Twenty-five years from now, we’ll escape the harsh realities of the real world using a special headset to tap into a virtual simulation called “the OASIS.”
We’ll be able to visit different worlds and interact with anyone, but we’ll neglect our physical world. It’ll decay. Infrastructure will crumble. Buildings will become dilapidated. The contrast between the utopian virtual world versus the physical one will be stark.
OK. That’s the storyline for the movie Ready Player One. Great movie. But also, not all that far-fetched anymore.
You’ve probably heard recently about similar digital environments.
That’s because Facebook … excuse me, I mean Meta … recently changed its name to reflect its commitment to making its own metaverse. Its own “OASIS.”
Following its announcement, other Big Tech companies are falling over one another to share their own vision for the metaverse.
What does this mean for new investment opportunities on the horizon?
How Soon Until We Get the OASIS?
The metaverse is supposed to encompass all aspects of your digital life, and there’s a lot that still needs to happen to make it a reality.
Whether it’s internet network speeds, efficient transfer of digital assets, or virtual reality headsets, those things that will enable the metaverse are still in the early stages of development. That means we’re still a long way off to joining the OASIS.
But crumbling infrastructure? We’re already there.
Just as Ted said in his recent article, it’s estimated that $2.6 trillion is needed to bring our “D” grade infrastructure up to “A” status.
In fact, the condition of our physical environment is so bad that members of Congress from both sides of the aisle came together in a rare show of unity to pass the $1.2 trillion infrastructure bill.
That at least gets us halfway there!
So, where’s the best opportunity for investors now … in the virtual world or the physical world?
Best Opportunities: Virtual or Physical World?
Don’t get me wrong. I’m excited about the hype around the metaverse and the potential that it holds.
There’s even a Metaverse exchange-traded fund (ETF) that plays on the theme. But the technology and applications are still in infancy and have yet to impact our daily lives on a large scale … kind of like the iPhone in 2007.
I’m more tuned into the things that impact me today, like the state of our physical infrastructure. I’m focused on the profits made when drilling down to the most basic elements … the type of stuff that’s going to hurt if you drop it on your foot.
Similar to the type of companies found in the SPDR S&P Metals & Mining ETF (NYSE: XME), which will see a boost from the infrastructure bill.
And here’s something else that matters a lot right now: valuations.
The average price-to-sales ratio for holdings in the META ETF is over 14 times. For XME, the average price-to-sales ratio is 2.3 times.
So that’s why, in the near term, I’m focused more on opportunities to profit from our physical environment rather than a virtual one.
Best regards,
Clint Lee
Research Analyst, The Bauman Letter
