Understanding The Big Tech Stocks

Does it feel to you like society has gone crazy? Well, you're not alone. There's a general view that all around the world, in the realms of politics, culture, business, and so forth, a lot of people are losing their minds. So if this is true, what's the reason for it? On this episode we speak with Dan Davies, the author of the new book The Unaccountability Machine: Why Big Systems Make Terrible Decisions - And How The World Lost Its Mind. Dan talks about the field of study known as cybernetics, and the inevitable outcomes of systems that grow more and more complex. This complexity -- which describes many things in the modern world, and leads to what Dan calls "accountability sinks," or entities that basically exist just to be blamed for things that have gone wrong. Dan walks us through how these emerged in the modern world, where things are headed, and how the trend could theoretically be reversed.

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Neil Dutta, the top economist over at Renaissance Macro, has generally been sunny and optimistic about the economy over the last four years or so. But now he's warning of a possible mistake by the Federal Reserve. In his view, the central bank is waiting too long to get confirmation that inflation is coming back to target. Meanwhile, unemployment is starting to creep up in a meaningful way. As he sees it, if you're still worried about upside risk to inflation at this point, you need to have a theory about where that inflation is going to come from — and it's really hard to come up with an answer for that right now, given the general downward momentum in hiring and the overall economy. In this episode of Lots More, we catch up with Neil to talk about the risk that the Fed will blow the soft landing.

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 From cars to toys to clothes, we're just used to seeing the label "Made In China" on all sorts of things. But how did China become a go-to destination for manufactured goods in the first place? Who actually recognized that there was a huge opportunity to tap the abundant, low-cost labor to sell goods to Western consumers? On this episode of the podcast we speak with Elizabeth Ingleson, a professor at the London School of Economics and the author of the book Made in China: When US-China Interests Converged to Transform Global Trade. Ingleson traces the roots of the US-China trade relationship to a handful of US entrepreneurs in the early 1970s who first went into the country and recognized its opportunity as an export powerhouse. We discuss who these individuals were, the obstacles they had to overcome, and how they reshaped the entire global economy.

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The stock market has had a torrid run in 2024 despite the fact that interest rate cuts haven't materialized in the way people had expected at the start of the year. In fact, outside of a few blips here and there (like spring 2020), US stocks have been phenomenal performers for years. Tom Lee, the founder of Fundstrat and FS Insight has been bullish for a long time, having caught the correct side of this lengthy trend. On this episode, we speak to the former JPMorgan strategist about how he thinks about the market, what he sees happening right now in macro and demographic trends, and why he thinks it’s plausible that the market could roughly triple in the next six years.

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Everyone knows that the AI boom is built upon the voracious consumption of chips (largely sold by Nvidia) and electricity. And while the legacy cloud operators, like Amazon or Microsoft, are in this space, the nature of the computing shift is opening up new space for new players in the market. One of the hottest companies is CoreWeave, a company backed in part by Nvidia, which has grown its datacenter business massively. So how does their business actually work? How do they get energy? Where do they locate operations? How are they financed? What's the difference between a cloud AI and a legacy cloud? On this episode, we speak with CoreWeave's Chief Strategy Officer Brian Venturo about what it takes to build out operations at this scale.

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Virtually everyone, across the ideological spectrum, has the view right now that it's too hard to build things (or get things done generally) in America. New infrastructure is thwarted by red tape and permitting. New housing is thwarted by YIMBYism. Even something that doesn't require much new construction -- like NYC's attempt to impose congestion pricing -- is difficult to get done after years and years of wrangling. What is the core problem? And what can be done to address it? On this episode, we speak with John Arnold, who started his career as an energy trader at Enron, before going on to found a highly successful energy hedge fund. Now in his role as the co-founder of Arnold Ventures, he works on policy solutions to address these key bottlenecks. We discuss how he goes about philanthropy to affect policy change, the problems he's identified, and what solutions could be put in place to improve domestic development.

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Throughout history, financial markets have struggled with the issue of borders. Borders create friction, add cost and cause headaches for anyone who wants to spend money across them. On top of that, various national currencies can be wildly unstable.

Could a borderless, global currency ease friction and enhance financial inclusion and stability around the world? Cryptocurrencies offer an intriguing possible solution to money’s border problem. And a particular kind of cryptocurrency, called stablecoins, could become a powerful medium of exchange for international payments - and offer people around the world increased economic freedom.

