HOWARD MARKS - SOMETHING OF VALUE
Fifth Era/Blockchain Coinvestors Newsletter
Vol. 3, No. 2, January 2021
Something of Value
We have thrown a lot at you over the last few newsletters, and we have received a great deal of feedback as well as questions. The one that seems to have really got your attention was #27 2020 Wrap Up: A Flight of Black Swans is Called A Wedge. Read Why? You can go to www.fifthera.com/newsletter if you want to re-read it or you can watch the webinar here. As a result, this newsletter digs a little deeper into the topics that got most reactions.
It also asks for your assistance with regard to a couple of specific actions we would like you to take.
Black Swan 9: Crypto Assets Are Now A Sensible Allocation in Every Portfolio
We will not rehash the years and years of rationale we have provided for why this is true. We are excited by the reality that the world's largest and most sophisticated investors are now joining us. However, since every trade has a buyer and seller and the world is full of those who are long and those who are short, it goes without saying that some people publish FUD (Fear, Uncertainty, and Doubt) in order to drive down prices. Some do it because they are short, and some because they want to deploy capital and they want a temporary lower price. We are preparing a webinar and newsletter on this topic, and we ask you to take a SINGLE question survey to help inform this work. Please take 1 to 2 minutes to help us please. This is the first of our two actions that we would like you to take.
We will publish the results when we have compiled them and both demystify Bitcoin in our webinar and newsletter and conversely highlight what we think are the real risks out of all of the FUD.
Black Swan 8: Intrinsic Value Appears to be Being Displaced by Austrian School Economics
This one was intended to be controversial. Most of us were taught intrinsic value by business, economic and finance professors and many of us had to master it as analysts at banks, investment, consulting, and accounting firms and so on. So just like efficient market theory we have been hard wired to believe in this paradigm.
We wrote two of our books, Build Your Fortune in the Fifth Era and The Intelligent Investor - Silicon Valley, because after 35 years in Silicon Valley we just knew it did not work for the early stage investing that we focus on. No one makes a seed through Series A investment principally based upon discounted cash flow.
Well a lot of you fought back. So here goes again. After Warren Buffet, the world's leading proponent of Benjamin Graham and David Dodd must be Howard Marks of Oaktree Capital. He is probably the greatest investor in distressed and undervalued companies in the US (World?). We love Howard - our oldest son Max is in his special situations team down in Los Angeles. Howard was just locked up for most of 2020 with his son Andrew amongst others and had to focus on something he has not really focused on before. The issue of how intrinsic value, and the value vs growth debate works in long term technology investing. His thoughts are deep and insightful shared in a new white paper called Something of Value. It's not an easy read, but click the link to see that it's not just Alison and Matthew questioning this paradigm of thinking that drives most investing today: Something of Value.
Black Swan 3: Governments Changed The Underpinnings of Monetary Policy
This one is very hard for many of us to grasp. Like the proverbial frog in the pan of water who does not jump out when it is heated to boiling, so we are all in a world of fiat currencies and we just can't perceive where we are if all of them are declining in value together. The foreign exchange cross pairs are all between depreciating monies. Well we really liked this recent white paper by Stone Ridge written as their 2020 Shareholder Letter. We think some very clear and powerful insights are in it, although we don't agree with everything that Ross writes.
No doubt there is more to be said on all three of these matters and we will all live them everyday in 2021 and beyond. For us, it is exciting to be investing into Internet, Fintech and Blockchain companies and projects in their earliest stages. We hope you will join us.
Finally, the second of the two actions that we would like you to take is to join us on the upcoming webinar on January 27th that our partner, Lou Kerner, is moderating regarding the AngelList platform. Why it exits, how it works, and why we have opened up a syndicate on it. He will be joined by one of AngelList's most successful syndicate leaders - Phil Nadel. Please register by clicking here.
Thank you for reading and we hope you are staying safe and well.
Alison Davis
Matthew C. Le Merle
Fund Performance & Access
Blockchain Coinvestors Funds are continuing to generate strong returns. To date, over 80% of the funds we are invested in are performing as top quartile funds against the Cambridge Associates benchmark. This remarkable performance results from powerful tailwinds driving the world towards a future in which digital monies and digital assets are ubiquitous and the businesses and projects providing blockchain and crypto products, services, and infrastructure benefit disproportionately.
Blockchain Coinvestors funds are open to Accredited Investors and can take investments via IRAs. We support several providers, including Millennium Trust Company and Pacific Premier Trust Company (Pensco).
Our coinvestment program provides opportunities to invest into the follow-on rounds of the most promising of our combined portfolio of 250 and more blockchain companies.
Blockchain Coinvestors AngelList - Our syndicate on AngelList providing access to rounds that we are investing in. Blockchain, Crypto and Fintech. Click here to go to our Syndicate page on AngelList.
Please visit the Blockchain Coinvestors website to learn more about our offerings. You can also reach our Investor Relations team directly at ir@fifthera.com.
Register Now For Our Upcoming Webinars
Please register for the January 27th AngelList webinar at 1:00pm ET with Lou Kerner, Phil Nadel, and ourselves by clicking here.
There are many good reasons that institutional investors should start looking more closely at blockchain investments.
Institutional Investors - Making the Case for Blockchain, Feb 1st at 7:00am PST
Institutional Investors - Making the Case for Blockchain, Feb 1st at 12:00pm PST
We have been working on Digital Monies and Assets for more than 30 years. Why is now a seminal moment, how will this impact the global financial industry and how can investors take advantage?
Digital Monies and Assets: The Road Ahead, Feb 15th at 7:00am PST
Digital Monies and Assets: The Road Ahead, Feb 15th at 12:00pm PST
Blockchain Coinvestors has a simple goal - provide the broadest coverage of the fastest growing blockchain companies and emerging unicorns. This webinar presents our investment strategy.
Blockchain Coinvestors Investment Thesis - March 1st, 7:00am PST
Blockchain Coinvestors Investment Thesis - March 1st, 12:00pm PST
Our webinar library can now be found at www.fifthera.com/webinars.
Appearances in 2020
We had the honor of presenting at multiple online conferences this year. A selection follows. Click links to listen to any you may have missed:
Inspired Insider: Early-stage investing hack and emerging opportunities
Digital Future: Why Digital Monies Change Everything for Business on VoiceAmerica podcast
On The Brink: How to make sense of Digital Monies and Assets
We thank you once again for your support, and we hope that in this challenging time you and your family and loved ones are staying safe and healthy.
Best wishes,
Alison Davis
Matthew C. Le Merle