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Infinite Curiosity

~ Exploring ideas related to tech, code, finance, markets, adtech, AI, humor …

Category Archives: finance

Baron Capital’s Ron Baron delves into the mind of Elon Musk

08 Tuesday Nov 2022

Posted by Grynn in aide-memoire, finance, trading, trends

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Tags

investing, newsletter, tsla

Elon interview with Ron Baron Nov 2022

Elon’s longer term vision for Twitter is to use it as the base for his next generation identity & payments platform (apart from being a useful digital town square for ‘most’ people). Elon says that he knows how to make a better Paypal – a business that could be the world’s biggest/most valuable financial services company. He claims to have developed the blueprint during his days at ‘x.com’ (the pre-cursor to paypal); relatedly Twitter is owned by ‘X Holdings Inc’. Possibly related, the largest PE firm – Apollo Global is also focussed on identity & payments. This also links with something Dr. Harshvardhan (Trust Capital) alludes too – the value for transactions is not in the moving of money/entries in a ledger, but in fraud reduction through identity verification/KYC. The idea being that $MA, $V are not so much in the business of facilitating the movement of money as in the prevention of fraud. A bitcoin or Doge or similar network with an identity layer on top could be very interesting.

Elon claims: “Must be done for the future of civilization, without which nothing matters” which is plausible. Perhaps, Elon really thinks he has no choice but to act. He who owns Twitter controls who the next government is and that man is Elon.

Tweeted: Dec 12, 2022

My read is that Elon has switched from saying that $TSLA is over-valued to TSLA is undervalued, especially if as he believes autonomy adds 5x the value to cars without changing manufacturing cost. TSLA has 15% operating margin at the moment (gross margin: 27%); if cars can be sold for 5x current price, gross margin would expand to 85% (and given the size of the market, this would be larger than any other business in the world). In other interviews Elon has repeatedly said that he thinks TSLA will be worth more than Apple and Saudi Aramco combined (the two largest currently listed entities).

Edited: Nov 9 ’22: Elon sold an additional $4B of $TSLA (https://www.reuters.com/business/autos-transportation/elon-musk-sells-195-mln-tesla-shares-worth-395-bln-sec-filing-2022-11-09/). So my read was wrong; it looks like Elon thinks there is more pain to come. At some point his wealth could flip with the more of Elon’s net-worth coming from SpaceX & Starlink than from Tesla! (600B marketcap on Nov 9; Elon 14% => $84B).

Back of the envelope $TSLA model: At this point most TSLA analysts believe that TSLA will be selling between 10-20M cars by the end of 2030 (1.6M/year at the moment, with a 50% CAGR projected). At a 25% operating margin, and 20x terminal EV/EBIT $TSLA’s NPV is ~$990B. At at 40% operating margin, this increases to: $1.7T. Current market-cap: $655B (ATH: $1.2T)

Installed Base of Vehicles in the USA

AutomobileBusesTrucksMotorcyclesALL
104M0.5M159M8.2M271M
source:

Tesla semi & Cybertruck – should add substantial value by greatly expanding TAM.

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Gargoyle Theory by @shakoist

04 Monday Jul 2022

Posted by Grynn in culture, finance

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Tags

idea, interesting, investing

My notes from Gargoyle Theory by #@shakoist

  • Financial markets are our collective attempt to predict what we will want to consume in the future, and to fund production and technology to get us to our future consumption
  • Hayek claims interest rates that are too low results in more investment going to long-term projects relative to short-term projects.
  • It also leads to Malinvestment – investment in projects that are barely profitable and could quickly become unprofitable if rates rise; and to projects that do not match future consumption (plausible example NFTs)
    • The problem we observe is that once interest rates rise again, these malinvestments which made sense at lower rates, can become worthless.If you can borrow large sums of money at a very low rate, you can consider bankrolling projects that may not generate returns for a very long time. If the cost of money increases, this stops working. This can also permit investment in projects that are barely profitable if money is free. And then become unprofitable once money becomes expensive again.
  • Natural rate of inflation is one which keeps employment and output high, without causing inflation. (Mises)
    • This would minimize the “misery index” (sum of unemployment & inflation)
  • “Gargoyles” fill with rage when the link between the financial economy and the real economy become a farce, and then seek to restore order by taking their money back through inflation, lowering asset prices, and forcing people out of jobs.
    • Firms that have no right to live anger them, and need to be killed.
    • People either retiring early, or working in the wrong job, angers them.
    • ==> Gargoyles will not be happy till BTC, NFT, Web3 is all dead, because they see it as disconnected from fundamentals
    • What this should look like is layoffs, bankruptcies, and transitions to more productive jobs
    • ==> Rate of bankruptcies must rise (to please Gargoyles)
    • We’re seeing bankruptcies & layoffs in Crypto world, is this enough?

