Bezos - Be Curious and Think Big
3-6-24
Opening Comments
My last note was about the protocol of accepting friends on social media. The most opened links were the Vermont shoppers who stopped a man in the parking lot after shoplifting and the short video of Biden and Trump at the border showing Biden looking 100 years old. The article on Dynasty Trusts used for multigenerational purposes received a lot of views as did the Macchialina restaurant website as well.
After my last piece where I wrote about countless bots trying to “friend” me, I received feedback. My readers are more social media savvy than I am, as I received messages that people will not accept “friends” without common connections, and most agree there are fewer “bots” on LinkedIn than on other platforms. One reader took the time to write this:
I approve the request if I know the person personally, if not, then I like to see either some level of mutual connections or the person is in a field that I find interesting or symbiotic with my fields of interest.
If FB or Insta I have a higher bar. I have to like the person and know them reasonably well. As a secondary filter if they are primarily friends of a mutual friend then it would depend on what mutual friends we have in common.
Under all circumstances, if there if I have no recognition of the people and it seems off that they would be friend-requesting me they are out.
In February of 2023, I called that I thought Michelle Obama would replace Biden on the Democratic ticket in 2024. I was wrong. She “will not run.”
LinkedIn was down on Wednesday afternoon. Hack?
Markets
Nvidia Becomes Tesla’s Successor as Market Flips From EV to AI.
Electoral Nightmare Scenario
Paris Olympic Woes
2019 Rent Law Disaster for NY
Average Down Payment By State
$38mm Hamptons Estate for Sale With a Twist
Two More San Fran Office Buildings in Trouble
Pictures of the Day-Cold Case Ice Cream
A reader sent me a case of his COLD CASE ice cream and I must tell you, it is fantastic. It is a gourmet chef’s approach to ice cream but comes for $109 for 6 pints. It is only available online today, but as it sells into retail, the price will come down. Many celebrities have posted about Cold Case including Kim K, Damon John, the Food God, and many others. Given my relationship with an investor, I can get Rosen Report readers a discount using this code (newleaf10). I feel this is a great gift to someone who loves ice cream but is hard to justify for everyday given the price. You can pick from 11 flavors and think anyone who received it would be pretty fired up. I felt the decadent flavors were better than the fruit flavors. The ice cream is rich, creamy, and delicious. Since I have tried to avoid milk products and have been eating coconut milk ice cream, I almost had a heart attack when I tried Cold Case, as it was so darn good.
Bezos - Be Curious and Think Big
I found this short video of Bezos speaking about the idea of launching Amazon. He went with his boss (David Shaw of Hedge Fund D.E. Shaw) for a walk in Central Park to tell him about the Amazon plan. Shaw said, “It is a really good idea, but a better idea for someone who does not have such a good job.” Bezos took a couple of days to think about it and decided to start Amazon. He spoke about not wanting regrets. “Most of our regrets are acts of omission. The things we did not try. It is the path untraveled. Those are what haunts us,” Bezos said.
It got me thinking about my life and my regrets which sadly are many. In 2008 I was offered my dream job to run a major business at a fund and I did not take it given we just had our second child, and the timing was not ideal to move to the West Coast. I often think about that missed opportunity. There have been a few other major missed opportunities as well. I am doing something right about getting the shot, but doing something wrong that I have not taken too many of them.
Other roles have been offered over the years that did not materialize for one reason or another. I agree with Bezos that our regrets tend to be things we did not try. This is not to suggest you jump at every opportunity but in your heart, you know the special ones. I am doing a better job of trying to limit my regrets, but I have a handful that gnaw at me. I decided to close the hedge fund and be a full-time father to my children given I grew up without a dad. I think of all the amazing memories I was fortunate enough to have countless hours with the kids when they were in their formative years and turned down various roles to continue parenting full-time. I don’t regret it for a minute.
I believe Bezos developed the most disruptive company of my lifetime. Just think if he never started Amazon; my house would not have 30 packages a day delivered in front of it everyday. Bezos’ idea was brilliant, but better yet was his execution and management. Below are his leadership principles. You can click the link to read them in full but due to space, I am only giving the abbreviated version.
Customer Obsession-Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust.
Ownership-Leaders are owners. They think long term and don’t sacrifice long-term value for short-term results.
Invent and Simplify-Leaders expect and require innovation and invention from their teams and always find ways to simplify. They are externally aware, look for new ideas from everywhere, and are not limited by “not invented here.”
Are Right, A Lot-Leaders are right a lot. They have strong judgment and good instincts. They seek diverse perspectives and work to disconfirm their beliefs.
Learn and Be Curious-Leaders are never done learning and always seek to improve themselves. They are curious about new possibilities and act to explore them.
