Wreck or Rebound – Part 3! With Anirban Mahanti, Matt Cochrane...
Anirban and Matthew were joined by Alex Morris, creator of the TSOH Investment Research Service, to look at seven former market darlings that have taken severe dives from...
November 1, 2022– By Samantha Bailey
In only two weeks since the last episode, Luke lost a prime minister, gained a prime minister, and found AI help writing exquisite poetry and doing research about American Depository Receipts.
Meanwhile, Krzysztof got married (!!!!), danced the tango, and began seeing Apple Inc. in a new, villainous light with respect to the Metaverse. We also banter about Tesla’s AI day, and Luke’s reflections on whether being a good husband is harder than being a good poker player.
There’s no limit to the wisdom we’re dishing (and tastier than the head of lettuce that makes a cameo)!
Edited Transcript Coming Soon!
[00:00:00] Luke: Hey everybody and welcome to another episode of No Limit with Krzysztof and Luke, where we talk about anything and everything vaguely investing related. But I guess currently we seem to have a bit of an AI theme running and I guess today’s episode’s gonna be no different. I’m Luke Hallard and as I from joined by my fellow lead advisor at 7investing Kryzstof Piekarski
[00:00:21] Krzysztof: Good afternoon to you, Luke. I’ve been waiting to have this conversation that so much has happened since we last spoke. Amir, can you believe it was a mere two weeks ago?
[00:00:31] Luke: for sure. So, well, today is uh, Monday the 24th of October, and I think this is gonna go out on about a week’s time, but something I will say very exciting just two hours ago we have a brand new Prime Minister. Our third in what, two months maybe. Pretty wild times over here.
[00:00:49] Krzysztof: Sorry to make this blunt, but, uh, what how do you look, how do you feel? Tell me, Tap into your feelings, . I mean? It’s hard, you know, not being in the place to not being there with you to understand or feel the upheaval, or maybe it’s projection, but how are you handling all this?
Is it wild? Are you okay with it? I mean, what the heck is going on? Even
[00:01:14] Luke: it’s just a mess, isn’t it? I’m a, I guess if there are any emotions I’m feeling personally embarrassment and frustration that we just haven’t sorted this absolute shit show out, to be honest. So, yeah. Uh, two hours ago, Richie Sumac, crowned as PM replacing Liz Truss, who lasted just 44 days in her disastrous role as Prime Minister.
[00:01:37] Krzysztof: can you walk us back, just maybe give us a little bit of, of concrete detail from your view, why did Boris Johnson get, booted out, let’s say ?
[00:01:48] Luke: So essentially I guess a couple of things were going down. There was something called Party Gate, which the newspapers got hold of. And basically while, uh, putting out his Coronavirus pandemic policies, uh, that stopped a lot of citizens actually from, you know, even seeing family members at Christmas at the height of the pandemic, allegedly Boris was having a bunch of parties at number 10 with his colleagues, so kind of flouting his own rules.
Um, but you know, if you, uh, if you’ve been following the Boris story for the last decade or two, you’d just be the, the mayor of London. You know, this guy has a kind of traveling circus that goes with him everywhere, right? And he kind of plays by his own rules. This really shouldn’t have been particularly surprising to anybody.
Um, and I think he did a decent job of navigating the, uh, the pandemic in the uk. But, he wasn’t a leader, but many of his, mps were really getting behind. And so, uh, yeah, he got booted out by his own party.
[00:02:44] Krzysztof: And then there was a replacement,
[00:02:46] Luke: There was, there was a,
[00:02:48] Krzysztof: right? 44 days.
[00:02:50] Luke: And, you know, hey, uh, 44 is a kind of magic number in, in Chinese as well, in Cantonese and Mandarin. 44 is double death, cuz the four say in Cantonese is very similar to the word for death. So, yeah, that’s a, that’s a double death day to finish on. Um, Yeah. Lit. Can’t be good. Can’t be good.
[00:03:10] Krzysztof: be good. So
[00:03:11] Luke: would’ve been much better.
[00:03:12] Krzysztof: how bad, I mean, when you said, you know, she had this disastrous run, what I’m curious about is, on the one hand, uh, obviously things could go very badly, but on the other hand, when you only have 44 days, just how, Just, just what, Just what was so disastrous that the turnaround was so fast.
[00:03:30] Luke: I think the main thing that was her undoing was the mini budget, essentially, uh, a sway of unfunded tax cuts. , put forward by, well, her chancellor, quasi Quang kind of took the fall for it. He was essentially fired a few days before Liz Truss was effectively fired herself. Um, but they were her policies.
Liz Quasi, , had put these together, , some time ago. So, uh, so he went down for putting forward her policies and, um, it was a mess. We saw what happened in the financial markets, it wasn’t pretty. I think the markets really took a dim view of that, and as a result, Sterling bombed. A lot of UK pensions were in really quite serious trouble. It wasn’t pretty, one thing about Richie is, he kind of set out that this is what he thought would happen and he’s kind of come to pass, you know, he’s probably the best of all bad outcomes right now.
But I think one thing we can look forward to, perhaps, hopefully is a bit of stability and a PM who’s as an ex Chancellor of the Exchequer himself has got some financial NA and is at least gonna navigate the economy side of things, hopefully successfully.
[00:04:38] Krzysztof: . Do you have any personal views in this
[00:04:41] Luke: Personally, I think we should have a general election, which is where the entire country has the opportunity to have a say on who our PM is. But, the opposition party have a really strong, lead in the opinion polls right now. It’s almost certain that labor will get, if there was a general election, so it’s kind of a suicidal move for the conservative party who currently have power to call a general election.
