March 7, 2021

Tech Stocks Down 30% From Highs! ๐Ÿ“‰

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Mesh Lakhani

Hey All,

Welcome to Talk Money Weekly - where I cut through the noise and curate the best money-related topics from the web.

We're taking a mid-season break of the podcast, but we'll be back with the rest of Season 3 in a few of weeks. We'll be covering retail, real estate, and investing. These episodes are going to be AWESOME. In the meantime, you can listen to the first six episodes of here.

๐Ÿ“ˆ Markets & Business

Markets Are Getting Crushed. Why?

Stocks only go up, right? One would think so based on the last 10 months. Unfortunately, the market will "correct" itself. The two main triggers of a market sell-off are the rise in interest rates and concerns around inflation from more money printing. As the country gets closer to reopening, the sentiment is starting to shift.

This causes a rebalancing of capital allocation. Ie, people move money out of companies that were leading the way during the shutdown, into less performing names. Tech is being hit really hard, especially tech companies that have extremely high valuations, which are now seen as "too expensive". Hence, why we see names like Tesla and Shopify down 30%. This is why we're going to do a Stock Market Series, coupled with educational content and how to really understand this stuff.

When Interest Rates Are At 0%, Any Increase Is a Wrench Into a Moving Wheel ย 

For the last year, we've had basically 0% interest rates. Meaning, you're not going to get a return on money anywhere else, besides the stock market. Everyone piled in. If you go from 0% to 1%, that's a 100% increase. It looks like a small move, but it's a big deal. Again, this is why stocks that had a huge run-up during the last year and are now seen as "overvalued" and as a result, sell off.

๐Ÿ  Real Estate

Is Renting Better Than Buying? Rich People Need to STFU

There's no right answer here. Everyone's situation is different. Some people prefer to rent because they have other places they can put their money to work. For others, buying a home is a great thing to do. It forces you to save and put your money into an asset that hopefully appreciates. I get annoyed when people make a claim that buying a house is dumb, or that renting is better. It's just not true.

Right now, I prefer to rent because it's hard to commit to putting money into a house given the 1) increase in property prices 2) NYC real estate is still very expensive 3) I have other places to put that money (if I had it). In a few weeks, we have our real estate episode coming out, and it's really insightful. I interviewed a gentleman who had a very successful tech career, and now owns a portfolio of 30 rental properties. Can't wait to share it with you all.

๐ŸŽฅ Entertainment

Jack Dorsey's Square Buys Jay-Z's Tidal

Don't think anyone saw this coming. For those that don't know, TIDAL is a music service that was started by Jay-Z, where the power was supposed to go to the artists vs the labels/streaming services. I don't think it particularly did well, but I've heard that it's actually a really great product. Here's what's interesting. The music industry is huge. The biggest stars in the world have tremendous reach. Creating original content is everyone's game plan right now. So why not own that distribution? For Square, they have the infrastructure and they have the reach as well. Cash App is a "cool" product and has a wide audience, including a younger generation.

Music stars are also cool. And they have a lot to sell besides just music. As we discussed in one of our previous episodes, the Creator Economy is very real and can be lucrative. Jay-Z, decades later, is still very relevant and he has a smart business mind. He just made over $300M selling his spirits company to LVMH Moet Hennessey. He's having an amazing week. Square continues to think out of the box as a financial services company, and remains on the path to being "hip."

Kings of Leon Announce New Album as an NFT

I almost made it through the whole newsletter without mentioning NFTs! I had to include this one because it's a concept that actually might make the most sense. As we discussed our previous issue, NFTs are non-fungible tokens- a type of crypto asset. Kings of Leon, a band most well known for their Sex on Fire song, is releasing a version of their album as an NFT. What does this mean?

It means you can bid on this digital version of a vinyl album. It includes moveable art, exclusive art pieces, a limited version of a physical vinyl, and 4 lifetime VIP tickets to all their concerts. People can bid on these items next week and Kings of Leon will probably make a good amount of money that goes straight to them. Because these digital pieces are built on the blockchain, they will forever be verified so no one can replicate them. Doesn't that Square deal with Tidal make more sense now? Jack is a big crypto advocate. He's clearly a music fan. He wants musicians to have more ownership. This could be a start to a new gold rush in music content.

What Are Your Pokemon Cards Worth

If you ever made fun of anyone collecting Pokemon cards...the joke is on you. These collectibles are BOOMING, with rare cards being sold for as much as $350,000. The '90s really were the best days. Enjoy this video! That's all the news from this past week! If I was to make this newsletter into a Youtube show, would you watch it?

If you haven't already subscribed to my podcast, Talk Money, do so here. New episode next Wednesday!

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