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The Metaverse, A New Long-Run Investment Opportunity (Cestrian Stocks Bulletin #60)

Cestrian Stocks Bulletin
The Metaverse, A New Long-Run Investment Opportunity (Cestrian Stocks Bulletin #60)
By Cestrian Capital Research, Inc • Issue #60 • View online
Victory at last for watercooler-haters.

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
A Virtual State Of Nature
Insofar as there is any such thing as society, it seems to us that it is to be found in the interaction between the individuals which together comprise it. Such interactions are governed by the emotional and rational actions of said members on the one hand, and the laws, rules and norms of their specific society on the other. And for as long as society has existed, humans have studied it and tried to understand it. Want evidence of this? Head to your nearest ivory tower, check your bag, take a look around the “library” (Google it, youngsters) and therein you will find tome after tome, volume after volume, shelf after shelf and indeed room after room of philosophical and biological and legal and psychological studies all seeking the answer.
Whilst no philosopher, lawmaker, neurobiologist or psychologist has yet to hit upon the lodestar, a couple of general observations might be made. One, the way in which individuals respond to external stimuli seems to be governed by some irresolvable tussle between the fast-twitch limbic brain system and the slower-to-react-but-less-likely-to-get-you-killed rational aspect of the brain. (If you watch some folks closely you can actually see this struggle playing out up top). And two, the way in which government and individuals interact was pretty much all wrapped up by around 1651 when Thomas Hobbes penned, well, quilled probably, Leviathan.
If you want to understand how government is formed from the state of nature you can either set aside a few days to read the presumably-deliberately-ironic-ho-ho leviathan-like book itself, or, take a shortcut and watch Hang ‘Em High, the Clint Eastwood movie. Which tells you pretty much the same thing. Biggest gun that everyone is prepared to recognize as such, wins. No big gun in town? No government. No government? Wild west, or, as it was known in the seventeenth century before the West Was Won, a State of Nature.
OK. Now, fast forward to 2021 where there is a new state of nature very much in flux and we aren’t talking about the re-opening of cruise ships. There is a whole new society being formed, one not bounded by geography but rather by bandwidth and storage and compute power. The metaverse, an already-much-abused strapline, is the totality of the electronic world, far removed from reality aka IRL (trans., from antiquity, “In Real Life”). The metaverse has no government, yet, though Facebook will likely lay claim to statehood before too long. It has no constitution, no customs and certainly no traditions. Individual electronic islands within the metaverse have developed their own cultures and practices but they are merely isolated instances unintegrated with the wider e-world. The metaverse is, in fact, the Wild West.
Which looks like the Internet circa the early 1990s, before the Netscape IPO.
Which means we think there is a long road to travel as vendors joust to occupy and defend critical turnpikes, bridges and escarpments.
Which means we think there is a long run investment opportunity ahead of us.
In this era of young, high growth, earnings per share lossmaking companies reaching public markets early, the beauty of this is that you don’t have to be a venture capitalist to try to play this theme - there are plenty of names right there on your brokerage screen. Here’s a handful that we own in staff personal accounts, and their function in the Metaverse.
We don’t yet own Facebook ($FB) - the analog to digital converter front end - but we will likely get around to doing so soon.
Our new 'Metaverse’ focused service launches soon. We’ll be sure to tell you about it once it’s live. It will be low cost and focused on long term investing in main-market US stocks in this theme. We’re excited about it.
Oh, one more thing. If you haven’t signed up for our free stocks research service, Cestrian Stocks Bulletin - you can do so here.
Cestrian Capital Research, Inc - 27 August 2021.
DISCLOSURE: Cestrian Capital Research, Inc staff personal accounts are long $U, $HOOD, $MTTR, $RBLX.
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