278: Bubbles, TSMC Pricing Power, Elon Musk & Content Moderation, Tiger Global, Netflix Ad-Supporter Tier & Password Crackdown, and Intel vs Nvidia
"Not with a roar 🐯, but with a meow 🐈…"
A good way to study a phenomenon is to see what happens when it disappears.
In hindsight, bubbles seem obvious.
Our brains are very good at re-writing history to make it seem like we knew more than we actually did — we vividly remember all the times when we wondered about it and were skeptical, and we forget all those other times when we pushed those worries aside and voted with our feet in the other direction.
As Buffett would say, it’s the Noah principle: "Predicting rain doesn't count, building an ark does." (though the word “Ark” does have a different association these days… 😬)
In real-time, people call so many bubbles that aren’t bubbles and miss so many important, very real large-scale trends that it’s very hard to be sure about anything…
According to some people, FANG has been in a bubble since 2014… And I’m sure they’re claiming victory these days, a mere 8 years later ¯\_(ツ)_/¯
🪴📸 Here’s an update on the growth of my green onions:
This thing is growing faster than most growth companies!
I think I’ll put the next one into a small pot with soil and just harvest it periodically. 🤔
💚 🥃 The good news is that readership has been going into overdrive lately. We’re about 7,500 people in this paddleboat!
The bad news is that the rate at which supporters are signing up has fallen behind, so we’re now back to 4.4% of paid supporters to 95.6% of free readers.
If you’re on the fence, have been meaning to do it but just never pulled the trigger, and are wondering if your support would make a difference — absolutely 10,000% it does!
This is a full-time job and I have plenty of bills to pay and mouths to feed, so if there is not enough support, I won’t be able to continue.
Thank you in advance! 🧡
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‘Being right a lot’ as a symptom of a mosaic of good qualities 🤔
It's hard to quantify, but one thing I generally look for in people is "being right a lot, about lots of things". Some people just seem to be right very often, and avoid being wrong even when many others are fooled. I see it as a symptom of positive characteristics at work under the surface. I'm not talking about "being right on investments a lot", that's just a subset of a wider idea. Some people are just more thoughtful, knowledgeable, smart, well-read, analytical, emotionally stable, have incredible networks, seek out disconfirming evidence, have great pattern-matching abilities, useful life experiences, etc... and they make *effective* use of their talents (many talented people are not effective -- like a powerful truck spinning its wheels in the mud). It shows in how they are well-calibrated on *a lot* of things. Even admitting you don't know something and doing nothing can be a way of "being right" in some situations, especially if others will pretend to know and make bad moves because of it. The mix of traits that leads to this won't be the same in every person that fits the bill, which is what makes it hard to identify them prospectively, but you can get at it indirectly by noting results big & small over a long period of time. Of course, track records are no guarantee of future results and all that, but it certainly tilts the odds in your favor, especially for things where the skill-to-luck ratio leans heavily in favor of skill (so investing is not the best place for that, at least over anything but quite long periods).
It’s kind of a Captain Obvious thing to even talk about, but the obvious things are often most important to keep in mind ¯\_(ツ)_/¯
TSMC’s Pricing Power
The Taiwanese company doesn’t release prices, but we can approximate it from the data it does provide. For the March quarter, it brought in $4,650 for every 12-inch wafer it churned out for customers. That’s 10% higher than the prior quarter.
📉📉📉 ‘Tiger Global hit by $17bn losses in tech rout’ 😩🤕
Not with a roar 🐯, but with a meow 🐈…
Tiger Global has been hit by losses of about $17bn during this year’s technology stock sell-off, marking one of the biggest dollar declines for a hedge fund in history.
The run of poor performance means the firm — one of the world’s biggest hedge funds and a big investor in high-growth, speculative companies whose shares have tumbled since their pandemic peaks — has in four months erased about two-thirds of its gains since its launch in 2001, according to calculations by LCH Investments.
[...] The fund lost 43.7 per cent in the first four months of this year, the Financial Times reported earlier this month [on May 3rd], more than double the 21 per cent decline posted by Wall Street’s tech-heavy Nasdaq Composite share gauge. (Source)
And we know what happened subsequently to May 3rd (things didn’t get better!)…
It’s kind of a Catch 22 when you get to that scale and are concentrated in one industry, because when you get hit by a wave of redemptions and have to sell, you’re such a large volume that the selling-because-prices-are-tanking becomes a self-fulfilling prophecy, and then the huge price drops are triggering other sector funds to get redemptions and sell/blow up, and so on, a cascade of pain…
🐦 Interview: Jim Rutt on content moderation and Elon Musk’s challenges with Twitter 🚫🙊📢
Jim recently did a podcast interview about his experience building and designing moderation rules for online communities since 1980 (two years before I was born and over a decade before the web was born). He’s been thinking about this topic longer and more deeply than almost anyone else:
For those who prefer text, he also wrote an article where he makes important distinctions between “Decorum moderation versus content moderation vs point-of-view moderation”:
There’s an interesting proposal about human appeals of decisions where users could stake money to be won or lost depending on the outcome (decided by a third party), which would create quite strong incentives for clear rules and quality enforcement, and limit trolls & bots from flooding appeals:
All acts of moderation other than warnings should be appealable to a human. Many moderation actions today are conducted algorithmically. The appeal to human review should take no longer than 24 hours. A second level of appeal should permit a user to stake anywhere between $100 and $1million and demand a review by a professional independent arbitrator to determine whether the specified post(s) actually violated the referenced section of the Terms of Service. As in “baseball arbitration,” the arbitrator must find for the user or for the platform in a binary manner. If the user prevails, the platform pays the user 10 times their stake (minus the $100 arbitration fee). If the platform prevails, the user loses their stake, the first $100 of which goes to the arbitrator.
