Making Markets EP33: Markets, FAANG, and IPOs. What Lies Ahead w/ dMY Technology CEO Niccolo De Masi
by Daniel Newman | April 25, 2022

In this episode of Making Markets, dMY Technology Group CEO Niccolo De Masi returns to the show to talk about the macro economy, the factors that are holding tech back, and why the disconnect between tech and the economy may be big, but none of it is unprecedented. They also talk about the first wave of tech earnings, how inflation fears and interest rate hikes have led to a massive sell off of tech stocks, and what’s ahead of big tech earnings this week.

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Daniel Newman: The first wave of tech earnings look good. However, the market shrugged it off as inflation fears, and interest rate hikes have led to a massive sell-off of tech stocks. dMY Technology CEO Niccolo De Masi joins the show again to talk about the macro economy, the factors that are holding tech back and why the disconnect between technology and the economy may be big, but none of this is unprecedented.

Also, what is ahead for the big week of tech earnings ahead and IPOs throughout the rest of 2022. So, tune in, it’s time for Making Markets.

Announcer: This is the Making Markets Podcast brought to you by Futurum Research. We bring you top executives from the world’s most exciting technology companies bridging the gap between strategy, markets, innovation and the company’s featured on the show.

The Making Markets Podcast is for information and entertainment purposes only. Please do not take anything reflected in this show as investment advice. Now, your host, principal analyst and founding partner of Futurum Research, Daniel Newman.

Daniel Newman: Niccolo De Masi, CEO, dMY Technology Group. Welcome back to Making Markets.

Niccolo De Masi: Pleasure to be here, my friend.

Daniel Newman: It’s good to see you. We live in the same city. I think we drive by each other occasionally and wave. But time is going so fast, the world is moving and sometimes we don’t have a chance to get together. So what better way to have coffee than do it right here on the show?

Niccolo De Masi: Exactly.

Daniel Newman: So, big week. We are heading into the biggest part of the tech earnings wave. We had the banks, we’ve had some of the early, and we’ll talk a little bit about that on the show. But I love having you on because obviously you’ve got a huge reputation for bringing companies public.

You did a number of them last year. You’ve got a really big following in that space. Interesting time for some of those businesses, just because of the sort of negative sentiment that’s gone towards growth, [inaudible], tech. Really anything that’s not value or oil right now is not seen very positively.

But at the same time, you have a read on a lot of things that are going on in the world, the economy. You’ve got a read on what’s going to happen in tech. You’ve got some thoughts about maybe what public markets and what going public is going to look like in the coming years.

I’d love to start off on the macros. I’ve been on the show for the last few weeks. So, pining about sort of this detached tech/economy that’s going on, but we’ve got war, we’ve got inflation, we’ve got interest. I mean, what’s kind of on your mind right now, generally speaking, in the economy?

Niccolo De Masi: I think you’ve summed it up surprisingly well. And I appreciate your summary of my own background. I couldn’t have said it better nor could my publicist have, Daniel, to be honest.

The reality is we’ve had largest expansion in history for the last 12 years, right? I was used to recessions before the last 12 years happening every five years or seven years throughout my earlier life. We had so 12 years expansion, we’re now obviously bearing some of the consequences of vast amounts of, I would argue, excessive stimulus at least in our country, and maybe in the UK, but really in the US.

And all tech stocks, other than Apple and Google, it seems maybe Apple, Google, Microsoft. Amazon sort of treaded water the past two years, but only Apple and Microsoft are up in the last two years if you look at performance.

Everybody else, Facebook’s been cut in half from their peak. Obviously, Netflix is about been cut in half. Great gaming companies like Roblox are down 70%. Unity is down similarly from their peak about 65%, about two-thirds. These things have all been cut in three.

My portfolio is unfortunately not fairing any better, but it all needs to be put in perspective, which is if almost all tech is moving in symphony I think it’s safe to say that there are rebounds around the corners when people recognize that inflation is going to start to decline at some point with these rate rises, whether it’s the May rate rise or it takes another one or two after that.