They’re basically giving up control if they do that.
[00:05:05] Krzysztof: Does it feel like a chaos? Like obviously it’s not stable and it’s not powerful course, so how bad or bad in quotes is it
[00:05:14] Luke: It’s been pretty bad for the last, uh, week at least, uh, when we’ve just been up in the air again. Um, I think the news today is good news. As I said, kind of best of all the bad outcomes that are currently on the table. Like Boris having just been booted out and I think still potentially facing, uh, kind of legal consequences for some of his actions while he was pm, that party gate thing.
Uh, you know, Boris getting back into power, which was looking like it was possible like 24 hours ago, that would’ve been a complete disaster. The other sort of third horse in the race is a lady called, um, Penny Mordaunt. I think she could have been a good leader, but she didn’t seem to have the party uniting.
Soak seems to have the edge here. Um, he got to the required number of votes from mps the fastest, and I think he’s gonna do a decent job of the economy. Plus, hey, I’ve seen one newspaper describe this as the UK’s, uh, Barack Obama moment, so that’s great as well. I can get behind Ruhi.
I think that’ll see us savely through to the next general election, but honestly, I’m not voting for the conservatives when I get my chance.
[00:06:24] Krzysztof: Uh, fascinating stuff. Luke, I mean, uh, not that the political situation here in the US is , anything to admire it’s, uh, it’s pretty wild with the world, I guess as a whole seems to be going through, but that, that quickness of, of change is, is quite startling. And one thing I’m curious about is that from a system’s view, often changes require time to move through the system, right?
You could pull a lever, but you actually won’t see the effect of the policy or how the variables shift. And often it’s many months or perhaps years. So I wonder maybe the only call it counter argument would. You elect a new Prime Minister and in 44 days, there’s no logical way for any policy to have had any real chance to do whatever was going to do.
So was this the case of a kind of hysterical, , panic or was it really just so disastrous that it was obvious from day one?
[00:07:33] Luke: Well, let’s, let’s put aside the, uh, the mini budget and the financial policies. Something that really alarmed me personally. Um, kind of the bread and butter for a pm. So there was a, uh, there was a vote on anti fracking that the opposition party had brought, and, uh, there was such chaos, for the tours, in trying to assemble their membership and vote against this motion that was being put forward by labor.
And this really should be kind of ABC stuff for a PM to be able to organize. And evidently the, the chaos and the mis confusion was rampant and nobody knew if it was what’s turned a confidence vote or not. I e kind of a three line whip. You have to get behind the party and kind of vote with the party as opposed to being able to have your own opinions that perhaps shaped by your constituents. or you’re kind of forced to vote along party lines. They, they couldn’t even figure that out between themselves. And so if the PM can’t organize her party in such a basic way, well, I think that doesn’t show a great deal, uh, for her competence as a leader.
[00:08:40] Krzysztof: Well, good luck,
[00:08:44] Luke: I should definitely have something stronger than a sparkling water in hand for this conversation, for sure. We need some luck.
[00:08:50] Krzysztof: and then, uh, it’s, it’s interesting, I’m noting that it’s October 24th, so next time we record will be two weeks. So that will put us on the US midterm elections.
So we’re both in for, some upheaval. I think
[00:09:05] Luke: Have you got some views on how that’s gonna play out in the us?
[00:09:08] Krzysztof: the stuff I’ve been following, especially on 5 38 statistically shows that the Democrats have a good chance at keeping the Senate and that the Republicans will take back the house. Unlike any other election year, it seems like the variables in play are so intense and perhaps unable that we don’t know.
And it’s also useful to remember that when, for example, you have a probability of 30% that’s still of high probability, you know, one in three times the lower odds will actually pull through. And that’s kind of hard. Or the, you know, I think that’s one of these biases where people don’t really understand that.
Even say a one in 10 chance means actually one in 10 times that low probability thing will happen. So it’s a real unknown, I think. Right.
[00:10:02] Luke: And that one in three, So that’s what 5 38 are forecasting as of way the House and the Senate play out.
[00:10:09] Krzysztof: Right, which would mean that the US Congress would be split in half, which in terms of partisanship and in terms of the generational upheaval that we’re looking at to further split things seems like a perfect recipe for absolute gridlock and the tensions continuing to rise.
So it’s a mess
[00:10:32] Luke: How long does Joe have in his term before there’s another election in the.
[00:10:37] Krzysztof: So the midterms will be in two weeks and then in two years. The, the presidential race, one.
[00:10:43] Luke: And, uh, and have you potentially got, uh, your own traveling circus moment where Trump might be returning in a kind of Boris 2.0 way like normally happened in the uk
[00:10:54] Krzysztof: Uh, yeah, I think anyone that dismisses that possibility is naive or, or, you know, it’s wishful thinking and, it’s pretty wild that at the same time there’s a subpoena for him to appear in court for criminal charges. And so, on one hand, is he going to prison?
And on the other hand, is he gonna be the next president? , it’s, Can he do both? Can he be president in front prison? You know, I mean, at, at this point, I’m not counting anything out. Luke
[00:11:26] Luke: Well, best of like yourselves. I’ve been watching that one closely in a couple of years time.
[00:11:29] Krzysztof: yeah. So something else big happened. As perhaps listeners to our previous two conversations, recall I up and got married. So I have a shiny, new, shiny new band signifying all kinds of, uh, vows. And it was a beautiful ceremony. I was, I was overwhelmed by the intensity of it. I did not expect it to be so sort of out of body and because this marriage is my first and I’m, you know, no spring chicken.