YouTube Revenue Stats (2010-2021)

18 Friday Feb 2022

Posted by Grynn in aide-memoire, finance, trading

≈ 1 Comment

Tags

investing, tam

YearRevenue
(USD Billion)
YOY Growth3 Yr CAGR10 Yr CAGR
20100.80
20111.3063%
20121.7031%
20133.1082%57%
20144.2035%48%
20155.5031%48%
20166.7022%29%
20178.1021%24%
201811.1037%26%
201915.1036%31%
202019.7030%34%37.76%
202128.8046%37%36.32%
sources: https://www.businessofapps.com/data/youtube-statistics/, others…

Workings: Google Sheet

Thoughts on Bitcoin/Crypto

05 Saturday Jun 2021

Posted by Grynn in finance, trading, trends

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Tags

idea, interesting, investing

Banking / Traditional finance (#tradfi) is ripe for disruption (and perhaps needs to be disrupted). Why 👇

  1. Fiat Currencies: Store of Value/Mobilize Savings
    Inflation is Taxation Without Legislation -Milton Friedman
    1. Government issued currencies (fiat) are prone to debasement – losing value every year
    2. Rely on a central government that controls supply (and value) 
    3. The central government has an incentive to create more money every year (steal from savers)
    4. Checks & Balances in the form of a link to gold / something with limited supply (scarcity) have disappeared
    5. Predictably supply increases every year (and in times of crisis, by massive amounts)
    6. ==> The USD has lost 95-96% of its value over the last ~100 years (at the FED’s current inflation goal of 2% the USD would loose half its value in ~34 years). If inflation is closer to 7% then the USD looses half it’s value in just 10 years!

  1. Banks
    1. “Fiat” cannot be stored without the use of intermediaries (banks, regulated by Central Banks)
    2. Your money is just some banks’ liability; you have exposure to a bank’s creditworthiness (and the banks in turn are exposed to the creditworthiness of the central bank)
      1. One can store “cash/gold/diamonds/paintings”, but this is inconvenient at scale; susceptible to seizure; susceptible to demonetization; susceptible to theft etc.
      2. Gold/cash can be faked; BTC cannot, easily verifiable by anyone.
    3. If banks go poof, then the money they created/owe you also goes poof
    4. FDIC / Government insurance of this money, makes the government liable to pay when/if banks go poof
      1. So the government protects the banks from going poof (systemically important)
      2. This means banks are immune from failure; so they do not innovate and improve customer service; instead they find new ways to tack on “fees”.
    5. Original intent: Bitcoin was created after the 2008 bank bailouts; https://news.bitcoin.com/a-deep-dive-into-satoshis-11-year-old-bitcoin-genesis-block/ (Note the bailouts were required because 95-96% of all dollars/rupees/pounds (fiat) are actually just bank liabilities not physical “notes”/real money.)
  1. Fiat Currencies: Medium of Exchange
    1. “Fiat” currencies cannot be transferred without the use of intermediaries (payment networks like Visa/Mastercard/Amex which are susceptible same regulations as banks)
    2. Banks are exclusionary. Only a few have access to the SWIFT network.
    3. You can move “cash” without using a bank, but this is difficult to do at scale (inconvenient form factor, susceptible to seizure, theft etc)
    4. Regulations limit innovation at banks (and now bank’s culture), because they are systemically important entities.

