I am an avid follower of Howard Lindzon, founder of StockTwits and an early stage investor on a level I just cannot comprehend. This week was the Stocktoberfest East conference in New York and, despite my usual discomfort and dislike for the city, it was well worth the trip in.
Howard talked about all sorts of trends as they related back to investing - both public and private. Robots, artificial intelligence, social and transactional themes carried over from previous years. What was a bit new, at least to me, was the deepening of the millennial theme. It seems that they like cities and prefer experiences to things. Maybe I knew the latter but the word "density" was used to describe the former. Density means that everything is right there. No waiting. No traveling.
While I knew about decentralization - blockchain and the sharing economy - they used a new term, fractionalization.
I actually have some experience with fractionalization. A company called Motif Investing presented at Stocktoberfest (West) a few years ago and they allow investors to create a portfolio of stocks using fractional shares. If you can't afford even one share of Google at $1051 (stick it Alphabet), then how about 1/15th of a share. And a quarter share of Facebook, for good measure.
It's like a personalized mini-mutual fund. And Motif is not alone. A quick check of the Google shows Stockpile, Acorn, Folio and more.
Stocks themselves are not tangible but this concept spread to the physical world. There was a vendor at the show called Rally Road that bought classic cars and sold shares to the public. It's not a time share where you get to use the car for one week in the year but rather you own a fraction of that car all the time.
You just can't drive it. The car stays in cold storage, nice and safe.
The point is that you can invest in this exotic asset on a retail investor level. If it goes up in price, so does your share.
It's not a brand new idea. I already mentioned time shares and mutual funds. How about limited partnerships on oil rigs, real estate and more?
The difference is that everything is completely transparent. You can even plot the price action to see how you're doing over time. We technical analysts love that. Although the data is monthly, only :-(.
Next, we'll probably see shares of jewels, space ships and maybe even brothels.
Finally, there was a company called StockX that offers bid/ask on high-end sneakers and few other products. Again, I love that you can track the prices but even better you don't have to deal with the other party. As with a stock, you deal with the exchange who guarantees you'll get what you expect, whether the real product or cash.
At first, I thought this was a ridiculous concept. Maybe that is because I think paying $200, let alone $700 for sneakers, is PT Barnum's dream. But then the CEO explained how it is transparent, safe and efficient in terms of establishing fair value.
Unlike eBay, where you can find your bargain using multiple pages, not knowing for sure if you had a good price. Think about bringing all those prices together on one page. It would force everyone to respect a fair market price.
For now, the business depends on the company fulfilling orders, which does not seem scalable. But then again, Amazon fulfills plenty of orders. If I can buy a car or some other asset that depends on salesmen then they'll have something. There would no longer be a sales person to mistrust. And unreasonable markups would be a thing of the past. What a boon for small manufacturers of any kind!
The times they are a changing, for sure. Some for the worse - like the crypto scam. Some for the better - like remote health monitoring.
See you next year at Stocktoberfest.