This episode is sponsored by Coinbase.

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For much of this year, the S&P 500 has marched steadily higher while measures of stock market volatility, like the VIX, have stayed pretty low. But looking at the headline index only tells you part of the story. Beneath the surface of the S&P 500, individual stocks have been moving up and down a lot. And of course, traders have figured out a way to make money on the difference between the quiet overall index and all that volatility happening in individual stocks. This is the dispersion trade that's gotten quite a bit of attention in recent months. But figuring out exactly who's doing it and how pervasive it is isn't that easy. In this episode, we speak with Michael Purves, CEO and founder of Tallbacken Capital Advisors, and Josh Silva, managing partner and CIO at Passaic Partners, about this new volatility trade and what it means for the overall stock market.

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A few lucky people have made generational wealth trading the ups and downs of the crypto market. And some finance professionals have shifted gears to focus primarily on the space. But what is it like to actually trade these coins day-to-day? How do people pick which ones to buy? How do they analyze the coins themselves? How do they get reliable information? And what is it like, emotionally, to trade such an infamously volatile asset? On this episode of the Odd Lots podcast, we speak with Julian Malinak. In his day job, Julian works in healthcare tech. But the rest of the time, he's looking on message boards for the next 100-bagger. At one point he had made enough to retire on. And then it all went poof. But he keeps grinding and trying to improve his craft. Julian — who we found on the Odd Lots Discord server — explains what he does all day, and how the market really works from a trading perspective. 

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There's been a huge change in the market for nickel, which goes into everything from electric vehicles to steel. Indonesia has grown to absolutely dominate production and now provides more than 55% of the world's supply. A lot of that is going to China, which has partnered with Indonesia to help grow its nickel industry at a phenomenal rate. Now, there are accusations that low-grade and low-priced Indonesian nickel is flooding the global market, to the detriment of other producers. Western miners like BHP and Anglo American have been shuttering their own nickel operations, and have written them down by billions of dollars in recent years. On this episode, we speak with Michael Widmer, head of metals research at Bank of America, about the sea change that's taken place in the world's nickel market and what it says about the green energy transition, as well as the scramble for other strategically important metals. We also talk about all those bullish calls on copper, and general volatility in the metals space.

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Big tech has seen strong gains in 2023 and has outpaced most other sectors. In doing so, the S&P 500 has also performed well, but when you take away a handful of tech companies like Apple, Microsoft, Amazon, Meta and others, the S&P 500 is only up 2%. This is a great reminder of why overconcentration can hurt a portfolio.

Being overweight in this tech position feels great when the market is doing really well because returns will be strong, but once we get a little turmoil and volatility, portfolios in that sector of the market really go down at that time. We’re going to unpack this topic with Laura Stover, RFC® and Michael Wallin, CFP® on today’s show and provide some context to this idea of stock market concentration.

This will dovetail right into a discussion on true diversification because when you have your portfolio segmented appropriately, one down year won’t determine the overall success of your investments. We’ll take you through our process and break down the strategy of diversification that we adhere to. That will help keep you from worrying about the direction the market is headed and how top-heavy it’s becoming.

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Timestamps (show notes):

6:00 – Large tech driving the gains in the S&P 500

9:53 – Why the dollars in the portfolio are the problem

11:28 – The gains are very modest for the majority of the S&P 500

15:29 – Resisting the temptation to chase the hot streak 

21:58 – How to structure a portfolio for diversification

Con el Privacy Shield muerto y enterrado, las Cláusulas Contractuales Modelo (SCC) empiezan a recibir fuego cruzado a pocos días de ver la luz su última versión. Se pone así en entredicho el ecosistema entero de MarTech y AdTech basado en SaaS (Software as a Service) con almacenamiento de datos en Estados Unidos. También lo hacen las redes sociales, con Facebook/Instagram a la cabeza. 

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Con Cris Moro y Sergio Maldonado

The usual content marketing approach is to make people want to read the things you’ve already written. We knew writing things that potential customers already wanted to read would be easier, and we scaled that strategy by building an editorial team. If you want to adopt the same approach, this chapter makes the case for it – and gives tips to get started.

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