ECONOMICS, ADVANCED TECHNOLOGY, AND SOCIAL MEDIA

 Fundamental drivers for pricing valuations in public markets have changed. Now, there is a new interaction among factors unseen just recently. Advanced technologies such as artificial intelligence have had a profound impact on the tools available and analysis presented to even the most amateurish investor. Social media, such as Reddit, Twitter, and other platforms, have allowed access to information and influence from media “stars” driving demand in an almost herd-like mentality driving up prices, and causing extreme volatility. Finally, technology has enabled a trading floor to be in everyone’s pocket. That same trading floor allows access to any information on anything from anywhere, and communication with anyone or, via social media, receive communication and information (regardless of how dubious) from anyone about any security or investment strategy.

These factors will cause unprecedented market volatility, along with extreme price movements for well-known (or perhaps more accurately, well-publicized) companies and their securities. While the supply of securities remains somewhat constant, demand for those securities is increasing (sometimes exponentially) because many more investors are now chasing those same securities.

The price of anything cannot escape supply and demand dynamics. Recent IPO activity is an attempt to meet growing demand (and raise capital at attractive prices). The new supply from IPO’s, secondary stock issuances, and most recently and monumentally, SPAC offerings, still do not provide enough supply to quench a growing and overwhelming demand. The valuations, especially those given to the SPAC’s, are entering stratospheric levels that could hardly be justified under normal market conditions. Successful investors are the ones who understand adding return without corresponding risk is the most critical component of successful investing, especially given the new equation for valuation:

Economics + Advanced Technologies + Social Media = Price

These three components are now inexorably linked and constitute an influential role in determining valuation from now on.

The More Things Change…

The pandemic has challenged many preconceived notions about the economy, markets, and public policy — and has impacted the way we live. But the inescapable truth remains unchanged:

There is no magic answer. No solution other than superior skill enables an investor to earn a high return safely and dependably. That is even more true in today’s low-interest rate, low return Tower of Babel world.

— Nick Mitsakos

Nick Mitsakos - Investment Principles and Strategies

 

Nick Mitsakos have completed the first draft of my book, “Investment Principles and Strategies.” Chapters of the book are posted on the website and on Arcadia’s website. The chapters are condensed versions of topics ranging from principles in thinking about investments, to innovation and its role in society, to political and public policy, as well as international trade. Economic disruption, growth, global markets, and increasing influence of central banks have created a new investment environment, in my book attempts to address the critical issues this new investment environment creates.

Nick Mitsakos Managing Director Merchant Bank

Nick Mitsakos is an investor and entrepreneur. He has invested in and advised companies over 50 companies in the U.S., Asia, and Europe over the last 30 years, serving on over 35 boards of directors (Chairman of six).

Nick Mitsakos Chairman of Arcadia Capital Group

 

Nicholas Mitsakos, Chairman

Nick Mitsakos is an investor and entrepreneur focusing on advanced technology and health science. At Arcadia Capital Group, he advises several private technology, health sciences and investment companies. He also manages venture capital and public equity investments.

Most recently, he was the Executive Chairman of a public biotech company, Co-Chairman, and CEO of a public software company, Chairman of an advanced materials company, Lead Director of a fixed income fund, and Managing Director of a technology-focused merchant bank.

As Chairman of Arcadia Capital Group, through offices in San Francisco and London (and cooperative arrangements in Shanghai and Singapore) invested in companies in the U.S., Asia (mostly China), and Europe over the last 30 years. Mr. Mitsakos has served on the board of directors to over 30 companies.

Mr. Mitsakos started his career at Goldman Sachs and co-founded Arcadia in 1989.

He holds an MBA from the Harvard Business School and degrees from the Harvard Kennedy School in Leadership and Public Policy, the MIT School of Computer Science in Advanced Technologies, and a B.S. from the University of Southern California. He is a contributor to Harvard University’s Innovation Center and a former lecturer at UCLA’s Anderson School of Business.

He is a member of the MIT Technology Review Global Panel.

Nick Mitsakos developed a 40-lecture course on Investment Principles and Strategies. An accompanying book will be published soon.

Mr. Mitsakos assists UCLA’s Center for Cerebral Palsy and the Neurological Rehabilitation Hospital of the Pacific. He is a Harvard Community Partner and volunteers at The People Concern in Santa Monica, CA.