So many people from the different layers of my life were there. And it was, it was like almost like a, like a historical holograph, where childhood and, and college and grad school, middle age. You know, and all in one place. So that was pretty intense.
But the ceremony of it, the, you know, imbuing these vows publicly with all these witnesses that really, really touched me in a profound way
[00:12:32] Luke: Very good. Were there, uh, were there tears of joy on the day? Could I ask
[00:12:36] Krzysztof: there were tears of joy. And we inspired, uh, uh, one of our friends proposed the next day. They were so inspired, which was, which was pretty cool.
[00:12:47] Luke: Fantastic. At least they didn’t try and steal your thunder by proposing on your wedding day
[00:12:52] Krzysztof: Right. And, uh, to those of you not seeing our video, uh, I feel much lighter, much, much lighter. And that’s because.
My, my fiance did not know that I had been working on a art project for a year and a half, which was growing my hair to end obscenely uncomfortable and , I, you know, to your, I, I think maybe to the seven investing teams benefit. Not one of you pointed out that I looked like a scraggly muffin
[00:13:27] Luke: you’ve always got that hat on, man. We could, We only saw the hair when you took the hat off. Maybe two, two team meetings ago.
[00:13:33] Krzysztof: Okay. Right. Could be. Right. And, but, but my sideburns were all bushy and outta control and I just looked like a crazy person. But that was, that was for, there was a reason for that because my, I knew my, my long time ago she, in passing, not requested, but I knew she wanted me to. Sharp, but I’m my own man, Luke, you know, I’m not, no one’s gonna tell me how to, how to dress and look.
So I, I, I, you know, and I always like toying with, with boundaries, pushing things. So I want to scare her, the living be Jesus out of her, uh, not telling her, you know, I would say like, You have no idea what I’m gonna wear. Right. And she really thought I was gonna wear some sort of like sparkling mirror suit and show up on a unicycle with, you know, like a, with clown shoes and a trumpet.
But instead, I decided a long time ago I was going as classic James Bond as I could. So,
[00:14:31] Luke: That’s, that’s an interesting play though. You basically tested the, uh, the strength of your engagement with your fiance by becoming like the antithesis as the man she wants to show up at the altar that day.
[00:14:43] Krzysztof: Correct. Correct. And, and you know, actually we had the rehearsal dinner before the wedding, so Friday. And my hair was as out of control as ever, and I wore a sparkly jacket. And, uh, two days later, I, I heard from the families, uh, that my mother-in-law was actually deeply concerned. . She, she did express some, some like, Oh my God, but she didn’t say anything.
So to her, I think great merit, she held her tongue. And so on Saturday morning I went and I got my hair completely cut, uh, got the clean shave with the razor, you know? And, um, surprised I think everyone by showing up, you know, looking like, I’d say I look pretty sharp if I don’t see it so myself, you know,
[00:15:35] Luke: Fantastic. I I like it.
[00:15:36] Krzysztof: So I feel, I feel so much lighter, my God, that, that, that hair like was.
[00:15:43] Luke: You know, one of my, uh, one of my close friends had a bit of a hair wedding disaster himself a couple of years ago. And, uh, I think his, his wife had had a sort of beautician come to do the makeup for herself and the bridesmaids. And so literally the day before, maybe they were having their eyebrows plucked, and my buddy said, Hey, he’s got pretty bushy eyebrows.
He’s like, Oh, hey, why don’t you do my eyebrows at the same time? And they use, I don’t know, I don’t do eyebrow plucking. They use some kind of, uh, chemical treatment to sort of tame these bushes. And he ended up with these chemical burns. So actually in his wedding photos, he has this kind of crazy surprised look on his face in every photo.
[00:16:22] Krzysztof: Oh my God.
[00:16:23] Luke: I’m delighted for you, uh, that, uh, they went swimmingly and particularly that there were presumably no hangovers on the wedding day,
[00:16:30] Krzysztof: Zero hangovers. That was the other thing. You know, I bar I didn’t drink anything. I had one champagne toast. I didn’t eat anything and I had, you know, we had donuts deliver. We had a big donut truck and uh, and I didn’t really get to sample any of it cuz it was just too, you know, too much going on, too many conversations and, and people, The one, one last thing, uh, I’ll, I’ll add that maybe was the highlight for me is that we had been practicing a secret dance for about two years.
And so when it was time for, Yeah, when it was time for the couples dance, we had the about two minutes of the Slow Walt to my favorite Dylan song. And then I choreographed that, that seamlessly transitioning to Leonard Cohen’s Tango Dance Me to the End of Love. In which we actually tangoed. And then that there was a transition to, uh, a salsa song where we saw su which transitioned to obviously Magic Mike Mike’s Pony. Uh, and when I watched the video of it, the crowd is just absolutely hootin and hollering. You know, cuz, cuz no one, you know, it’s one of those, no one who’s expecting it. And I didn’t fuck up too badly. I missed maybe a couple turns here and there, but mostly it was, it, you know, it went all right. So it was so joyful.
[00:17:56] Luke: Fantastic. Uh, I’ll, I’ll look forward to, uh, seeing the video of that at some point if it’s public domain
[00:18:01] Krzysztof: Uh, it will be soon.
[00:18:02] Luke: or maybe you can reprise the dance for us on a future podcast episode.
