Breakaway - Investing & Finance

Life
Yoga life. 

• College admissions: 
• Tulane:
  • Tuition and Fees: $69k
  • Housing: $11k. 
  • Meals: $8k
  • Books: $1k
  • Total: $88,000. * 4 = $352,000
• Wow. College can be very expensive!

Diddy

https://youtu.be/NKMtZm2YuBE?si=irc0uxpLLHbHpBjE&t=53

What’s up with Diddy? 

• His fashion label, Sean John. Not a bad name
• The rapper is “going to fight this with all of his energy and all of his might,” and during a court hearing argued that the so-called freak-offs — marathon sexual productions that prosecutors say involved hired sex workers and women coerced to perform sexual acts for the gratification of Combs and others — were consensual, if unconventional. “Is it sex trafficking?” he asked in court last week. “No, not if everybody wants to be there.”
• Lot’s of tapes recordings. So be careful if you go to a sex party. Know you’re getting recorded. Be cool with it. 
• authorities say they seized “more than 1,000 bottles of baby oil and lubricant

Any similarities to Epstein here?

Markets

Everything is up. S&P 500 up 20% YTD.

As a reminder: 10%: Double in 7 years. 7% double in 10 years. 

What is PE or Price to Earnings?  PE definition and explanation

• When you make an investment and pay cash you’re looking to receive more cash ultimately than you put in. 
• Price to Earnings Ratio. 
  • Value of company; i.e. Market Cap. Divided by Earnings (12 months). 
  • Example: 
    • Company is valued at $100m. Earns $5m per year. PE = 20. 
    • Could think of it as 20 years to get your money back thru earnings. 

Cape Ratio

Cape Ratio (like PE) average of top 500 US Companies since 1950 is about 20. Now it is at 35. Seems high right? Don't be surprised if there is a 10-20% correction in next 6-12 months. 

NY Mayor

Didn’t toe the line and he is paying the price. 

Eric Adams indicted. 

Bill Ackman explains. 

Eric Speech

FAA Hates SpaceX

• Rep. Kiley Questions FAA Administrator Michael Whitaker at T&I Committee Hearing
• SpaceX letter refuting everything the FAA administrator said. 
• Let them launch for crying out loud. 

Tesla Stock Booming
I somehow got invited to Tesla AI event!?

Meta

Orion Glasses 

Netflix

All time high. Still the best pure streaming play. 

Southwest

• No more open seating and adding premium seating! 

Recommendations:

• Instigators on Apple TV
• Chamath on Joe Rogan. 

Personal

• Yoga
• Golf Lesson

Markets

• S&P500 up 20%
• VGT up 19%
• Dividends/value up 11%. 3.36% yield

BTW: 5 years ago you buy 

• VGT: you’re up 2.7x. $100k = $270k
• VOO: up 2x  = $200k
• At 7% annualized return = double in 10 years. 
• At 10% annualized return = double in 7 years. 
• At 20% annualized return = double in 4 years

• Fed just cut by 0.5%. First cut since 2020. I.e. Covid. 
• Current federal-funds rate is at 5.25% to 5.50%, 
• Expect 0.75% of cuts in 2024. Meeting Sept 18. 2 more this year. 
• 2.00% to 2.25% by year-end 2026.

So what does this mean? 

• Money Market lower returns.
• Mortgage rates should come down. 
• Car loans down. Good for Tesla. 

Government Debt per WSJ

According to recent data, interest expense currently makes up around 13% of the US government budget, representing the third largest spending category behind Social Security and Medicare.

Demand for AI

Listen to Larry Ellison explaining the crazy demand for AI. 

Netflix:

• All time high.
• I still think its recession proof! 
• Seems like Q4 subscription #’s should be HUGE! WHY?  
• New events:  Boxing: Tyson and Jake Paul
  • The fight, which will be held over eight two-minute rounds, will now take place on November 15 at the At&T Stadium in Texas.Tyson, 58 is 30 years older than Jake. 
  • Squid game: Squid Game Season 2 will premiere on Dec. 26, Most-watched series: Squid Game became Netflix's most-watched series and the most-watched program in 94 countries.
  • NFL Football x-mas. On Dec. 25, 2024, we’ll be the global home of the NFL’s two Christmas Day marquee games:

Tesla

• Tesla Semi: PepsiCo drivers love it. PepsiCo said today that their drivers who operate the company's Tesla Semi trucks have reported that, after driving the electric truck, they don't want to go back to driving a diesel truck.

Elon on All In Podcast Summit

• 15:40 on Fresh Water dumping and $140k fine. 
• Inspiration. 
  • Uncrewed landing to Mars in 2026 
  • Crews in 2028 if successful (and if government gets out of way). 

