Weekly Articles by Osbon Capital Management:
Practical AI, Rates
All eyes on rates For the first time since Nov 2021, we are seeing the first real reprieve from the persistent downward pressure on markets. The overwhelming strength of the dollar peaked in October when the GBP hit 1.06, the EUR hit .95 and the Yen hit 150. A weaker dollar will help earnings going forward. As expected, this week…
Status Quo, Innovators, Buffett
Status Quo People and companies typically don’t change unless or until they’re forced to. Christensen’s Innovator’s Dilemma points out how companies often fail to grab new markets because they both fear disrupting their core business and vastly underestimate the opportunity. An amazing amount of innovation gets left on the table when companies follow the status quo. Google invented the transformer…
More GPT, Spikes and Limbo
GPT and AI tools Microsoft recently invested $10B into OpenAI at a $29B valuation. This is reminiscent of Adobe buying Figma for $20B. Both valuations are extremely high, but these companies cannot afford to not participate in the future of these markets. LLMs (large language models) like ChatGPT completely change how we gather, interact with and consume information. Whereas a…
AI Integrations, Debunking, Fed Fights
Let’s start with the bright spots Life.Subtitled. NReal is an augmented reality glasses company from Beijing that’s reminiscent of the success of DJI, the dominant consumer drone company. NReal’s augmented reality glasses look like regular sunglasses, which makes them attractive for public use. The combination of NReal’s AR glasses, Amazon’s Alexa tools powered by AWS and a smartphone app…
Bullwhip, Normalization, Momentum
Bullwhip Effect As we enter 2023, we’re now three years into the substantial and dramatic shifts brought on by Covid. Redrawing the economic landscape is like attempting to redraw country borders after shifting tectonic plates. The path back to homeostasis cannot happen without bullwhip effects and significant, momentum-driven ups and downs across all markets. Earnings volatility reduces valuations. At a…
AI 2023, Automation, Rates
Rates The driving forces of this market boil down to a handful of factors we’ve been tracking all year. Short-term rates are now 4.5%, up from .25% in February 2022, meaning you can earn 3.5%-4.5% on your cash alone. Higher rates make risk assets like equities far less attractive. Why risk anything when you can earn 4% guaranteed? The problem…
Hikes, Productivity, Leaps
Rate Hikes The Fed is doing exactly what it said it would do: raising interest rates rapidly to get inflation under control. This week’s 50 basis point hike brings us to 4.5%, the fastest rate hike in modern history. Notably, the futures market says this could be the final rate hike, with now just an outside chance of reaching a…
Money Supply, Inflation, ChatGPT
Money Supply When you add cash into a system, the value of each dollar starts to dip, which ultimately leads to a rise in prices across the board. And if supply is tight due to disruptions in the supply chain, well, then you can expect prices to skyrocket for obvious reasons. The big question on everyone’s mind right now is…
Unicorns, Commodities, Warp Speed
Unicorns The term “unicorn” refers to a private startup worth over $1b. Globally there are more than 1,200 unicorns with a combined valuation of $4.2 trillion. This term serves as a tool for marketing and recruitment as well as bragging rights for founders and investors. VC’s don’t have enough dry powder to mint or sustain unicorns on their own. In…
