The Sunday Drive - 07/09/2023 Edition

Musings and Meanderings of a Financial Provocateur

Jul 09, 2023

👋🏼 Hello friends,

Greetings from Saratoga Springs, NY! Let's take it easy and enjoy a leisurely Sunday Drive around the internet.

🎶 Vibin'

We just celebrated the Fourth of July holiday this past week and I’m still enjoying the carryover of positivity. So this weekend, I’m vibin’ to Saturday in the Park by Chicago from their 1972 album, Chicago V. As my kids would say, “No thoughts, just vibes.” Enjoy.

💭 Quote of the Week‌

“The happiness of most people is not ruined by great catastrophes or fatal errors, but by the repetition of slowly destructive little things.”
– Ernest Dimnet

📈 Chart of the Week

We often hear about the current investing environment as being an overly concentrated, top heavy equity market that is outrageously overvalued and rip for either a major correction or an extended period of tepid returns.

The Chart of the Week pretty much says, “Meh.”

The markets of the late 1990’s and the early part of 2020 were both very expensive (bottom graph) and of low quality (upper graph). Compare that to the current market environment that shows a middling valuation (bottom graph) and of somewhat low quality, but certainly not a junk rally (upper graph).

So what’s to be done?

Be patient. This middle of the road market will resolve itself in one direction or another at some point. I think we are already seeing the beginnings of a broadening of the performance of the stock market which is a good thing, and something I wrote about recently.

Be invested, but also keep some dry powder in case some great opportunities present themselves. For me, some of that dry powder comes in the form of three month Treasury Bills, now clocking a 5.4% yield. As a cash substitute, that’s not so bad.

🚙 Interesting Drive-By's

A fairly AI intensive set of drive-by’s this week:

📈 ChatGPT is Like Having ‘Millions’ of Investment Associates - from Bridgewater Associates

Greg Jensen, co-CIO of the world's biggest hedge fund, told Bloomberg that ChatGPT was able to pass its investment associate test, and that the power of the buzzy AI chatbot is like having "millions" of junior staffers working all at once.

💡 Sufficient Resolution - from Seth Godin

When a medium hits sufficient resolution, future advances are nice, but they’re not essential. And once an industry realizes this, future investments in resolution begin to slow down. Of course, it’s difficult to tell if the resolution is sufficient until after the fact.
Right here, right now, we’re discovering a wide range of content that has a resolution that is crossing the line to sufficient. That’s going to lock in new forms of interaction and culture for a long time to come.

🤔 The Rise of the AI Engineer - from Latent Space

We are observing a once in a generation “shift right” of applied AI, fueled by the emergent capabilities and open source/API availability of Foundation Models.

A wide range of AI tasks that used to take 5 years and a research team to accomplish in 2013, now just require API docs and a spare afternoon in 2023.

as discussed in our spaces chat, the API line is permeable - AI Engineers can go left to tweak/host models and Research Engineers go right to build atop APIs too! But their relative strengths and “home base” is clear

🤓 So, Your Client Wants to be a Snowbird - from Rethinking65

“I can’t stand the cold anymore.” Is your client finding winters up north more difficult than they used to be? Are they considering wintering in Florida like their snowbird friends? As their advisor, what practical advice can you provide?
Is “feeling the cold weather” something that only exists in their minds? Probably not. According to medical research losing weight and thinning skin make it difficult for older people to maintain a normal body temperature. They get cold. Since your “Golden years” should not be your “Frozen years” many people up north decamp to warmer climes every year. Florida alone has a million part-time residents, also known as snowbirds.

👋🏼 Parting Thought

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em at me.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌

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