If 2020 could be summed up in one stanza, it would be, “the best laid plans of mice and men often go awry.”
Last year, at this moment, I was trying on my flapper dress and getting prepared to greet the modern-day roaring twenties. I rang in 2020, in a crowded restaurant, dressed in flapper garb, popping open the champagne and drinking the giggle water like it was 1925.
Two and a half months later, my gym membership was on hold, my favorite restaurants were forced to close, business contracts were suspended indefinitely, my kids were being schooled from their bedrooms, I was attending conferences in pajama bottoms and, for some inexplicable reason, toilet paper became a tradable commodity.
What began as an inconvenience, quickly turned into a never-ending dystopian B-rated horror flick. Well, for most people, anyway. There were a privileged few who benefitted immensely from endless lockdowns and constant fear mongering.
Inmates received early releases from prison – especially if they were “big boned”. Yes, in 2020, instead of contrition, parole became contingent on weight – even for terrorists. And, it was not because larger criminals are easier to spot and slower to get away. It was simply what seemed to make sense to some – in 2020 BIZARRO WORLD.
While convicts roamed free, law-abiding citizens were mostly confined to their homes. Fortunately, they were granted a few liberties here and there, such as choosing what color face covering to wear while dutifully serving the maskless political elite who were busy smuggling haircuts, traveling at will, and brazenly dining out in 5-star restaurants with their 15 deepest pocketed co-conspirators.
For publicly-traded corporate conglomerates, COVID was the gift that just kept on giving. Sales escalated and stock prices rocketed – all at the expense of small businesses which just so happen to employ the majority of America’s workforce. Again, perfectly logical – in 2020 BIZARRO WORLD.
As local economies closed, globalized capital markets soared. Main Street was being decimated by night, while Wall Street rallied by day. Unbelievably, the public responded to their neighborhood wreckage along with the nonstop warnings of imminent COVID death by PURCHASING STOCKS! Only in 2020 BIZARRO WORLD would it be completely rational for the distraught, panic-stricken soul to seek console from a “stockbroker”, or more accurately, a robo-advisor.
New account openings for robo-advisors surged in 2020. According to data and analytic company Hearts & Wallets, 8% of American households now have a robo-advisor account. And, no, those accounts are not just sitting idle. According to Citadel Securities, retail investors now account for as much as 25% of the stock market’s activity, up from just 10% in 2019.
As retail raced to buy stocks, institutional investors decided it was finally time to chase some of that “rat poison squared”. BIZARRO 2020 turned out to be THE breakout year for bitcoin, as was forecasted by Tim Peterson, Investment Manager, Cane Island Global Macro, back in 2018.
Actually, it turned out to be quite an eruptive year for a number of cryptocurrencies. Not only did bitcoin nearly quadruple in value as it reached historic highs, but the overall cryptocurrency marketplace increased by over 200%, significantly surpassing the impressive 2020 returns of the S&P 500.
However, nothing – not even bitcoin’s astonishing appreciation – was able to hold a candle to the explosive growth of decentralized finance (DeFi). While most eyes were glued to bitcoin, the total value locked (TVL) into smart contracts of popular DeFi applications and protocols was skyrocketing over 2,000% and quietly laying the foundation for significant asset innovation in 2021.
With restaurants closed, gyms padlocked, concerts cancelled, vacations postponed and sports betting off the table, securities speculation became America’s favorite pastime in BIZARRO 2020 – making the “investment” the premier “consumer product” of the year.
While this consumption anomaly may have hindered GDP growth in the short-term, the macroeconomic impact of this surge in production and innovation could turn out to be extraordinarily GDP accretive in the long-run – so long as taxes and bureaucratic red tape are kept at bay and consumers regain unfettered ability to do what they do best: CONSUME.
Given these fruitful economic conditions, consume they will. Only, thanks to fintech, they won’t be consuming in lieu of saving and investing. They will be consuming in unison with saving and investing. Fortunately for the hospitality industry and economic growth overall, fintech will enable consumers to prolong their 2020 investing spree without it subtracting from their entertainment budgets or offsetting national consumption.
