The Real Reason Why Amazon Shares Are Killing It

Stock Market Bubbles

How are all the following companies similar?

Facebook

Google

Amazon

Apple

Netflix

Spotify

Tripadvisor

Priceline

Airbnb

Waze

The similarities are important because it gives you a hint as to why these types of companies will continue to expand their dominance and influence over your world. So what do you think? And no, it’s not enough to say they’re technology companies. HP is a technology company. IBM is a technology company. Pitney Bowes is a technology company… so technology is not their connecting factor.

Two things stand out to me.

One – The Companies Above Are Driven by Mathematics, Not By Brand

They all have algorithms running in the background figuring out what you want next based on your last click or last fifty clicks. And these algorithms never sleep. They never get tired. And they never go on vacation. And they are getting smarter one click at a time. Every mathematical click is translated into zeros and ones to predict what you want to see, read, and hear next.

That’s why once you click on a “Gold Is Going To $10,000” ad, those invisible zero’s and ones  give you another “gold” ad/article. Did he bit? Yes? Then send another. And another. And another. Eventually all you see, hear and read is gold commentary. And not just any gold commentary but specific gold commentary about gold going higher. 

My friend. There is a war going on for your attention. And “they” won. But they don’t have to continue winning. The twelve companies I listed at the top of this letter to you have effectively built an echo-chamber or a belief bubble around you. This is why people were shocked that Trump won. Everyone ended up in their own belief bubble built by the 12 companies at the top of this letter.

People are Living in an even Bigger Belief Bubble

All Democrats heard in the 2016 Presidential campaign was their own algorithmic chosen belief bubble screaming back at them “Hillary is going to win!!!” And then that bubble popped. A bubble popping is nothing more or less than your own well constructed belief system getting popped. Market’s. Don’t. Pop.

This is also why the next market crash will hit people even harder than the 58% stock market fall in 2009. People are living in an even bigger or more well fortified belief bubble then just eight years ago. You have “the world is ending” belief bubble people.  Who’ve been in cash for seven years waiting for the signal to crawl into the bomb shelters. I’m exaggerating of course but only because it’s true. You have the “you better buy this small cap biotech Chinese startup before it takes off without you” belief bubble people. These people own six to twelve “pick of the month” newsletters.

What Bubble are You in?

The next market correction will hurt even worse because people won’t see the problem until their own belief bubble pops. So if you want to talk about “Bubbles Forming.” They aren’t forming in the stock market per se they are forming in your “news feed.”

Again, market’s don’t pop. People’s belief bubbles do. Remember markets are never wrong. Just like oceans are never wrong. No one screams at the ocean and says, “you’re overvalued.”

Investors won’t be able to see what’s really happening because they will be stuck in their own belief bubbles. An all they’ll see is what they believe to be true and not what’s actually true.

Two –
The Companies Above are Aging in Reverse

The second reason why the list of companies at the top of this email are growing in dominance is because they get smarter with each use(r). I really want you to get this because this is big.

So please slow down if you are skimming.

Take Waze for example. This Israeli founded company was purchased by Google in 2013. The way Waze works is you can type in traffic, accidents, or driving conditions to alert other drivers who use the Waze app on what’s the best route to get to where you’re going.

And each time someone turns on the Waze app, the app gets smarter. The app knows how fast your car is moving, where you are, what you are noticing and mostly where you are going. It’s learning and getting smarter with each use and user.

These Companies Are Aging in Reverse

You get it? These companies are aging in reverse. With each use the product gets stronger and not weaker. It gets younger and not older. There’s no depreciation. Unlike Ford or GM where their product’s value gets cut in half the moment you leave the showroom with your new vehicle . The companies above don’t have that problem. The more their product are being used, the more they are appreciating. [side note: Scott Galloway did a great talk on this idea of aging in reverse if you want learn more.] 

Take a look at four of these “aging in reverse” companies.

Google

The first chart I want to show you is Google, which is actually called Alphabet. The reason they shifted from Google to Alphabet is because they see the writing on the wall that their company is going to get broken up. So they said “you know what, we’re not Google, we’re actually a bunch of different companies under a parent company called, Alphabet.”

Google did this so when the policy makers ultimately break up Google, it will have already been broken up on their terms. Smart Guys.  This of course is my reason why not Sergey and Larry’s. And as you can see below Google is aging in reverse and is algorithmically driven. The more people use Google the smarter it becomes.


Amazon

The next of the four companies we’ll look at is Amazon. They’ve figured out how to age in reverse too. Every single person that goes on their website – especially Prime members who buy $500 more a year than a non-Prime member – gives Amazon information that will allow it to understand what people will buy. This is why they are dominating and will continue to dominate.

The only problem, Amazon too will get broken up in the future. I personally believe that no company can sustain being broken up if it surpasses a $1 trillion market-cap. It’s coming Jeff, so you might as well break up Amazon now into separate companies. And as you can see below Amazon shares show that it is aging in reverse and is algorithmically driven. The more that people use Amazon the smarter it becomes.

