Spy sat in on an AI meeting this week, without a drop of beer, where a very young and breathless company promised to provide a solution that “would be able to write LinkedIn posts automatically, generate the perfect event agenda instantly and dynamically produce content in your tone of voice.” Once the ever-so-clever ChatGPT style spewing out of words on the screen was over, the reality started to set in. Quickly. Their AI model produced words that no sane person would ever put down on paper. Whatever the promise of AI to replace human creativity, Spy left the meeting assured that his (and all of your) bumbling over the keyboard still have a place for a while yet.
It was supposedly Albert Einstein who said, “compounding was the eighth wonder of the world.” That may be apocryphal notes Spy, but it is certainly true that compounding your investments works, over time. Asset manager, TCW has listed a new strategy on the NYSE, the TCW Compounders ETF. It is an actively managed fund that “aims to invest in durable companies that will continue to grow and create increasing amounts of free cash flow over time. These companies often have significant recurring revenue, sell important and difficult-to-replicate products or services, and have management teams with a strong track record of quality leadership.” Hardly the most original idea, but with less than 30 stocks in the portfolio and with heavy concentration (the largest position, Constellation Software, is nearly 20% of the fund) – this is the epitome of active. It has a nice ticker too: GRW.
The blurring of the lines between public and private markets continues. This week, public markets manager Capital Group and private markets manager, KKR, announced a partnership that will see hybrid public-private investments offered to the high net worth individual (HNWI) segment, in due course. The partnership will apparently offer its first products next year: blended public and private credit funds. One of the aims of the partnership is to bring private equity, credit, infrastructure and real estate funds to wealthy individuals instead of institutions. Spy can see private banks in Asia finding these types of offerings, when launched, of particular interest to their HNWI and ultra-HNWI client base.
There may be an entire generation born after 2000 who have no idea what a stamp looks like or is even used for. And yet, some people clearly love them. Bill Gross, the so-called Bond King, and founder of PIMCO in 1971, is apparently selling his stamp collection via auction. He is hoping to raise between $15m and $20m according to various media reports. If the sale is successful, this gives an entirely new meaning to “the cheque is in the post”.
Nvidia continues to defy gravity, muses Spy. The figures are rather staggering, after this week’s blow out results. Revenues are up 262% from the first quarter of last year. A market cap of $2.5trn – just shy of Apple’s $2.8trn. Ironically, the chips Nvidia makes are creating an electricity boom via AI datacentre growth and yet its own market cap is now $890bn higher than all of the companies in the S&P 500 energy sector, which will surely benefit from the trend. The total net income of the energy sector is $128bn versus. $43bn for the chip giant.
Talking of AI, a little reminder, if one was needed. At the beginning of 2000, there were between 7,000 and 10,000 “substantially funded” internet companies. Just three years later, after the Dotcom bubble burst, about 5,000 of those firms had either been acquired or had gone bust. The capital destruction of the period ran to trillions of dollars. Whilst history does not repeat, notes Spy, it sure does rhyme.
Shorts, longs, shop houses? Spy was amused to read that Ray Dalio, founder of Bridgewater Associates, is apparently snapping up Singapore’s shop houses. His new, Singapore-based, Dalio Family Office has acquired two properties on Club Street. When you are the new kid on the block, perhaps a little property heritage goes a long way?
Spy has heard more than a few alarmed conversations in Central this week about regular airline travellers in the wake of the Singapore Airlines turbulence debacle. Spy suggests everyone has a nice cup of tea and a sit down. Last year, there were 37 million commercial airline flights. There was not one fatality. That is correct, not a single one. You are more likely to pop your clogs on the way to the airport than in the air.
Investing in Bitcoin ETFs is so January, folks. By all accounts, the floodgates are about to open for the other crypto anyone has actually heard of, Ether. The SEC, on Thursday, approved applications from the NYSE, CBOE and Nasdaq to list ETFs which are tied to the price of Ether. This will surely lead to launches within a few months.
Spy has absolutely no doubt that the Chinese government is utterly focussed on boosting domestic growth. President Xi told a meeting in Jinan, during a visit to the eastern province of Shandong, “We must resolutely eliminate the ideological concepts and institutional shortcomings that hinder the advancement of Chinese-style modernisation.” Spy just wishes he knew what that actually means.
Every now and then it is worth reading this. And then re-reading it. “The stock market is a device for transferring money from the impatient to the patient.” ~ Warren Buffett.
Finally, Spy’s spotters found this Natixis ad in Singapore:
Until next week…