To ensure that users of modest means have a meaningful second appeal available, a user should be able to syndicate their appeals—that is, post the proposed appeal on a market, along with their initial stake (if any), where third parties can then increase the size of the stake. Third-party stakers get 80 percent of any win, and the appealing user gets the remaining 20 percent. Once the total stake reaches $100 or a higher level specified by the appellant, the appeal would be automatically filed with the platform. Third-party stakers would retain the ability to increase the stake until a decision is returned, should they choose to do so.
I don’t know how well it would work, but it’s certainly interesting to think about!
📺 Netflix ad-supported tier + password-sharing crackdown may come by ‘end of 2022’ 🗓
In the note, Netflix executives said that they were aiming to introduce the ad tier in the final three months of the year, according to two people who shared details of the communication, speaking on condition of anonymity to describe internal company discussions. The note also said that they were planning to begin cracking down on password sharing among its subscriber base around the same time, the people said.
That would be faster than the original conference call statement.
in the note to employees, Netflix executives evoked their competitors, saying that HBO and Hulu have been able to “maintain strong brands while offering an ad-supported service.”
“Every major streaming company excluding Apple has or has announced an ad-supported service,” the note said. “For good reason, people want lower-priced options.”
This is a little too “everybody else is doing it!” for my taste, but as Jeff Green has been saying for years, it probably also makes sense from first principles. The question is mostly about how it could potentially damage the brand and change the psychology of paying for Netflix from “I buy content I like” to “I pay to get rid of ads”.
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Intel aims at Nvidia with new ML-accelerator chip
Intel announced that Habana Labs, its data center team focused on AI deep learning processor technologies, launched its second-generation deep learning processors for training and inference: Habana® Gaudi®2 and Habana® Greco™
There are two types of companies out there. Those that put ® and ™ next to every instance of one of their brands being mentioned, and those who are saner.
The new Gaudi2 and Greco processors are purpose-built for AI deep learning applications, implemented in 7-nanometer technology [...]
“Compared with the A100 GPU, implemented in the same process node and roughly the same die size, Gaudi2 delivers clear leadership training performance as demonstrated with apples-to-apples comparison on key workloads,” said Eitan Medina, chief operating officer at Habana Labs. (Source)
Good for Intel to get deeper in the game (2 years after acquiring Habana for $2bn). But the A100 is Nvidia’s *previous* generation that came out 2 years ago. What I’ll be curious is to see how this does against Hopper, and with a wider set of benchmarks by an independent third party like Anandtech.
Also, performance is just one of many things that customers are looking at. It’s very important, but if the software ecosystem means that their developers aren’t as productive or can’t do what they want to do, it’ll be a deal-breaker. It’s one of Nvidia’s big advantages, having built their software stack and developer community over many many years.
Still, it’ll be interesting to keep an eye on Intel in the space.
👁👁 🧠 Interview: Andrew Huberman 👨🔬
Captivating interview of prof Huberman by friend-of-the-show and supporter Shane Parrish (🇨🇦🕵️♂️):
I think the part that jumped out the most for me was his discussion of “go” and “no go” behaviors around 1-hour into it, and how we tend to spend all day in “go” mode (do this, do that, get more and more done) but we rarely rehearse “no go” signals (don’t do this, don’t do that).
Huberman talks about how he tries to consciously train his “no go muscles” by deliberately introducing at least 20 “no go” decisions to resist certain impulses each day as he’s about to do a reflexive action (ie. don’t pick up your phone when you have a free moment and are tempted to do so), which helps build up capacity for that skill over time.
Makes a lot of sense to me. Probably something I should try to do more of 🤔
🎨 🎭 Liberty Studio 👩🎨 🎥
Mad Men S6E8: ‘A proprietary blend of vitamins’ 👨🏻⚕️💉
I recently watched Mad Men S6E8, the one where partner Jim has his personal doctor give a “vitamin” shot to Don and half the office (clearly some kind of amphetamines) and Don has a drugged-out surreal 72 hours without sleep.
This scene was something…
…and so was the one with ‘give a hug to grandma Ida’!