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The virtual future is here. Here’s how to invest in and find the metaverse

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Visitors experience an immersive art installation titled “Machine Hallucinations Space: Metaverse” by Refik Anadol at the Digital Art Fair Asia in Hong Kong, showcasing digital art and NFT.

Anthony Kwan / Getty Images

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I thought I had a decent asset allocation: a two-thirds weighting in overvalued stocks; most of the rest on fixed income, currently set to pay almost no income; and assiduous exposure abroad to both geriatric democracies and spirited police states.

But it turns out I’m dangerously overloaded in reality. All of my investments are tied to our physical existence as humans on planet earth which I don’t know if you’ve been following the headlines but let’s just say I have a Hold odds.

Deep thinkers, on the other hand, are suddenly in turmoil about an opportunity to invest in an alternate world called the Metaverse.

In a recent report, investment bank Jefferies defines the metaverse as “the convergence of the physical and the digital in a persistent manner, rendered in real time and infinite in its ability to deliver shared experiences allowing for a total sense of presence in the world. point. where he embodies us. I’m not sure what that means, but I’m tempted to be long as a Robinhood trader after three tough seltz due diligence.

I need to find the metaverse first. A word of warning: don’t call it a video game, or you risk being ridiculed by the kind of forward-thinking friends who have strong opinions on


Apple

included the correct ports in its new MacBook Pro. In fact, to be sure, don’t even call video games video games.


Roblox

(ticker: RBLX), which features pixelated characters on screens and is accessible through gaming machines, is called a “human co-experience platform”.

But it’s okay to recognize the game as a building block of the Metaverse, which means the major investors in the Metaverse include Roblox, Minecraft owner


Microsoft

(MSFT), and a private company Fortnite creator Epic Games. Add traditional game makers with metaverse compatible titles:


Activision Blizzard

(ATVI) and its Call of Duty franchise;


Electronic Arts (EA)

with Battlefield; and


Take-Two interactive software

(TTWO) with Grand Theft Auto.

What all of these multiplayer games have in common is that they quickly become rich social networks with homicide and friendly looting alongside. Who has


Facebook

(FB) founder Mark Zuckerberg is so eager to switch to the metaverse that he would consider changing his name to reflect his new direction. Faceblox? Markaver? MetaHate monetization? Probably not the latter.

One way to get into the metaverse seems to be to tie a toddler’s toilet seat to your forehead. Zuckerberg demonstrated this technique on CBS this morning in August, when he wore something called an Oculus Quest 2 headset to access Facebook’s new virtual reality platform for office colleagues, called Horizon Workrooms. There, up to 16 coworkers can come together as prettier avatar versions of themselves, with body language and hand movements to convey unsaid things like, say, exasperation. from the group about almost all of Kevin’s ideas. This could provide Kevin with some important performance clues to avoid being fired by a cartoon one day.

Oculus is just a manufacturer of bulky metaverse headgear.


Sony

Group (SONY),


HP
Inc.

(HPQ), and


HTC

(2498.Taiwan) also have absurd-looking units. These could eventually be replaced by glasses that will allow graphics to be superimposed on the real world, called augmented reality rather than virtual reality. Do you remember Google Glass? It is now called Glass Enterprise Edition 2, and


Alphabet

(GOOGL) is beta testing its Google Meet video conferencing software on devices. Facebook recently partnered with Ray-Ban to offer its own smart glasses, called Ray-Ban Stories.

Zuckerberg, who trains with Apple (AAPL) on new iPhone privacy features that may reduce the profitability of social media advertising, donned a pair of sunglasses for a video, calling them ” important step towards a future where phones are no longer a central part of our lives. It was like watching an android experience insolence.

Opportunities for investing in the metaverse abound. Most range from outrageously valued to financially nihilistic, but there are some values ​​as well. The metaverse will need real-time rendering, or image drawing, which favors bullet points.


Nvidia

(NVDA), which trades at over 20 times sales, and programs like


Unity software

(U), closer to 40 times sales. Tiny


Immersion

(IMMR) specializes in haptic feedback that can give the illusion of feeling virtual worlds, and represents six times the sales.


Qualcomm

(QCOM), at four times sales, manufactures chips for mobile devices, including smart glasses.

There is a Metaverse exchange-traded fund that owns these names and more, called


Roundhill Ball Metaverse

(META). It costs 0.75% of assets. Roundhill Investments is an asset manager. Matthew Ball is a venture capitalist who calls the metaverse the next phase of the internet and has created an index of companies with enabling technologies. Among his predictions is that the metaverse will be “a fully functioning economy” and an experience “that will extend to both the digital and physical worlds.”

Jefferies argues that cryptocurrency and non-fungible tokens, or NFTs, which can prove ownership of digital images, will be useful in the metaverse. Morgan Stanley says the metaverse’s functions will expand beyond games and social media to include shopping, concerts, education, virtual travel and even dating.

About the latter: I can’t help but notice that a baby boom that was predicted at the start of the pandemic lockdown never happened. Online games have exploded in popularity. Attention turned to the metaverse. And the US birth rate plunged 4%, to the lowest level on record.

When I was young children learned about birds and bees as nature intended: with a hidden nine-volt radio and mono headphones tuned every 22 hours to a cheerful and outspoken therapist named Dr Ruth Westheimer. Today, young people know everything, but live their lives in the metaverse.

Where will the babies come from? I’m not sure, but I recommend Facebook to send Dr Ruth an Oculus Quest 2 and set up a virtual strategy session, pronto.

Write to Jack Hough at [email protected] Follow him on twitter and subscribe to his Barron’s Streetwise podcast.



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