Recommendations:

• All In - Megyn Kelly
• All In - John Mearsheimer and Jeffrey Sachs. Univ of Chicago and Columbia. 
• All In - Interview with Dave Portnoy
• Napoleon on Apple. 

Trump & Kamala Debate: Boring and horrible. Name calling. Accusations. Nothing interesting or intelligent. 

Markets:

• YTD: S&P up 16%.
• Tech (QQQ) up  15%.
• High Quality up 10%.

Building Wealth for your kids:
My Blog analysis on Building wealth for kids. 

• 529s and Roth 401k. 
• Small investments over time create generational wealth.

Nvidia

• $3t market cap. $30b revenue/qtr.  $28b in cashflow.
• Mgmt style: Jensen Huang on Working. 

Government vs Capitalists: 

• All in at 56.30: Friedberg: Do you want someone who has lived in government or is not a government operative? Career civil servants vs. capitalists. 
• 1.17.40.  Government spending is 50% of GDP. So could say ½ of people are employed directly or indirectly by government. Free market system is finished if there are more “takers” than “makers”.

Government Efficiency (oxymoron):

Donald Trump on Government efficiency commission:

From WSJ: Trump Proposes 15% Tax Rate for Some Companies and a Role for Elon Musk in Government

Elon Musk has said that all laws/regs should be auto-repealed after 20 years or some time. Otherwise we’re in a web of bureaucracy. 

Getting a Loan from DOE is near impossible. I have a story.

Tesla

Tesla Robotaxi day on October 10. 

SpaceX

The company confirmed that the SpaceX Crew Dragon spacecraft carrying the crew reached its peak altitude of 1,400.7 kilometers (870 miles).

That distance surpassed the record set by NASA’s 1966 Gemini 11 mission

Also!!! 60 day delay for Starship launch. 

• “Unfortunately, we continue to be stuck in a reality where it takes longer to do the government paperwork to license a rocket launch than it does to design and build the actual hardware,” the firm said. “This should never happen and directly threatens America’s position as the leader in space.”
• https://www.spacex.com/updates/

Nuclear Power imperative by Bill and Brad.

Recommendations:

Bryson DeShambeau on YouTube:

• Breaking 50. With Tony Romo (64 is his lowest round). Eagled 1st hole!! 

Podcasts:

• Smartless interview with Michael Keaton. 
• Rogan Actors
• Russel Crowe
• Dennis Quaid

TV: Wyatt Earp on Netflix. 

Yacht sinks:

• Living the dream. Anchored off Sicily coast in late summer. Storm sinks you in early morning. Dead. 
• 15 people rescued, including 1 year old girl. 
• 6 dead. 5 found in sunken boat. 
• 184ft $35m yacht. 
• 165 ft deep.  In tact. 

Investments and Markets

• Markets booming. year-to-date
  • S&P: 20%
  • Tech: 18%
  • Div: 14%
  • Bitcoin up 40%! 
  • Netflix up 44%. 

Netflix!

• All time high. $700. 
• Jake Paul, Tyson, Squid. NFL. 
• Excited for Wyatt Earp.

Mag 7:

• I can’t think of a reason to bet against any of these? 
• Apple: all i use
• Microsoft: embedded in every corporation (redwood). 
• Nvidia: Years ahead of competition. 
• Meta: Open source AI. 
• Google: Break it up! Worth more! 
• Amazon: Only place I buy from. 
• Tesla: Robot in my kitchen prepping my coffee and other beverages. (10 years).
  • Ford has said its EV business is on pace to lose about $5 billion this year. In the three-month period ended in June, the automaker lost about $44,000 on every electric vehicle that it sold.
  •  is canceling plans for a large electric sport-utility vehicle and expects to take $1.9 billion in related special charges and write-downs, as automakers continue adjusting their EV plans because of softer-than-expected demand.

The AI Race:

Politics and Govt Policy

• Policies. Friedberg on Price fixing: https://www.youtube.com/watch?v=xA5B6quoahY
  • 1:06:35
• Biggest problem with both parties is excessive spending to please big money backers and constituents. 
  • Milton Friedman on spending: Nobel Prize-winning economist: https://x.com/icannot_enough/status/1824411533671080335?s=51&t=YUkdoBz4yNifBaQlQUp3-g
• Where is Kamala. 
• Obama at DMC speech. Pretty dynamic. 
• Trump on Theo Von vs Trump on X-spaces with Elon. All in Podcast
  • Talked a lot about drugs and alcohol. 
  • Trump has never smoked or drank alcohol. Pretty remarkable. Brotherly advice (me on the otherhand…)

Saving for your kids:

• Probably need $250,000. Rule of 7&7. $7000/yr at 7% over ~18 years. 
• Roth IRA. Brokerage Account. 

