This week, Beth spoke with Clay Finck of the Millennial Investing Podcast about the Metaverse, the Fed, Wall Street flops and how to find winning stocks.
The discussion began with Beth’s investing strategy, namely how she distinguishes a marketing tactic from real revenue growth. She explained that real revenue growth among young or growing companies is often buried in other revenue segments, making it difficult to track growth in emerging trends. Beth explains that companies who have been working at something for years and now serendipitously found their market are usually the ones that find long term success.
Aside from companies that serve established markets, Beth also has a very realistic time frame. She emphasized that Tech gets beaten up, with 40 to 60% drawdowns per year, while drawing parallels to the fact the best Tech investors, which are venture capitalists, are not able to touch that money in five to seven years, even if there is a recession. They must wait that long for an exit which is why they do so well compared to public investors who get skittish and withdraw their money during macro concerns.
When Finck asked her for opinions on the Metaverse, Beth estimates Metaverse to become an $800 billion market, driven by movies and gaming integrating themselves with augmented reality. She explained that what the Metaverse will do to entertainment is add another layer to that market, expanding it.
Going back to her earlier comments about having a realistic time frame, she cites Nvidia – a long time favorite of the I/O Fund – as an example. Beth understands the company’s products, its capabilities as well as its long term trajectory, and that she has no intention of exiting her positions. In this sense, people who don’t like high beta, or have a short time horizon, should be wary of the Metaverse as it will take years to see gains here.
When Finck asked about entries and exits, Beth said that the IO Fund may trim and manage risk, but they rarely close long-term conviction stocks unless the fundamental story has changed. Essentially, the process is driven by fundamentals forward but their exits are driven by technicals.