Enter Bitcoin:

Bitcoin is many things; digital gold; a commodity with limited supply; a medium of exchange; a store of value

The core innovation is the lack of central “authority” (aka gatekeeper, that can be corrupted). Central authority is distributed and yet no participant can just claim all the coin. Scarcity without a single authority! Incredible. 

  1. Medium of Exchange:
    1. Easy to transfer anywhere in the world, where there is internet; code is open, network is open
    2. No permission needed; every single participant (node) can verify & create transactions without requiring any permission from anyone
    3. Becoming a participant is permissionless too; no gatekeepers
    4. DOES NOT work without internet; sure you can write down long codes and use pigeons, but really it does not work. (In times of crisis, governments like to cut off internet access; see Kashmir, Yemen, Syria ….)
  1. Store of Value
    1. Supply is “algorithmically” limited; cannot be debased – (not without a hack/security flaw/corruption of the core BTC dev-team); 
    2. There can never be more than 21M Bitcoin*; in fact some will get lost every year in abandoned wallets, so the supply is likely to decrease YOY.
    3. No insurance (FDIC); if your money is stolen no government will help. May be alleviated by private cos offering insurance?
    4. No plunge protection team like the US FED (i.e. no Bernanke PUT)
    5. No one to kill competitors (the US has an army and uses stronger army diplomacy when folks want to supplant the USD as the reserve currency)
    6. OTOH the army of bitcoin maximalists grows every day and is quite a strong force 
  1. Commodity:
    1. Similar to say physical steel; supply is limited; mining is needed to mint new coins; has high volatility; 

Risks to participation as a speculator

  1. Security: 
    1. A single double spend, or other weakness in the core consensus algo would destroy all value.
  1. Competition: Competition among peers, BTC vs ETH vs Doge vs CumRocket etc.
    1. Is this a winner take all market? Will there be one global ledger (blockchain) or many? Will some be more important than others?
    2. While easier to transfer if you have internet, physical stores like gold/diamonds/guns don’t need internet or electricity … 
    3. Central Banks could also create their own “coin”, and thus compete. They’d have the resources to force compliance, esp. from institutions & companies.
  1. Regulation
    1. IMHO Crypto is anti-fragile, regulation will spur innovation and make crypto even more resistant to threats.
    2. Something with this much demand is more likely to be taxed than outlawed; but heh, Cocaine has demand and it outlawed, so …

Risks that I don’t think are really risks, but hey, I could be wrong

  1. High volatility ; the USD exchange rate is volatile 
    1. Has not hurt adoption so far; # of wallets, nodes, transactions all rising
    2. High vol is good, it removes paper hands.
  1. Excessive Power Usage / Inefficient
    1. The network will and can vote to change from Proof of Work to say Proof of Stake or Proof of Space or something else
    2. This can be solved.
  1. Stability: 2.5 trn of crypto recently went thru a 30-50% drop in price; no FED/SEC stepped in to save the “banks”. No vultures (economists) jumped in to save the rich by stealing from the plebs (or Is the Fed meant to the opposite, protect the plebs? I get confused sometimes). Nothing bad happened, no systemic risk. There was plenty of leverage and those who took the leverage paid for it. No one else was affected. Imagine if the SPX plunged 50%; there would be carnage and the losses would be socialized. Crypto market cap is now > than top 2-3 banks I think – which should be considered systemically important! and yet nothing untoward happened when it tanked. The fact that Central Banks want to get in on the game, by making a digital currency (crypto) just legitimizes the model. It works. If you can’t beat ’em join ’em. 
  1. Lack of Utility:
    1. What is the utility of money if it cannot be exchanged for good & services? BTC is liquidateable at scale (100’s of M/day)…

Risks to adoption / Technical Risks

  • Low transaction speed; since every transaction must be broadcast / verified by every node, there is an inherent limit to the number of transactions per second. There are solutions like Bitcoin lightning, but there is no one clear winner as yet. This is also a problem for Ethereum and similar chains;
  • Poor UX: Wallets are not terribly easy to use; much easier to use hosted wallets like Coinbase, but then the distributed, pseudonymous nature of Bitcoin is lost.
  • Trust / Anti-fraud: For example there is no reliable service that provides trust; #Bitcoin has the carrots that incentivise good behaviour but none of the sticks. Cannot kick out / ban bad actors especially since pseudonymity makes it harder to identify a bad actor.

(Low) code API integrations

19 Wednesday Feb 2020

Posted by Grynn in finance, programming, tech

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Tags

pontification

What does a distributed / internet operating system look like?

A platform that lets you natively read/write from modern apps? Make apps?

In some sense this is what IFTTT was going for – though consumer focussed, it is IMHO, a very example of a ‘no-code‘ development platform . It’s what Apple’s ‘Shortcuts’ aka Workflow is. It’s what Alexa skills are. I’m not sure Airtable fits, but Airtable got the marketing right.

And now we’re seeing the green shoots of a new generation; pipedream.com and autocode.stdlib.com. These are more developer focussed and provide the “plumbing”, but still need devs to actually make stuff. I’m a lot more excited (perhaps that’s cuz I’m a dev, and these platforms are targeted right at me). I think there’s going to be an explosion of new apps + services, because it’s just so, so easy and quick to knock out an app that uses say Twitter and Amazon S3 … is this how the promise of “serverless” will finally be delivered?

+QQQ

Twitter’s potential

23 Saturday May 2015

Posted by Grynn in finance

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Tags

$twtr, idea

$TWTR has not been doing so well off late, but has immense potential.

Twitter is primarily an interest graph. I tweet about things I am interested in (and do so very publicly). I follow and am followed by people with interests similar to mine.

People reading my twitter feed are able to figure out what topics interest me. For example every time I tweet about Apple’s terrible iCloud Photo Sync, someone tells me about Dropbox Carousel and so on. I crib about how expensive the iMac is (mainly because I really really want one) and Microsoft fanboi’s see this as something to be countered.

Why are algorithms not able to do this for me? Do you need the full firehose to be able to do this? I should be able to target ads to people who are interested in a particular topic. What is a topic? What is my view on that topic? This is where I think some AI / clever algos are important.

This makes me think Twitter’s has tremendous potential. Potential that may not be fully appreciated and therefore may not be fully valued.

Apple shipped 3x as much battery capacity as Tesla in 2014

25 Wednesday Feb 2015

Posted by Grynn in finance, tech, trading

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Tags

$TSLA, aapl, apple, tesla

So, everyone’s talking about the possibility of an Apple iCar; it looks certain that it’s got something to do with batteries (Apple’s being sued for recruiting scientists from A123) and arch-rival (wannabe arch-rival?) Samsung just bought out a company that makes automobile batteries…

So I was thinking – who sells more batteries today? Apple or Tesla? And because it’s not quite Apples to Apples I’ll try comparing battery-capacity.

Apple Battery Capacity 2014:

  • approx. 180m iPhones; the iPhone 6 has a 7.9 watt-hour battery, while the 6+ has 11 watt-hours. Presumably a decent chunk of the 180m phones were older 5, 5s, 4 etc. So let’s say the average capacity per iPhone is 8 watt-hours. Total: 180m * 8 = 1440 million watt-hours (i.e. 1.44 GWh aka Giga-Watt-hours)
  • approx: 60m iPads; the iPad Air 2 has a 27.6 Wh battery, while the Air (1) had a 32.9 Wh battery. Let’s hand-wave and say 28 Wh average. Total: 60m * 28 = 1680 million watt-hours (1.68 GWh)
  • approx: 19m MacBooks; MacBook Air’s have between 38 & 54 Wh, Pro’s 63.5 to 91 Wh. Let’s say 54 Wh on avg. Total: 19m * 54 Wh = (1.02 GWh)

Apple also sold a quite a few other devices with batteries, remotes, iPods, Beats headphones, Wireless keyboards and watt-have-you (haha), but’s let’s ignore it for now.

 

So Apple shipped 4 GWh (1.44+1.68+1.02=4.14 GWh) of battery capacity last year alone. That’s about $2 billion (cost) assuming Apple has the same cost as Tesla for battery capacity. I’d argue that it’s lower, but who knows.

 

“Tesla Motors may have the lowest rates for electric car batteries; the estimated battery costs for Tesla Motors is around US$200 dollars per kWh.” — From <http://en.wikipedia.org/wiki/Tesla_Motors>

 

Now Tesla shipped 17,300 Model S cars (http://insideevs.com/monthly-plug-in-sales-scorecard/). They can have a 65kWh or 85kWh battery-pack. Say 75kWh on average. Total: 17.3k * 75kWH = 1.3GWh.

 

So there you have it. Apple shipped 3x as much battery capacity as Tesla in 2014.

 

Some more fun napkin math (let me know if it’s all wrong…): Apple’s batteries pack 25% more energy per gram than Tesla’ (so for the same weight, using Apple battery tech in Tesla’s could improve range by 25%!)

 

The iPhone 5s battery is 26g -> 7Wh 26g (26/7 = 3.7 g/Wh)

(http://www.ebay.com/itm/Original-1560mAh-3-8V-Li-ion-Internal-Replacement-Battery-for-iPhone-5C-5S-/201227137579?pt=LH_DefaultDomain_2&hash=item2eda12722b)

 

Tesla cells are : 10Wh 45g -> (45/10 = 4.5 g/Wh)

(http://industrial.panasonic.com/lecs/www-data/pdf2/ACI4000/ACI4000CE17.pdf)

 

Apple’s batteries probably charge faster too (assuming that you can parallel charge the 1200 or so MacBook Air batteries that make up a single Tesla sized 65kWh pack).

 

Also interesting: Batteries like memory are super-high-margin. Like 60-70% gross.

 

Disclosure: I’m long Apple (+ve net delta) and have no position in Tesla.

$MU

31 Friday Oct 2014

Posted by Grynn in finance, trading

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Just putting this out here:

Recommended $MU on Oct 20 @ $29.69 (right here on this blog)

It’s up 11.5% to $33.08 since then (10 days).

image

I’m going to be replacing my stock with some PUTs. Perhaps 1/4th my position. +ve delta and theta.

And it turns out the scuttlebutt was right, the iPad Air 2 has 2Gb of RAM. (And a unexpected, to me at least, 3rd core)

Can anyone think of a reason why DRAM demand would fall from here on?

$MU, time to buy?

20 Monday Oct 2014

Posted by Grynn in finance

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  1. Apple is one of the largest consumers of RAM (and a key customer for Micron via Elpida); It’s been tipped in the past, that Apple could make up as much as 25% of the world’s demand for DRAM.
  2. The iPad Air 2 looks like it will have twice as much DRAM as before (the iPad Air has 1GB)
  3. Apple’s been up’ing the base RAM across much of its Mac line
  4. And iPhone 6(+) sales are looking robust
  5. So, DRAM demand looks solid
  6. About 70% of Micron’s revenue is DRAM.
  7. Micron’s PE is 11.64; which is pretty low.
  8. The big risk is that while demand for DRAM is growing crazy fast, supply if growing equally fast.

 

Perhaps it’s time buy some (more) MU?

 

Disclosure: I am long $AAPL and $MU

Apple getting hammered today (3-Sep-14)

03 Wednesday Sep 2014

Posted by Grynn in finance

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Tags

aapl

Possible reasons:

iCloud Leak: A lot of celebs had nude selfies stolen from iCloud. (NSFW) example. (Apple PR). This story was catching fire for at least a couple of days before today though. For instance, Business Insider, dated Monday 1-Sep-14, 4.55am.

People could be jittery too; Apple has risen quite bit (~45%) this year. Perhaps people just want to get out before Sep 9?

Or it could be IFA
Basically every other device maker, showing off their latest & greatest

  • Samsung Galaxy Note 4 ‘egde’ looks interesting….
  • Gear S (the newest smart watch) also looks interesting…
  • Sony has a smart wearable too

Wonder if we’ll see a reversal tomorrow? Any other theories?

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