WayWardCloud

You guys are making me bullish with all the doom talk The sp500 has returned 26% + dividends since the beginning of this thread by the way.

Is it different from Wise? I used them a few times and it's been a refreshingly simple and transparent experience.

Is this the new "have we hit the top" thread?

I agree with Luke it's a big deal. As we know only a very small subset of 100+ baggers have accounted for the lion share of overall gains in major indexes. The needles in the haystack. If the Amazon, Google, Facebook, Microsoft, Netflix, Visa, Nvidia... of the next 20 years (such maybe OpenAI, SpaceX, Anthropic, I don't know...) either stay private or IPO but really late only after the first 50x or 100x in value growth have been captured by private money then how will everyone's pension funds fare?

Thanks for explaining! I'll defer to you as the engineer. The comparison I used was SpaceX versus NASA on purpose because there was no Moore's law and no ground breaking leap there either. Just the unforgiving reality of a heavy industry bound to the limits of physics and launchers that had been supposedly refined over many decades and well over a trillion of public dollars. Yet when the private sector showed up the price per kilogram of payload to orbit got divided by 20 or something. No idea if utilities can be improved by that much or how, again I'm no engineer, but I've learned to never underestimate the difference between sleepy monopolies spending someone else's money and what the top talent in the tech world can make happen if you let them loose. The ability of Elon et al. to hire the absolute best and brightest in the world, put their feet under a flame and demand results yesterday can really move mountains.

Re: Meta - Totally agree, if Meta wanted to rationally maximize profit they would act like Apple. They don't have a natural foot in the door in to serve business solutions like Microsoft does or to assist and inform people in their every day life like Alphabet does, so I agree they should only use AI to refine their ads algorithms + offering their users better tools to generate AI videos and improve engagement but they would be totally fine being a year or so behind the bleeding edge, using a "good enough" model that's 20x cheaper. But Zuk has always wanted to leap into new categories so he's thrown money at the newest trends anytime one has showed up in case that's the next big thing. I don't believe he thinks of his company as a social media company but as a tech company who happened to get its head start in social media. The man just has big ambitions. Re: Power - the real problem is politicians not removing the red tape for hyperscalers to be allowed to build their own power generation on site. If they remove those barriers to competition with sleepy local monopolies the tech giants will innovate and make electricity much better, cleaner and cheaper than the current decrepit grid we have, leapfrogging legacy utilities companies just like SpaceX made a laughing stock of NASA.

I like Alphabet here because they win either way : - either AI is the next big thing and they are extremely well positioned to profit - or it's not, they slash capex and simply go back to printing money with Search with the threat of disruption gone It's like when Facebook became Meta and the stock tanked. Zuk was wrong with the metaverse but so what? He tried, it didn't work, he reverted to printing money with Facebook and Instagram, shareholders profited. The incumbents this time around are VERY different than the ones in '99. They can afford to take massive swings and be wrong. They're also hyper aware of the Kodak story so I doubt they would fail in the same way.

I'm not necessarily disagreeing on the potential for short term over investment and I find it healthy to question the exuberant tone of some techies but mostly it is wild to me that on an investment forum the thread about what's most probably the next big thing after the PC, the internet and the smartphone is 95% negative statements. Fortunes have been made with every new major technology and trend and I'm sure it will be the case once more. What are the 10x+ opportunities that 10 years from now we will wish we had invested in back when we were too busy being the smart but pessimistic people criticizing from the side line and focusing on what may go wrong and which company is overvalued?

You could diversify into countries that have healthy balance sheets and/or wealth funds such as Norway, Switzerland, Denmark or Singapore.

I've been reading some versions of "it's just like the late 90's all over again" and "It's just like 2007 all over again" with a bunch of very alarming charts ever since I started investing 10 years ago. Listening to these experts who have kept predicting the last crisis to happen again and again is such a costly hobby that affects most investors, but especially the "value" ones. Because we looove the idea of being smarter than others, we love it more than making money. One day something bad will happen and the experts will claim they were right. In the meantime how much wealth has been left on the table out of fear? Just find a few things you'd like to own at prices you think are sensible and maintain a tactical allocation that you can sleep well at night with regardless of market conditions, then let go of overthinking and do something else more interesting with your life than doom-scrolling twitter for macroeconomic tea-leaves readings.