Eventually inflation will turn the corner. Economies are already, I would argue, adjusting … supply chains are already adjusting due to, as we talked about last time, the helpful price mechanism that is inflation. Inflation has been vastly disproportionate for certain items, as we all know, whether not just commodities, but certain chips. You talk a lot about chips. More than probably I do these days.

But those whole bits of the economy that we can’t make enough cars. We can’t make enough consumer electronics, et cetera, et cetera. But this is causing reshoring, and this is causing changes in behavior.

And so I always ask myself where are you going to get yield for all the money on the sideline, right? So all the money on the sideline now is looking at inflation at 8.5%, maybe more, but that was the last formal number, whatever a few weeks ago.

If you’re holding cash, how do you prevent the erosion of value? And so in the next 6, 9, 12 months, I think we’re going to actually have a bunch of this money on the sidelines start to recognize that technology offers yield. Believe it or not, there’s a lot of great tech companies that are executing exactly the plan.

You look at the dMY portfolio, our businesses are all doing exactly what they’ve said they’ve done. There was one admittedly that changed its mind in November, then reset and went back to the original plan in January. And that hurts credibility.

But the reality is businesses I think this year are going to execute in the tech space more or less along the lines of what they said they would do with a couple exceptions like Netflix. Facebook obviously is facing competition from TikTok.

But broadly speaking if you looked at tech earnings overall, Tesla’s obviously knocking it out of the park. That bodes well for segments of the economy that can show they can outperform as well as some of these guys are underperforming. But overall tech is going to be a growth adjusted value play is my prediction by this time next year.

I think you’re going to say, see inflation come down. You’re going to see people go well, there’s a trillion dollars that could sit in cash and just erode a few percent a year in real asset value or it can start to leg back into the market.

This happened in 2016 to a smaller extent. This is obviously a grand readjustment rotation relative to 2016. I’m not saying that energy stocks and commodities and real estate won’t do well. I think those will do well also, but I believe you’re going to see people recognizing that the risk-adjusted returns are asymmetric and things have gotten beaten up to the point whereby it’s gotten silly.

The other catalyst that we’ve talked about a bit about last time, but I think we start to see it second half of the year, is merges and acquisitions, right? When prices get this low the real upswing comes, I think, first from strategic. People going like, “Hey, like, you know, I thought I wanted that business at double the price. I really want it now.”

And so even though my business has been beaten up 30 to 50%, your business might have been beaten up 50 to 70, on a relative value basis there’s going to be some people issuing some stock, issuing some paper. Probably not borrowing to do stuff given rates are going up, but I think people are going to do some deals the second half of this year.

Right now there’s paralysis, right? And I think that’s obviously the least helpful phenomenon in any public market environment is just outright paralysis, right?

Look, Vladimir Putin’s not helping things obviously on that front and general sort of like I don’t want to be the first fool back into the market is not helping things. But people are going to start testing IPO markets I think this quarter.

We’ve seen IPO volumes die off by 90%, 95% from Q4 to Q1, right? And that’s true. And I’m talking tech in general. I’m not talking IPOs. I’m talking all IPOs are probably down something like that.

Daniel Newman: Let me ask you a quick question. Just curious. This is a broader topic. One of my thesis’s that probably hurt me a little bit in some of my own investing decision making, and besides the fact that I can’t invest in most tech companies that I know it well because of the work I do, I have to kind of work around the peripheries of that.

But is that with the debt we’ve taken on and created throughout the pandemic to do all this stimulus, the government can barely function and operate. And what happens when these rates adjust and they have to actually start paying this debt?

I can’t figure out how we can push rates so fast so high, let all these assets fall so hard. All these growth companies that basically fuel our economy and all the risk that creates and then pay the interest. What gives there?

Niccolo De Masi: No, I mean, listen, I’ve had the same perspective since 2006, 2005. I was living in the UK running a public company there. And I thought then that it was not much of a threat that the U.S. and the UK were going to raise rates that much when they both had 70% debt to GDP ratios.