Netflix

Third we have Netflix. Every time we log-in and click on something to watch, Netflix learns and ages in reverse. If you go in and watch something for five minutes vs. an hour, Netflix knows and is learning what else a viewer should watch based on their watch history.

Just like Google and Amazon, Netflix is learning extremely fast and is aging in reverse. And guess what? Your monthly subscription is so low that most people won’t even think about ending their subscription because it’s such a negligible amount of money. Nice business model Reed. And as you can see below Netflix is aging in reverse and is algorithmically driven. The more people use Netflix the smarter it becomes.

Facebook

Finally we have Facebook. The more people use Facebook, the smarter it gets at delivering you information. So like in the example above, when you click on that “Gold is Going to…” ad, Facebook sees that and sends you another ‘Gold ad’ to see if you will click. And IF you do, your personal belief bubble gets bigger and stronger… and more fragile to surprises. And as you can see below Facebook is aging in reverse and is algorithmically driven. The more people use Facebook the smarter it becomes.

Of course,  these aren’t the only companies that are aging in reverse. And they weren’t the first.

What if companies like these have been around for the past 100 years? But you just never thought of them as companies. I want to offer you four companies that are mathematically driven so that every new user that subscribes to them allows them to age in reverse at faster and faster rates. These four companies are literally the original Benjamin Button’s of our world.  

Enter The Original “Age In Reverse” Companies

I want to share these four companies with you because when you get under the skin of what’s going on with them, you understand everything you need to know about the investment world and how to be the smartest investor in the room.

The four original “age in reverse” companies are:

The Stock Market Company

The Fixed Income Company

The Commodities Company

The Real Estate Company

This first company is literally the original “aging in reverse” company. And it’s killing it. Every time someone subscribes to this company it gets stronger. And that is why this company is able to see and do things that other companies cannot.

Look at the chart of the first company below. This is The Stock Market Company (below) and it’s being driven 100% by its subscriber base even more than Google or Facebook or Amazon. And every new user makes it stronger, not weaker. There is no depreciation with the Stock Market Company.

Today The Stock Market Company’s market cap is $22 trillion dollars. In contrast, Facebook today just passed the $500 billion dollar mark. This means that the Stock Market Company is 44 times more powerful and bigger than even Facebook. And there’s no chance of the regulators breaking it up.

The Fixed Income Company

The next company is the Fixed Income Company. You can immediately see the subscribers here are behaving much differently than those who subscribe to The Stock Market Company. And in the price chart below you can start to learn what those subscribers are doing with their money. Not what they might do, or feel like doing, but what they’re actually doing.

What’s surprising here is that The Fixed Income Company is even bigger than the Stock Market Company. While the Stock Market Company is around $22 trillion dollars, this is a $33 trillion dollar company. And the more subscribers to this company, the clearer the messages it sends.Fixed income company

The Commodities Company

The third company is The Commodities Company. You can immediately tell what their subscribers are thinking. They are not having quite the party that the Stock Market Company subscribers are having. And that is why you see this company’s price chart going from upper left to lower right. If you understand what the subscribers are doing within each of these companies then you understand everything.

The Real Estate Company

And lastly we have The Real Estate Company. You can see the price chart of the U.S. Real Estate Company below and understand immediately what is going on with its user base. The Real Estate Company’s user base did not like what was going on much from 2006 to 2012 but since then their user base is clearly pushing The Real Estate Companies price chart higher.

Now Here’s The Deal…

The real key is understanding how the money flows between these four original “aging in reverse” companies. Knowing how the money is flowing between them is the key to understanding everything about risk, bubbles, crashes, growth and turning points. Because here’s the deal…

We live in a closed-ended investment system. There are only four places on planet earth to place your money. As soon as you get a Dollar, Yuan, Yen or Euro in your life then you are already fully invested in the system because cash is a division of The Fixed Income Company.

Money is always flowing into one of them more than the other three. And it’s this flow that tells you everything. Know the flow of money between these four companies. And know everything. No judgement just observation. So if you see more money flowing into The Stock Market Company over the other three companies, then you know we have stability in front of us.

But if you start to see money flowing into The Fixed Income Company more than The Stock Market Company, then you know immediately that people, hundreds of millions of people, are looking into the future and saying, “I see a instability.” And it’s the flow of money between these four “aging in reverse” companies that tells you everything.

This is exactly what I do with my research company, Fearless Wealth, and it’s the reason people buy my researchFearless Wealth research looks at the results of how these four “aging in reverse mathematically driven” companies move relative to each other and then has uncommon insight into where to have your money. And it’s here, where clarity and stability and consistency lives.

In Your Corner,

RCPeck-Dig Signature.JPG     
RC Peck, CFP

 

 

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