The S&P 500, currently performing a rather boisterous jig, has, predictably, convinced many that gravity no longer applies. Nineteen percent up in a year? A delightful illusion, but illusions, like bubbles, have a habit of bursting. Even if this exuberance continues—and let us not be naive—it won’t last forever. A prudent portfolio requires ballast, something that doesn’t evaporate when the music stops.
Still, Nvidia has done rather well for itself, hasn’t it? A gain of 977% over the last three years is nothing to sneeze at. Their graphics processing units – GPUs, to the knowing – have become the very gold standard for this AI business. And after such a breathless sprint, a little pause for refreshment is perfectly understandable. The stock currently sits a modest 12% below its recent peak, which, frankly, seems a perfectly reasonable place to be.
In the most recent accounting, this Druckenmiller divested himself of holdings in Broadcom, a purveyor of the essential, if largely invisible, infrastructure of the digital realm. He simultaneously initiated a position in Sandisk, a manufacturer of flash memory. A thousand and fifty percent increase in valuation since its separation from Western Digital, they report. Such numbers possess a certain terrifying beauty, a testament to the capacity of the market to generate phantom wealth, divorced from tangible creation. It is a spectacle worthy of careful, if melancholy, observation.
There’s this one player, Amazon (AMZN +0.40%), that only went up about 5% last year. Which, in the current market, is practically a recession. But here’s the sneaky part: they were also growing, thanks to AI, e-commerce, and this weird thing called “cloud computing.” Amazon is a solid pick for both the aggressively optimistic and the cautiously pessimistic. The cautious types will appreciate that Amazon wasn’t built on AI; it was already a functioning business, which is a nice change of pace. Even Amazon Web Services (AWS), which does deal in AI chips and platforms, has a bunch of other stuff going on. It’s diversified. Like a sensible adult.
Now, Thiel Macro, his hedge fund (a sort of collective consciousness dedicated to making more money, which, when you think about it, is a rather alarming concept), has done something… curious. It’s sold all its Nvidia stock. All of it. This is like deciding you no longer require oxygen, or the continued structural integrity of your planet. Nvidia, you see, has been on a bit of a tear. A parabolic tear, to be precise. (A parabola, for those unfamiliar with the geometry of success, is a curve that goes up, up, up… and then, eventually, doesn’t.) It’s become, effectively, the most valuable company in the world, which, as any economist will tell you, is almost always a sign that something is about to become terribly complicated.
Now, Advanced Micro Devices, or AMD as the grown-ups call it, is a bit of a scoundrel, really. It’s been nipping at the heels of the big cheese, Nvidia, for quite some time. Nvidia, you see, is a bit of a bully, hoarding all the best bits and pieces for its fancy graphics cards. But AMD is no slouch. It’s been busy brewing up something special in its laboratories – a whole heap of clever chips for something called ‘artificial intelligence.’ A bit of a mouthful, that one. It’s like teaching a machine to think, only without the messy bits of having a brain.
Netflix, of course, has been everywhere. It’s the streaming pioneer, the disruptor, the reason I haven’t left the sofa in three days. Shares are up something ridiculous – 732% in the last decade, apparently. Which is… impressive. Though, let’s be honest, a lot of things were impressive in the last decade that turned out to be bubbles. I’m cautiously optimistic, but I’ve learned to distrust anything that sounds too good to be true. It’s a rule I break approximately every other Tuesday.
This document, a tome of 278 pages, builds upon the Clarity Act, a piece of legislation passed by the House which, as far as anyone can tell, aimed to divide digital assets into neat little boxes and assign them to various regulatory guardians. The main division, it seems, is between “ancillary assets” and “digital commodities.” A distinction as clear as mud, naturally.
The papers say Louisbourg established this position on the 16th of January. A new claim, a new hope. The price, calculated on the quarter’s average, came to that $5.25 million. It’s a small sum in the grand reckoning of things, but enough to plant a seed and see if it takes root.
The transaction, dutifully recorded in an SEC filing on January 16th, represents a reduction in Louisbourg’s holding of OR Royalties. The fund retains a respectable 219,271 shares, representing 1.55% of their reported assets under management. One pictures a portfolio manager, not panicking, merely…rebalancing. A tedious exercise, but necessary, especially when dealing with assets that have exhibited a disconcerting tendency to appreciate.