Like Buying McDonalds (MCD) All Over Again
From Skeptical to Confused to Impressed...
When I was about 8 years old, my Dad told me for Christmas that my “Stocking Stuffer” would be picking 3 stocks so I could start learning about the market.
It was around the time that McDonald’s was running one of their annual “Monopoly” Games so naturally that was my first pick.
I’ll never forget the excitement of “buying” the stock around $35 and checking the updated quotes in the weekend paper each week.
My other two stocks were NOV (Novacare - A Nursing home company my Mom worked for as a speech pathologist) and QMS (a local public company founded where several family members worked).
In addition to having the monopoly game and M&M McFlurries, MCD was also the best performing of the three picks. It even had two 2/1 stock splits (for the degens reading this that is akin to the company airdropping me additional shares). I can’t remember exactly when I sold but based on the chart, my paper hands cost me $$$.
Fast forward to the year 2022 and I am excited to say that I finally gave into the hype and “Bought an NFT.”
To be honest, my first thought was, “what’s the big deal about these JPEGs?”
My second thought was, how am I ever going to remember this seed phrase.
In next week’s issue I’ll share a pretty straight-forward guide that walks through how to actually buy an NFT but for now, I’ll lay out my investment thesis and overall outlook on the industry:
1.) It’s not about JPEGs… it’s about community.
The community of the team behind the project
The community of the early adopters
The community of the discord group
The community of the twitter mob who goes hot and cold in an instant
2.) Much like investing in early stage startups, there is betting on the idea but more importantly, it is betting on the jockey.
3.) There are no neutral parties:
People marvel at it or think it is dumb
Web 3.0 is the future or “NFTs are flatlining” like the WSJ article that came out today (two days after Yuga Labs record setting $320 million metaverse land sale)
The strong opinions above usually lead to increased media coverage, stories by each side promoting a narrative, and ultimately, more exposure.
4.) Venture Investment is Pouring In:
Yuga Labs raised $450 million from A16Z
Epic (developer of Fortnite) raised $2 billion to build a metaverse
Proof (launched Moonbirds NFT) raised $10 million from Alexis Ohanian’s Seven Seven Six VC Fund
And with all this will come increased regulation which in the long term is good for the health of an industry.
5.) The vast majority of projects will go to $0.
This has been common with pretty much every “boom” or new market
As well as Bitcoin, Ethereum, DOGE and other coins have performed, there are hundreds if not thousands that have gone to $0 (or been outright scams).
We’ve seen the same thing from the tech boom, legalization of cannabis, sports betting, oil booms and busts, etc.
NFTs will be no different, the projects with a solid team, a vision that is well executed, and the ability to pivot in an ever changing regulatory environment will significantly outperform the “fast money” crowd that hops on the trend and then is on to the next thing.
One of the first projects I bought into was Deck of Degeneracy, an NFT project with Professional Poker Player, Jonathan Little and an incredible Artist, Wes Henry.
To be honest, I didn’t know much about either of their background but I thought the idea was cool (and the artwork was solid). I minted 3 NFTs which I believe at the time was somewhere around .10 ETH - approximately $280 each based on the current price of ETH (minting is sort of similar to buying into the initial launch) and ended up with the King of Hearts, Queen of Spades and 3 of Clubs. Once the minting is finished, existing pieces can be listed for sale and are available for purchase on a marketplace (The most popular being Open Sea).
The benefit (known in the NFT world as Utility) in addition to the artwork/collectible nature is the community that Jonathan has built and provided tremendous value on everything from poker strategies, learning about upcoming artists and collections and just the general banter of a group of people who love JPEGs.
All cardholders also receive a physical deck of cards with the amazing art work, the opportunity for IRL (in real life) meetups, free roll member tournaments and the chance to win airdropped custom NFT pieces by top artists in the event Jonathan pulls one of your cards.
I’ve been HODLing these plus my first “airdropped” Cozomo card, made in honor of one of the most popular NFT contributors in the twittersphere. since March 23 and plan on keeping them for quite some time. In fact, any featured project I mention, I’ll hold at a minimum for one week (but almost always longer because it is a project I believe in) to avoid any risk of price fluctuation/conflict of interest due to the article.
Next week we’ll cover another project, a story of how I was scammed out of a few thousand dollars (an NFT rite of passage) and also the guide on how to buy an NFT.
From time to time I’ll also bring on a guest contributor so if you are passionate about NFTs (or absolutely hate them), hit me up on twitter and would love to discuss more.
Speaking of twitter, I’m really putting the algos to a test because my follows on twitter span across three non-correlated categories: Value Investing, NFTs and People who are bullish on the Chicago Cubs.
To the moon (or maybe not),