Transcription
Exactly here in part 3, how to spot the x 10 to x 100 opportunities? So I am therefore going to present to you the famous patterns and the ways of thinking to have to succeed in identifying generational opportunities. Rule number 1 is that each innovation prepares the next one. It creates the infrastructure or the path for the next one. For example, it's like Lego blocks. Bitcoin brought the blockchain. The blockchain allowed the arrival of Ethereum with smart contracts. Then smart contracts allow the tokenization of assets. Each time we see a new innovation, well, we have to imagine what the next one could be that can be grafted onto it like Lego blocks.
Second thing, each new generational opportunity responds to a lack in the current technology. So when we have a technology that is dominant, that is saturating, that is slowing down, that has pain points, like for example if we take transportation, I think with an example it will be the easiest. Transportation, we want to transport goods. In the beginning, it was horses, but what was the problem? It was limited by fatigue. So what could replace horses? Ah, we talk about cars, but there we have limited autonomy and capabilities. We move on to trains, but there it lacks flexibility. You have to follow a railway. So there, we move on to planes, it's faster, but still, it lacks flexibility. You have to get to an airport. So what's coming tomorrow? Well, drones that will be more flexible. Do you understand? Each problem will have a solution coming. You have to start thinking like that.
Rule number 3. Cheaper, more efficient, and saves time. So innovation is simply better than what already exists. Like for example, emails were better than faxes. So it's faster, more efficient. So that's why we quickly used emails rather than faxes. Example number 2, well, we have it currently. I'll show you another generational opportunity. The tokenization of real assets on the blockchain allows institutions to save 10 to 20% of fixed costs on investment funds. We're talking about billions of dollars. So but there's AV Chainlink Syrup RSR. What are we waiting for? We're saving costs, it's just a matter of time for the technology to be adopted.
Number 4, there are people who change their behavior to adopt new technology. When we see a minority of people starting to change their habits, but especially who can no longer do without it, like for example with Generative AI, with ChatGPT, well, it was seen as a toy for students. Now, in each of the biggest companies in the world, we use ChatGPT or generative AI. Bitcoin was money for geeks. Today, it is recognized as a global store of value and so on.
So number 5, what do we want to have a generational opportunity that gives between x 10 and x 100? We want the wind at our back. So, we want to target a sector where we are expanding and not crashing. So, I can give you an example here. Paper newspapers, even if we invest in the best paper newspaper company, it doesn't have the wind at its back. It has the wind in its face. I don't know if that's said in French from France. Yes. Okay. It has the wind in its face. Okay. Look at the chart here. This is the number of people who read the newspaper each day. We went from 70% of the population to 10%. And people who never read the newspaper, we are almost at 50% of the population. So we don't want a sector that is in decline, we want a sector that is expanding. Exactly. Thank you. And other declining sectors, cable television, DVDs, cassettes, well forget it, that's not where you're going to find generational opportunities unless I'm mistaken. We want sectors that have the wind at their back. Okay, so artificial intelligence, robotics, web 3, decentralized finance.
Now, rule number 6. Are you okay? Are you still following? Yes. Okay. Okay. Rule number 6. Aim where there is a potential circuit breaker cost. So we're talking about moderate loss and potential circuit breaker cost. So when we have an investment where we say that if things go wrong, we might lose 20, 30%, maybe 50% of our investment. But if it goes well, we make an x 10 to x 100. That's how we have to think if we want to spot the circuit breakers. And how do we succeed in having extremely positive risk and reward ratios? Well, it's when we have extremes, charts in the extremes, sentiments in the extremes, like we saw just with the tariffs. It was the 4th time in 30 years that we had the fear index so high to buy the tariff crash. We are already more than x 2 on all our investments. These are extremely positive risk-reward ratios.
7. We want to see insiders and whales accumulating positions. So we see smart money, experienced founders, venture capital firms positioning themselves. So we are like the little fish here following the whales in the ocean. We are not the ones who will set the trend, but we can follow them and follow their path, and that's generally where the opportunities are. Rule number 7, accumulation. Well, it's the same rule by insiders, but this is a Wyckoff accumulation pattern on a chart, it looks like this.
Number 8, imminent catalyst. It can be technological, cultural, regulatory. So this means following politicians or powerful people, following what they do, not what they say. So I'll give you examples. In Canada in 2017, we legalized cannabis. What happened? Several companies made between x 50 to x 100. A change in strategy. MicroStrategy decides to invest its treasury in Bitcoin. Its stock goes up 100. Real estate, for example, there's a new highway that will pass through a location, but you buy land, for example, if you have the insider information, the land goes up x 10. These are imminent catalyst changes. Rule number 8.
Rule number 9. We want to see fundamentals improving and the price stagnating, like cryptos right now, which are developing, as we saw with Bitcoin in the 2022-2023 accumulation. Fundamentals were improving, we saw countries, institutions accumulating it, the price was stagnating, we had an asymmetric opportunity.
And finally, rule number 10 to spot generational opportunities is that the idea is despised. There is indifference from the media and the masses. So, we are not looking for what is trendy. We are looking for where there is an opportunity, ultimately. So if we think about Bitcoin, we were all seen as idiots. If we bought it 10 years ago. Now, we look like geniuses. Cryptos before 2024 were not recognized. Now we look like we're intelligent. Oh, you bought cryptos in 2020? Well, well, yes. Or Michael Burry in the movie The Big Short. The Big Short, that's it. He predicted the big real estate crash of 2008. Everyone ridiculed him, and finally, he was right, and his investment fund made billions of dollars. Generational opportunities are born when reality is changing, but the majority are still living in the old world.