원문 보기
The average company will not catch up with the leaders easily or quickly, and there will be many challenges along the way. But it's obvious. If you rewind five years ago, you'll see a world where the "magnetic seven" actually represented seven quasi-monopolies, semi-monopolies, or, in the worst case, duopolies and oligopolies, right?
A handful of firms dominate the industry. You felt the breath of competition in cloud technologies, where three of them converged. But they coexisted very happily . They either called each other, or, most likely, simply decided: if they behaved with restraint, the enemy would not start a price war. And so they did.
So the three of them became a respectable oligopoly and made a lot of money. This is normal. But now we're faced with a completely different world, where all seven of these guys, plus 15 others around them, are flexing their muscles, beating their chests, and saying, "My 120 billion this year is better than your 82 billion." Each of them intends to win the AI war.
They understand that the first to break through to a new level of technology will become trillionaires, etc., and they strive to be there first. So, we have moved from a world of monopolies to a fiercely competitive world, and we will remain in it for years. There will be "blood" on the streets because these are aggressive companies that take no prisoners, have a lot of money, and are going head-to-head with each other.
It will be interesting to watch, but, dear viewer , it is not like anything we have seen in the last 20-30 years, when Amazon took over retail, Tesla took over the electric car market, etc. If I'm not mistaken and it's not too complicated , I would say: it does n't look like it at all. As far as I can tell, junk stocks are beating solid ones.
We have an index where we bet on quality and short the junk, and it's taking a devastating hit. But there was a great example in 2021 when blue chips felt good and more questionable stocks were eliminated. For example, Katie Wood's briefcase. She got off to a brilliant start from the Covid low, and a few months into 2021, Katie Wood's portfolio began to grow.
Then he collapsed and lost a lot of ground. And one after another, remember the meme campaigns? They were taken out and " shot" while the market was growing steadily throughout the year, they " shot" the meme stocks. And I inadvertently owned a meme stock, QuantumCape. I had a huge position. These were the only conditions under which we could receive shares—5% of the company.
And it was too much for the fund we run for environmental protection. So that was the only thing I owned personally. And I watched as it went public through a SPAC at $10 in late 2020. While the market continued to surge, she exited through a SPAC at 10, giving me a four-fold return. Not bad. Much better than getting a kick in the ass.
And in 3 months it soared to 131. At a price of 131, it was more expensive than General Motors. This was a research lab that hopefully will one day develop a solid-state battery, but they don't have a commercial product yet today, although I think they will in a year or so. In any case, he was n't there then.
It was just an idea. And yet it cost more than General Motors. By the way, in 1929 there was never an idea of this scale. I mean, you have to admit, it's more expensive to be a seasoned company that sells millions of cars...When you have a research lab that's years away from sales , let alone profits.
Unfortunately for me, the peak fell in December 2020, then all the other "meme " stocks peaked in the first half of the year, Katie Wood's portfolio—somewhere in the middle of the year, and so on. It was classic. It was exactly like the behavior in 1929, 1972. Better than 1972, better than anything except 1929.
And we don't see that clear behavior. And I'll tell you why this happened. I was talking about Mr. Prince: as long as the music is playing, we have to keep dancing. But you don't have to keep dancing with Pumatech. Pumatech is my favorite example because it was the most promising stock of '99 during that bubble.
And mysteriously, over the next few months, people transferred funds from Pumatech to Coca-Cola. So Mr. Prince was still dancing, but he was already leaning towards Coca-Cola. And why not? History says that in 1929, etc., it was better to fly into a waterfall with Coca-Cola, among the survivors, than with Pumatech, which quickly ceased to exist.
And Coca-Cola, of course, doesn't. So it's a logical strategy, and you can imagine how it plays out. They say, "Yes, I'm an optimist and the market has been great, but this is crossing the line." I'd rather play this game, but at least I'll play with those who survive. So, I understand this logic. I can see why this only happens in extreme situations.
And this clearly happened in 2021. And 2022 was a very unpleasant "bear " market, if anyone has already forgotten. The S&P fell 25 , growth stocks fell 35, the " magic seven" fell 40, the worst year in the history of the bond market. And then, as I like to say, my good forecast, my wonderful "bear" market, was rudely interrupted by OpenAI, introducing ChatGPT in October 2022.
Ovva. And that ruined the bear market. For the next 10 months, all other stocks fell on average. By the way, they couldn't quite believe that the bear market was over. But the " magic seven" doubled and dragged the S&P with them. And then, 10 months later, the remaining stocks gave up and joined the bull market.
