1: Rise of the retail investor
Twenty years ago, if you had disposable income, you gave it to a Financial Advisor, who invested your money into safe, boring vehicles earning roughly 7% – 10% per year.
You basically paid an FA a 1% fee for the right to invest in some big boring mutual funds, and you weren’t able to withdraw or even touch your money without an email. (Many FA’s would argue that’s a feature, not a bug!)
Then the robo-advisors came along. Companies like Betterment and Wealthfront promised all of the peace-of-mind that FA’s offered, but with lower fees and more flexibility. This worked for a while (and many robo-advisor companies are still wildly successful) but as an investor you still couldn’t pick & choose specific assets. You were beholden to their pre-existing funds, and couldn’t buy individual stocks unless you wanted to pay $5 – $10 per share with the big brokerage firms.
Finally, Robinhood came along and offered everyone free trading. And options. And spreads. And margin lending. And crypto. And with that, the retail investor was born.
It was beyond groundbreaking. The world realized unlimited free trades is what retail investors ultimately want. The brokerage firms followed suit and began offering free trading themselves to compete.
Robinhood either singlehandedly created the modern retail investor or kicked retail investing into high gear, depending on how you look at it. In hindsight, their success was inevitable and blindingly obvious.
Today, retail investors are increasingly shunning FA’s and managing investments themselves. A decade ago, 57% of households with $500k+ in net worth and a prime earner under 45 years old had an investing style considered “mostly self-directed.” By 2019, that number had shot up to 70%.
New generations are self-educating and taking on higher levels of risk to to get higher returns. They look to invest in alternatives, which usually aren’t an option with mainstream advisors.
(Even to this day, shockingly few mechanisms exist for traditional FA’s to offer their clients crypto. This means many FA’s still cannot even offer their clients crypto. And these are the people who are supposed to be on top of trends! Talk about missing the boat…)
Wealthy young investors don’t see much use for the wealth-management firms their parents relied on. They would rather pick their own investments, educate themselves, and make their own choices.
Which brings us to the next trend…
Trend 2: Memes and Tribalism
It’s hard to believe the whole GME fiasco only happened in January, but it set the tone for the entire year.
If you were anywhere near the Internet in January, you likely heard about /r/WallStreetBets, the Reddit forum that orchestrated a short squeeze on GME’s stock. Traders used social media to pump meme stocks like GME and AMC, make lots of money, and generally have a fun time “sticking it to the man” (whatever that means)
People took notice. The phrase, “AMC stock” was this year’s 7th most popular search term (right after “stimulus check”)
But to me, while GME’s pump was a fun joke, AMC’s pump was not. Remember this took place during a time of lockdowns, when the future of many legacy business models was in serious question. I happen to love going to movie theaters. If a ragtag group of retail investors can band together and essentially change a movie theater company’s fate? Wow. That is a huge deal.
It turns out GME was not an aberration, but rather the beginning of something much bigger. It brought the concept of community-based investing into the digital age.
Tribes are important. It’s easy to forget that we’re all just apes with clothes. And when we aren’t allowed to go outside and form tribes in person, when we’re stuck inside, bored and flush with government stimmy checks, we form tribes in all sorts of new ways.
Speaking of Bored Apes…
Trend 3: NFTs
Okay, this trend unexpectedly fell into our lap.
We were talking about NFTs back in February before they were cool. But I’ll be honest: I didn’t think NFTs would grow this quickly.
At first, I felt the optimal use case for NFTs was photography. Digital rights management has been a pain for photographers for decades, and this new technology seemed to offer some hope here.
Instead, we got pixelated punks and machine-generated squiggly rainbows.
But that’s okay! Lots of important movements start as a gimmick or a game. Five years ago, Pokémon Go brought AR into the mainstream. And I am convinced that when historians look back on gesture recognition, Nintendo’s Power Glove will be seen as way ahead of its time.
You can certainly argue lots of (perhaps even most) current NFT artwork is not about the art. I agree, and think that’s okay too! Traditional artwork collecting isn’t always about the art, either. You think people own a Jackson Pollock for the art? Please. It’s about status and being part of a club. A tribe. Sound familiar?
You can also argue these decentralized markets create a huge opportunity for price manipulation and money laundering. And again, I agree! But this concept is nothing new, either.
Artwork and classic cars have always been ways to save on taxes through appraisal arbitrage. You buy something for $50k, get it appraised for $150k, then donate it. Boom. You’ve made $100k in tax savings.
The big difference now is:
- You used to have real scarcity, not artificial scarcity, and
- There used to be a handful of market manipulators, now there are likely tens of thousands.
If you’re bullish on NFTs, there is no shortage of blogs and channels to confirm your bias. If you’re bearish on NFTs, I recommend reading Concoda, who has done a convincing job calling BS where he sees it.
I do think it would be wise to pay attention to the bear case here. 2021 was clearly the year of the NFT. But they are already in the SEC’s crosshairs, and the pendulum may swing back in 2022.
As always, I try my best to remove bias from my mindset. I try to view the world not as it ought to be, but as it actually exists.
Trend 4: Fractional Ownership and Alternatives
It’s probably no surprise, but I believe fractionalization is the single most important investing trend of our lifetime.
It’s important to remember this trend was born out of Regulation A. What started as a relatively small provision of the 2012 JOBS Act has blossomed into an entirely new, rich ecosystem of platforms and players.