Through a novel macroeconomic theory, called Investumernomics, which will be formally introduced in early 2021, “investumers” (a combination of the labels “investors” and “consumers”) will be defying conventional laws of macroeconomics by augmenting the national GDP while simultaneously saving for retirement.
Whether it is being deployed to make saving and investing more accretive to economic growth; or whether it is being used to create new revenue opportunities for consumers; or even if it is being utilized to democratize access to higher risk-adjusted portfolio returns, fintech is about to assume a predominant role in practically every aspect of our lives.
It all begins to unfold in 2021.
This brings me to my annual investment predictions. We’re always told to “go big or go home.” Since I haven’t been anywhere in months except for home, the only option here is to go big – like really, really big.
And so, below are my biggest and boldest prognostications for the new year.
- RESTAURANTS WILL MAKE A COMEBACK.
“Restaurants are to people in the 80’s what theatres were to people in the 60’s. I read that in a magazine.” – Marie (When Harry Met Sally)
Yes, in 2021, restaurants will make a comeback. Why? Because cooking is a chore and I’m most people are really terrible at it. The fact is, even great cooks crave dining out. Restaurants are so much more than food. They don’t just feed our bellies, restaurants nourish our hearts. They host some of our dearest memories and capture our loudest laughs. They are where our marriages commence, our biggest milestones are celebrated, and our most profitable business deals get done.
No amount of Zoom happy hours or pictures of home-cooked meals on facebook will ever replace the specialty cocktail and dish ordered off a restaurant menu when surrounded by family, friends and colleagues. Although nothing can truly ever compensate for all of 2020’s missed celebrations, Congress can ease both the emotional as well as financial pain with tax incentives.
Congress should introduce legislation similar to Opportunity Zones that would encourage investment into hospitality businesses – the sector most hurt by 2020 BIZARRO-NESS. In recent years, Opportunity Zones were proven extremely effective in spurring investment in undercapitalized communities. A similar regulatory structure can and should be created for “Hospitality Zones”.
There have also been rumblings on Capitol Hill of not only restoring the full business tax deduction for travel and entertainment, but of broadening it to include non-business-related meals. This, too, would be a huge and necessary boost to the hospitality industry. Should lawmakers do the right thing here, 2021 could be the perfect time to invest in a local restaurant. I might even consider opening one up myself. If I do, I think I’ll name it, “Burnt Salad”, after my signature dish.
- BROADCAST MEDIA IS THE BIGGEST SHORT SINCE, WELL, THE BIG SHORT.
“Truth is like poetry. And most people f**king hate poetry.” – The Big Short
As a poet, I am seriously offended by this quote. I f**king love poetry, and the world could certainly use a lot more f**king truth. Sadly, today’s news media is the last place anyone will find it. More than half of the populace currently distrusts the press. In fact, most believe the exact opposite of what “journalists” spew.
Traditional media has been losing viewers to alternative media for years. This is nothing new. Digital Ad Spending, now makes up 53% of total ad spend, and, according to eMarketer, is expected to increase to 60.5% of total media ad spend by 2023. However, it is not only technology that is pulverizing conventional media. It is their own lack of credibility that is fueling their demise. They have simply lost the trust of their viewership.
Interestingly though, even film media, where people go to escape the truth, is bleeding viewers. Today’s youth just isn’t interested.
I came of age in the 80s. My generation loves movies. To us, movies are more than entertainment. Movies shape our personality. We grew up living and breathing movies. We reference and quote them all day long. I couldn’t even keep myself from doing it in this article. In simpler – less technologically distracted – times, Hollywood was able to capture hearts and inspire dreams.
Those days are long gone.
The other day I picked up my daughter and her friend from an afternoon of shopping. They got into the car and started telling me about a celebrity they took a selfie with on their outing. I had no idea who this superstar was, but, apparently, he was a famous youtuber.
The kids were shocked that I had never heard of their idol – as stunned as I was to learn that they never heard of Rob Lowe, only the greatest teen idol of all time. They told me that they have no interest in movie stars or even aspiring to be one. They would rather have internet fame. They prefer followers and likes to being on a cover of a magazine or appearing on a late night talk show.