Retirement Strategies:

• My simplest rule is $5m. Why? Most people can live pretty good on that. 5% return, $250k/year.  
• Age 45 have $1m. Double in 7 and again 7: at 60 you’re at $4m. 
• Very stressful when you don’t have an income. 

Recommendations:

• Work your ass off.
• Hit the gym every day; or at least break a sweat.
• Dinner with kids.

Life updates:

• 20 years of marriage!! 
• Cost Rica

Why talk about Politics and government? 

• Has a profound effect on business.
  • U-Haul Announces Top Growth States of 2023
    • Texas netted the largest number of movers in one-way U-Haul® equipment in 2023, marking the third consecutive year it has finished atop the U-Haul Growth Index.

― Milton Friedman

Example: Contained within the 2021 infrastructure bill, the Broadband Equity Access and Deployment (BEAD) program authorized more than $42 billion in grants, to "connect everyone in America to reliable, affordable high-speed internet by the end of the decade."

• Not one single household connected. 
• Starlink could do now for a fraction of the cost. Its entirely obvious. 
• Among several examples, the senators noted that NTIA's BEAD proposal "requires subgrantees to prioritize certain segments of the workforce, such as 'individuals with past criminal records' and 'justice-impacted […] participants.'"
• Bill Gurley and Brad Gurstner on FCC

Ben and Mark Show: Key Silicon Valley leaders turning on Democratic policies. They have Billions $ at stake and do not want to talk about politics, but its paramount to the future of tech and innovation in the US.  

• Technology, Economy and Military. 
• For example:
  • Regulatory agencies have been green lit to use brute force investigations, prosecutions, intimidation, and threats to hobble new industries, such as Blockchain and Artificial Intelligence.
  • Energy: Europe is the ghost of xmas future. Need to be energy independent!
  • Tax: Structure! Unrealized Gains! – Not rate discussion. 

Trump vs. Kamala?

Kamala policies>

• Trump:
  • Capitalist and pro-business. Freedom of speech. 
  • Reasonable border policy. 
  • No more forever wars. 
  • Supports independent energy. 
  • Tough on crime. Not even tough, but basic security. 

Tesla

• AI, Robotics and Energy. 
  • Real-world AI. Explain. Not LLM
  • Cars and Optimus. 
  • Battery and Solar manufacturing. 

Stocks and Economy

• Market Correction.
  • On Monday the 3rd day of “down”. Market down 8-9%, Tech 13%, Nvidia 28%: 
• CAPE at 35. Since 2000 Average is 27. 

Recommendations.

• All In podcast with Trump. 
• Rogan and Jordan Peterson
• Andreesen Horowitz. 
• Presumed Innocent. - Apple
• Your Honor - Netflix (airplane qualification)
• Land of Bad - Netflix (airplane)

https://www.youtube.com/watch?v=bl7IqyEyqhY

Apr 22. 

Wow. Been awhile. Volleyball. Mexico. 

Markets:

If you lived thru 2021 you’re a rockstar and welcome to our first year down 

YTD US up 7% and Tech up 20%. 

Since Dec, 2021 US down 14% and Tech down 20%

I know many and myself buying 6 month 5% bonds. But maybe I should pay down the mortgage?

Recession looming. San Francisco vacancy at 33%. 15 sales force towers.??

National Guard in SF

Netflix:

$690 - $166 - $328. 232m paid subs. 

Same analogy I make to legacy media. Disney (closest streaming competitor) lost $1b on streaming. Amazon makes no money except on AWS.

Key statement: “We are pleased with the current performance and trajectory of our per-member advertising economics. In the US for instance, our ads plan already has a total ARM (subscription + ads) greater than our standard plan.”

Winding down DVD.com

Tesla:

Margins are down. But

• Ford Motor said Thursday its electric vehicle business lost $2.1 billion last year.
• Tesla Net Income $2.5b in the quarter! 
• Punchline: How can these companies scale. Innovators dilemma. 
  • Charging network, insurance. Battery tech. Lithium refining! 

Model Y best selling car in Europe. 2nd best in US behind Pickups. 

Cyber Truck in Q3 and FSD this year? Definitely by 2025. “Our growing fleet of FSD Beta users has an exponential impact on total FSD Beta miles driven – with over 150 million miles to date and counting.”

Service and existing fleet. Service is margin. Razors and blades! : 59.08: . 

Pricing: Sit around in a room and make informed decision 1/week. 

