Investment news

My investment ideas live here. Good and bad. I will constantly update this page. Use this information to go wide and deep.

Click here if you want to learn about specific business ideas or market updates with some economic commentary.

My investment thesis

It's time we enable our sixth sense and become superhuman. This can only be done with great technologies.

To do this, we must invest heavily into the future. We need to advance the current state of electronics. Why? Because software is limited by the physical constraints of great hardware. Don't believe me? Well chances are you have heard of Moore's Law. Moore's law is the observation that the number of transistors in a dense integrated circuit doubles about every two years.

Well there is another side to it.

Wirth's Law, or also known as Bill Gates's Law, is the belief that software gets slower more rapidly than hardware moves faster. Or as Gates said, "The speed of software halves every 18 months." I believe this to be true. While computer hardware might not be a high margin business like software, we still need smart chips, servers and more hard tech.

In fact, we need more types of electronics. The personal computer and mobile phone will be ancient in the future. There are so many new pieces of hardware being developed everyday. The best examples are robotics, drones, 3-D printers and autonomous vehicles. Each of these new machines require a ground up approach to hardware and software development. We have the luxury of building on old tech but still need to advance the future of new tech.

So to expand life, improve safety and reduce costs, we will need to invest in the future of electronics. It is necessary to build a better future.

Cloud spend is increasing

Oracle, SAP, and ServiceNow are all seeing an increase in future revenue growth. The metric to track is Remaining performance obligation, or RPO.

Oracle saw a 68% increase in bookings for 2022. This is inclusive of the Cerner deal and some non-cloud revenue. Either way it is very impressive for the company. Oracle now has $61 billion in revenue. This is an unbelievable run rate for such a large business. A quick reminder of how much upside is left in cloud computing.

Other cloud competitors also had an impressive quarter such as: SAP RPO of $35.7 billion, up 35%, ServiceNow RPO of $14 billion, up 25% and Salesforce RPO of $40 billion, up 10%.

Again, growth in the billions is very impressive. These are core technology products with long term contracts. Nobody is spending millions per year without thinking deeply about the cloud. Impressive results. Much more to come.

GE Healthcare spinoff

$GE is spinning off assets into three categories: GE Aviation, GE Healthcare and GE Energy Energy and Aviation will spin off in 2024. But GE Healthcare $GEHC will spin off next week, possibly Jan 3rd 2023. It's a tax-free deal. And Healthcare is GE's most profitable division. It'll probably sell off when the stock goes public. Definitely worth keeping on your 2023 watch list. 

Micron is cutting 2023 forecasts

Micron $MU is cutting its forecast and workforce. this looks bearish for the industry now.

Ordering food online, fast

I saw this breakdown of restaurant stocks on Twitter. The most interesting to me are the mobile apps for McDonald's, Starbucks, Chipotle and Domino's. All of these companies have fantastic feature sets.

My thoughts on 2022

2022 was tough. It was the year of de-stimulus. We injected trillions into the economy. Everything was inflated along with cheap interest rates. And it worked. The economy didn't collapse during a pandemic, a proxy war and supply chain constraints. Nothing stopped the consumer from spending and investing.

In fact, their was excess cash in the system. Which caused bubbles to brew in several pockets across industries. Not unexpected though.

So what have we learned?

One major breakthrough I didn't foresee was nuclear fusion and OpenAI's new product releases, Dall-E and ChatGPT. New A.I. software proliferated in December 2022. So many apps pivoted and even more integrated ChatGPT's features. It's worth mentioning that this is only GPT-3.5. I can't imagine how powerful GPT-10 and beyond will be.

Predictions for 2023

Don't waste time on economic predictions. There are too many unknown unknowns. Most you can't control. Plus if economists were good at predictions, they would be investors.

Now for 2023. I'll be adding several ideas to this list.

Other than that, I don't have any other macro updates. In fact, market forecasts are completely useless. Don't bother listening to equity analysts. They don't know the difference between preferred stock and livestock. It's better to think in terms of probabilities. So here's your framework: interest rates and inflation will be above zero. Great investors like Bill Ackman and Warren Buffett use 10% as their discount rate. I do the same now. If 10% is your base case, then your hurdle rate is high enough for you to make money in any environment.

As for industry predictions, I do think paid social will become mainstream in 2023. Twitter Blue was only the beginning. This will be a mega shift on how internet companies make money. Better products will come from paid subscription sites. Online paid communities will have a new meaning this decade. Digital products will get better.

Semiconductors

America is investing $200 billion in semiconductor chips. While it's necessary to invest in onshore manufacturing, I don't think it is enough.

spinoffs

$GE is spinning off assets into three categories: GE Aviation, GE Healthcare and GE Energy

Energy and Aviation will spin off in 2024. But GE Healthcare $GEHC will spin off around Jan 3rd, 2023. It's a tax-free deal. And Healthcare is GE's most profitable division. It'll probably sell off when the stock goes public. Definitely worth keeping on your 2023 watch list.

So far the $GEHC spinoff was successful with the stock up and a new CTO onboarded.

Decline of PC sales

During the Dell leveraged buyout, peak PC sales were a real concern for investors. Now it has been a decade since the deal and I think we have achieved peak PC sales.

PC manufacturers are forecasting downtrends in 2023 sales. No surprise. The market has achieved the end game for personal computers and mobile phones. Yes, even mobile phones. There's only so much compute possible in one physical device. It's limited by specific constraints such as screen size, battery power and internet bandwidth.

Look, each of these constraints will broaden overtime. But the reality is we need to expand our sensors. Today new hardware devices are becoming an extension of humans. This includes VR glasses, robotics arms, cars and much more. Each of these devices require new batteries, antennas and sensors.

So what's the problem? It's capital intensive, harder to predict winners and has a longer development cycle. But the cycle is inevitable. There will be new technologies tomorrow and it will require us to go beyond PCs and mobile phones. In many ways, it's already here.

Short sellers are coming for Etsy

Citron Research released a short seller on Etsy for selling counterfeit products. Find out more below.