That figure is now what double? It’s over 100% in both cases, right? So at least 50% from where they were 15 years ago. And I do think that is a real phenomena as we talked about last time, like the government becomes a printing press, inflationary, devaluation problem, if to service the debt they have to take on more debt.

We’re not that far off from that in my opinion, right? It’s like, you’re paying what $2 billion a day in interest or something like that on U.S. sovereigns. Maybe it’s more. I don’t know. I haven’t kept up.

And you’re absolutely right. If the government treasuries double and that becomes $3-4 billion a day, you get very close to that Argentina-style runaway inflation/deevaluation issue. I don’t think it’ll get to that because the U.S. has fortunately still the leading reserve currency, if not the only reserve currency.

But I agree with you that there are real inflation opportunities in my opinion that I think might last a lot longer than people think, even if inflation moderates. Rates are going to stable the inflation is what I’m saying for, I think for a good while to come because-

Daniel Newman: They’d be cutting their legs off if they basically raise rates too much. Like if they there’s like this happy medium and they need to push it. And I think that’s some of the reason why they’re being so aggressive is the faster they can bring inflation down, the faster they can turn the cycle back, start lowering rates again and spur growth.

I do think this is sort of a ride it out moment. I think maybe owning a little Bitcoin isn’t terrible. Having some hard assets, gold, real estate, certain luxury items right now if you’re thinking about it. And I think that’s a reason they’ve been so strong despite so much of the stock and the most exciting growth companies being destroyed by the way. Chip designer, AM Pier, announced they’re going to do an IPO this year. So that’s interesting.

Another company called Service Titan is looking at doing it as soon as June, but overall the IPO market sucks. I just want to point that out. I just actually got an alert about that today.

But, yeah, I love that you kind of put an answer on that. Just a kind of quick rundown, Niccolo, is like over the last couple of weeks, this is really interesting to me. So TSMC is a Taiwan semiconductor, and whether you’re into chips or not chips have had a moment over the last couple years. So the whole world’s watching this particular industry.

Not only did they have a beat on revenue and earnings, they actually raised their guidance for the rest of the year. I wrote an op-ed on Market Watch about this, but talk about a disconnect. The markets have almost untethered because the chip market, the semiconductor market, is basically saying demand for technology because chips power everything – software, data center, phones, refrigerators, cars, smart watches, everything.

Chip demand is still so high. A combination of the backlogs that have been built up and demand that continues in. And, by the way, who does TSMC supply for? Invidia, AMD, Qualcomm, Intel, AWS.

I’m just saying like the demand is so high, Niccolo, that we are actually raising our guidance, we’re raising our forecast and we beat the streets’ expectations. That probably means AMD Qualcomm, all those companies are going to have probably pretty good results.

And I said this is actually in my opinion and indicator, oh, one more thing. IBM, double digit growth this quarter. Double digit growth enterprise tech. You know the last time IBM had dig double digit growth, Niccolo?

Niccolo De Masi: 1985.

Daniel Newman: Over a decade since they’ve delivered that growth. What I’m saying is look at some of the things that are happening in terms of what’s being reported and the results and we’re not any longer in the beginning of the selloff. The selloff started like in November.

The economy changed around the Fall. Around Thanksgiving is when things really started to turn. Their rates started climbing. The fed’s hawkish comments grew. The war started in the new year. So we’ve had a few months now. This quarter is factoring in things.

The guidance for sure is factoring in things. And these companies are bullish. They’re delivering and they’re bullish. Chips are bullish. Enterprise tech is bullish, and next week we’re going to see companies like Apple. And we just saw Tesla. To me, it’s so disconnected.

Niccolo De Masi: Well, look, remember to that there is no natural law of the universe that says Bitcoin has to have any value. Okay? You don’t need to have Bitcoin to manufacture chips, cars, boats, planes. You don’t need it to function. It doesn’t have any aesthetic value like art does. It doesn’t have any value to semiconductor business like gold does. And there is no history of it being something that you pay dowries in, right?

