Scott Galloway on fintech and Square; Sorry, We Aren't Going Back to the Movies; The Jeff Bezos Paradox; Amazon's annual letters; The magnificent Uzbek city of Bukhara
1) I agree with NYU marketing professor Scott Galloway's smart comments in his latest missive, Bank, on fintech – including Square (SQ), which we recently recommended to Empire Stock Investor subscribers. He concludes:
In sum, fintech is likely as underhyped as space is overhyped. Why? The ROI on your professional efforts and investing are inversely proportional to how sexy the industry/investment is, and fintech is... boring. Except for the immense opportunity and value creation – for multiple stakeholders. "Half the world is unbanked, but we need to colonize Mars," said no rational investor ever.
Re investing in fintech: What has, and will always be, a good rap? The guy/gal who owns the bank.
P.S. The average return of all of our Empire Stock Investor stock picks since the newsletter's inception in December 2019 is 28% versus 24% for the S&P 500 Index – which I view as exceptional performance given that our focus here is on conservative, blue-chip stocks.
To learn more about Empire Stock Investor – including how to subscribe for only $49 for the first year – click here.
2) In addition to NYU's Scott Galloway, Bloomberg's Matt Levine, and my friend Doug Kass of Seabreeze Partners, one of the writers I enjoy the most is Kara Swisher of the New York Times. I think she's spot-on in this column, which reinforces why AMC Entertainment's stock (AMC) is likely going to blow sky-high: Sorry, We Aren't Going Back to the Movies. Excerpt:
It's clear that will be proved right. He correctly pointed out that streaming was about to match and eventually overtake theater as the critical way to distribute entertainment.
It has been the same across the business spectrum. Post-pandemic, retailers or restaurants or office real estate developers will surely be back, but not – I am sorry to report – better than ever, no matter how hard the old guard decries the inevitable. COVID has only escalated tech power that was already starting to overwhelm many industries. And movie theaters remain on the lowest flood plain...
When streaming is an option, given the decline of the price of home theaters and boom in streaming capabilities, increasing numbers of people will take it. And the theater business, including struggling chains, will continue to shrink...
3) With Amazon (AMZN) founder Jeff Bezos stepping down at CEO, there have been many articles about him. The Jeff Bezos Paradox is one of most insightful and is written by Brad Stone, the author of Amazon Unbound: Jeff Bezos and the Invention of Global Empire, which I highly recommend. Excerpt:
The latest creation from the technology giant Amazon occupies two floors in a shopping district in central London: a hair studio. Inside the 1,500-square-foot Amazon Salon, customers can visualize potential new hairstyles on the company's tablets, buy shampoos and conditioners not available in drugstores, and order up things like a children's haircut ($20), a roots tint ($62) or a thermal cut with heated scissors ($166).
When the company announced this initiative in the spring, I probably wasn't alone in thinking it might be an April Fool's joke. Hair coloring and conditioning seem especially far afield from the company's primary pursuits in e-commerce and cloud computing. And Jeff Bezos, the wealthiest person in the world, hasn't had a substantive topiary mane himself since the early 1990s.
But something about the salon seemed apt, considering Amazon's wide-ranging ambitions under Mr. Bezos, who will retire as chief executive on Monday after running the company for 27 years. He founded Amazon in July 1994 to sell books online, a deceptively innocuous objective that served as a beachhead for one of the most successful expansions in business history. Today, the company is a kind of corporate apeirogon – a shape with infinite sides – extending into new industries on a regular basis, terrifying potential competitors and sending blasts of anxiety across the antitrust establishment.
Mr. Bezos now hands his successor and longtime deputy, Andy Jassy, a company with the third-largest market capitalization in the world. But there's an incongruity – call it the Bezos paradox. As the fortunes of the company and its founder have increased, their public images have taken a beating. As recent news reports show, Amazon's workers are often pushed to the limit by arduous goals, arbitrarily changing rules, and algorithmic masters, which seem to have little tolerance for human frailty.
P.S. Love him or hate him (I admire him greatly), Bezos is a remarkable man who has built one of the most powerful, successful companies of all time, so every smart businessperson and investor should study him and Amazon carefully. As a starting point, I suggest reading all of Bezos' annual letters going back to 1997. I've compiled a PDF of them, which you can download here.
4) My guide Farrukh and I hopped back on the high-speed train yesterday morning and continued another two hours (134 miles) from Samarkand to Bukhara, another historic city here in Uzbekistan. (I posted a description and pictures from our day in Samarkand on Tuesday here.)
The cities have many similarities. Both are ancient: Samarkand was founded nearly 3,000 years ago, Bukhara roughly 500 years later. Both are on the Silk Road and thus benefitted from the resulting trade, wealth, and technology. Both were conquered by Alexander the Great in 329 BCE and again by the Mongols under Genghis Khan in 1220, but not long thereafter reached their height of glory after the conqueror Timur made Samarkand his capital in 1370.
Over the next 35 years, Timur built one of the largest empires in history that encompassed much of today's Middle East, central Asia, plus parts of India and Russia. As a result, both cities have magnificent mosques, mausoleums, madrasas, and minarets. As Farrukh summarized, Mecca and Medina are the heart of Islam, while Samarkand and Bukhara are the head.
The main difference I observed as a tourist is that Samarkand has many more mind-blowing buildings, but they're scattered all over the city. Bukhara, in contrast has only a few – albeit still spectacular – buildings (including an amazing minaret and impressive fortress)... but they're all concentrated in a beautiful old town, which has lots of streets to explore, filled with vendors, restaurants, charming hotels, fountains, etc. The best analogy I can think of is the difference between Rome and Venice. The former is much bigger and has more historically epic things to see, but Venice is more charming/romantic and easily walkable (Bukhara reminded me a bit of Marrakesh as well).
Samarkand, historically, was the center of wealth and power, whereas Bukhara was known for its scholarship, culture, and religion. From 800 to 1,000, it was a major intellectual center of the Islamic world. It was the birthplace in 810 of Muhammad al-Bukhari, who is revered by Muslims second only to Prophet Mohammed because he compiled al-Jami' al-Sahih ("The Authentic Collection"), the most important source of Islamic law and practice after the Koran itself.
Here are four of my favorite pictures from yesterday:
I posted these pictures plus 14 more, as well as descriptions of them, on Facebook here.
Best regards,
Whitney