That was awesome

Some French blue chip companies bonds now yield less than French government bonds. Isn't that interesting? The textbook idea that government borrowing is "risk free" and that every other debt necessarily has to be priced with a spread above that floor could come into scrutiny given how well run many blue chips are and how financially irresponsible many governments are.

I'm with you guys on Lululemon since this morning at $160 for about 3.5% of my net worth. Thank you Parsad for bringing up the idea and to everyone who contributed to the thread.

When you ask a human coworker to do a task how often do they make mistakes on the assignment or confidently answer something completely wrong? For me it's hard to find someone that will do every task I ask for. I'll send an email asking five questions and get the answer for maybe two of those back and they feel like they've completed the task. It's a lot of trial and error and double checking other people's work and asking for the same thing over and over again. Sometimes they even mess up in the exact way I predicted and specifically asked not to mess up. We have chains of command with lots of redundancy and double checking for that reason. There are tasks where a 10% error rate is totally fine (sorting trash) and tasks where it isn't (surgery). Actually the Pareto principle states that you are most productive when you stop once about 80% of the goal is reached and move to the next one. Maybe tomorrow's hot job is "hallucination hunter" where OCD/perfectionist people are in super high demand, that'd be really good for me "humbling" is a good thing in my vocabulary I do not think scientific progress has degraded man in any way. I think we tend to romanticize early humanity a lot and that it's been mostly a painful and brutal shit show that we are slowly improving upon thanks to the scientific method.

Thanks for clarifying! I agree that "AGI" whatever that means is a very over-hyped and vague concept. I don't know, however, what "real" intelligence means. Every major scientific revolution I can think of has had the effect of humbling us. Heliocentrism (Earth isn't the center of the universe) Evolution (Man is just another animal) The subconscious (humbling of the conscious mind / the ego / the illusion of rationality) Maybe the next big humbling is that our precious intelligence is some type of LLM that can be done just the same in a lab and actually improved upon by building brains that are much bigger than what the cranium can sustain. When you hear a child speak they start with stringing together random sounds and then words they don't fully "understand". As they grow they just get better and better at making mostly structurally sound sentences. Maybe we just forgot how we all started "thinking" when we were kids. Even with fully developed brains, most adults I hear give their "opinion" just regurgitate and sum up (poorly) the last 2-3 things they've heard/read and they call that thinking and they believe it's super unique and precious... Anyway, that was a digression. The main point I want to get across is I would suggest focusing on what the new tool (AI) does do and not on what it doesn't do. The current capabilities are already able to create a lot of value once they are fully integrated into the production chain and understood by the workers and those capabilities are growing every day. Maybe some things do stay out of its reach and only humans can do them, that can be true and also that trillions in labor can be automated / augmented both at the same time. This reminds me of discussions here a couple years ago about self driving when some of the forumers arguments were that it would never happen because of some crazy edge cases they could think of. It can be true that only humans can drive in a blizzard or an icy road or when sun flares hit the car at the worst angle or whatever and at the same time true that most boring city commuting can be automated. We are seeing it now with Waymo/Tesla Robotaxi. So even if LLMs keep fumbling things that are very easy to us forever (I doubt that's the case but who knows) they also already are incredibly better than us at other tasks and their capabilities are growing so I find it hard to believe they won't create a tremendous amount of value.

The chatbots you are using are very generic tools and not at all optimized for wordle solving. If either Alphabet or OpenAI decided to they could in just a few days slap together a specialized wordle agent using their underlying LLM which would be the best wordle player in the world ever. Remember the history of AI development has been to apply it to games so we know that works very well. It's not that the models aren't good enough it's actually the other way : the challenge of getting wordle right is so trivial none of the developers are even bothering with it.