[00:18:06] Krzysztof: Okay, Right on. So, uh, you wanna talk, you wanna talk some, AI stuff.
[00:18:13] Luke: Let’s do that. Let’s get serious.
[00:18:15] Krzysztof: How about taking this back to the Tesla AI day?
[00:18:20] Luke: I did watch the Tesla AI Day from a beach in Thailand. The overwhelming sense I had watching was that it was like a recruitment event for some of the smartest engineers.
And that’s a really smart way for Musk to leverage his brand. Like their culture of innovation is one of the key things that really sets him apart from their competitors. And if he can. Like some of the best AI engineers on the planet, which it seems he’s successful in doing well. You know, that in itself is a very significant moat for the company,
[00:18:54] Krzysztof: And that’s what I heard too in the follow up that he mentioned that the amount of resumes increased by whatever magnitude. It’s amazing to think some of the, you know, what is it that makes a company truly stand out? We get caught up in the financial statements and all of that, but sometimes it’s these intangibles that are just, you can’t even, you know, they don’t fit on the balance sheet or they don’t fit on the cash flow statement.
But it’s like little moves like this, which end up being gargantuan. because if you think about, right, like where did brilliant ideas come from? They come from human minds. Well, how do you get the human minds to sign up on your team? It’s through doing these, the kinds of things, and Tesla is, yeah,
[00:19:36] Luke: have the most interesting problems to work on them. You know, you’re gonna attract people. Even putting things like salaries aside, if you have the most interesting problems, right? People are gonna want to come there and try and solve those with you.
[00:19:47] Krzysztof: Yeah. So the second question I had that was sort of maybe open-ended, but I think I have a view on it. I’m curious what yours is. My recollection is that afterwards there was some pushback against the quality of the robot that was revealed. Right? Because if you, if anyone listening to this remembers there’s the Boston Dynamics.
Team. Right. And I remember seeing a video, YouTube video of the robots, their robots like doing summer salts and kind of choreograph dancing. And it was, you know, very high level stuff. Like, Oh my god, these, these robots can really do a lot. And then you have Tesla showing what a period of like a more primitive, kind of clunky, you know, version one kind of thing.
And the pushback was, you know what, like you, you had this, this big hoopla and you’re, you’re revealing this thing that isn’t that impressive. My take is that, correct me if I’m wrong, Luke, that what Tesla was emphasizing was that we are looking in terms of actual. Productivity and the capacity to make these things that have utility and utility does not mean doing somersaults.
Utility means we are thinking really in terms of like production line and getting from point A, this idea of a robot being a legitimate helper to making them and selling them and implementing them. So the quickest path toward Rev, another revenue generating source on one hand, and obviously optimizing efficiencies in another.
So therefore we don’t need to make them fancy. Is that your understanding ending?
[00:21:35] Luke: Yeah, for sure. I know, I think this is Musk’s kind of, um, first principles, thinking about everything, right? What’s the point in creating say, a half million dollar robot? If you can’t really kind of scale out production because it’s so complex to build at scale and, you know, uh, by what is the potential, um, demand for these, right?
You’ve, you’ve said they’re like factories and in the home, like just by themselves, that could be like a billion plus robots. And there’s a ton of other use cases too. Um, if you could start producing these things at like 10, 20, $30,000, not half a million dollars, well, there’s a whole bunch of use cases that just make absolute sense.
[00:22:17] Krzysztof: Yeah. Yeah. It just seems like a huge, It’s hard to, It’s really hard for me to think about this company now, other than an AI. Right. So when I hear about all the revenue forecasts and always focusing on the amounts of cars being sold, I mean, right. Obviously that’s where the current revenue is coming from.
Mostly if you discount even solar, I mean, or energy stuff. But after the AI show or recruitment event, anyone, I just can’t take anyone seriously that that calls Tesla a car company. I’m not trying to be dismissive either, but I mean, it’s just like right there. Like we are about to make robots like so
[00:22:58] Luke: Yep. Yeah, I agree. Um, but it’s still a long way to go. Right? There are some, you know, not insurmountable hurdles to, to clamor over, but it’s a long way from what they showed at AI Day to actually. Sticking something in a environment where it has to, you know, interact with people so you’ve got all those kind of risks and danger potential, um, to be able to do that safely at massive scale.
Um, it’s a long journey, but Tesla do seem to be the leader on this journey right now.
[00:23:28] Krzysztof: So I wonder in terms of realistic timelines, whether this AI event day would actually allow Tesla to speed up the rate at which they catch, say the leaders, if they in theory, are even behind,
[00:23:45] Luke: Right.
[00:23:46] Krzysztof: Like whether, whether this had the impact, the desired impact. And it seems like if you’ve collected all these thousands of resumes, then the rate at which the robot might actually be brought to production might, this is maybe our inherent optimistic ways of thinking might actually be faster than we.
[00:24:06] Luke: For sure. I mean, I suppose there are already robots in warehouses, right? What’s, what’s that company? Six River Systems. Um, and you know, Amazon have robots scurrying around their warehouses, but I guess, you know, they’re, they’re like almost the Amazon robots, almost like mobile packing shelves to help human packers.
Here though, we’ve got, with Musk’s Optimus, we’ve got a, you know, an actual humanoid robot that can do more human tasks, so much more general purpose.
[00:24:35] Krzysztof: And as far as I could tell on the last earnings report now, I’m pretty sure there’s zero revenue from, from the robot, right? And there’s zero revenue being anticipated. It’s all still about the cars
so that extra optional s-curve of growth is simply not being accounted for in current valuations.
