Imposter

 We keep coming back from the 9th inning as Howard Marks likens it.
There are these microbreaks... like the semiconductor sell off last month.

And then the wonderkid losing his shirt because of that sell off.

What are the odd ducks right now?

1. Geopolitics - Iran, Taiwan, Russia, US, Korea, New defense alliances because of Trump's wavering mind
2. Hacking by AI
3. The massive money bubble around AI along with real capex
4. The insurance engine behind the private credit engine
5. The bond market signaling that there is no merit holding long bonds at these yields
6. Murmurs of the US losing its privileged reserve currency / treasury position
7. Inflation looks underpriced

_____________________________

On a side note a word in praise of America. 

Economy	2014 GDP	2025 GDP	Incremental GDP	Share of global increment
United States	$17.6tn	$30.7tn	$13.1tn	34.9%
China	$10.7tn	$19.6tn	$8.9tn	23.7%
ROW excluding US and China	$52.1tn	$67.7tn	$15.6tn	41.4%
World	$80.4tn	$118.1tn	$37.7tn	100.0%

Thats just the GDP.

Wait for the USD market caps:

Equity market cap	2014	2025	Increment, 2014–25	Share of global increment
United States	$26.3tn	$68.9tn	$42.6tn	48.4%
China	$6.0tn	$15.5tn	$9.5tn	10.8%
ROW excluding US and China	$37.3tn	$73.3tn	$35.9tn	40.8%
World	$69.6tn	$157.7tn	$88.1tn	100.0%

This encapsulates China's lies, American chutzpah and the multiplier effect of capitalism.

(And also the upcoming drawdown)

______________________________

My plight: The imposter syndrome.

I have had reasonable success thus far but a few lessons stand out.

1. Everyone has a portfolio of which they feel confident and proud. Everyone is smart and everyone has very good tools.

So what makes me special? Am I the patsy?

2. As Pulak Prasad pointed out
There are researchers in the Arctic who have dedicated 2 generations of lives in pursuit of a single goal. And then after 60 + years, they were proven wrong.

And here we are, with our money and our chutzpah betting on businesses run by people who are actually in the know.

3. My own research of investment performance of some greats has shown poor to mediocre performance for elongated periods after having done well.

So, it reminds me of the superinvestors of graham and doddsville.

That for the longest time, there are these monkeys which survive.

And hence the monkeys start believing that they are great; until at the subsequent roll of the dice another segment of monkeys falls off.

At which point, the remaining praise themselves.

And so it goes on.

Takeaway: If I get the finish the game on my terms - that should be the goal.

4. Lastly, something I read recently on FT.

https://www.ft.com/content/7b95cdab-7546-432f-b4a1-6509e7648ec5

The purpose is to play. Come up with constraints and then play that game.

I juxtapose that onto what my friend Karthik had said:

We are lucky that we can aspire to be gentlemen of leisure.

I often remind myself;

I would like to read, learn, play to my strengths and make some money along the way.

And now another goal that is paramount: Engross myself in life with my family.

The snowball will roll as long as nuclear war is averted and I don't blow myself up.

"You dont know anything!" - My daughter sang it for me recently. 

I hope you dance https://www.youtube.com/watch?v=RV-Z1YwaOiw

We're off to see the wizard

Every bubble has its poster child.

This time, there is a lot of Gavin Baker, Altimeter Capital, Ron Baron.

And Jensen is like a superhero - going everywhere, striking deals.

I truly hope we are in a bubble that grows wild

Why? 

May you live in interesting times; as the old saying goes. (Intgly, Google AI mode corrected me saying that its not chinese by origin!)

The polarity of AI usage is amazing.

Burry, Kakashi, Ed Zitron, Databricks - they are on the other side. That the accounting, and the utility and circularity are all unsustainable or suspect.

On the other hand, with Berkshire backing Alphabet, and mega primary capital raises - along with significant cash flows going to the chip makers such as Lam, ASML, AMD, NVidia, Broadcom, and the 3 memory guys.

What we get is a concentrated new capital cycle .

And then we have the narrative of: Uber, Zepto, Airbnb, Booking.com, Gaming.

That the beneficiaries of these waves can be app developers who are solving particular problems, and ultimately, consumers. 

May you live in interesting times.

Final days of a bubble. Or, the final 364 days.

 And just like that, we are at new global highs.

