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The Metaverse

The metaverse is worthy of an investor’s attention, but what exactly is it?

According to Mark Zuckerberg, CEO of Meta (formerly Facebook), “you can think about the metaverse as an embodied internet, where instead of just viewing content—you are in it . . . ” Matthew Ball, a venture capitalist and thought leader on the metaverse, describes it as an experience that spans both physical and virtual worlds, one with a full-fledge economy and unprecedented interoperability among these worlds, applications, and digital assets.

Some of the ideas and technologies that make up this vision of the metaverse may seem odd to reasonable people. However, there is no more important characteristic in investing than open-mindedness. Investors must realize that the historical truth of the past two hundred years is that that the business and revenue models that dominate the economies of tomorrow are usually inconceivable today.

At the advent of the internet in the 1990s, many initially doubted some of its most apparent applications and use cases. In this famous clip from 1995, David Letterman jokingly scoffs at Bill Gates as Bill tries to explain to Dave how the internet could be useful. The utility of the internet was unthinkable to David then, but here we are.

At GMAG, we have been researching the applications of the metaverse for over a year, and we believe it is the next iteration of the internet. We see the metaverse as a future state, in which the digital world may be indistinguishable from the physical world . . . and immersive and hyper-realistic digital experiences are the norm rather than the exception.

Below, we have attached a link to a video in which Mark Zuckerberg shares his thoughts on the metaverse. We encourage you to watch the video and even share it with your family. In it, he details the future of work, play, and social interaction in general. Although some of these products and experiences seem far-fetched, GMAG aims to keep a radically open mind and extrapolate current trends in society and technology.

At GMAG, we’re taking the metaverse seriously, and we’re vetting exposures in both public and private markets for clients where these opportunities are suitable. In public markets, some of the largest and most cutting-edge names in tech have exposure to the metaverse theme. In private markets, smaller companies offer asymmetric risk–reward opportunities if their vision for the metaverse is realized.

The digital economy may end up becoming larger than the physical economy, which would involve extraordinary value potential. We don’t see any other theme that is as potentially attractive as the metaverse. The companies that are exposed to the metaverse are likely to become the most innovative tech companies of tomorrow. Many of these companies already exist and have been around for decades; those companies are likely going to get bigger. However, some don’t even exist yet.

Even if the metaverse isn’t fully realized, many of the companies in the space are already the most innovative in the world, so their investment case isn’t dependent on the metaverse.

We hope you found this informative. Please give us a call if you have any questions.

These opinions are subject to change at any time based on market or other conditions. Information included herein is based upon information reasonably available to GMAG as of the date noted herein. The references to specific securities here are for informational purposes only, and must not be construed as a recommendation that any person buy or sell securities. Further, the information contained herein does not constitute intent to trade. No strategy ensures a profit or protects against loss. Investing involves risk including the risk of loss, other key risks applicable to all of the types of investments include; market risk, emerging market risk, underperformance risk, currency risk, liquidity risk, tax risk. This commentary does not provide a full listing of risks.

The information contained herein is provided for informational purposes only and based upon information reasonably available to GMAG as of the date noted herein. Furthermore, the information included has been obtained from sources that GMAG believes to be reliable; however, these sources cannot be guaranteed as to their accuracy or completeness. The information does not contain certain material information about making investments in securities including important disclosures and risk factors.