[00:24:56] Luke: Yeah. I guess people are forecasting that the manufacturing costs of the cars will come down. I suppose sticking robots into warehouses will be one of the levers that can help them bring down costs, like they can eliminate or redeploy the human workforce into different roles.
[00:25:13] Krzysztof: Yep. Okay. Have you been playing with any new AI toys?
[00:25:18] Luke: That’s a leading question. You know, I have , I got, I got two awesome AI toys. I, uh, I got to the top of the beater Q4 in the last couple of weeks. So one was, uh, Darli two, which is that awesome tool for kind of creating pretty much any image you can describe. It’ll go out and produce like beautiful works of art or photorealistic renders of whatever.
Crazy Id you could come up with. Um, and then one I’ve been playing with just in the last 48 hours is a, Authoring tool, a writing tool called Lex, which basically uses G P T three, to, help you write stuff. I read an article over the weekend and Lex was invaluable when I was getting kind of writer’s block.
At certain points, Lex would chime in with some really interesting kind of snippet to help me sort of prompt my thoughts and, uh, and get to the next part of the article.
[00:26:12] Krzysztof: that’s so fascinating.
[00:26:14] Luke: Yes, I’m, I’m loving this tool, Lex. I’ve only just started to get to grips with it. I got it to write me a poem. I was pretty blown away with, uh, how articulate it was. It’s helped me with an article and, uh, I was demonstrating it to my wife yesterday and it helped her with an Instagram post.
She was trying to write this thing. It’s a large language model and it just seems to be insanely smart at helping you kind of finish your thoughts. So, uh, I think it’s gonna add a lot of utility to anyone who’s in the writing trade in the same way that, uh, Darli too is gonna help artists.
You know, these things aren’t gonna replace people in any way, but they’re gonna accelerate, um, and kind of give you superpowers as a creator. I think
[00:26:54] Krzysztof: I read the poem that you, you generated and, uh, wow. Do I have mixed feelings about this thing? Because it really like, Yeah, I mean, if a stu, if one of my poetry students handed that. I, I mean, maybe if I really, you know, if I was aware that, that there might be AI in play, I would scrutinize very, very carefully, but without any kind of like priming, I don’t think there’d be a way to know.
Like if it read like a poem, you know, and a pretty decent one,
[00:27:28] Luke: And it, and it kind of tied together somehow. It tied together like the beginning and the end in a nice way. Like the lamest contributions to the poem were the two lines I wrote. Man, this thing’s super good,
[00:27:39] Krzysztof: They, uh, they had, they had a real sensibility to them, right? Something about, uh, was it a bird, um, a bird shadow?
[00:27:47] Luke: I think, I think I’ve got the poem on Twitter. I won’t read it now, but, uh, but go check out my Twitter at seven Luke hell, and have a read. It’s, uh, it’s interesting. I, I, I actually, I, I humorously, I went back to my title and I substituted ai poetry for an AI recipe and generated something from the same starting line.
The thing gave me like a recipe for, uh, making, I think make it a la pie. It’s, uh, it’s
[00:28:12] Krzysztof: Wow.
[00:28:14] Luke: and the recipe made sense. I spent a bit of time in the kitchen, like these flavors kind of made sense together.
[00:28:19] Krzysztof: Are you open to talking about how it helped you with the content that you were writing? Like, like what point did you get stuck and say, Okay, I wonder what, what I could get from this? And then what did it offer you?
[00:28:33] Luke: Yeah, so I’m, I was writing an article about ADRs, American Depository Receipts, and, um, you know, I won’t go down that rabbit hole. It’s, it’s quite complicated topic, but essentially it’s, uh, it’s a mechanism for us investors to get exposure to international companies in a slightly different way than just investing on the, the overseas exchange.
So it’s quite a technical topic Lex, well, let’s, let’s think of an example. So, okay, there are, there are what’s called sponsored and Unsponsored ADRs, and they have kind of different attributes and are kind of pros and cons of both of those categories. Well, with a kind of a key sort of keying up phrase.
Um, the benefits of a sponsored ADR are, and you just kind of hit plus, plus plus and then the Lex AI jumps into action and it generated like a bulleted list. That was pretty robust. You know, I’m writing an article for seven investing, right? I’m not gonna take anything the AI tells me or the pinch of salt, but I went off and did my own research and it was a pretty good list.
So, um, I think, I think you’re not gonna want, as a professional author, you’re not gonna want to kind of lean on this stuff and rely on it like it could be coming up with complete garbage. But I think just helping you kind of, you know, unstick your mind and giving you a starting point for a bit more of research.
[00:29:55] Krzysztof: I’ve been saying, I think maybe to my students now on the collegiate level for I want, hmm. It seems like maybe it’s been a while. Call it 10 years. That the point is no longer information, Right? We have all the information we need in our pockets. Start with the iPhone or iPhone error, right? And so what is it that I can teach you that’s of value that doesn’t have to do with information.
Now it seems like that’s that case, embodied Like, it’s no longer about knowledge. So the question becomes what value can humans provide? What is the kind of, maybe the hard stuff right, that we should be working on?
And the, the, the best guess I have is it now using this as a test, What you talked about Luke as the test case. It seems like the task for us is to be interpreters of the knowledge, right? And maybe contextualizing appropriately, which is, which might not be obvious, right? Like, so let’s imagine this AI robot can write the whole paper for you,
[00:31:01] Luke: Right.