Hire and Develop the Best-Leaders raise the performance bar with every hire and promotion. They recognize exceptional talent, and willingly move them throughout the organization.
Insist on the Highest Standards-Leaders have relentlessly high standards — many people may think these standards are unreasonably high. Leaders are continually raising the bar and drive their teams to deliver high quality products, services, and processes.
Think Big-Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.
Bias for Action-Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.
Frugality-Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention.
Earn Trust-Leaders listen attentively, speak candidly, and treat others respectfully. They are vocally self-critical, even when doing so is awkward or embarrassing.
Dive Deep-Leaders operate at all levels, stay connected to the details, audit frequently, and are skeptical when metrics and anecdote differ. No task is beneath them.
Have Backbone; Disagree and Commit-Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious.
Deliver Results-Leaders focus on the key inputs for their business and deliver them with the right quality and in a timely fashion. Despite setbacks, they rise to the occasion and never settle.
Strive to be Earth’s Best Employer-Leaders work every day to create a safer, more productive, higher performing, more diverse, and more just work environment. They lead with empathy, have fun at work, and make it easy for others to have fun.
Success and Scale Bring Broad Responsibility-We started in a garage, but we’re not there anymore. We are big, we impact the world, and we are far from perfect. We must be humble and thoughtful about even the secondary effects of our actions.
Quick Bites
Stocks sold off on Tuesday led by Apple after the report that iPhone sales plunged 24% in the first 6 weeks of the year in China. On Wednesday, stocks rebounded on the heels of strong earnings from Crowdstrike and a positive outlook from Palantir but closed off the daily highs. NY Community Bank was -44% at one point and then finished +10% after $1bn was raised by a group of funds. On the Fed front on Wednesday, Powell reinforced the position that the Fed is not ready to start cutting until there is “more confidence that inflation is moving sustainable toward 2%.” Post Fed, the 1 and 2-year Treasury yields were slightly higher and the 10 Year was down 3bps. Bitcoin hit an all-time high of $69.2k+ before it sold off on Tuesday but rebounded 7% Wednesday to $66.7k. One chartist is calling for $98k on BTC.
I liked this Bloomberg article entitled, “Nvidia Becomes Tesla’s Successor as Market Flips From EV to AI.” Nvidia Corp.’s rise is captivating the stock market and driving the S&P 500 Index to new highs. But it also raises cautionary reminders of another investor darling that soared on dreams of a technological transformation, only to tumble back to earth when those hopes turned to disappointment. That stock belongs to Tesla Inc., which sparked its own mania in 2017 as investors bet that electric vehicles were going to take over the world. Back then, Elon Musk’s company was a phenomenon as it blew past established carmakers like General Motors Co. and Ford Motor Co. in market capitalization to become America’s biggest auto manufacturer. Some analysts were looking beyond the industry and calling it “the next Apple Inc.” Telsa is down 56% from peak 2021 levels (-28% YTD) as demand for EVs is slowing especially given the price, range limitations, charging issues, and increased competition. There were claims of sabotage at a TSLA gigafactory in Berlin on Tuesday. Nvidia’s rise from niche chipmaker to one of the biggest companies in the world is based on the premise that its phenomenal sales growth over the past year has staying power. For Nvidia, it’s too early in the hype cycle for any signs of a slowdown. The article is great and brings up important points and comparisons between Tesla and Nvidia.
With the election quickly approaching and turmoil with the elderly frontrunners coupled with third parties, I thought this article was worth a read. It is entitled, “What if no candidate wins 270 electoral votes,” and outlines scenarios where Kennedy makes a dent. I had no idea this is how it works. If no candidate receives a majority of electoral votes, the Presidential election leaves the Electoral College process and moves to Congress. The House of Representatives elects the President from the three (3) Presidential candidates who received the most electoral votes. Each State delegation has one vote and it is up to the individual States to determine how to vote. (Since the District of Columbia is not a State, it has no State delegation in the House and cannot vote). A candidate must receive at least 26 votes (a majority of the States) to be elected. The Senate elects the VP from the two (2) VP candidates with the most electoral votes. Each Senator casts one vote for VP. (Since DC has no Senators and is not represented in the vote). A candidate must receive at least 51 votes to be elected. If the House of Representatives fails to elect a President by Inauguration Day, the Vice-President Elect serves as acting President until the deadlock is resolved in the House. This Telegraph article suggests 8 states will determine the next election (AZ, FL, GA, MI, NV, NC, PA, WI).
