Watching the Fed is like a Keynesian Beauty Contest

Good morning!

Watching the Fed is like watching a Keynesian Beauty Contest.

I’ll explain in a moment.

First though, an important announcement.

I’m going to be travelling to Las Vegas for the MoneyShow next week then taking my first true break from work in more than 2 years which means that there will be no (or limited) 5 with Fitz from May 5th through May 20th. Don't get me wrong - I love what I do and writing to you, but my brain needs a break.

I will be posting updates from the show and subsequently from the Sierra Nevada Mountain range as I ride via Twitter (@fitz_keith) and on Instagram (@keith.fitz.gerald) if you’d like to keep up.

I recognize that Twitter, in particular, may not be everybody’s cup of tea but it is the easiest, fastest and most accurate way to get information to you.

Thank you for being here and for the trust you place in me.

I am both honoured and humbled!

Here’s my playbook:

1 - Watching the Fed is a Keynesian Beauty Contest

Many people have never heard the term “Keynesian Beauty Contest” but would be wise to think along these lines because that’s what the Fed’s meeting will be.

Regular beauty contests judge contestants by evaluating them on a series of criteria. Keynesian beauty contests judge contestants by looking at how other judges react but without looking at the contestants themselves.

Watching the Fed is a lot like that.

Whether the Fed hikes 50 or 75 basis points is moot … it’s how traders perceive Powell’s take that matters. Will he be dovish, more hawkish, or simply say something stupid (again)?

Meanwhile, I’ve been encouraging you to buy into the weakness over the past weeks and I hope you have, along with the hedges I’ve also suggested.

2 – Twitter to go private, then re-public

Elon Musk has announced that he’ll take Twitter private, then re-public after 3 years or so. That makes the company super interesting to me for two reasons: a) it’ll probably actually have a value proposition and b) it’ll be real. (Read)

3 – I’m actually interested in Airbnb now

A lot of people asked me what I thought about Airbnb going public and I responded that I wanted to give it a few quarters to see if they could put up the numbers needed to make a case for investing.

They did. With 105m bookings in Q1 alone (beating pre-pandemic levels) and profitability projected in 12 months, it’s worth a look. (Read)

4 – Uber/Lyft is still a hard pass

Uber and Lyft reported earnings earlier this morning and the fact that both got slammed doesn’t come as a surprise. With high interest rates, high gas costs, high labor costs, they're still burning through cash at an amazing rate. (Read)

Still a pass.

5 – Customizable adverts

Amazon has introduced a new product called “virtual ad placements” that lets advertisers place products into shows and movies after they’re aired and depending on who’s watching.

Think of watching a movie where the lead actor/actress drinks a can of Coke but then having Pepsi swapped in digitally if the algos determine that’s more to the viewers’ liking. (Read)

I’m not sure just what the investment proposition is yet but it’s a game-changer, especially for the likes of Netflix and movie studios that charge a premium for such things.
 

Bottom Line

Haters rain on everybody else's parade because they don't have one of their own.

Same with stocks.

Find what works for you, then get on board and stay there.

You got this – I promise!


Keith