Kids today wouldn’t even notice a Hollywood star if they tripped over one, while lost, on a red carpet. The fact is, with thousands of cable channels, streaming services, gaming, and social media, we are being oversaturated with content. When you are not watching the same shows week after week or seeing the same familiar stars in movie after movie, actors’ faces get lost in the latest streaming binge. So much so that they eventually become unrecognizable. Except, of course, for Rob Lowe.
Media is at a very interesting crossroads. Traditional media is dying of old age while social media is killing itself with censorship. All areas of media could use some decentralization, democratization and truth. Indeed, it could use some blockchain.
Blockchain technology holds the potential to completely disrupt the media and entertainment industries by transforming archaic advertising revenue models as well as royalty and distribution agreements. With blockchain, expect more innovative ways for consumers to monetize their own eyeballs as well as for media personalities to leverage their voices. As a result, more opinions will be heard and media profits will be distributed more equitably. Most importantly, blockchain will enable content creators to have a much more direct and honest relationship with viewers.
Media has never been riper for major disruption. And where there is disruption, there is investment opportunity. I predict there will be a number of blockchain media disruptors arising in 2021. When they do, traditional media and entertainment will begin riding off into the sunset and fading to black.
- BITCOIN WILL SURPASS THE TRILLION-DOLLAR MARKET CAP MARK.
In 2021, I can easily see bitcoin (BTC) reaching $1.5 trillion in market capitalization (price target of approximately $80K). I believe that this is due to the same reason that legendary fund manager, Peter Lynch, was able to grow the Fidelity Magellan Fund from $18 million to $14 billion in 13 years and deliver average annual total returns of more than 29%. He simply followed the consumer. In his day, Lynch was known to scour malls to collect consumer data. Of course, that was back when shoppers actually shopped at malls. (If you need a visual refresher of what a mall looks like, feel free to check out almost any 80s movie.)
While Lynch focused on what people were buying, today it is more important to focus on how people are buying. It is the how that will determine, once and for all, whether bitcoin is a fad or our future. I believe that bitcoin’s fate was solidified as the latter, this past October, when Paypal opened the floodgates by announcing that it will be enabling its 305 million users worldwide to not only buy, sell and hold major cryptocurrencies – presently including bitcoin, ether, litecoin and bitcoin cash – but use these cryptocurrencies to pay for products and services at its 26 million merchants worldwide.
To put this into perspective, according to Coinmap.org, there are presently around 15,000 businesses across the world that accept bitcoin or offer bitcoin ATMs. Although it is impossible to know the exact number of bitcoin users, experts estimate that there are presently approximately 100 million.
The exponential growth potential of going from 100 million users and 15,000 merchants to at least 305 million users and 26 million merchants, in a matter of months, is historically unparalleled. And, this doesn’t even include companies like VISA and Mastercard which will likely follow in Paypal’s footsteps. Nor does this encompass the significant bitcoin adaption that is likely to ensue from the fintech payment space as well as other parts of the conventional banking industry.
Corporate adoption of this magnitude had not been witnessed since the mid-1990s when every single business across the globe began launching websites and implementing IT strategies.
It is this rampant mainstream acceptance that is helping fuel the astonishing investment appetite for bitcoin. Not only are institutional money managers now actively chasing bitcoin, financial advisors are recommending it to their retail clients. Indeed, the very same advisors who were once warning their clients against buying bitcoin, are now cautioning clientele against not having any exposure at all. Even corporate treasuries have begun looking to convert cash positions into bitcoin for diversification purposes.
With limited supply, and unprecedented demand, from 30,000 feet in the air, bitcoin appears to be truly unstoppable.
Yet, bitcoin is merely the tip of the cryptocurrency iceberg.
- WITH HELP FROM DEFI, THE CRYPTOCURRENCY MARKET WILL SURPASS $2 TRILLION IN VALUE IN 2021.