This Telegraph story is entitled, “Paris could be heading for an Olympic-sized disaster. Rats, bed bugs, blockaded roads, and a transport system on the brink – the French capital could be making a mess of its year in the spotlight.” The article paints a bleak picture of labor strikes at the Eiffel Tower and France’s national rail system. There are environmental protests, a growing homeless population, and hotels filled with bedbugs. Paris is indeed a beautiful city with amazing sights, museums, food, and history. However, I am going to skip the Olympic festivities in person and watch them on TV. I will never understand the economics of the Olympics and most cities spend countless billions only for the new infrastructure to become decrepit shortly thereafter. Article from the Council of Foreign Relations about the economics of hosting the Olympics. Massive stadiums cost hundreds of millions and are often never used again. The average cost overrun between 1960 & 2016 was 172%-Oxford University.
Israel
UN sexual violence envoy: Israelis were raped, sexually tortured on October 7
UN Special Representative of the Secretary-General on Sexual Violence in Conflict finds damning evidence of rape, sexual violence, necrophilia during visit to Israel. Yet many media agencies refuse to call Hamas terrorists.
Nasrallah's grandson killed by IDF in Lebanon attack
The grandson of Hezbollah leader Hassan Nasrallah, Abbas Ahmed Halil, was one of the three Hezbollah terrorists killed on Saturday by an IDF strike in Naqoura in south Lebanon.
Swiss teenager arrested on suspicion of stabbing an Orthodox Jewish man on a Zurich street
15-year-old stabbed a 50-year-old Orthodox Jewish man.
Antisemitism rules the halls at another NYC high school — does the DOE or UFT even care?
Just three weeks after the Oct. 7 Hamas massacre of 1,200 Israelis, dozens of teens marched through the halls waving a Palestinian flag and chanting “Death to Israel!” and “Kill the Jews!” Kids went to a Jewish Museum and were kicked out for saying antisemitic things. Welcome to the new world where Jew hate is rampant and the consequences are minimal. Could you imagine if you inserted any other minority group into this arena? If students were doing this towards Black, Asian, Hispanic, LGBTQ…Jews make up .2% of the global population and just over 2% in the US.
Other Headlines
Each point of view is given in the article.
BofA’s Subramanian Is Latest on Wall Street to Boost S&P 500 Target
Strategist expects benchmark index to end the year at 5,400
Firm sees stronger economic growth and higher profits in 2024
Oil fell slightly on the news.
The World Is in for Another China Shock
China is flooding foreign markets with cheap goods again. This time it isn’t buying much in return.
I’ve harped on this topic for some time. I don’t know when the debt levels becomes center stage, but know it will in the coming years.
Nordstrom shares fall 10% as retailer warns of potential sales declines in 2024
CrowdStrike shares surge on earnings beat, strong full-year guidance
Foot Locker shares plunge 30% as retailer posts holiday loss
Banks With Heavy Commercial Property Exposure See Bonds Get Hit
AI Talent Is in Demand as Other Tech Job Listings Decline
Supreme Court Unanimously Overturns Colorado Ruling Throwing Trump Off Ballot
Essentially, the states lack the power to enforce Section 3 against Presidential candidates. Despite not being a big fan of either candidate, this was the right call. Haley ended her Presidential run.
Majority of Biden’s 2020 Voters Now Say He’s Too Old to Be Effective
Oregon lawmakers pass bill to recriminalize drug possession
Wait, legalizing heroin or methamphetamine was a bad idea?
Bail fail: Study shows that repeat crime INCREASED in New York because of justice ‘reforms’
So, you mean that no consequences for a crime does not deter it? There were claims that bail reform led to no increased crime. News studies suggest 2/3rds of those released on bail reform who had a recent prior arrest were re-arrested again within two years.
New York City reinstituting bag checks to combat rising subway crime
Amazing. Now, when people are caught, they need to face consequences.
Teens break into Clippers’ new $2B arena, wreak havoc in TikTok footage: ‘Posting this is crazy’
Social Darwinism-The idiots posted their faces inside after breaking in.
The owner was caring for his sick wife and GA law requires you to go through the court system giving squatters all kinds of rights. Are you kidding me? The man had his house stolen.
California’s Politicians Appear Determined to Bring ‘Atlas Shrugged’ to Life
Great article.
Merrick Garland blasts voter ID requirements as 'discriminatory' and 'unnecessary'
You need an ID to get on a plane, drive a car, buy a beer & check into a hotel but not to vote? 28% of Mail-In Voters Confess Fraud in 2020
Wall Street’s DEI Retreat Has Officially Begun
I believe the DEI craze peaked in 2023. The world went overboard and I want to thank Bill Ackman for publicly speaking up.
Over 60% of San Francisco has just voted to pass Propositions E and F.
Proposition E gives police more powers to fight crime, pursue suspects, and allow drones to catch criminals. Proposition F will require single adults on city welfare to be screened for drug use.
The best savings account rates for March 2024
I am constantly reinvesting my funds and picking up yield. Some banks offer aggressive Term CDs can beat the respective Treasury by 20bps.
An anxiety drug has been linked to soaring overdoses. What’s going on?