The first fractionalization opportunities were in real estate. This makes complete sense given the high upfront capital required to invest in RE traditionally.
But the idea of owning part of an asset without having to buy the whole thing is hugely compelling for everyone from collectors to forward-thinking speculators to alpha-seeking investors.
Nowadays, it seems like everyone is talking about fractionalization. Dru Riley just had an excellent thread on this, and the drumbeat is getting loud. Yet despite fractionalization going mainstream via roughly 100+ fractional investing platforms, there are still hundreds of asset classes that have yet to be fractionalized.
Off the top of my head, here’s a list of assets we haven’t yet seen fractionalized to a significant degree:
- Diamonds and ultra-rare gems
- Movie scripts and film rights
- Industrial real estate
- Classic motorcycles
- Hotels and resorts
- Data centers
- Golf courses
- Parking lots
- Toll roads
- Billboards
- Airports
- Towns
- Websites
- Podcasts
- Surfboards
- Model trains
- Photographs
- Sports teams
- Mineral rights
- Airspace rights
- Game consoles
- Sealed VHS tapes
- Vintage magazines
And on and on we go. I could think of dozens more.
A world of alternatives awaits us. Fractionalization leads to alternative assets. It’s not unreasonable to think almost everything that can be fractionalized, will be fractionalized at some point.*
This trend is here to stay. It’s the most exciting thing I have ever been a part of, and we are all over it like a fly on shit.
*I draw the line at people. That’s just weird and dystopian.
Trend 5: Decentralized Ownership
2021 was the year DeFi found its legs.
Ownership over your own investments through NFTs is one thing. But collective ownership/membership is another. WallStreetBets kicked this movement off, and the Friends With Benefits token showed the power of DAOs and token appreciation.
There were other DAOs that, amazingly, didn’t grab the headlines as expected. PleasrDAO buying the Wu-Tang record “Once Upon a Time in Shaolin” from convicted felon Martin Shkreli was pretty underrated news.
But the fervor around collective ownership didn’t hit mainstream media until ConstitutionDAO. A group of retail investors raising $40 million to buy a copy of the Constitution? In under a week? Are you kidding? This is the kind of story that even grandma and grandpa understand. They may not understand the logistics, but they know the significance.
Even though the movement failed (in ironically spectacular fashion), it has, without a doubt, moved the goalpost forward. Oh, and the $PEOPLE token has itself appreciated tremendously since last month. There are now DAOs forming to buy all sorts of goods, including a Dune manuscript, The Goodyear Blimp, you name it.
Once again, the genie is out of the bottle. The idea of any of this stuff ever going away at this point is unthinkable.
The demand and supply are both here, as is the technology. Now it’s just a matter of the right “bridging companies” coming along to help everyone cross the chasm.
Trend 6: Investing as Entertainment
The final trend I’ll discuss concerns me a bit.
If Robinhood brought about the rise of the retail investor, it also brought about the gamification of investing.
Using apps like Robinhood feels more like playing a video game than serious investing. This isn’t a bad thing, of course. It’s good to have good UX! But combined with other megatrends, it’s easy to see how investing is starting to look a lot like gambling.
To be clear, I think gambling has a natural place in society — and increasingly so do lawmakers. Legalized sports betting, which began in Nevada, is now spreading to all 50 states.
But gambling goes beyond betting on the Red Sox. Meme coins, which Robinhood makes a tremendous amount of money from, is basically gambling. As is most NFT investing. The market cap for meme coins is somewhere around $42 billion.
Gambling has gone up and down over the years, but we’ve never had anything like this before. Not to this degree.
I think a lot of this is driven by the crazy inflation of fundamentally essential goods. In a world of million-dollar starter homes and unforgivable student loans, younger generations may feel they have no other choice but to shoot for the moon.
Gen Z’s risk tolerance is through the roof, as are their expectations of returns. They have no fear because they have no past financial trauma. 10% per year? Psh, that’s for mom & dad. Why bother with boring when you can make 300% overnight betting on doggy coins?
And yet the truth is, for many of them, it’s working! Crypto, YOLO trades, meme coins, and NFTs have genuinely helped lots of people climb out of debt. No wonder emotions are running high.
What’s next for us?
Okay, so investing is starting to look more like gambling. So what?
The problem is that in the long run, this is precisely the wrong way to invest.
Sure, it’s fun to invest in a dinosaur skeleton, sealed video games, a Beatles record, or a random squiggly line, just like it’s fun to go to Vegas and slap $500 on red.
But ultimately, you want to take emotion out of the equation. No matter what you invest in, investing necessitates both quantitative and qualitative analysis,
This is why we love what we bring to the market. As you probably know by now, we do the complex analysis nobody else wants to do, providing original research and actionable insights on 31 classes of alternative assets.
We work hard to find an edge, and it shows. We’re up 458% for the year.
Over the past year, our rigorous analysis has led to a solid performance. And this solid performance has given us the confidence to do a lot more than just analyze deals.
Interested in learning what we’re cooking?
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Conclusion
We’re in the early innings with fractional investing, and the game is getting fun.
But as Mike Tyson says, “Everyone has a plan until they get punched in the face.”
It’s easy to get lucky once or twice. But in the long term, you’re only as good as your consistency.
We approach this world with a healthy optimism but also a healthy skepticism.
It’s a crazy, rapidly evolving world. We’re doing our part to help make sense of it all.
Thank you for being a part of this journey. Onwards!