So there’s no reason that has to keep going, okay? There’s also no reason why a semiconductor business has to trade at 20 times earnings when it could trade at 15 times earnings. The governor on that second one tends to be the real inflation rate, right? And what yields need to be to not erode value on your cash, right?

So at a very, very fundamental level TSMC is a great stock. I have no doubt they would manufacture double as many chips as they could to try and just service the car industry right now given what’s happening with prices, delays, and supply chain there.

But the earnings yield is what you should keep an eye on. So if the earnings yield on TSMC is much higher or at least on par with where interest rates are supposed to be by the end of the year, then I think you start to get a lot of support.

And if the earnings yield is higher, like if the earnings yield is closer to the inflation rate than the interest rate, then I think you absolutely get people piling into these stocks again.

And so Apple, these things like Apple and Microsoft and the Google, like they have pretty sanguine, Apple certainly has always had pretty sanguine PE ratios right in the last decade or two. So that’d be an interesting to watch.

I think the growth adjusted PE ratio and growth adjusted earnings yield is what people are going to keep an eye on in the next 12 months, right?-

Daniel Newman: You’re being … Go ahead.

Niccolo De Masi: Looking at inflation rates coming down and then looking at effectively will be earnings yields coming up and trying to figure out when they meet, if they meet. And that forecast will be sort of the battle, if you will, over whether or not you buy or sell sort of tech on mass.

Daniel Newman: And you’re being so logical though. I don’t know if that’s good. Tesla is going up. It’s trading at 200 times Ford. The models are putting it at some ridiculous valuation. And then I believe Alphabets at 23.

And, by the way, just crushing earnings every quarter trading at 23. Amazon’s moved sideways, but it’s been trading at 50 PE, which I think the market’s kind of saying that might be too high, especially because the eCommerce business doesn’t make money. So it-

Niccolo De Masi: Walmart’s been a great stock the last two years. It’s a sub $500 billion market cap business still right now, but they are the fortune one. And the reality is, I think your assessment is correct, which is like Amazon was expensive two years ago. It’s growing well. It’s growing into its valuation. As opposed to growing shareholder value.

Google has been growing like a champ. Apple’s been growing like a champ. I mean, the [inaudible] thing about these companies is Google might trade it 23 times earnings, but I think they’re growing revenue at more than that. They grew like revenue, 30%, at least one quarter last year, it’s-

Daniel Newman: They’ve been growing very well and very profitably growing, by the way. And the business is very robust and doesn’t have the same impacts of say like Apple’s IDFA has had on Meta and Facebook. By the way, just quick yes or no answer for the fun of the show. Is Fang over? Is Netflix gone? I’ll get your answer first.

Niccolo De Masi: I never understood why anybody ever included Netflix in the same guys of companies as an Apple, Google, Microsoft, Amazon. I’ve never understood that, right?

Daniel Newman: Okay. Agreed.

Niccolo De Masi: I don’t think they ever deserved to be in there. And I don’t think it’s going to be in there obviously. I think the other three are in a different category, given vastly different scale and profitability.

I mean, Netflix is like if you look at the content costs and like … it’s not a free cashflow machine. These other guys are free cash flow machines.

Daniel Newman: They actually beat earnings pretty significantly. The market didn’t care though. Everyone say, Kramer says, “Oh, it’s all about being profitable.” But what I’m saying is they actually did okay on the elasticity of price and made money, but they lost subscribers. And everyone’s like, “That’s what we focus on now, subscribers.”

Niccolo De Masi: Well, remember when you’re richly valued, don’t say overdone, you’re valued … Netflix only hung together as a story where subscribers grew to compensate for the vast investment in content subscriber acquisition cost, marketing, et cetera.

If you go into reverse and your DCF doesn’t show growing subscribers, it shows declining subscribers, like your DCF lapses very, very, very quickly, regardless of the discount rate. It’s a different sign. The growth is a different sign. It also prefaces Disney taking market share from them and maybe doing so in grand style. HBO … there’s other people nipping at their heels here.

