Welcome to Nofinity

• Bitcoin Below $60K: Bitcoin is trading below the 200-week moving average at around $59,500. This is a rare event, historically seen only in severe bear markets.

• MicroStrategy (MSTR) in Crisis: MSTR stock is down 84% from its all-time high, while Bitcoin is down only 53%. Michael Saylor faces a three-body problem: he must maintain the value of Bitcoin, MSTR, and the preferred stock STRK (which promises 11.5% dividends), which is proving increasingly difficult.

• STRK Under Pressure: STRK is supposed to trade at $100 but is around $74. The market doubts its solvency, as the company has only about 10 months of dividend coverage left. Saylor now has to break a social contract: either sell Bitcoin, issue new MSTR shares below NAV, or default on STRK dividends.

1. AI Dominates Attention: All market capital and attention are flowing into Artificial Intelligence (e.g., Nvidia, Micron), harming crypto as an asset class.
2. Debasement Trade on Pause: Global liquidity, especially from China, has decreased. As long as the dollar is strong and central banks aren't printing, the trade of Bitcoin as an inflation hedge is on hold.
3. The 4-Year Cycle: The market is in a deleveraging phase. Excess credit from the last bull market must be purged from the system, leading to price declines.

• Ethereum Foundation (EF) Shrinks: The EF cut its budget by 40% and staff by 20%. It wants to focus on Ethereum's weaknesses (e.g., censorship resistance, privacy) rather than commercial success.
• ETH Labs Launches: A new, independent R&D lab founded by former EF members (e.g., Casper, Barnaby). Its goal is to make Ethereum relevant and win by prioritizing ETH, DeFi, and adoption. This is viewed as a bullish move for Ethereum.

• US Executive Order: The US is accelerating quantum computer development. The goal is to implement quantum-resistant cryptography by 2031, which is sooner than expected.
• Impact on Crypto: Both Bitcoin and Ethereum are not yet ready for the quantum threat. This represents a significant, but still distant, risk.

• The governor of Illinois has signed a 0.2% transaction tax on all crypto movements (the "Digital Asset Privilege Tax"). The tax takes effect in January 2027 and is described as the worst crypto tax ever. It is expected to be challenged in court.

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• Otis, Kone, and Schindler are defensive elevator stocks benefiting more from servicing than new installations.
• The market grows 2.9% annually and could double over the next decade.

• Stock down 40% from its peak 1.5 years ago.
• P/E ratio: 19, Dividend yield: 2.48%, Market cap: $28 billion.
• Business model: Servicing 2.5 million elevators and escalators is the core, providing stable cash flows.
• Challenges: High debt from spin-off, negative equity, and weak new equipment sales in China.
• Financial health: Adjusted free cash flow of $1.5 billion, share buybacks of $800 million.
• Valuation: Intrinsic value at $43 (assuming 6% dividend growth); current price is higher. A margin of safety appears only at $30–35 (50% drop).
• Shareholder yield: Total yield of ~5% (2.5% dividend + 3% buyback yield).

• Kone: Better stock performance, focus on dividends (no massive buybacks). Solid balance sheet (near-zero debt). Adjusted free cash flow close to $2 billion.
• Schindler: Swiss company with confirmed guidance. Valuation similar to Kone.
• Common trends: Digitalization, connectivity, and modernization reduce maintenance costs and boost efficiency.
• Competition: Otis is market leader, followed by Kone and Schindler (oligopoly).

• Strengths: Stable, predictable cash flows, oligopolistic structure, growth tailwinds from urbanization in Asia.
• Weaknesses: High valuations in current market, insufficient margin of safety for value investors.
• Recommendation: Monitor these stocks; if prices drop (e.g., Otis to $30–35), they become attractive entry points.
• For patient investors: These defensive stocks offer dividend growth – but only at the right price.

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