Questions about Bitcoin, Elon Musk, MBA, M&A Dealmaking
Hi there! Dan DeFrancesco in NYC.
Fun fact Friday: City parents, including Eleanor Roosevelt, used to put their children in cages that hung out their windows for fresh air.
With the stock exchange closed today, we decided to shake it up a bit. Today’s issue consists of questions submitted by readers.
A quick note: Some of you had questions related to personal finance, a topic I’m not qualified to advise on – just ask my 401(k). I encourage you to subscribe to 10 Things Before the Bell, which is much more focused on the daily movements of the market.
Okay, let’s get into it.
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1. Post time!
Why is there so much misinformation about the state of the market on a given day or of a given stock on a given day?
Misinformation is a problem that plagues all industries, but its impact on finance is particularly keenly felt. It is easier to exploit misinformation for personal gain in the financial world than in perhaps any other industry.
So what to do? I’m not the type to suggest that the only real information you can get on the markets is from established news outlets. That said, some general rules to follow:
1. No one can guarantee you a return.
2. If it seems too good to be true, it probably is.
3. Don’t trust anyone who uses emojis to detail their investment strategy.
No one seems to cover commodity traders anymore. Can you tell me where I can find stories about successful CTAs or commodity hedge funds?
I love items! I had a short run covering the space at my old gig. I agree that the space is underserved compared to other markets. A main problem is that space can be painfully isolated at times and somewhat intimidating for newcomers. (Have you ever tried to understand contango and backward?)
I think our colleagues at Markets Insider do a great job of hitting the daily highlights. If you’re looking for commentary on the space, Javier Blas is as good as it gets, and also the author of one of my favorite commodity stories ever.
Do you think the legacy media is afraid of Elon Musk’s new Twitter?
I’m not sure scared is the right word. It’s a common misconception that Twitter is a massive driver of clicks for media organizations. (It isn’t.) That’s not to say that it doesn’t play a crucial role in sharing information. I just think the discourse on Twitter is very different from what you find on a media site.
But even if they don’t want to admit it, journalists care a lot about Twitter. Meanwhile, Musk has been quite open about his disdain for the media. It creates this weird dynamic where you have a business owner fighting with some of their biggest (albeit non-paying) customers.
What are the problems in bitcoin?
This question could encompass its own mailbag, but I’ll try to keep it simple.
My take on bitcoin, and the wider digital-currency ecosystem, is that too often it’s a solution looking for a problem.
The technology has so much fascinating potential, but that’s all. Potential. And for all the talk of decentralization, sometimes these new offerings aren’t about truly democratizing access to things. Many times they are just about replacing the current holders of power.
I am a student studying B.Tech in Mathematics and Computing at Delhi Technological University. I want to end up with a job in finance. What would be a better domain to work in so that I can get into an MBA program in top B-schools in the US after 2-3 years of work experience? SDE [software development engineer] in a bank like Goldman/JPMC or in an HFT firm?
Here’s a question for you: Why do you need an MBA?
If you’re dead set on getting into some type of front office role, you can see it as a necessary requirement. But as the importance of technology continues to rise on Wall Street, those lines are beginning to blur. Blackstone, for example, has included its technologists in the agreement process. And it’s not alone, as more firms seem to have technologists and dealmakers working hand in hand.
I would also argue that working in tech usually comes with better hours, more flexibility and less stress. It’s true that you won’t get paid as much as an investment banker or PE dealer, but it’s not like you should be making peanuts.
But to answer your original question, I would choose the HFT firm. With all due respect to the big banks, it still is challenges with how they manage technological talent. A well-known HFT firm on your CV can open many doors. And perhaps you will receive the greatest gift of all: gardening leave.
I’m curious why we’re not seeing M&A deals, in either public or private markets, increase at least a little more than we have YTD. PEs are flush with dry powder and valuations are at much more appealing levels than they have been in years. Do we chalk it up to groupthink – there is some short-term market uncertainty and my competitors are conservative, therefore I should be conservative too?
Your analysis is perfect. So much so that I almost didn’t want to include it so I could steal it as my own.
To expand on your point. The M&A market is in a massive game of standoff. PE firms are on one side. On the other are companies that still hope to return to 2021 values. Both sides have dug their heels in, but are also starting to feel the pressure.
For PE firms, the LPs expect to eventually put the money to work. For the acquisition targets, many of which burn money, there is pressure to get more capital.
Industry consensus was that things wouldn’t pick up until about halfway into 2023. At first, I thought the collapse of Silicon Valley Bank might push it back further. But with the uncertainty of venture debt, I wonder if everyone will just bite the bullet and dive in.
What do you think of SAM (Boston Beer Company)?
I’ll take two. Preferably cold and with some friends.
Curated by Dan DeFrancesco in New York. Feedback or tips? Email [email protected], tweet @dandefrancesco, or connect on LinkedIn. Edited by Jeffrey Cane (tweet @jeffrey_cane).
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