And I am convinced that we would enter a mild recession. Why not? Because they increased capital spending on AI so much that if you subtract it from that period, it turns out that they provided all the GDP growth. So, we would be approaching zero GDP growth. As Keynes explained, “animal instincts” are very important.
When the market falls and economic growth rates decline , “animal instincts ” sometimes become very pessimistic. They affect the level of investment, and you slide into recession. How to prove this? My opinion is this: in 2023 we would enter a recession, and the market would fall another 25%. But AI prevented this.
So now we're in uncharted territory, we've never been here before, where a big event—AI—with huge capital expenditures unprecedented for any era, even including railroads as a percentage of GDP. We have a bubble forming from a bubble that was only half- completed, only half-deflated, and then was resuscitated by this extremely complex and important business— AI.
I began to believe that purpose is very important . But when you get older, you don't want to sit and think, "What a worthless life." " Why was all this done?" Ultimately, it's about doing your best or trying to improve the system in any way possible. So my advice to young people who are graduating, etc., is to make sure your career is going to be useful.
Become an engineer, a scientist, work in healthcare—be where you know your work is useful. Start a new company. I believe that venture capital is the best part of modern capitalism. I think capitalism has become a bit corrupt and too monopolistic. But I really think that the venture capital world generates very important new ideas.
If you look at the "Magnificent Seven," ask yourself: how many of them left the venture business 50, 30, or 25 years ago? GMO was founded a month or two after Apple and Microsoft. It's a very good idea to have a goal and keep moving forward. And this is especially important when you retire. Otherwise, you just sit there, play golf, and wonder what all this is for.
There are so many really important risks. Risks that could lead to the sudden collapse of culture, civilization, security, and growth in the near future if we don't start to combat them, like the chemicals we "swim" in every day. The food we eat is covered in toxic chemicals. Our species' birth rate is plummeting.
This is all a matter of public record. So, we are actively heading towards our extinction as a species. The problem with capitalism is that it kills its own market by fiercely defending its right to produce toxins. They were thinking about going to the Supreme Court to ensure that oil and gas and chemical companies could not be sued for the harm they caused.
So okay, go ahead. But at least the toxicity is regional. If people in the EU want to behave well, they live longer and healthier. If you want to behave badly in the US, it's the other way around, and we're the only country where 15 years ago life expectancy was high, and healthy life years were even worse.
Let me give you one example. 10,000 chemicals are used in cosmetics . The EU banned 1,500 of them. Canada has banned about 550, and the US has only banned 12. And as a Brit , I tend to say, “Okay, you guys want to kill yourselves? Forward". But that seems like a bad idea, doesn't it? And then we have climate change.
If it is not stopped, it will make life very unpleasant. By the way, for the last two years, for the first time, it has cost about half a percent of global GDP. Preventing climate disasters, eliminating them, etc.— the situation will only get worse, and the whole world realizes that this is a serious topic, except for the USA—it is not the best place to live.
So, these are very serious topics , and there are many others. Even worrying about AI and trying to solve some problems would be entirely appropriate, but most jobs are essentially just a way to make a living, and I understand that someone has to do them, but if you have a choice, choose something useful.
A truly striking trait of homo sapiens is that he does not like to think about the long term and does not like pessimism. I suspect we are optimistic because it helps us survive. If you look at millions of years of our evolution, I think pessimism has hardly been very useful. And this desire to see the bright side and keep moving forward despite any dangers was useful.
Who needed a long-term perspective for 99.9% of our history as a species? Who was to worry about the future? Eventually, painfully enough, we learned to try to save enough for the winter to put aside enough potatoes or any roots , berries, and that was it. So, as a species, we don't take bad news seriously and we don't plan for the long term.
And my advice to investors is to try to fight these two trends. Try to be realistic, rather than systematically looking for good news, and focus on, say, a 5-year horizon. What is happening? Since the war with Iran broke out, the S&P index has risen by 5%. Oh, I understand. Apparently, this war is to our benefit.
Let me tell you, this is very, very good for the profits of US oil companies. Not great for the people who buy their products, but great for the oil company. But do n't you see, dear? Listen, since the war began, it hasn't been very good for the world, for Europe, for everyone who needs oil. The only two who look more or less reasonable are Russia and the USA.
The US is neutral on oil and gas. We don't need to import oil and gas. What happened in the US was that when prices went up, the oil companies made money, the people who bought the fuel lost the same amount, but together we did pretty well. Everyone in Europe is losing money. In the Far East, in China, in Japan , they are all in a difficult situation.
But Russia makes money, while the US only transfers money from the poor to the rich. So try to overcome these two tendencies and you will become one of the best investors.
Comments 0