FY2021

Benchmarks

I added 3 benchmarks to the track record above. At my age, late 20s, the most popular asset to own is a house/flat. And not only that, the most popular way to own this asset is to leverage up. Given the merit of this asset, being its popularity, I have added them to the track records as 2 new benchmarks. I have gone with London house price as this is where I live at the moment.

In addition, I have also added a “Rice” benchmark, tracking the growth of the rough rice commodity. It’s a bit of an odd benchmark but it’s highly relevant! Over the last 5 or so years my investing has enable me to afford more rice!

General

Major central banks in the West have started raising rates and/or started tapering the quantitative easing operations. It also seems that the recent rise in inflation is not 100% transitory, in fact a good portion of the rise appears to be permanent.

So, it makes sense for central banks around the world to start becoming cautious, and to start doing something, but not too drastic.

That said the bond market still marks the 10-year Treasury rate at 1.5%, which is still very low.

I continue to use a 6% rate to discount the future cashflows of all productive assets. It is high enough that it bakes in a significant margin of safety in case interest rate rises significantly from here, but it is also low enough to allow for the exceptional value of truly long durable stream of cashflow to shine in today low-rate environment.

I was going to write a pretty long write up on Universal Music Group, which was the company I recycled the proceeds from selling Inditex in Q3 2021. However, it recently came to light that Universal Music Group is on my company’s restricted list (so annoying!) so I can no longer own the stock. I will have to sell it and redeploy the proceeds into something else, which is still undecided.

Oculus quest 2 experience.  

I must confess that the fourth quarter I haven’t finished reading any new books. But to replace this I have spent a good deal of time “testing” the Oculus Quest 2. By “testing” I meant watching Netflix and playing games in it!

Oculus, and Facebook Reality Labs in general, are very important to my investing thesis in Meta (formerly known as Facebook). After all, Mr Zuckerberg is spending $10bn a year on it. Or around ~15% of Meta’s operating profit. That is a lot!

Becoming a user of Oculus really helps me understand what he meant by the “Metaverse”. From a user experience, which plays directly into future adoption, I note the following:

Work: right now, you can’t use Oculus for any high productive work yet. Whilst experimentally you can already sync a keyboard, the experience is still “glitchy”. So is the hand tracking function which is also very glitchy. I would rank a 2/10 for this one for now.

Researching: I enjoy reading in VR. For one thing I can have 3 tabs opening and I can have them with me all the time, anywhere at home, be it sitting at my desk or on my sofa. However, the nature of VR glasses prevents you from seeing things 100% clear, and you will have to focus on the central point to read text with 100% clarity. I would rank this experience overall at 7/10

Entertainment – playing games: 7/10. You definitely can feel the “immersive” experience playing shooting games or playing sport that requires less mobility like table tennis. I would leave 3 points left for graphics to improve. Plus the small VR community has not enticed much gaming developments from major gaming publishers yet.

Entertainment – watching movies: 6/10. Images are not yet crisp, and the headset is still too big to enjoy a movie completely for 2-3 hours.

Social experience: 1/10. None of my close friends are on it yet. I may be a bit harsh on this and yes as the ecosystem grows, user count will also.

General usage experience: headset still too clunky. It takes a full day to get used to all the controllers/navigation, hand tracking still is very glitchy. I would rank this a 6/10.

Price is £300 a headset. I would rank this 7/10. Quite affordable. But they don’t tell you that most of VR apps are not free! You do need to pay probably £50-100 extra to make sure you have all the good gaming apps to play around with.

In any event, I would definitely recommend you get one.

Over time, Mr Zuckerberg already said that the business model will be to take a cut of the GDP flowing through his version of the metaverse. It could be taking a cut from app developers like Apple, or from merchants if transacting activities happen more and more, like Paypal. The revenue from the headset sales itself I think will gradually reduce. The DNA of Meta isn’t to produce the best hardware, like Apple with the iPhone, I think the DNA of Meta is to apply crazy engineering skills to develop great social experiences and to build digital communities. Social experiences mean all of the above, from hanging out with friends to playing games.

But I also must be conscious that $10bn spend a year on this is a lot so Mr Zuckerberg better scale the ecosystem more quickly (hitting his goal of 10m users to have a real ecosystem quickly) and constantly testing and adding new features and improving existing ones).

See you in the metaverse!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s