[00:31:02] Krzysztof: So, so now what, Okay. If it’s most, if it’s almost entirely true and accurate and factual, our job done? And it seems like no, because the next step is to ask like, where does that piece fit in, in relationship to everything else we know? Which I think is the thing that true general intelligence can’t do it, can’t understand the context of its world.
And that’s the only thing that humans can do, right.
[00:31:33] Luke: Yeah, applying the sort of human intuition perhaps, and making kind of logical leaps that, um, you know, perhaps it would be hard for a very specialized algorithm to create outside of its kind of specialized domain of competence. You know, we are, we are good at kind of making links between seemingly disconnected pieces of information and kind of drawing inferences, um, as you say, right?
We’ve, we’ve gone from this kind of posity of information, maybe just a decade or two ago to now suddenly, you know, the world’s information is organized and at our fingertips and, uh, you know, a Google search can tell you pretty much anything about anything. But now you’ve got AI that’s kind of bringing that information together in a much more kind of coherent and easy to use manner.
[00:32:21] Krzysztof: Hmm. All right, Luke, did we wanna say a little bit about, uh, a little pause for an ad in this case for seven investing?
[00:32:29] Luke: Why not? Why not? We, uh, we, we’ll try and stick a little Luke and Christoff ad into every episode, but we got a bit bored of our ad from the last two weeks, so we thought we’d chat about seven investing itself. So, you know, Christoff, we’re both lead advisors at seven investing and what Seven Investings kind of mission statement.
We say it’s our mission to empower you to invest in your future, and we do that providing monthly stock recommendations for our premium members and educational content that’s freely available for everybody. But you are kind of new to the team. First off, you’ve been this for a couple of months now. What does that mean to you?
How does that mission statement resonate?
[00:33:09] Krzysztof: I think the differentiator that I’ve experienced so far is one, the depth of research that we offer in terms of the, the reports, I mean, they’re really not that length is always the , the key signifier, but they’re long, which means that we’ve all put in a lot of time to really get to understand the companies that we’re recommend.
And then what I’ve heard and what I’ve experienced is that we’re accessible to that the, there’s one seven of us and that all seven of us are available to answer questions, both on the Discord chat and on the subscriber call and in, uh, I guess the, through the company updates. And so that it’s not like the thing we’re doing is some holy grail of knowledge that then remains behind some paywall, and then you just have to take our word for it.
But it’s feels to me a much more dynamic invitation for anyone wanting to learn how to invest to follow the process and to interact with us. And knowledge is born, I think, the good knowledge via interaction and unexpected emergence of ideas. What do you think?
[00:34:25] Luke: No, I, I agree. I think the discord is, is quite new for us. Bash. It’s incredibly powerful. Um, it’d be great, you know, we’ve got thousands of members on the Discord now. It’d be great actually, you know, if you’re listening and you’re in the discord and you’re kind of lurking, like chime in, say hello, Ask a question, share an opinion, right?
Be good to hear from more people. But we’ve got maybe I would say maybe 20 or 30 members now. actively contributing and, you know, helping me understand the companies I’m invested in, in better ways, um, and sharing stock ideas. I think it’s really, really valuable. And as you say, um, you know, you look online on the Discord and Discords kind of fun.
You can sign a C who’s active at any time. So, you know, I can see you sitting there in green sometimes. I know Kristoff is maybe writing something or, uh, or chatting with another member. it feels kind of real. It feels live.
[00:35:16] Krzysztof: And to the last point here, it feels. To me, like one of the biggest mistakes any investor can make is not understanding for themselves the reason or reasons why they invested or the company itself. If that’s the case, then you are at the whim of basically somebody else’s idea or bias, and you really can never know their motivation.
I mean, not to, not to infuse any malevolent, uh, things here, but, but the market’s tricky, right? And so I think we empower people to really say, you can learn, you can figure out what’s important to look at, to study, and it is possible to have a pretty deep understanding of the companies you invest in. And if that’s your floor, then you will be set up for.
[00:36:07] Luke: And you know, when the stock market’s in a sort of part of the cycle, it is right now when at least growth stock valuations are really through the floor, right? Really understanding your own thesis for the company is critically important because, you know, if you, if you’ve bought something because of service you signed up for, just told you, Oh, go buy this thing.
Well, it, you know, if you’re sitting on maybe a 50, 50% plus drawdown, at some point you’re just gonna say, Those guys got it wrong and you’re gonna, you know, you’re gonna bin that stop from your portfolio. But if you really understand the thesis and the reasons why you are invested, well that’s gonna help you kind of hold the line when things are going bad because you’ll know the kind of metrics that show the, the company is improving and growing in the most important way.
Like the stock price isn’t always an accurate reflect. Of truly what’s happening in a company and its prospects,
[00:37:02] Krzysztof: Mm-hmm. . Amen. This was the best seven investing ad we’ve ever written.
[00:37:11] Luke: get a, we’ll get OT to transcribe it for us and we’ll get Lex to improve it.
[00:37:14] Krzysztof: Right. Awesome. So my, uh, my main update for this week has to do with the Metaverse.
[00:37:22] Luke: You’ve been reading that book
[00:37:24] Krzysztof: Yeah. Uh, I’ll, I’ll hold it up to the light one more time. I’m finding really fascinating, and the last section really taught me something, and maybe it was because I was naive to start with, but anytime I learned something like what, you know, like what feels like a big chunk, I’m, I’m delighted.
So I highly, highly recommend this book. Here’s what I learned. I did not know. The extent to which Apple is kind of playing the role of villain in terms of, call it being the gatekeeper through which a company shall not pass unless it’s willing to give up a huge chunk of profit to Apple’s platform. Right.
