Revenge of the Nerds

I want to get long nerds, but one "BroCoin" is standing in my way

From the Desk of Boomer:

You hear sophisticated investors wanting to increase their exposure to crytpo. I don’t view myself as being particularly sophisticated, but I do have a good track record as a Global Macro Manager, so much so that we were able to turn our fund into a family office. (pardon my flex). So maybe I fall in that sophisticated investor crowd. The question though, that a lot of sophisticated investors can’t seem to answer is why they want crypto exposure.

I can. I want nerd exposure. I’m looking to short bros and get long nerds.

The reason I want to increase my exposure is it pays to be long nerds. And the nerdier the better. I don’t want exposure to pseudo-nerds. Social awkwardness and sociopathy is not nerdcore, so not looking to get long say Mark Zuckerberg. Or “Jack” from twitter.

I want magic the gathering level nerdery. Here’s why:

I was born in the late 1970s. It paid during the 1980s to be long the bros—junk bonds, leveraged buyouts, and in general “Wall Street.” Everyone wanted to long the captain of the football team essentially, and short the dungeons and dragons crowd. It was a very profitable trade. These people were long bros:

But quietly, the D&D lunch table was doing something special, and they would come to defeat the bros in a major way.

Despite how much money the bros brought in, underneath the surface, the nerds were planting seeds, and those seeds came to be worth more than all the stuff the bros put out there combined.

In the successful film franchise, that, like all film franchises makes at least one too many, if not multiple “too many” films, “Revenge of the Nerds” was ahead of its time. It was the earliest trend trader in the nerd trade. In case you haven’t seen it: a group of nerds get snubbed by the bros in joining a frat, and so they strike out on their own path, owning their nerdery and beat the bros.

In the film, the nerd hating member of the pretty boy frat “ogre” hates nerds. He’s not particularly smart. But he has intuition. He realizes he is being used by the bros for his athletic prowess and switches teams, fully embracing his nerd self. It was, a true conversion, unlike the fake conversion of Doge hype beasts.

There are two things holding the nerd trade back.

One are ultra Bitcoin maxi’s. I addressed those folks in last week’s “Dangerous Bitcoin Maxis.” The other is pure bro: Dogecoin. People have attacked Doge from every level. Its a meme. It has no use case. It was created as a joke. People got long with a price target of 69. It sold off when the bro ringleader Elon Musk didn’t hype on Saturday Night Live. (As an aside, I will never understand the Musk bro worship—guy is not a visionary. And while he may be extraordinarily rich, aka sitting on a massive pile of unrealized gains, he never made me any money, and he has not to my knowledge materially changed the way we live our lives the way say the early computer coders and hardware gang have, and so he is a bro).

My attack on Doge is that it that it is eating into my otherwise quite profitable long nerd trade. I cannot fully capture the number of people—the number of institutional investor friends of mine who are sitting out crypto because of Doge. The summary of a recent conversation I had with a friend who has $6bn of assets under management:

Me: So there’s this other side to crypto you don’t see—smart contracts. They are basically venture stage convertible debt trades investments.

Friend: Sounds cool. What kind of yield?

Me: Some are sky high—I’ve seen over 100%.

Friend: That kind of return? They must be longshots.

Me: Yeah the higher yielding ones are, and to be clear they pay the yield in the native token associated with the project not in USD. A token what you would probably call a coin, or an alt coin—you know, “not bitcoin” cryptocurrency.

Friend: that sounds cool, but it sounds risky and complicated, which is all you (haha). are you using relative value like the good macro boy you are? [fyi a relative value trade is when you go long one thing and short another that are similar to capture a view that one thing is better than another while taking a lot of downside risk out. An example would be long Coke short Pepsi or vice versa. If the government were to say, ban soft drinks, and the stocks went to zero, you’re hedged and you would have preservation of your original amount, less the interest rate it costs to borrow Pepsi shares to short, which is negligible]

Me: You know it! Macro is all relative value. It is. You have to be fairly in depth and in the weeds to really trade into smart contracts and know which ones are more likely to succeed, my buddy Haal69k has that level of knowledge and has picked the good ones, but you know, that’s in the code level understanding world. I stick with the tokens associated with the products. I went long about a month ago a group of tokens (ETH, UNI, SUSHI) which have strong use cases you would say, but I want to get long nerds so I picked the ones with the most nerd appeal, versus a bunch of coins which I don’t even know why they are still a thing (ICP, BCH, BSV) Its going well, up over 20%. Take a look:

Friend: Nice trade. And yeah relative value seems like it could work out well in space where there is regulatory risk, and people wonder whether its for real. However, even though that’s some sound thinking, and who wouldn’t want to be long nerds, I simply cannot trade in an area where there is a meme of a Japanese dog that has a +$20bn value.

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Folks, its time to take the “Brocoin,”aka DOGE, aka “Old Yeller,” out back and put it out of its misery; let the nerds run the show!