Daniel Newman: And I happen to own some FUBO so if you all want to do something, I would appreciate it. But in all serious, Netflix is gone, but they’re going to have to change the acronym cause you take the N out and there’s all kinds of problems with that.

Niccolo De Masi: Well, no, that’s okay because Facebook’s now Meta. So, you know.

Daniel Newman: I think Kramer called it Mama. Like Meta, Apple, Alphabet. What’s the other one?

Niccolo De Masi: Microsoft. Yeah, Microsoft and Apple.

Daniel Newman: Well, yeah. I mean, listen, the acronyms, the acronym … Tesla will probably find its way into the acronym at some point, but we’ve seen good companies like Invidia. Like you said a lot of the richly valued have been discounted the fastest.

And I know for every 100 bips they look at earnings compression of something around 15% on growth is about the discount rate. We haven’t actually seen two to 300 bips yet, but if you look at Invidia being down 40% and we’re estimating 2% to 3% increase, you can actually see how that actually got there because the market is forward looking.

So they’re kind of starting to price in what they think is going to happen, not what’s happened now. So some of it can make sense if you look at it long enough. And by the way, if you watch what happened to Zoom stock after the pandemic slowed down, even though the company was still growing, actually at a pretty good rate, you could have predicted what was going to happen to Netflix if that ever slowed down.

I know one’s enterprise, one’s consumer, but the subscription model, recurring revenue kind of how people would discount. It was actually there. I am great, Niccolo, at identifying macro trends after they happen, by the way. I am trying to.

Niccolo De Masi: Listen, there’s other analysts who are able to predict nine of the last five recessions. So it goes both ways on that one.

Daniel Newman: Oh my God, it’s terrible. But with all that in mind, I think it is interesting quickly on Meta is I think their … So here’s a prediction. I think that all of those companies we talked about Microsoft will have a strong quarter. Apple will have a strong quarter. I’m going to come back to Meta. Alphabet will have a strong quarter and Amazon will have what I will call a neutral quarter.

Because AWS will do great. But I think some of the supply chain will have calmed eCommerce down. And I think their costs are rising significantly to try to facilitate that business. I think META is going to have a shitty quarter. I think META, the IDFA, what Apple has done to basically make it difficult for them to do their targeting and advertising.

And not to mention the sentiment around META ever since Zuckerberg moved to that new business model. They added $10 billion in annual costs for a business that nobody knows when is it actually make him money. And then on top of that, people didn’t like him before. So like at least people didn’t like him before, but it was a cash machine. Now they don’t like him and the company’s basically saying we’re not going to make as much money.

Niccolo De Masi: Look, META has similar challenges to Netflix structurally, which is they are complaining about competitors, whether directly or indirectly. They complain about TikTok on the earnings calls kind of thing. Coupled with they’ve added costs. In Netflix’s case it’s more content investment. In META’s, it’s hardware and the Metaverse.

And lowering your growth rate combining with keeping costs high, or in META’s case increasing costs, and worrying about competitors is an unholy trinity, right? Those are three things that don’t speak to barriers to entry being as robust. The moat is not as robust as the great Warren Buffet would put it, right?

Daniel Newman: Yeah. Yeah. You kind of hit that. It’s interesting that you say that. I don’t know. I’m just telling you like my gut is that we’re going to get a restructure of the sort of the bigs and it’s going to be interesting. I think Tesla comes in, Netflix is gone for sure. META is on the rocks though. I mean that stock has been halved. I mean, they’ve been halved.

Niccolo De Masi: They’ve been halved. Absolutely. And if it goes down any further, I agree with you that MCM won’t be in any Mama or otherwise It’s going to be Apple, Microsoft, Google, you know that.

Daniel Newman: Right now it’s hard to say this, but I was actually like as I’ve been trying like any cash I have, I’m like right now, I don’t know if I was going to do something. I have two schools of thought. I’m like right now, when this paralysis that you mentioned is going on, probably it’s probably the actual signal to be buying some of these things that have been destroyed because you’re probably getting it at a good price now.