It goes by multiple names: Pregabalin, Alzain, Axalid and Lyrica.
I like the line of questioning here.
LeBron James surpasses 40,000 career points as NBA legend burnishes legacy
Lebron will finish his career with 10,000 more points than Kobe or Jordan.
Facebook, Instagram and Youtube users fume as social media giants face global outage
Phone one week and social media the next? Coincidence?
Massive boulders rush down Peruvian mountainside, crush trucks in video
This is the craziest video and scary. It is only a few seconds.
For perspective, Saudi Arabia has a little more than 10% of the population of the US and in 2022, 18 people were killed on Death Row in the US.
Berlin on lockdown after German armed police open fire on far-left communist terrorists
Real Estate
I have written extensively about the idiocy of the 2019 rent laws for rent-stabilized buildings in NY. Lawmakers attempted to do something to protect tenants (limit rent increases) and instead, it created a disaster where landlords could not afford to fix apartments and recoup the expenses. The result is prices of these buildings are down 50% or more since 2019 and tens of thousands of units are off the market as the landlords refuse to lock in low rents. This Real Deal article is entitled, “Industry says report proves the 2019 rent law was ‘disastrous.’” Now a real estate–commissioned report puts data to the effects, as the industry calls for amendments to the law, which effectively capped revenues in rent-regulated buildings. Its findings: The law has “wrecked the ability of property owners to pay for the upkeep of their property,” forcing them to hold more units off-market. That lack of income poses a growing threat to the city’s property tax revenue. Long-term vacancies have trended up since 2018, according to the analysis, which was done by HR&A Advisors for the Real Estate Board of New York and the Rent Stabilization Association. The cause of lasting vacancies, according to over a quarter of respondents, was “economic infeasibility of unit improvements” after a long-term tenant left. I feel strongly that these onerous laws from 2019 need to be rescinded. Comments from an owner of rent-stabilized units in NYC.
Most rent-stabilized buildings with mortgages purchased after 2015 are essentially bankrupt.
Keep in mind that insurance premiums doubled along with overall repair costs skyrocketing.
New “good cause eviction” will only make it worse
A new law appears to be coming for units that are “warehouses” such as paying $500 per unit per month in penalty. Warehousing is when landlords refuse to rent a unit given the cost to upgrade it cannot be recouped under the rent laws.
There is a disaster brewing for the banks given NYCB and Arbor are strongly linked to rent-stabilized properties.
Another friend who is an owner of numerous rent-stabilized units said:
Capital is now frightened across the entire structure from senior debt to equity for existing housing assets in New York. Only vulture capital has assembled.
The policy environment has also chilled new development of housing where only 4000 permits per quarter are being pulled.
None of the policy proposals will restore trust. Shortages of capital and housing will become more severe.
I thought this picture of the day from Bankrate.com was interesting, as it shows the average down payment required to buy a home today. Mississippi ($5.8k), Louisiana ($6.5k), West Virginia ($6.6k), Alabama ($8.8k) and Arkansas ($12.0k) are at the lowest end of the spectrum. The average price of a home in MS is $170k. On the highest end, California ($84.2k), Washington ($86.8k), Florida ($98.7k), Hawaii ($98.7k) and DC (98.7k) are the average down payments required in those states.
My readers like salacious stories and here is one about NYC developer, Harry Macklowe and his Hamptons estate. The house is for sale for $38mm and it is on Georgica Pond in East Hampton. This area is one of the most beautiful in the Hamptons in my opinion and many celebrities have lived near this house over time (Spielberg, Ron Perelman, Beyonce & Jay-Z, Russell Simmons…). However, the aggressive developer made additions to the Hamptons house without permits, illegally removed preserve plants, and has not paid fines on the 21 violations for years. As a result, whoever buys the property cannot live in it until the situation is cleared up. A reader lives down the block and told me remediating the violations will ruin views and damage the value. He believes it will sell at a big discount to the asking price. Remember the infamous story from 1985 with Macklowe? He hired a mob-run company to blow up four buildings on West 44th Street in the middle of the night without city permits, hours before the city started to enforce a ban on razing single-room occupancy buildings. Macklowe paid a $2 million fine, but escaped indictment because “criminal intent” could not be proven.
Bought for $949 million, two San Francisco offices have been marked down to zero
Both buildings are 45% vacant and the speculation is the owner will turn them over to lenders. I am sure the lenders don’t want them either.
© 2024 The Rosen Report LLC. All rights reserved. Does not constitute investment, financial, legal or tax advice. Consult with your lawyers and professional financial advisers. Rosen Report™ #662 ©Copyright 2024 Written By Eric Rosen.
I did not know before I read the article. Low probability event, but if it happens, it could be crazy.
Fascinating about the electoral college. Never considered that!