Sold my ~5% Amazon position last week at $230 after a nice 30% return in about 3 months. I still think it's a long term winner but it was my stock I liked the least and I wanted to free up a little cash for the next draw down. It seems to trade between EV/EBITDA ~12 and ~16 quite reliably for the past few years and I've been lucky to do this back and forth thrice already. Below is my reasoning. Being the number 1 e-commerce and cloud platform in the US is a beautiful position to be in. However it feels like retail is mature and that as the incumbent cloud is theirs to lose. I believe Microsoft in particular is showing their teeth and could take over AWS within the next 3 years. It is Day 2 which doesn't have to be a bad thing. They could reap what Bezos sowed and print money without innovating much. In fact margins are set to massively improve in '26 and '27 but I think they're in denial about being Day 2 which is dangerous in itself (more below) and that Jassy feels much more like Ballmer than like Cook. The OG team is gone. When Bezos left, most of his lieutenants left as well. Jassy's letters are an uninspiring snooze fest. Their AI strategy is non existent (revive Alexa which no one wants). Their latest projects have been stupid : they should be deep in self driving cars for delivery (zoox is lost at sea), robotics AI for the warehouses (buying solutions from Nvidia), have included Amazon Music for free in Prime to increase stickiness (Spotify won), and most importantly be making the big push towards consumer healthcare they've been tiptoeing around for the last 10 years (please!). Instead they went physical groceries stores (why??), terrifying cashier-less panopticon supermarkets with thousands of cameras, face recognition and fingerprint readers (creeps out everyone except maybe the Chinese government), doubling down on completely useless Alexa (tens of billions invested to get : turn on the lights, play something, tell me a joke) and even opened a freaking hair salon (OK that was a tiny project but doesn't it say something?). For a company claiming to be the world's most client-centric they don't seem to have any idea what people want or who they are and what they're good at. OK this was all very negative because it's a "why I sold" essay but for anyone who owns this I also stand by : Number 1 e-com and cloud platform in the best market + margins about to increase a lot = reaping what Bezos sowed for many more years. So I will happily be back in this if it dips around EV/EBITDA 12 again. Just wanted to derisk my tactical allocation a bit for the next volatility event and the other stuff I own is much more promising

Added to Alphabet. It is now exactly 1/8th of my net worth.

Thanks! I wouldn't read too much into this. Especially given the weather in the Taiwan straight during summer. October and April are the two window months for an amphibious attack.

Can you provide a link? I'm not seeing anything like that but maybe I'm searching wrong.

Thanks for sharing this is super helpful

You seem to know the sector very well. Do you have an opinion on Patria (PAX)?

Thanks for sharing! Commodities go straight in the too hard pile for me since I have no clue how to assess better than the market the future price of the thing being extracted. I've lost enough money on nat gas to learn this. But I can see how if you have expert knowledge it can be a very fertile ground for value investing. Curious if most of your outperformance in the past 8 years can be attributed to using options on mining stocks?

You're welcome! Peace of mind is priceless, enjoy. If you feel like sharing your current holdings into the "share your portfolio" thread and/or if in the future you feel like sharing your next high conviction idea I think it would be a nice way to give back to the forum. We need to get rich too

Here's an idea. Separate accounts at separate brokers (your wife hold the password to the safe one if needed) with a all world stocks ETF on one side and complete freedom for you to stock pick and concentrate guild free on the other. You can set up a ratcheting rule-based system for yourself (write it down very clearly so you won't be tempted to change the rules later). In this example you start with $1M in each portfolio. Every time the actively managed portfolio ever reaches x3 the balance of the passive one you have to rebalance to 50/50. So let's say sometimes in the future you hit 1.5M the safe portfolio and 4.5M in the active portfolio, you transfer some of the money to go to 3M / 3M. The rule only goes one way : if the active portfolio underperforms the passive one and ends up 3X smaller you do not rebalance. The important point is using a ratio between the funds rather than a set dollar amount. Do this only if the original amount in safe portfolio already more than covers your capital preservation needs forever. The downside is it's probably not tax efficient (depends which type of accounts you have). It doesn't have to be 3x, pick the ratio that feels right after simulating scenarios (both where you outperform AND underperform) this is more of a gut check than math. Basically we're creating a ratchet that eliminates both the risk of losing what you can't afford to lose and the risk of wasting your wonderful stock picking talent. Hopefully this helps!