As of this writing, bitcoin comprises approximately 70% of the nearly $800 billion cryptocurrency marketplace. By the end of 2021, I predict that the cryptocurrency marketplace will be worth well over $2 trillion, but with bitcoin’s market share beginning to wane.
This is because as bullish as I am on bitcoin, I am even more enthusiastic about other segments of the digital securities universe, most particularly: Decentralized Finance (DeFi).
DeFi is a modernized form of finance that instead of depending on centralized financial intermediaries such as traditional banks, brokerages, or exchanges, it relies on smart contracts (blockchain-based programmable contracts which automatically executes all or parts of an agreement upon specific conditions being met).
DeFi platforms allow people to lend and borrow against their digital assets; the ability to receive higher interest rates than available with conventional debt products; a way to speculate on price movements on a variety of assets; a means to trade cryptocurrencies directly with one another; and the opportunity to protect digital wallets and smart contracts with decentralized insurance.
DeFi is presently a $20+ billion industry with the potential to completely disrupt multi-trillion-dollar global markets including the insurance industry, credit markets, stock exchanges and banking.
The shift from Centralized Finance to Decentralized Finance is perhaps the greatest financial transformation since civilization moved from barter to a currency system. It is truly that big.
Because DeFi operates via decentralized applications, called DApps, which are regularly built on the Ethereum blockchain network, Ether (ETH) is poised for another year of considerable growth. If ETH – the world’s second largest cryptocurrency by market size – performs as well as it did in 2020, it could fetch a price of $3,500 and add approximately another $300 billion in market cap to the cryptocurrency marketplace in 2021.
Chainlink (LINK) is another company on the forefront of the DeFi boom. Chainlink is a decentralized blockchain oracle that allows smart contracts to access and utilize data that is not stored on the blockchain. Such off-chain data can include weather data, flight information, inventory levels, currency exchange rates, price predictions, the temperature of perishables during shipping, and so on. Oracles essentially provide the opportunity for blockchains to interact in real-time with nearly any product on the face of the earth. This has the potential to not only transform finance, but to revolutionize all industries across the planet.
While Chainlink oracles play a critical role in DeFi, its solutions can benefit a variety of areas beyond finance such as Supply Chains, Gaming, IT, Cloud, Energy and Government. It can even be used to ensure the sanctity of the electoral process.
Chainlink was one of the best-performing cryptocurrencies in 2020, ascending over 550%. But, I believe that Chainlink was just getting started in 2020. Its breakout year will be 2021, particularly as the comprehension gap between traditional and digital finance begins to diminish. As more conventional financial players and businesses realize how they could benefit from blockchain oracles, the more they will seek to leverage Chainlink’s solutions. As a result, I believe that Chainlink could reach $42 in 2021.
Bitcoin, Ethereum and Chainlink are merely three of more than a thousand cryptocurrencies. Yet, if just these three, alone, reach my price targets, it would bring the entire cryptocurrency market close to the $2 trillion mark.
- DEFI WILL INSPIRE SIGNIFICANT FINANCIAL INNOVATION IN 2021.
DeFi is helping to facilitate the development of a modern finance method known as Asset Tokenization which has the potential to bring trillions of dollars of real-world value on to the blockchain and inspire the most prolific era of asset innovation in the history of mankind.
Asset Tokenization is essentially the process of converting all kinds of tangible and intangible assets (such as real estate, art, wine, cars, sports contracts, college degrees, even valuables such as toilet paper) into digital assets on a blockchain. In doing so, Asset Tokenization facilitates the fractional ownership of previously illiquid and pricey assets and produces an endlessly proliferating universe of micro investment options. Portfolio diversification of this scope will give all individuals – regardless of one’s income level or net worth – an equal opportunity to achieve higher risk-adjusted portfolio returns.
Asset Tokenization also fosters a lesser addressed – but equally as important – form of diversification called “investor-base diversification.” Investor-base diversification is a process used by issuers to help mitigate price volatility by possessing vast and diverse cap tables.
As portfolios and investor-bases grow ever more diversified, asset classes overall will become increasingly less correlated with one another, making portfolio allocation models that much more effective. The broader macroeconomic benefits of such diversification employments will include better products, stronger businesses, more jobs, greater confidence in the capital markets and most importantly, narrower national wealth gaps.
