"The money money makes, makes more money" - Ben Franklin. Striving for equanimity and clear headedness | Not investment advice
Joined May 2018
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This feels like a violent chart crime
This chart shows the key risk to the AI trade, and it's missing from the latest revenue announcements.
The AI boom is fundamentally driven by a top 1% of companies that drive 80% of spend. Within that top 1%, 80% are venture-backed.
That's all fine if the AI trade works out, and if, as some prominent investors say, everyone wins.
But if it doesn't work out, then we have a cascading effect of large customers simultaneously pulling back their AI spend.
This guy is the definition of a smooth brain
It’s high time professional investors stop using the word “cheap” when they mean “trading at a low multiple”
Value investing worked because information was scarce. Today, if a stock is cheap, there's a reason, and the reason is terrible:
Alix Pasquet (@alixpasquet), managing partner of hedge fund Prime Macaya Capital Management, explains:
"Value investing taught you to look at things bottom up. You look at the business, and that's it. And that wasn't because Graham or Warren were bad at understanding an industry. It's because back then, they didn't have access to the information we have now."
"One of the reasons value investing worked really well is you could buy something cheap that was very good, and no one knew it was good, because there wasn't enough information on it."
"But today there's so much information that if something is cheap, usually there's a really good reason why it's cheap, and that reason is terrible."
"You're not gonna have a really good athlete trade cheaply for a short period of time. People are gonna know."
"I look at certain long-only, quality-focused investors and say, I bet you 100 bucks to a hat pin that Visa or MasterCard are in that portfolio. And yes, it is. The cat's out of the bag."
"But guess what happened this year? Quality took a dive, a really big one. It's gonna take those guys a couple years, if not five, to dig themselves out of that. It's gonna be painful."
Honestly don’t fully understand how MMs can generate mid-teens returns after fees. 4% ROA before fees x 6 lev net of 10ppt fees = 14%? They haven’t blown up yet, but do wonder if 4-8x lev on public equities ever causes a major problem for those strategies (realize they’re mkt, factor, sector neutral)
AAPL re-rated 39 percentage points vs the S&P 500 LTM. Is it just that it's a better "staple" to own than Staples and everyone crowds in on it for that? Yeah they have a new phone too. In general, I just don't get it.🙄
There are features that remind me of wireless telecom. Very high fixed costs and very high incremental margins with low switching costs. This could incentivize pushing hard for incremental subs/consumption. So ROIC is perpetually capped at a low rate. Despite delivering exponentially more bits, wireless telcos did not see exponential revenue growth. The tokens the models produce are certainly higher value than commodity telco bits, but it’s a treadmill to maintain relative token value for the labs. The question is what % of frontier lab revenue/consumption requires frontier lab models? If it’s very high, there’s only a few competitors and switching costs could be higher than I expect.
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Jay retweeted
The question is increasingly less about "does valuation matter?" and more about "what technical/flow or pscyhological shock would have to happen to cause a large allocation shift within the current market structure?"
Can someone tell me what multiple is too low for an out of favor stock and what is too high for an in-favor stock? We’re at the point where there is no too low or too high. Nothing is priced in.
There are many serious issues policy must address... a couple % (absolute max) cost impact on spending does not seem like one of them. Lest we forget the retailers just pocketed the savings from the original Durbin Amendment anyways.
Today, I filed an amicus brief to combat Visa and Mastercard’s attempts to hollow out the Durbin Amendment, which prevents exorbitant debit interchange fees.
American consumers and businesses deserve a debit card system that is affordable and fair, and we cannot allow Wall Street to add extra costs and line their pockets.
Always surprising how proliferation of pod AUM have made public single name equities so volatile and the broad mkt so fragile. Polar opposite of "anti-fragile". Not a good thing for capital alloc & formation, imo. Supposedly hedged every way; we'll see (or Fed will bail them out)
Jay retweeted
1/2
NYT: "Just as President Trump is making it much more expensive for American companies to bring in skilled foreign workers, China is rolling out a plan to welcome them."
nytimes.com/2025/09/26/world…
