Insights on markets, emergent trends, history, innovation, risk management, global economics, strategy, policy, and other topics that catch our attention. Inspired by ongoing research, conversations and events. Written and edited by Osbon Capital Management and published every Thursday morning.
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Too much time is spent talking about price. Fundamentals are ultimately what drive equity prices higher over time. To say this another way, a company’s stock price can’t continue to rise unless it continues to be successful. The famous quote by Warren Buffett is, “In the short run, the market is a voting machine, but in the long run (...)
Green Energy Transitions
Two influential green energy transition papers were published this week. At this point, parties on all sides agree that investments in green energy are necessary and urgent. Eventually, the sector will experience an economic tailwind that investors will want to take advantage of. The first paper is by Michael Cembalest of JPM, a long-time author of financial markets opinion pieces….
Berkshire
Berkshire Hathaway Annual Letter Over the weekend, Warren Buffett released the Berkshire Hathaway annual letter. Here is what stood out to me: Scale: Berkshire is the only fund of its kind, and its scale and impact is massive. The largest hedge funds in the world are around $120 billion, like Bridgewater Associates, run by Ray Dalio. Bridgewater is a diversified…
Adapters, Prediction Markets, Groq
Disrupters, Adapters, Victims Generative AI has replaced interest rates as the top factor moving markets. It’s not a coincidence that OpenAI, Google, Meta, NVidia, Apple, Amazon and others originated in the US. US equity markets have been the dominant beneficiary of the AI wave to date, and that will likely continue. The wealth gap will widen as small elite tech…
NVDA Chips and Bad Banks
NVDA Chips We don’t typically zoom in this far on a particular company, but I felt compelled to zoom in on Nvidia this week for a variety of reasons. Quick disclaimer: we may or may not hold shares in NVidia at any time. We may change our viewpoints at any given time. This is not advice. Nvidia has just 26,000…
Credit, Argentina, Vision
Credit Growth Credit growth remains quite healthy despite the obvious challenges in the office markets, particularly in the US. For good reason, private credit gets most of the attention these days. While private credit markets have grown $500b in the past four years, public credit and bank lending have grown $2.3T and $2.2T respectively. Increasing access to credit helps support…
Fed, $1B, Private Markets
Fed + Inflation Interest and inflation are still the dominant market factors, and yesterday, the Fed decided to keep rates at 5.5%. Inflation has trended down, but the Fed has paid a hefty price to raise rates and does not want to cut too early. As of today, the futures market expects no cut in March but a 99% chance…
Goodharts Law, FANG VC, Custody Milestone
Goodhart’s Law Last week, one of the data providers for Truflation’s real-time inflation tracker made a small but significant adjustment to their historical data set. That adjustment pushed Truflation’s US inflation reading from just above 2% for 2024 to just below 2%. While I’m sure the adjustments are justified, I can’t help but feel a bit disappointed that the 2%…
Stats, Bulls, Evolution
Stats While the end of Q4 2023 was primarily focused on the victory in the fight against inflation, the expectations for rate cuts were too optimistic. The story for Q1 2024, at least for now, will be the market digesting the reality that there may be just two rate cuts in 2024. That’s down from the six rate cuts predicted…
AI, Robotics, Diversification and Optimism
AI + Robotics DeepMind had a great post last week about AI and robotics and their new models. I liked their comments about prioritizing layers of safety. While I’m not worried about AI generally, I don’t want untrained robotics swinging around and confusing me for anything other than a human. The ChatGPT store opened yesterday, and the most popular app…