So Apple is this, uh, gatekeeper because they control the payment infrastructure and therefore that makes it very hard for developers to have a business model that they could essentially innovate and profit from. when you have the, the David, um, s Goliath kind of thing happening, and it seems like the Metaverse cannot happen in our idea of it, meaning like many vol, virtual worlds that are interconnected to one another.
If you have this, this gatekeeper currently again in the form of Apple, so. There’s a part too to that, but for One, Apple is one of the two companies in my life that I truly, truly loved and followed the story of from, you know, like one of those passion projects. So it was odd for me to come across them in this more villainous kind of light.
I’ll pause there and see if you have something, if you have a reaction to just that piece.
[00:39:14] Luke: I guess apple’s actions around privacy in inverted commerce, but essentially, clawing into their world. A lot of the advertising revenues, um, from our tech, well, that’s hurt my portfolio quite badly. I’m not an Apple shareholder, but I am a shareholder of many companies that have kind of suffered from, uh, the, the actions they’ve taken over the last year or so.
But, you know, uh, competition isn’t fair. There’s no point in kind of whinging and moaning about it. I do wonder at what point the regulators kind of step into this, uh, in the US and start clamping down on some of the power they have.
You know, it’s not dissimilar to maybe Microsoft , when they were kind of sanctioned for, uh, you know, forcing Internet Explorer to be like the browser on every pc.
[00:40:00] Krzysztof: So if, If I were to think of this in binary terms at the moment, in 2022, it seems like if the Metaverse is going to evolve into a vibrant thing than Apple, whatever its current structures are, those have to, by definition, So either they’re going to lose a whole bunch of revenue and then they’ll have to really adapt to whatever the metaphor versus forcing them to adapt to.
Or there might not be a Metaverse the way we currently envision it because of the, their policies. And it’s curious, I believe recently I heard that Tim Cook isn’t deliberately avoiding the use of the phrase Metaverse. And now I think I’m starting to understand why.
[00:40:50] Luke: Okay. What, what’s, um, what’s happening inside Apple? Have they got their own VR hardware that’s coming at some point, or is that just rumor?
[00:40:57] Krzysztof: it’s rumor, but I’m pretty sure it’s one of those, uh, rumor in just the sense that they’ve hidden the product, but they’re working on their device.
Actually, if I, if I’m being honest, you know, the whole knock against Apple since Steve Jobs passed away is that they’ve only been iterating it seems to me that the greatest opportunity they have to truly create something innovative. It, it would be in whatever the ar, vr headset thing would be. And I would not be surprised if they really came out with something that was, you know, uh, a whole leap whatever Facebook Meta is offering.
[00:41:41] Luke: Yeah, I, I, I agree. You know, their focus on design and kind of, you know, uh, aesthetics and usability I think is what’s needed. Cuz this hardware is kind of clunky in the current iteration.
[00:41:52] Krzysztof: And so, Right. So the second piece that connects to the first loop is that I now have a greater respect for what blockchain technology is doing or trying to do, because the answer to Apple’s closed payment rails, gatekeeping is blockchain. And I think for a lot of people, this might be a valuable insight that what we’ve seen so far in the carnivalesque, uh, scam infested waters is yeah, the early stages of, of the bad actors and just people speculating.
But with the cryptocurrencies and the alt coins and all of that, But we also now know for a fact that blockchain technology enables a different form of payments on which the Metaverse would thrive. Therefore, circumventing the problem of Apple and you, that that immediately gives the whole space much to me, much more legitimacy as far as like why, why we should care and continue staying updated.
[00:42:58] Luke: Yeah, maybe for a future podcast we can go down that rabbit hole a bit further cuz I’m also a believer. That, um, sort of decentralized currencies are the future for lots of reasons. And we’re in this kind of wild West time right now that probably isn’t indicative of the true power of some of these, Well, this, uh, this protocol or this platform.
[00:43:20] Krzysztof: Yeah. Luke, So I see that we’re on about the hour. . And I also know that, uh, I don’t know if you, you came across the latest Lex Friedman podcast with Ba Syverson. Pardon? Pardon? In the, I butchered his last name, but that was eight hours long,
I don’t know if we’re, if we’ve worked up to that level yet.
[00:43:44] Luke: I’ll definitely need more than sparkling water if we’re going eight hours. What, what were Lex and Largy talking about that they went so long?
[00:43:49] Krzysztof: uh, everything uh, I made it through the first hour this morning, which was about UFOs and the network state and the problem with governments.
[00:44:05] Luke: Wow. Cool. Okay. There’s a, there’s a whole, I consider myself a distance runner, but there’s a whole bunch of distance runs to get through that one.
[00:44:11] Krzysztof: Hmm. Or one long one.
[00:44:14] Luke: Yeah. Very long one. Yeah, but you’re right, we we’re, uh, we’re coming up on the hour, which is kind of the arbitrary deadline we’ve set for ourselves right now.
[00:44:22] Krzysztof: So do you want to, do you wanna land this plane or do you wanna talk some more about the agenda items?
[00:44:28] Luke: Let’s, uh, let’s land the plane, but I think we’re gonna close the episode out with, uh, you taking revenge on me for the three conversations game last week.
[00:44:38] Krzysztof: Correct. Luke. So, unless I’m mis uh, unless I’m misremembering, I’m going to ask you three questions and you get to veto one of them as, as, uh, off the table, and then I pick one of the two remaining ones. Is that correct?