- NONWITHSTANDING A CHALLENGING 2020, THE TWENTY-TWENTIES WILL ROAR.
The extraordinary financial innovation that is currently unfurling will not only save us from the COVID-induced economic wounds of 2020, it will inspire a decade of economic expansion unlike any we’ve seen before. That is why I am keeping my flapper garb nearby and am standing behind last year’s roaring twenty-twenties prediction.
In fact, I would even go so far as to forecast that the economic, philosophical and democratical ingenuity emanating from blockchain technology is so consequential that it will make the twenty-twenties roar even louder and soar that much higher than the nineteen-twenties.
For years I have been expounding on a theory that innovation in mass media has been a catalyst for stock market growth and economic expansion. From the radio to the television to the internet, the greatest bull markets in modern history have all coincided with the invention of a new broadcasting medium employed to entice consumers. Each technological advancement in mass media heightened consumer engagement which, in turn, triggered an economic domino effect of escalated consumption, corporate profits, job growth and stock market returns.
The radio set off a never-before-seen boom in consumerism which, in less than 10 years, doubled the nation’s wealth and more than quadrupled the DJIA. Yet, the radio’s monumental economic impact will ultimately seem trivial in comparison to what blockchain will beget, for blockchain is the very first innovation to revolutionize mass media amid the tailwinds of a technologically progressing financial system. This is a world-defining alignment that will forever alter the planet’s economic arc.
Please don’t be discouraged by 2020. So what if it hadn’t begun to roar. One year is not a decade make. Sometimes you need to listen to an entire album just to appreciate one song. Likewise, mankind will need to experience the full decade to fully grasp this one stupefying year.
- FINTECH WILL SAVE AMERICA’S FRACTURED RETIREMENT SYSTEM.
2021 will lay the groundwork for fintech to save America’s fractured retirement system. This prediction you can take to the decentralized bank.
As previously alluded to, fintech has inspired a truly revolutionary macroeconomic theory, called Investumernomics. Investumernomics forms the bedrock for a groundbreaking consumption-based, egalitarian retirement solution that empowers economic activity, narrows wealth disparity, and will save America from a fractured and unsustainable retirement system on the brink of triggering a cataclysmic economic collapse.
The best part of Investumernomics is that it enables policymakers to resolve all of America’s current retirement challenges without having to raise the retirement age, increase payroll taxes, cut promised retirement benefits, or disrupt existing workplace plans.
My days of 2020 were spent devoted to the construction of Investumernomics and the drafting of an exhaustively detailed regulatory roadmap for a consumption-based retirement system. This is a project that I had started over two years ago, but frankly, between departures, landings and more time-sensitive assignments, I never had the time to finish. It wound up being an incredibly massive undertaking, and one that, ironically, I never would have been able to accomplish without the inconveniences of lockdowns or the setbacks of business suspensions.
As it turns out, BIZARRO 2020 gifted me with the time to refocus and the impetus to plant new seeds of opportunity. It allowed me to produce the most important and profound document of my career. I consider this work to be my personal “Joshua Tree.”
The Joshua tree is an album by U2 that many believe embodies the pinnacle of creativity. The title is named for a tree famous for growing in fiercely adverse conditions and is seen by U2 as a symbol of faith and hope in the midst of aridity. To some, the Joshua tree exemplifies strength, beauty and new beginnings.
To me, the Joshua Tree is simply the marvel that can only emerge once the best laid plans have gone awry.
Disclaimer: The opinions expressed in the article are for general informational and entertainment purposes only. Under no circumstances does the information presented in this article represent a buy, sell or hold recommendation on any investment product. Investing, like life, contains risk. Do your homework. Eat a well-balanced diet. Never put all your eggs in one basket or eat all your life’s omelettes in one sitting.
Gene Massey says
Dara, You are a truly wonderful writer and your insight into the financial world is amazing. Your writing converts a subject that many consider to be just boring statistics into a truly entertaining read.