Allocator of things to allocate. Views are my own. Not investment advice. DOW IS AT 50,000
San Francisco, CA
Joined November 2012
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Sadly, what's happening today will happen more and more often
Multi-manager platform blows up --> triggers simultaneous degrossing across several trillion of platform hedge fund exposure --> quant hedge funds pile on --> market crashes
Way too much money has gone into these strategies
“.. McCormick said she expects there is ‘going to be a lot more review’ of new projects. ‘What I mean by that is to start new data center build-outs today in the United States will be very challenging.’”
@WSJ $META
wsj.com/tech/ai/meta-preside…
$SPCX
VC in public markets
Likely base case in 2027:
-DC delivery misses due to land/power/shell constraints and regulatory headwinds
-inventory cycle in for chips
-compute shortage worsens
-downward earnings revisions for chips
-downward revenue/earnings revisions for labs
If a new demand intensive use case accelerates demand, we can see another big upswing down the line
Healthier for the longer term compute supply/demand balance
Base case increasingly seems like:
-$200 oil case off the table
-US/Israelis continue bombing for some time, fails at regime change but eventually stops and calls it a win. Iran escalates on a tit-for-tat and de-escalates once US/Israelis stop bombing
-Iran tolls and controls Hormuz, traffic gradually reverts. Pipeline diversion + traffic recovery results in LSD crude supply deficit
-Regions like SE Asia, Australia, and parts of Europe experience periodic fuel shortages
-People start bidding AI stocks and BTD wins again. AI fundamentals are stronger than they were 6 weeks ago and likely the only group of stocks with major upward earnings revisions vs. old economy companies that will see cost pressures.
-Can equity markets hold up at $100 dec 26 brent/$130 june 26 brent? TBD
Feel free to change my mind with facts
That’s the challenge I have with the hyperscalers and valuing them on longer term cash flows
Even if there’s a lot of acceleration coming
We’re taking high margin, capital light businesses, the best businesses the world has ever known, and we’re weighing down the balance sheets with huge debts and leases, and transforming their business into capital intensive utility-like structures. And that’s only if the revenue ever arrives. Big fucking if.
Dynamicmoats retweeted
Are we finally seeing news of productivity gains due to AI adoption?
H/t: @EPBResearch also reported by @jburnmurdoch @FT
Because multi managers and quants are significantly more levered than fundamental funds, the notional and gross dollars managed has increased even more than the graph indicates
Spending time on $FICO long is low ROI until Pulte is no longer in office
The situation is inherently unpredictable