Sandisk, Samsung, SK Hynix, Micron, Intel, Kioxia and others going mad.  
Kospi is up 200% and Taiwan approx 100%

I am excited

I am scared

I am heavy

The Nasdaq is up almost 30 percentage points since the fall due to Iran was reversed.

Meanwhile, the Iran issue still remains.

The China, Japan Taiwan issue still remains.

And the US is in a recession without this AI bubble; there is a stronger divide between the AI economy and market prices, and the non AI stuff.

The battle for Investment Survival.

For a lot of oldies, they are prepared for a sharp sell off and recession, or an even wilder blow off.

Market reflexivity is at its weirdest, because we now live in a world where the oldies can warn well, the aggressive can spur on well, there are 'stages of a bubble' predictions everywhere, we are in the globally most well oiled liquid market ever; 

And as Terry Smith warned recently, ETFs and index funds have become momentum plays, and self deceit inducing plays.

I hope I survive.

Mandi ka moo kala

 I wonder whats up; the IEA is saying that things are going to get worse in April because physical supplies of oil and gas will actually dry up.

Helium shortage; Open AI closes a $122 B round, Pvt credit companies figuring out continuation vehicles and secondary buyers, Fannie and SpaceX IPOs?

But lets see.

The odds are that economies tend to cope.

The IVs of the OTM calls have crashed.

But one simple table shows us what can happen:

See the YoY numbers.

A country which should attract a mad amount of FDI because of AI, and where the consumption story is genuinely intact ought to rerate soon. 

In a scenario where the world goes back to normal oil and gas, or a scenario where India's heft allows it to get a chunk of the oil and gas at the expense of poorer economies, a sharp rerating is possible. 

Anyway.

Focus is always: One foot fence, low price, margin of safety, position sizing and knowing one's competence. 

I wonder if long dated calls fulfil these conditions.

Howard Marks reminded me: Best to stay in the 'I dont know' bracket of investors.

Addendum:

This is 14 days later :D

Kospi is up 185% YoY and Taiwan is up 92% YoY  

I ran from Iran

 So, the market has found its issue.

The Iran thing was building up, but I doubt anyone foresaw the intensity of damage, the Hormuz being shut, and that Iran would retaliate against its neighbours.

I foresaw an oil price spike but nothing more really - thought it would be an extremely localised issue.

Just another example of unknown unknowns.

I doubt anyone foresaw a Qatar gas shutdown. 

_________

Meanwhile, in another corner of the market there are rumblings of a private credit issue; guess it got precipitated by the SAASpocalypse because of Claude etc.

And skeletons like First Brands, MFS etc.

(Intg story, I had met Paresh 8 years ago when he pitched me for a product - bullet dodged)

____

Meanwhile, the Mag 7 continue to spin money and build out the AI stuff; NVIDIA, TSMC, Broadcom, and suppliers keep getting dollops of cash from the hyperscalers.

Oddly, the consumer is not really spending a lot more, but are enterprises spending more?

The more things change, the more they remain the same.

This is another market cycle; it will destroy a few companies; Berkshire is ready with cash.

The Iran war might end abruptly, but the AI and private credit fiasco will continute to grow/ unravel?

 

The ability to see

 If only we could be kids.

They see things the way things look to them.

Chatgpt is a commodity.

Bitcoin is a fraud

Trump is just another president.

Why are all the wild animals only in my books?

Private Credit was a fine idea; they are now just hungry lenders who dont have a 'run on deposits' risk. Hungry lenders tend to lose money.

Fat people are now injecting themselves because they cant resist the temptation of high carbs and sugars.

Adults keep looking into their phones.

Now, can I please go and play.

Remember

Remember that in 2019, even before the COVID mayhem, we had ADAG, DHFL, GMR, Yes Bank, ILFS, Crompton, Jet Airways, Essar Group, Coffee Day, Zee Group, Cox and Kings, Adhunik, Amtek, Videocon, Bhushan failing.

And since 2021 we have barely had a whimper.

No frauds, No NPAs.

Its only when the tide goes out...

Addendum:

Maduro gets kidnapped

Iran is falling? 

Greenland is being purchased?

And there is barely a whimper.

Reminds me of the Icahn interview... "I fired the whole floor, and its like a bomb went off... there were no complaints, nothing. Its like nobody even cared and nobody was ever there"