[00:44:52] Luke: That’s it, and I’ll, I’ll try and be articulate about that topic for, let’s say a minute.
[00:44:58] Krzysztof: Okay. Here we go. Question number one. Is imagine tomorrow we get to have general artificial intelligence or a flourishing Metaverse, Which do you, which, which fork in the multiverse do you take
[00:45:16] Luke: Okay.
[00:45:17] Krzysztof: and why?
[00:45:18] Luke: Okay.
[00:45:19] Krzysztof: Question number two, what’s harder for you being a good husband or being a good poker player?
[00:45:26] Luke: Okay.
[00:45:31] Krzysztof: And, and, and why? in question three, Luke is which of these three has the most merit? The uk. Ireland or head of lettuce
[00:45:47] Luke: head of Lettuce
[00:45:49] Krzysztof: Uhhuh. There was a joke. There was a
[00:45:51] Luke: Yeah, yeah, yeah.
[00:45:53] Krzysztof: right. Like, will, uh, list truss out, outlive a head of lettuce, and I believe the head of lettuce won.
[00:46:00] Luke: It did the Daily Star, uh, a fantastic bit of promotion, self promotion there. Uh, okay. I like it. Uh, I’m, I’m terrified of all three of those, but I’m gonna veto the third one just cuz it’s a, sounds like a confusing topic. So, your choice, her husbands or Agis
[00:46:18] Krzysztof: Okay. I, uh, talk to me about, uh, yeah, what, what’s harder, what, what’s harder Being a good husband or a good poker player?
[00:46:28] Luke: being an agi. being an AGI in the middle of us. Uh hmm. Okay. Right. Let’s see. Let me, We certainly haven’t prepared this in any way. Let me steal myself around this topic. So, what’s harder being a good husband or a good poker player? Have I understood the question? Okay, so let’s, okay, let’s think about the disciplines or the attributes of each of those so we can contrast them.
So, uh, and both require work, by the way. I’m, I’m sure, uh, being a good husband, uh, requires, uh, being considerate, kind of understanding your partner’s needs, being a good communicator, um, and being, you know, part of a team and collaborative. And as I said, those four things, I realize I’m terrible at all of those. being a good poker player requires discipline, study, a great memory, bit of a head for maths, and maybe the ability to kind of put yourself. In your opponent’s perspective and kind of, you know, think about things in a multidimensional way to make a good decision. Um, so they’re wildly different, uh, almost polar opposite skill sets.
And I do wonder, this isn’t answering a question. I do wonder if being good at one thing is kind of, uh, correlated with being bad at the other. Cuz I think I’m a decent poker player and I’m kind of a bit of an average husband . So what’s the, uh, what was the question? Was it, was it better to be one or the other?
Was it, what’s
[00:48:00] Krzysztof: what’s harder for you?
[00:48:02] Luke: harder? Harder for me. Well, okay, so harder for me. Certainly is being a good husband for, because of those kind of key attributes, which I think is a pretty decent list of, uh, of, you know, things. I’m a, I’m kind of a bad communicator about emotional things. Um, and I certainly do think of Katrina and myself as a team, but I maybe don’t talk to her about that clearly enough.
Maybe for me it comes down to communication. Um, I, I enjoy, you know, kind of talking into the ether on a podcast. I’m enjoying chatting to you. I enjoy chatting to my buddies when kind of, you know, emotions get overlaid on that, though maybe I find communication much more difficult than I should. I actually had my buddy Albert listen to episode two and, uh, told me off just this morning for saying that I find it easier to say I love him to him than I do to say the same thing to my wife.
[00:49:00] Krzysztof: Oh, wow. That was such a good answer.
[00:49:02] Luke: Would you, uh, so I, I can’t turn the question back at you, but you know, you are a poker player and you are a new husband. Would you give up your poker skills to be the world’s greatest husband?
[00:49:12] Krzysztof: that way. That’s so unfair. I can’t, It’s not my turn this week.
[00:49:19] Luke: Okay, man, it’s on my list for next week.
[00:49:21] Krzysztof: Okay. Hey, I’m only seven days in. I, I don’t know what I’m doing yet. I just, Sure. I just wake up and I’m like, Oh, I get to be a husband today.
[00:49:32] Luke: Just don’t release any mini budgets in your first 44 days.
[00:49:35] Krzysztof: No, The, the one thing, uh, maybe maybe to end this pod, when I heard you say that a good poker player can take the perspective of, you know, the other hands, I’m not sure if that’s, I think that’s actually. Exactly the kind of skill that would make someone a great husband cuz it’s all relation,
[00:49:58] Luke: sure.
[00:49:58] Krzysztof: right? Like if, if you know why, why your partner is upset and you could actually step out of your own view, then the odds are you’re not gonna create more, more of a mess.
So I would say they’re actually,
[00:50:10] Luke: yeah. Although in poker you could, you know, you can probably relatively accurately, uh, assign probabilities to certain outcomes. Whereas, you know, you try and predict what your partner’s gonna do, your, uh, your like for an upset
[00:50:27] Krzysztof: and that’s hard. Wor hard one wisdom, right?
[00:50:32] Luke: Oh yeah. Oh,
[00:50:32] Krzysztof: That’s come from All right, Luke, it’s been such a pleasure talking to you One more time with no limits to our conversation. I really look forward to talking to you again. Post us elections this time in, uh, early.
[00:50:49] Luke: Very good. Great chatting to you buddy. See you soon.
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