SpaceX:

Everyday Astronaut Thread

Antonio Gracias. 

Mainstream media perspective. 

So you going to bet against this company. Has anyone else landed a rocket? Dec 2015. 8 years ago. Blue Origin in 2021. 

Recommendations: 

Night Watch, Full Swing, Succession

Markets. S&P 500 -16%, Tech QQQ -30%, Utra tech! ARKK Tech -65%

• 4.6% on 6 month treasury.
• Inflation. 7.1% YoY.  
• Fed raised 0.5%. So now 4.25% - 4.5%. Probably going to 5.0 - 5.5%.  
  • Fastest in history. 

My Mortgage. 4.5% and adjusting again to 2.25% + LIBOR. 

Baby its cold outside! 

Crypto Arrests.  

• SBF in US and out on bail!  $250 million. 
• Caroline and Wang charged. Caroline Ellison, the former chief executive of Alameda Research, a trading firm tied to FTX, and Gary Wang, FTX’s former chief technology officer, both pleaded guilty to criminal offenses similar to those Mr. Bankman-Fried was charged with last week. Ms. Ellison, 28 years old, pleaded guilty to seven counts, including wire fraud and conspiracy to commit securities fraud, according to her plea agreement, which was signed Monday. Mr. Wang, 29, pleaded guilty to four counts, including wire fraud.
• Caroline interview. 

Tesla/Twitter: 

• Twitter Spaces. 1 hour interview with 38,000 listening.  
  • 13.56. Making ads better.  
  • Making sure Twitter doesn’t go bankrupt. 
• Tesla stock down 69% YTD. $400b company. 
• Now it could triple in 2023. Buffet will probably take a serious look. 
• Elon has inspired a CEO and silicon valley “builders” renaissance. 
• Elon to step down as CEO. Mr. Beast!? 
• San Francisco to investigate worker conditions. Sleeping at work! 
• From WSJ: Redundant managers, along with managers who have opaque responsibilities, are in essence professional critics. 

Tesla: 

• Tesla energy. 
  • MegaPack in Lathrop.
• FSD
• Tesla Semi

All they want for Christmas is to stop that Mariah Carey song. 

Is Netflix back? 

• Last week, Netflix said “Wednesday” had crossed 1 billion hours viewed, only the third title to do so within 28 days of its release, joining “Stranger Things 4” and “Squid Game.” 
• Netflix Training classes 
• See Rich Greenfields tweet about eyeballs. 

Recommendations: 

• White Lotus.
• Wednesday
• The Peripheral on Amazon. 
• Mr. Beast interview on Rogan. Saw it on a list of most liked podcast episodes. 
• Country xmas on Spotify. 

Markets. Down 17% was down 25%. 

Meta job cuts. 11000 13%. Brad Gerstner letter. A summary of some of the layoffs this year…

• Twitter: cutting 50% of its workforce (estimated 3,700 jobs).
• Facebook ($META): cutting 13% of its staff (11,000 jobs), its largest round of 

Crypto

SBF is a FRAUD! Bernie Madoff style! 

FTX lends money to Alameda!! $10b loan on $16b in assets.  

 FTX meltdown. FTX. Alameda. Binance. Coinbase. Nothing safe. 

• FTX has a prominent list of backers such as Sequoia Capital, BlackRock Inc., Tiger Global Management and SoftBank Group Corp.
• Sam Bankman-Fried. $8b shortfall! He was worth $26b…apparently. 
•  Tom & Gisele. Hedgefunds. 
• FTX Arena in Miami. Home of Heat. FTX on umpire uniforms. 
• Celeb lawsuits: https://deadline.com/2022/11/tom-brady-giselle-bundchen-ftx-lawsuit-larry-david-steph-curry-crypto-1235174541/
  • In the case of Curry, the NBA legend admitted in another tongue-in-cheek-ish TV spot that he was not that knowledgeable about crypto. He added, looking at the camera: “I don’t need to be. With FTX I have everything I need to buy, sell, and trade crypto safely.”
• FTX’s new chief executive“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,”  “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
• SBF is 2nd largest democratic donor this election cycle. $37 million. 
• SBF parents. raised by two Stanford professors who specialize in law and taxes.
• Caroline Ellison.    
  • Caroline interview. 
• Related party loans: 
  • $300m from last $450m investment to SBF.  
  • Alameda Research had $4.1 billion in related-party loans. Among those were $1 billion to Bankman-Fried, $543 million to FTX Director of Engineering Nishad Singh and $55 million to FTX Digital Markets head Ryan Salam

Twitter

Lays off ½ of 7500 workers. 

Had to bring some back.  

