Today, Money Morning … invest in innovation … approaches are legacy opportunities … Nintendo is in the metaworld … and more …
Last week I learned that the famous company is much older than I thought.
For a short time it coexisted with the Ottoman Empire. But although this empire ended in 1922, this campaign is still with us.
But you never guess its name or the industry in which it is located.
I want to talk about it today, because in these turbulent markets, the history of this company really made me think.
In the midst of all the talk about interest rates, inflation and central banks, it reminded me that there is one illuminated sometimes way to beat the markets.
Invest in innovation.
Let me explain…
This is the industry of this 133-year-old company.
This is a Japanese company Nintendo.
But, to my great surprise, the iconic “eighties” campaign began its life in the 1880s, not the 1980s!
Fusadir Yamovchi founded Yamauchi Nintendo on September 23, 1889 in the quiet city of Kyoto.
The company produced and sold hanafuda – quality handmade playing cards (there is a very interesting parallel to the hot trend today, to which I will return).
Nintendo’s name is said to have meant “Leave good luck in heaven‘.
Perhaps a relevant message for a company that makes playing cards. But the one that also applies to investing.
Anyway, in this niche, Nintendo has grown and grown.
By the 1960s, they were making deals with people like Disney to license characters for their popular cards.
Nintendo was listed on the stock exchange in 1962 and began to diversify into various industries.
Taxis, noodles and even a chain of “love hotels” … whatever it is!
But it was his transition to the video game industry of the 70s and early 80s that led Nintendo to the global phenomenon we know today.
Video game characters like Donkey Kong and Super Mario Brothers are just as iconic as Nintendo itself.
So what do I mean?
Recession is an opportunity to create a heritage
As you know, the markets are now shaky. And truth be told, no one can tell you where and when it will come out.
Such moments tend to panic bears.
“Remember the technological collapse, remember the collapse of the dotcom” – will cry!
These people make me laugh, really.
Because they congratulate themselves on the fact that they missed the “crash,” and yet I would bet that most have never taken advantage of this to buy up cheap technology stocks.
But it was a real time to earn a technical condition.
Amazon [NASDAQ:AMZN] at one stage traded less than 10 US dollars (today – 2299 US dollars) and Booking Holdings [NASDAQ:BKNG] – Owner of a number of popular hotel and restaurant booking sites – was also less than 10 US dollars (today – 2197 dollars).
These are just two examples, but in the years after the dotcom crash in 2000, there were still many, including companies like Facebook that hadn’t even been founded yet.
So, as I said, congratulating yourself on missing a dotcom bust doesn’t make sense if you didn’t take advantage of it later.
I don’t know any fortune teller who would do that.
But the fact is that such moments – when everyone is suddenly afraid of “technology” – are great opportunities.
Think about it…
Do you think in five years you will see more or less technology in your life?
Do you think advances in biotechnology, artificial intelligence, quantum computing, robotics, space travel and battery technology will suddenly stop because of market momentum?
I think not…
The fact is that such are the times when you set yourself up for years to come.
My colleague Ryan Clarkson-Ledward laid out in a lovely piece last Thursday that even a top proponent of value investing, Warren Buffett, is buying technology stocks on the latest fall.
Which brings me back full circle to Nintendo …
Nintendo in the metaverse
Is Nintendo a good buy here?
It can be…
This is a company that has gone through a 130-year history to become where it is today. He owns huge assets and franchises that can be monetized on various platforms.
And the Nintendo Switch console seems to be gangbusters.
As reported in Polygon magazine:
‘Nintendo switch is now officially the best-selling Nintendo console of all time. Nintendo announced On Thursday, as of December 31, 2021, the company sold 103.54 million units, exceeding Wii lifelong sales by 101.63 million units.
‘The Switch achieved 100 million sales faster than any other console to date, including competitors from Sony and Microsoft.‘
This is the platform game that Buffett has always loved – like Apple with its smartphones and tablets.
But for my money, the real value of Nintendo lies in its iconic brands.
For example, a character like Super Mario can be monetized through movies, television broadcasts, games, toys, branded clothing and more.
And going back to its roots, it seems for Nintendo is an opportunity in the metaverse and space NFT (irreplaceable token).
NFT is the modern equivalent of the handmade gaming cards on which Nintendo was created. These are unique digital asset tokens.
And they are very popular now.
For example, Bored Ape raised $ 285 million in virtual land sales in just a few hours.
Monkey cartoons have become a cult classic in the crypto community, some selling for millions of dollars. It is reported that some of them have celebrities such as Paris Hilton and Madonna.
While the stuffy suits will sigh and claim it’s another bubble – and even me think this space is now overpriced – they probably don’t know that the mighty Nintendo was built on that idea.
Handmade playing cards and NFT are very similar concepts, except that NFTs are in the digital realm.
And one former CEO definitely wants people like Nintendo to adopt NFT and the metaverse.
Former boss Reggie Phils-Am said at a recent conference:
‘I believe in the blockchain. I think blockchain as a technology is really compelling. I also believe in the concept of “play to own” in video games.‘
Super Mario NFTs on your way?
Race against Donkey Kong in the virtual world meta-world?
I would not object to that. And if Nintendo can discover value here, it could be very good for shareholders.
Like Buffett, I sometimes like to invest in “boring” old companies… like Nintendo!
Editor, Morning money
PS: While finding opportunities in any technological correction is one way to play in this market, it is certainly not the only way. That’s why my colleague Jim Rickards made a presentation on how he sees changing geopolitical sands.
And, in turn, how you can create a portfolio to survive the immediate dangers. I will certainly tune in to this and encourage you to do so. Go here to book a place …