Did Jerome Powell Kill The #Metaverse?

Rumors Of Its Demise Are Much Exaggerated

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Guy Had One Job

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Remember Jerome Powell v1.0? Guy worked for Trump? Sorry, not worked for Trump, we mean, was the independent chairman of the independent central bank. Anyway, back when he was working for Tr.. running the Fed with an expansionist policy, he printed money aaalllll day long, loaned money for free to tier-1 banks who then loaned it for almost-free to hedge funds who then loaded up bigly on the newly available levels of leverage, spent that money - sorry, invested it wisely in the growth stocks du jour, and everyone was happy even though people were, you know, dying a lot in the global pandemic thingummy.

Then the party started to dry up, hangovers started to set in, the big ETFs hit unburstable resistance levels (SPY at the 1.618 Fibonacci extension of its prior Wave 1 up, QQQ at its 2.618 extension and ARKK at its 3.618 extension - like magic!) and then whoaaaa did the plunge begin.

Inflation, recession, supply chain, oh yes and let’s not forget a war with Russia following their invasion of a sovereign state … cue sentiment as bearish as in the depths of the Q1 2020 Covid Crisis.

In such times, when Big Money dashes for safety and even Amazon or Apple aren’t considered safe enough - you can expect early-stage investment opportunities to be not just passed over but veritably thrown under the bus and then the bus driven back and forth over them, just to be sure.

And that’s what has happened to Metaverse stocks. Here’s a handful of them, showing their % off their highs.

When even the mighty Nvidia ($NVDA) and Meta Platforms ($FB) are >40% off their highs in the last year? Then you have to worry. And you can see what’s happened to the younger, growthier, risker names - Unity Software ($U), Matterport ($MTTR), Roblox ($RBLX) - toast!

So, is it all over before it even began?

Nah.

When markets go risk-off, as they have been since late November last year, nobody wants to know about the new new thing. They want to know about oil and airplanes and fertilizer and a bunch of stuff like that. Which is why it pays to run a sector rotation plan in your own accounts just like Big Money does. To quote one of our favorite YouTubers, buy what everyone’s laughing at. In 2020 or 2021 if you were buying oil stocks, you were the laughing stock. Right? Right. And if you bought those old line names, are you getting laughed at now? You are not.

When markets go risk-on, as they tend to after a prolonged period of risk-off, everyone wants to know about the new new thing because it is growing so dang fast and GDP, er, isn’t.

Now we aren’t saying that your Robloxes and your Matterports and such are going to make new highs tomorrow - that’s unlikely. But we do think they are going to start moving up soon and we do think the up-moves can be explosive because the growth can be so fast in new names like these. And so we think it is a sensible time to be accumulating positions in these names right now. What do we mean by accumulating? We mean, roll like Big Money. Pick up a modest allocation each time there’s a rainy red day. Don’t bet the farm. Be unafraid to trim back if the stock starts to move up; be unafraid to use a stop-loss to take you out if the stock falls further to earth.

Oh, and if you want some lower risk ways to play the upside? Don’t forget about the Grandpa and Pa of Metaverse names, being those same Nvidia ($NVDA) and Meta Platforms ($FB). Each will we think come back into fashion faster than people expect.

Because you know who’s getting laughed at now? Tech investors. Know who we think won’t be getting laughed at 12-18 months from now? Tech investors. And since the Metaverse is a cutting-edge theme within tech right now, we think Metaverse investors may not be laughed at for very long at all.

Stay tuned for stock-by-stock coverage of these names.

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DISCLOSURE: Cestrian Capital Research, Inc staff personal accounts hold long positions in, inter alia, FB, NVDA, MTTR, U, RBLX.