The whole world shit-posting that the site will go down now. Tesla AI runs with 150 engineers. 
Ligma and Johnson.

Markets. Down 20%. Was 25%, but rallied up 5% just this week.  

GDP growth 2.6% (-1.6 and -0.6 in Q1 and Q2). So no recession…currently. 

Apple. +7%

Amazon. -14% 

Meta. -25%

Amazon. AWS insanely profitable. All other biz combined is break-even. Sales of $127b and Operating Income of only $2.5b (2%).

• Story: AWS $5.4b. All Other: $-2.9b. Everything losing money!! 
• Tesla: $5b on $21b. 

Meta: meltdown. 

"Meta's results last night was an absolute train wreck that speaks to pervasive digital advertising doldrums ahead for Zuckerberg & Co. as they make the risky and head scratching bet on the metaverse," Wedbush analyst Dan Ives said in a report. 

Revenue flat to Q4 20 at $27b. NI 4.3 vs 7.8!! 

Viral Video (Play audio). 

Twitter: what “products” does a 23 yr old product manager manage? 

• 71% off high. 
• Mkt cap $265b. Was 913b.
• Headcount growth! The number of employees is up over 3x from 25k to 85k employees in just the last four years! 
• Wants everybody to work in MetaVerse!? 
• Brad Gerstner letter. 
  • To accomplish this goal, we recommend a three step plan that will double FCF to $40 B per year and focus the company’s teams and investments:
    • Reduce headcount expense by at least 20%;
    • Reduce annual capex by at least $5 B from $30B to $25B; and
    • Limit investment in metaverse / Reality Labs to no more than $5B per year.

The Netflix rebound.

• Hammered too hard initially. 
• Reached “profitability” and growing. No one else has. 
  • Disney will. 
  • Amazon spending too much! 
• Advertising more appreciated. Not affected by Apple tracking. A rich ocean to fish in. 
• Comcast. Peacock has 15m subs and lost $614m in the quarter. 

Twitter takeover. 

• Walks in with Kitchen Sink. Entering Twitter HQ – let that sink in!”
• Fires CEO and CFO and head lawyer. $100m in severance pay
• Denies that he’ll fire 75% of workforce. 
• Tesla engineers reviewing code. 
• Employees walking out with boxes. Hoax? 
• Just tweeted: Twitter will be forming a content moderation council with widely diverse viewpoints. No major content decisions or account reinstatements will happen before that council convenes.
• People threatening to leave.. Where? Truth Social, Parler? 
• 
  

Tesla: 

• Cruise vs Tesla FSD in SF. 

Recommendations: 

• Upload.

US Stock market is down 22% and the Nasdaq 100 (NDX or QQQ) is down 32% year-to-date. 

Netflix

After 2 quarters of negative subscriber growth Netflix adds 2.4 million subscribers in Q3 and expects 4.5m in Q4. Here are some key takeaways. 

• Revenue grew 6% YoY or 13% excluding FX. This is a big deal because it shows they continue to scale topline at double digit growth. 
• Advertising tier launching in November ($6.99 in US). 5 minutes of advertising per hour. As linear TV continues to die, advertising $’s will move to streaming. Netflix is charging top tier rates to advertisers. 
• Netflix estimates all streaming competitors are losing money and combined losses are north of $10 billion. Why important? Because Netflix has reached critical mass and is generating $5-6 billion in annual operating profit. Very difficult to replicate! 
• Free cash-flow over $1 billion in 2022 and materially larger in 2023. 
• Netflix stock was 75% off its high. Now it is trading around $270 or 61% off high.

Tesla

Tesla is the most exciting company in the world; leading the EV revolution and transition to sustainable energy.

• Q3 Revenue: $23 billion. Up 56% Year-over-year. 
• Q3 EBITDA: $5 billion. Up 55%. 
• Q3 Storage Deployed (residential and commercial batteries). Up 62% 
• Full Self Driving (FSD) Beta will roll out to everyone in Q4.
• Reiterated 50% topline growth for the foreseeable future. 
• Semi deliveries begin this December and Cyber next year. 
• Next gen car will be half the cost of 3/Y platform and smaller. Will exceed production output of all other vehicles combined.
• Elon see’s a pathway for Tesla to exceed the value of Apple and Saudi Aramco combined ($4.4 trillion), excluding accounting for Optimus (the robot). I do too.
• Tesla stock down 5% 🤔🤣Reminds me of Taylor Swift lyrics: “And the haters gonna hate, hate, hate, hate, hate…”  I’m just gonna wait, wait, wait, wait, wait.  
• Did you see Tesla AI day? Here’s a short video to give you a taste of Optimus.