But the paralysis is real, really hard to function. So then the alternative is just buy Apple. Just buy Apple and you’ll be fine. But, again, some of those names haven’t really come back. They haven’t pulled back much.

Niccolo De Masi: No, they haven’t. Apple and Google haven’t pulled much back at all.

Daniel Newman: The industries up too, to make the illusion for the average viewer that just watches the headlines. “Oh, the market’s still only 20% off its high.” Yeah, but the average NASDAQ stock’s at 55% off of its high right now. So there’s a huge, huge disconnect there.

Hey, I’d like to wrap up with you talking something near to your heart, and you could take it from whatever angle you want. General IPOs, direct listings, SPACs. But I mentioned earlier the IPO market’s almost silent right now. We’ve heard very little, there’s nothing going on. The SPAC market has been absolutely destroyed.

There’s sentiment out there, Niccolo, that there’s banks out there that will not let this end until every SPAC is worth zero. And I’ve seen quotes like that in message boards and pundits saying stuff like that.

And basically I think the thought process is more or less that somehow the SPAC market was harmful to the IPO market, the typical IPO market where the banks make a fortune. And a different set of investors made money on the SPAC market. I don’t know if any of that’s true, but kind of what’s your outlook on the whole space?

Niccolo De Masi: Yeah. So look, if you’re one of the top performing SPAC franchises of all time, I think you’re in a completely different category than sort of a proverbial SPAC market, which I’ve never personally encountered with our deals in the sense that our shareholder bases has looked very similar if not identical to an S1 or a direct listing that Goldman Sachs would do. And they’ve been our underwriter on all our deals along with Morgan Stanley on half of them.

There’s been some bad actors, okay, in the IPO markets in general. And there were bad actors in the boom. We can all remember them. WorldCom, Enron and a bunch of people advertising businesses in the bowl in 2000 that had no business other than a domain. And they were still going public.

I think there were some people that got ahead of themselves on their promises around technology commercialization, and we all remember certain companies pushing cars down hills and claiming they were working when they weren’t and that kind of thing.

So that’s getting regulated out, right? That’s getting regulated out with the FCC and that’s getting regulated out automatically by virtue of underwriters being more careful, as well as investors synching the bar up dramatically on what they will support in pipe investments, as well as frankly in follow on offerings.

My prediction is that this is extremely healthy for the long term S4 IPO business, which is what it really is that we’re doing here. It’s an S4 IPO instead of an S1 IPO. I think the super majority of sponsor teams and the what’s called the SPAC industry are going to be one and done, and they’re going to retire.

And it’s going to shrink the size of S4 IPOs relative to the S1 IPOs significantly in the next 18 months. Certainly by the end of the next year, you’re going to see not the … The majority of IPOs last year, and maybe even the first half the year before, the majority of the IPOs done were S4 SPAC IPOs. That’s just a volumetric fact for a number of quarters.

The majority of IPOs in ’23 are going to be S1 IPOs, I think not S4 IPOs. And redressing that balance is perfectly reasonable from a long term health perspective. It’s a Darwinian effect as public markets always exert their influence through regulators, as well as just investors sitting on their hands.

Only the best deals and best teams and most experienced operators are going to still be doing this at the end of next year. We consider ourselves very much in that category. I mean, my partner, Harry You, and I have done this for a combined 60 years. We’ve done 25 plus public and something like 45 IPOs and maybe 200 M and A deals.

So the reality is we’re in this for the long run and we’re in this to deliver quality. And what we’re going to do is work harder, add more value, and obviously move with the times, which is people care about yield. They care about free cashflow. And they care about businesses that can do well in rising rates environments.

And so I believe that you’re going to see not two thirds of IPOs being S4 IPOs. It’s probably going to be a minority of IPOs by this time next year and beyond. But for the rest of this year, I think the overall public market, new issuance market, whether or not that is secondary’s, primaries, et cetera, it is it’s currently paralyzed. You’re spot on about that.

