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Winners and Losers Are Emerging From Conflict
This week, Brent crude saw prices climb to $119 for the first time since 2014. News that Germany will reach carbon neutrality by 2035 would also send shares of green-tech firms soaring.
Meanwhile, Russian-related stocks have all but collapsed. The VanEck Russia ETF (BATS:RSX) has dropped two-thirds in less than 10 trading sessions, and companies from Aercap (NYSE:AER) to Exxon Mobil (NYSE:XOM) have found new meaning to the term “stranded assets.”
International tensions are also testing investor patience for zero-revenue companies. On Tuesday, Lucid (NASDAQ:LCID) sank 15% after the carmaker cut production estimates for 2022.
“Lucid has a high ‘wall of worry’ to climb,” I warned on Monday, recommending investors consider Arrival (NASDAQ:ARVL) instead. ARVL subsequently jumped 10% after reporting a better-than-expected outlook this week.
Nevertheless, it’s also been a week of many surprises. Today, we’re going to take a quick detour from the regularly-scheduled program to consider some of the happier surprises from the past week in the stock market.
1. Football Oligarchs and Crypto Barons Unite on Ukraine
On Wednesday, Russian oligarch Roman Abramovich surprised the world by announcing a sale of the Chelsea Football Club. His stated intent? Donating net proceeds to charity.
“The foundation will be for the benefit of all victims of the war in Ukraine. This includes providing critical funds towards the urgent and immediate needs of victims, as well as supporting the long-term work of recovery.”
Mr. Abramovich joins an unlikely band of people donating to Ukraine. Russian punk rock band P***y Riot has already raised over $6 million in cryptocurrency through UkraineDAO. And crypto exchange FTX founder Sam Bankman-Fried has given $25 to every Ukrainian user on its platform.
I’m not sure what was on your 2022 bingo card… this offbeat collaboration certainly wasn’t on mine.
2. Ukraine Accepts Dogecoin
Meanwhile, the Ukrainian government has also taken steps toward self-help. Last Saturday, the country’s leaders announced it was accepting Bitcoin (BTC-USD), Ethereum (ETH-USD) and Tether (USDT-USD) donations. They would raise $12 million by the following day.
This week, they went a step further:
They started accepting Dogecoin (DOGE-USD) too.
“@dogecoin exceeded Russian ruble in value,” tweeted Mykhailo Fedorov, vice prime minister of Ukraine. “We start to accept donations in meme coin. Now even meme can support our army and save lives from Russian invaders.”
By Friday, total cryptocurrency donations to the Ukrainian government had exceeded $50 million. It turns out it’s hard to keep a good doge down.
3. “No Taxes” For Captured Russian Tanks
Ukraine’s tax agency has also been stepping up its fight against Russia in its own… special way.
“Have you captured a Russian tank or armored personnel carrier and are worried about how to declare it?” a statement from the tax office read. “Keep calm and continue to defend the Motherland! There is no need to declare [it as income].”
I’m glad that got cleared up, because I certainly wasn’t sure.
Actually, does GEICO offer tank insurance?
4. Belarusian President Accidentally Shares Invasion Plans… And Sends Its Currency Spiraling
This week, Belarus strongman president Alexander Lukashenko managed to let slip “what looks like an actual invasion map,” a reporter Tweeted.
The revelations were likely unintentional. The map showed Russian forces seizing Moldova, as well as plans of missile attacks from Belarus.
Financial markets would immediately react. On Monday, the Belarusian Ruble opened 12% lower; it has drifted downwards since.
The pain will likely get worse for Belarusians’ currency. The U.S. and other countries have since announced additional sanctions barring technology and software sales to the country. Though Mr. Lukashenko might have surprised the world with his unexpected military announcement, it’s created a rather predictable fallout in the markets.
5. Pixelmon Creates “Completely Hideous” NFTs
Finally, a $70 million NFT project became an unintentionally hilarious punchline this week after revealing “a huge mess of irredeemably ugly pixel art.”
Buyers spent up to 3 ETH (about $9,200 at the time) to access “the largest and highest quality game the NFT space has ever seen,” according to the project roadmap (I’ll let you be the judge of artistic merit).
“Pixelmon will be a metaverse available to all, giving immediate multiplayer access on PC whilst continuing to develop a cross platform experience that will be available on Mac, PC, Xbox and PlayStation.”
Instead, the project would fail in a fashion I can only describe as “astonishingly 2022.” One Pixelmon holder tweeted that his NFT looked as if it had “hatched dead,” while another noted he had received an “invisible character.”
To their credit, the project’s founder hasn’t disappeared with the cash. But until they move beyond invisible NFTs, perhaps it’s fine for us to sit back and chuckle at the absurdity.
Oil and Reddit
Regular Moonshot readers will know that I like my humor the way commodity traders like their oil.
But one group of people have missed out on some of the recent joy. Retail investors.
Unlike in March 2020, when Reddit-driven investors piled into the United States Oil Fund (NYSEARCA:USO), individuals today are far more cautious about picking up risk-on assets. Total net assets of USO have risen just 39%, barely outpacing the 36% rise in WTI prices.
It’s a continuation of the trend away from speculative assets. According to data from VandaTrack, S&P 500 ETFs and Apple (NASDAQ:AAPL) now make up almost half of all retail investor buying. No meme stocks rank among the top 10.
High-potential tech firms like Matterport (NASDAQ:MTTR) have also been caught in the mix. Shares of the Direxion Shares ETF Trust (NYSEARCA:MOON) are down 58% from their 52-week highs, despite many constituents announcing better-than-expected earnings in recent weeks.
The Moonshot Investor will be back next week with more of your regularly-scheduled program. In the meantime, stay safe, stay sane — and keep watch for the moment retail investors come roaring back into the market.
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On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing.