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Last week I got a new refrigerator. That may not be very exciting to you, but it is to me for two reasons. A) The old one had been around for 23 years and the freezer only worked when it felt like it. B) It was relatively small, 22 square feet. While these facts might frustrate anyone, they are devastating in Manhattan, where a scarcity of grocery stores and of cars to lug stuff home makes stockpiling into our tiny apartments both hugely important and frighteningly difficult. The new fridge, an LG French-door model, has two advantages: A) It works! B) It is massive. (It also seems to talk to me through my phone, a call I’d rather not take, I think.) But all that luxury comes with a psychological cost: There is so much room, where do I put everything??? So I went to my favorite place: Down the ChatGPT rabbit hole! In less than an hour, I learned that leftovers go on the top shelf; snacks go on the right-hand side (the first porte française opened); fruits and vegetables need very different crisper-drawer atmospheres (dry and humid, respectively); apples and avocados can’t go with grapes and berries [1] ; the condiments I buy compulsively at Kalustyan’s go inside the door; and so forth.
The Brave Little Toaster’s fridge talked, too. Source: villains.fandom.com
Fridge organization is the best use I have ever made of AI. You know what’s the worst use I make of it? Retirement planning. Seriously. Bond ladders, target-date funds, fixed-date annuities, covered-call EFS — it can talk me through all sorts of things I will never understand. And it will probably have me living off of Social Security and cat food in my dotage. The great shame here is that I already have an unofficial, unpaid investment advisor, our very own Nir Kaissar. I should also be sponging off Allison Schrager, who has some fantastic advice: Stop trying to retire rich!
“A ‘magic number’ is meaningless,” Allison explains. “It is good to have financial goals, and to work toward them, but a wealth goal is counterproductive. The aim shouldn’t be to attain a certain level of wealth by a specific date, but to assure yourself of a steady level of income throughout your retirement.”
Magic number or no, one thing you should not have in your portfolio: private equity. Allison says PE “is being mainstreamed as an asset class, with most everyone seemingly wanting a piece of the $7 trillion or so market” but “none of that means private equity should touch our portfolios despite the government’s increasing efforts to add so-called alternative investments to the retirement accounts of Americans.”
Which brings us to something called, ahem, leveraged single-stock exchange-traded funds. Say that 10 times fast! Shuli Ren explains: “They are easy to understand; a 2x leverage means the provider aims to deliver twice daily returns of the underlying asset. They trade like stocks and investors don’t need to maintain a margin account.” No wonder they are “popular with retail investors for their simplicity over options, both of which are used to enlarge directional bets on the underlying assets.” Easy peasy.
Yet Aaron Brown warns that these tracking funds will probably go off the rails. “That leveraged single-stock exchange-traded funds will eventually maul the retail investors who love them is, by now, close to consensus,” he writes. “The system is stable for now in the way a row of dominoes is stable.” [2]
It’s little surprise that the hottest of these risky ETFs are tracking tech’s latest big boomers: chipmakers SK Hynix and Micron Technology. “Can the circle be unbroken?” Shuli asks. “Despite record earnings, the world’s largest memory chipmakers still have to prove that they’ve escaped the boom-and-bust cycles long known to the industry.”
Investor skepticism has been on the rise, Shuli notes, including one rather high-profile investor. “After joining the trillion-dollar club, Micron Technology Inc. and SK Hynix — the two memory chip pure plays — have been struggling, with their shares displaying elevated volatility,” she writes. “This has drawn criticism from Michael Burry of The Big Short fame, who disclosed a short position in Micron last week, proclaiming that the company ‘defines cyclical like no other.’”
Chris Bryant thinks Micron has a different massive problem: its massive profits! Huh?? “Micron Technology Inc. and its South Korean peers face an intractable problem. With data centers for artificial intelligence gobbling up supplies of their memory chips, there aren’t enough to go around,” he writes. “This scarcity is forcing up memory prices and making Micron, SK Hynix Inc. and Samsung Electronics Co. astonishingly profitable. But customers are unhappy, governments could intervene and shortages may open the door to Chinese rivals.”
Well, I guess I don’t need Allison, Nir or my fridge to tell me to stay away from these things. I’m going to stick to good old-fashioned, rock-solid US stocks in companies like … GameStop.
Bonus Magic Number Reading:
What’s the World Got in Store?
- US CPI & PPI, July 14-15: The Memorandum of Misunderstanding’s Margin of Error — John Authers
- Netflix earnings, July 17: Streaming Is Threatening to Dim British TV Creativity — Matthew Brooker
- IEA Global Critical Minerals Outlook report, July 16: This Mine Predicts Major Wars. It’s Opening Again — David Fickling
Back when talking fridges, brave toasters and LLMs were unimaginable, a different piece of science fiction was already flying high: the Concorde. The best thing about it was that it could zoom you to Paris in three-and-a-half hours as you munched on Iranian caviar, lobster in sauternes and ballotine of duck, all washed down with 1969 Clos de la Roche:
Source: Facebook
The worst thing about it was the double-crack sonic boom and takeoff roar that left half of Howard Beach ducking for cover. The plane was permanently grounded in October 2003, the month I bought my old fridge. Now I have my new fridge — and passengers may soon have a new SST. “The Federal Aviation Administration is resurrecting the dream of passengers flying faster than the speed of sound after it recently proposed lifting a ban on supersonic flights over land, which has been in place for more than five decades,” Thomas Black tells us. “The catalyst for the proposed rule change, which is now open for public comment, comes from data collected on flights of NASA’s X-59 aircraft, an experimental supersonic plane built by Lockheed Martin Corp. This long, sleek jet began flying in October to test a design that mitigates the continuous boom that takes place when an aircraft breaks the Mach 1 sound barrier,” Of course, in the age of leveraged single-stock exchange-traded funds, the hoi-polloi aren’t invited to emplane. “The return of civilian supersonic travel likely will come as a private jet,” Thomas explains. “The market is large enough among high-net-worth individuals, private-jet fleet operators and heads of state — customers willing to pay a high price for speed or bragging rights — to provide the required volume for such a plane to be profitable.” Sure, but can it talk?
Note: Please send Kalustyan’s mango lime chili pickle and feedback to Tobin Harshaw at tharshaw@bloomberg.net.
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