I do believe that paralysis can start unwind in the second half of the year assuming that we see some crystallization of what is likely to happen in the Ukraine, whether that is an unfortunate frozen conflict or an unfortunate partition of some kind.

And as you see rate rises, start to turn the quarter on inflation, I think people will think about the world differently. So go back to what I said 20 minutes ago or so, and we’ll end where we started, which is like once people see inflation coming down from eight and a half to seven and a half and so on, I think the world change. I think tech markets start to open up, IPO markets start to open up. And a lot of money in the sidelines start to go, “Okay, I’ve got to think differently about how I position for real yield in ’23.”

Daniel Newman: Yeah. I think great outlook, Niccolo. And like I said, couldn’t have come from a better person. I’m sure you’re kind of sitting there because the deal flow is a big part of what you do. And so you’re thinking about, “Hey, what is next? Where do I put my energy now? What’s the pivot move? What’s the hedge? And what’s the strategy.”

And I think there’s always these waves. There’s always going to be these waves. And probably most of the most successful people will probably tell you that finding the right moves during the right moments in those waves is very important. And by the way, one of those moments I do remind people, and again, not financial advice so don’t take it as any, but having a little bit of the courage to make the buys when it looks dark is actually the time that a lot of people do well.

I know that in March 2020 and April, I probably deployed more capital than I’d ever deployed in my life. And it was really hard. I was pretty paralyzed after what had happened prior. But at the same time you’d looked at it and you’re like this is not reality.

This is a moment. And the opportunity, that could be to buy a business, that could be to invest in a partnership, that could be to get into a fund. But what I’m saying is the moment that it’s really the right time, you know what we all do we chase it when it’s high.

Right now in Austin where people are buying real estate, they’re paying through the nose. Buying cars for hundreds of thousands of dollars over list. What I’m saying is people are chasing a market and there’s not enough volume or not enough supply. Tip for all these chasers. And then when things go on sale people become paralyzed and can’t buy. So it’s just an interesting kind of mental-

Niccolo De Masi: Well look my aunt, my mother’s sister, is one of the most successful investors I’ve got in my family and she had this fault with only irrefutable logic on the back of the great recession in ’08-’09. My grandmother passed away. She got her inheritance and I’ll never forget this. In 2009, they distributed. She took her inheritance money and she walked down to I think her local brokerage and she dumped all of it into the Dow. And her logic was, “Niccolo, I don’t see how the whole country is worth half what it was six months ago.”

Daniel Newman: There you go.

Niccolo De Masi: So she bought the DOW at $6,000, whatever, $6,500, right? And look at us now. That logic is correct, Daniel, which is like is the whole tech market worth less? Is every tech company except three worth less and will it always be that way?

Daniel Newman: …like half to a quarter of what it was. And that’s the real question mark. It will turn if you have horizon, if you are willing to see the long picture, it’s very hard to not think there’s going to be a transition back to growth.

However, that’s how markets work. They can’t only go up forever. And so great conversation, Niccolo. Always appreciate you joining me here on the show. A few months from now I’m sure I’ll be pinging you up last minute like I love to do and “Hey, what are you doing today for lunch? Come on my show.” So it’s really good to have you on here. I’m really glad it worked out.

Niccolo De Masi: Always a pleasure. I’ll leave you with this. There was a guy that wrote a book called “Dow 36,000” during the late ’90s. People thought he was nuts. The Dow’s at about 34,000 right now. Right? And so the U.S. economy will do amazing things in the coming decade. It’ll do amazing things. And there will be a Dow 50,000 and a Dow beyond Dow beyond. A DOW 100,000.

Daniel Newman: Never underestimate power of innovation and capitalism.

Niccolo De Masi: Exactly.

Daniel Newman: So listen, Niccolo, thank you so much. See you again soon.

Niccolo De Masi: Take care.

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About the Author

Daniel Newman is the Chief Analyst of Futurum Research and the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio