Two Angles on the Global Chip Shortage | 7investing
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Two Angles on the Global Chip Shortage

September 8, 2021

We’ve all heard automakers talk about how a shortage of chips/semiconductors has caused production delays and, in some cases, has led to actual shutdowns. It’s a problem that’s not easy to solve and one that impacts pretty much all technology, not just cars. Computers and televisions, for example, use chips and a number of companies are taking steps to address the shortage. Simon Erickson and Steve Symington join 7investing Now to look at what’s going wrong, how it impacts automakers and technology companies, and to address how it’s being resolved.  The 7investing Lead Advisors also dive into what the the global semiconductor shortage means for the stock market.

 

Transcript

Dan Kline  0:14 Welcome to the Wednesday edition of 7investing Now. I keep bringing up that I cannot believe it’s September, but we’re almost in like the middle of September. My name, of course is Daniel Brooks Kline. I’m being joined today by Steve Symington, and Simon Erickson, those are two names that are difficult to say one after the other. We have a lot of show to get to here. So normally we banter a little bit, we talk around, but I am legitimately concerned about fitting this show and your potential questions all into under an hour, we hope. So let’s get to our top story here. It is two angles on the global chip shortage.

So we’re going to talk about the global chip/semiconductor shortage from two angles. Hence it’s right in the title. What’s going on in the automotive industry, and the steps tech companies are taking to deal with it? Simon, you brought in the topic. So we’re gonna go to you first. But there are a bunch of problems here. So first, manufacturing capacity is a problem. Factories working with less workers because it COVID There were all sorts of reasons keeping people at home, slowing down capacity. But that’s not the only issue. I’ve highlighted here. There is a lack of silicon that is a crucial raw material to making this. And the shortage has been exacerbated by the move to electric vehicles.

This is something I learned literally this morning, or maybe yesterday afternoon, a Ford Focus, which I used to drive, takes 300 chips, not a technologically advanced car, that car had a horn, and maybe an a.m. radio like it was not a great car. An electric vehicle takes about 3000 chips. So I’m going to guess my hybrid vehicles probably somewhere between those two, that is a giant drain on this. So is there a solution for this? Are we simply looking at not having enough chips for cars for the foreseeable future? Wow, that was a long introduction. My apologies.

Simon Erickson  2:03 I’ll just say that was impressive. Dan, I think we all have coffee, you had bone broth this morning. We are ready.

Dan Kline  2:10  That is part of my try to do things more healthy kick led by Maxx Chatzco go. My wife asked me the other day, why am I eating so many almonds. But back to the chip shortage here.

Simon Erickson  2:21 Very impressive. Well, yes, the answer is actually both of what you described, there is a solution to this. And there’s going to be a shortage for the foreseeable future. I think that kind of maybe to set the table on the story, we should talk about just what a magnitude this chip shortage is, and how it’s wreaking havoc on the auto industry. You might read the headlines and say, okay, there’s a couple 1,000 cars that probably, you know, automakers aren’t going to be able to roll out because they can’t call the chips they want.

Toyota just said it’s cutting its global production forecast by 40% in September. That’s 360,000 vehicles across the entire world. I mean, when you think about how the average selling price is, depending on what that would be. This is billions of dollars, even just for one automaker. Multiply that by all the others that you also mentioned out there.

Again, this is a huge, huge problem. And the answer is that cars are requiring more chips, just like appliances are requiring more chips, just like anything that’s consumer electronics product is requiring more and more chips, and there’s only so much capacity that’s been there to keep up. And we’re seeing globally, the companies that are either designing those chips, the first angle to the story, or the companies that are manufacturing those chips, receiving the designs from the chip makers themselves are both kind of stretched to capacity at this point. And it’s getting very interesting from an investing angle in so many different perspectives.

Daniel Kline  3:37 It’s also a pretty big supply chain problem. And as Steve will work you in here soon, I promise. But think of it this way. If you’re a car company and you only have X amount of chips, you’re going to make the cars you make the most money on. Well, that has a ripple effect. It means you’re not making cheap cars, it means you’re not making cars that go to rental car companies, which have, you know, sort of a ripple effect to whether I travel or not. So there is a big economic impact. We’re going to talk about that a little bit in the second half. But Simon, does that mean that cars are just expensive? Or is it possible that Ford says Geez, I know we want to make more electric vehicles. But boy, we could charge a fair amount for a Ford Focus right now. And we could make 10 of those for every one electric vehicle we make.

Simon Erickson  4:24 Well, Ford and Toyota and every other automaker is in the business of making money. So they’re going to definitely adjust their short-term forecasts on where they actually can get supply rolled out. But generally, the way that chip-making works is you’ve got some really, really cutting edge chips that are going into the highest, the highest demanded applications. They’re typically in smartphones. If you look at Apple’s iPhones, those are some of the most demanding chips with the smallest nodes of process technology that are globally out there. And over time, you know, we get improvements in chips, we get seven-nanometer nodes, we get five-nanometre nodes, we’re already down to some R&D work being done on one-nanometer nodes.

These are the gates that are going into transistors that are going to the processes that are going into consumer electronic devices. And those bleed down over time from super, super cutting edge into the rest of the market that doesn’t want to pay as higher prices right upfront. Automotives are not cutting-edge chip designs, they are not five nanometer nodes that you need for this. In fact, most of them are 25 nanometers or higher nodes, which is not as expensive. And so the answer of supply chain to your point, Dan is who’s taking on that supply capacity? If you’ve got the most cutting edge, fabs that are wanting to produce the most cutting edge chips, because those are the highest price points that they can get from their customers, they’re going to go after that, and everyone else is going to be filling in the gap.

We just saw a company in China SMIC, just I think five days ago, announced that they’re putting $9 billion to work for a JV fab with China’s government, right. And they’re going to be manufacturing only 28 nanometers and taller and higher process technology. So there is suppliers that will come online and meet this demand. It’s just that the ones that are out there right now that really know what they’re doing. They’re using it for their own smartphones, or they’re contracting at a very, very high price for the most demanding customers.

Dan Kline  6:15  And Simon just to clarify here, when you say fab, you mean manufacturing plant? Is that sort of?

Simon Erickson  6:20  Yep. Yep. That’s a manufacturing plant for chips. Exactly. So I want to work Steven, a little bit here. So we’ll let Steve weigh in before we get to Simon. But of course, we would love your questions and comments. We know this is a dense topic. So if you have some sillier questions or things you want us to answer later in the show, we are more than happy to do that.

Dense topic. I love it.

Daniel Kline  6:41  Pun not intended. Steve, let me ask is this simply just a, we have to wait because you can’t easily build like you and I can’t go, hey, let’s throw a chip factory together the way if there was like a shortage of I don’t know, I’ve talked about this, my family being in the steel scaffolding business, we could have a makeshift welding facility to triple our capacity as long as we can get the raw materials. You can do that with certain things. We’ve even seen Tesla do it. But it is probably not something you could do with something as precise as semiconductors. Right.

Steve Symington  7:13  Right. And part of this is that we need to understand – this is partly as far as automakers go, a disaster of their own making right. There are some natural factors at play that kind of back this up even further, like you’ve got a drought in Taiwan, that has made it challenging to actually meet demand because it takes a lot of water to make semiconductors, right. And at the same time, you had automakers who going into the pandemic, basically canceled orders, canceled chip orders, because they’re predicting out, you know, six, eight months what they’re going to need. So they have to order these well in advance.

So as soon as they canceled those orders, you had chipmakers kind of retool a lot of their fabs in order to focus on the booming demand for consumer electronics. And what happens then is automakers say actually never mind. Like you can’t just say, Hey, you know, please, you know, put this order back in. And we’d like that demand back. Like it’s not that simple. You don’t just pull a lever and have your entire fab switch back to be able to address that demand that’s pushed back. So you know, I think we’ve seen CEOs like Intel said, it’s probably going to be two years, couple of the other CEOs came out and said it’s probably going to be late 2022, at least so I think we’re looking at about a year or two, before we kind of catch back up. And all these factors, sort of the confluence of events that allows this to kind of wane.

Dan Kline  8:42 Rashad, I promise, we will get to your question, but I want to follow up on that. Because as someone who ran a factory, I think I have some insight here. When you have a weather reason why you don’t sell as much, you don’t stop producing, you might adjust your production down because the one thing I’ve learned running retail and manufacturing business is a certain percentage of sales never come back. So a snow day at the toy store. Those sales are gone. But not all of them. So if you’re a car CEO, a CEO of one of these car manufacturers, it does seem short-sighted to me for you to go, okay, there’s a pandemic we’re just going to stop production, when instead they could have been building at a third or a half or whatever it was. Because Simon, am I wrong that in some cases, you can delay a car purchase but eventually your car becomes unrepairable or undriveable. That there’s an inevitability here and it feels like there was some bad planning as part of this.

Simon Erickson  9:38 The semiconductor industry is notorious for being cyclical, where it typically you’ll see capacity expansions like this, where supply is tight and the chip manufacturers in the fab say hey, okay, we got to we got to make more chips. Let’s add to our capacity to spend the capex budget and let’s bring all this this this new volume online. And typically, historically, traditionally, that’s been followed by a time of lower pricing, where you build out too much capacity to keep up with demand that’s out there. And the market kind of goes like this, right? I am of the belief as someone who’s really, really looked at this a lot during the last year or so that this is a step-change in demand for chips, for cutting-edge high-performance processors.

And I don’t think that it abates, I don’t think that this is going to be a planning cycle or budgeting cycle, or we’ve got too much capacity a year from now, I think that a lot of this capacity that is coming online, is tied up, I think that Samsung or Intel, or Taiwan Semiconductor, whoever it is that’s making the chips is investing 10s, if not hundreds of billions of dollars in the next five years, because it’s a very conservative forecast. They’ve got orders that are lined up and ready to go for these chips, that they’re producing for automakers, for appliance makers, for consumer electronics makers, whatever it might be.

And so I think that I would, I would personally dispel the notion that this is just going to be another cyclical, you know, top for the industry, that’s going to come right back down. I think that the reason you’re seeing so many announcements right now, so many press releases of new capacity coming online, Dan, we see them every week now – it’s really to just keep up with all these different applications. And depending on whether how cutting edge those chips really need to be.

Dan Kline  11:21 And the numbers bear it out. So if you look at the forecast for what percentage of vehicles are going to become electric, even the most conservative forecast, and then you go wait a minute, these electric vehicles use 10 times the chips. Oh, and by the way, when the new phones come out, they use more complicated, they use more. Your television uses more everything is increasing demand here.

So I don’t think this is a case of, you know, like the gun industry had to question whether to increase capacity, or that demand would be one time. Well, your gun doesn’t wear out the way your television does, unless you’re, you know, an avid hunter or something. For the most part, there are industries that can forecast demand, the car industry might be able to forecast demand. But it has a long way to go to catch up when you’re talking literally 10 times the amount of chips.

We’re going to get to a couple of questions in a second. But I had one I wanted to throw an assignment before we get to yours. And then of course, we’ll talk about how tech companies are taking things into their own hands. But Simon, let me ask, could the shortage of vehicles change how we do transportation? Let me give you a concrete example.

So I’ve talked a lot about – I have a place near Disney World. And rental cars are very expensive right now. So Disney has already put in the infrastructure with its different ways you can get from its hotels, the skyline, or the boats, the buses. But I actually think the city of Orlando might put in more infrastructure, and we’re seeing high speed rails and other things go in. Do you think that those are sort of like one offs or that nationally, we might address transportation in a different way?

Simon Erickson  12:56  Holy cow, Dan, that’s a that’s a dense question. That’s a beef broth kind of question right there.

Daniel Kline  13:02  It was chicken broth to be fair, chicken.

Simon Erickson  13:05  How is this going to impact transportation? That’s one of a zillion variables right? From from ride-sharing and the cost of ownership of a car, to if you’ve got electric vehicles on something like the Tesla network, is that a cash-generating asset for you rather than something that depreciates off the lot? 40% after you drive it away, urban planning, you know, are city’s going to be more friendly and conducive to mass transit. I mean, the Smart Cities themselves internet-connected cities, they’ll need more chips, but maybe it’s much more efficient. I mean, there’s a lot to unpack there, I guess. Rather than just completely skirt the answer the question to your question, I do think that all of this is going digital, and it all is being monitored and the analytics are being closely watched.

And of course, all of that’s going to need semiconductor chips, just like the Internet of Things is going to need billions of semiconductor chips to keep up with the forecast they have. And global supply chain of those semiconductors is certainly going to influence all of that. So there’s a lot going on. I don’t know for sure how this will impact things down the road. But there are a lot of moving pieces here.

Dan Kline  14:12 It’s also worth pointing out that transportation doesn’t change quickly. So I’ve talked about Simon how my wife and I are looking at buying a new home. And one of the communities I looked at actually had driverless automated shuttles that take you to like the pool and the clubhouse and things like that. And that’s really cool. And it limits you owning a golf cart or driving your car. But for that to become a widespread thing needs an awful lot of infrastructure.

So I brought up Disney World, because college campuses and closed-loop places are going to have this, but those are not solutions we can implement in time to sort of offset what we see happening with the chip shortage. I want to take Rashed’s comment here, because it’s one I think both of you will have an opinion on it. Let Steve start first. He says can the chip shortage affect Tesla over the short term? Let’s get it back to a pure investing point, Steve you can go first here.

Steve Symington  15:03 I would say it already has, to some extent, and I think it kind of helps the Tesla hasn’t scaled to the extent that, you know, larger automakers like Ford and GM have. So they’re not necessarily you know, and we’re not talking about, you know, millions of vehicles produced on a monthly basis. I think that actually helps Tesla, but they did if memory serves shut down their factory in China for like four days last month because of the chip shortage. So it’s affecting them already. They’re definitely not immune to this. So yeah.

Dan Kline  15:40 Simon, did you want to add in here, and we appreciate that comment. Rashed, we, we love our members, and we appreciate feeling the love back sometimes. Yeah, thanks very much Rashed.

Simon Erickson  15:52  Depending on how you want to take the program, I think it’s kind of a perfect segue of companies that want to design their own chips in house, Tesla being one of those because it’s very interested in self driving cars that are computer vision.

Daniel Kline  16:05 And so let me so let me let me jump in a little bit here, because this is our next segment. And it probably is a good time. Basically, manufacturers used to not think about this. And we’ve seen a shifting trend to more of them saying a couple of things. One, I’m worried about supply. But more importantly, and this is sort of where the lead with Apple has been, I want my chip to do what I want it to do. And to do that means being involved in the process. Simon, that’s something you could speak to, and you brought up a term that I previously thought was only a sneaker brand.

Simon Erickson  16:39  Yes. ASIC is an application-specific integrated circuit. Also a great pair of shoes, like you mentioned, so there’s different purposes. But okay, so back to the chip design part of this, we mentioned it a little bit earlier in the program is now companies are bringing a lot of the know how with a large enough balance sheet, and a large enough, you know, in house engineering team to actually start designing a lot of these chips themselves. I’ll use a fun example to start and then I’ll actually go to some real-life examples that are going on out there. But Dan, let’s say that you want to create your own custom chip to mine Dogecoin. Okay.

Daniel Kline  17:13  I do you’re a step ahead of me, as always.

Simon Erickson  17:16  Or Dan coin or any other cryptocurrency that’s out there, right? You might design a custom chip that will do that as efficiently as possible. And by efficiently I mean, get you the most number of Dogecoin you can mine for the least power consumption, which translates into electricity costs as possible. And we’ve seen kind of this progression from there used to just be CPUs that would do this. But there was an entire industry of GPUs that kind of got brought in again, Steve knows this from following for a decade of the Nvidia and the AMD’s of the world saying, hey, GPUs are a huge opportunity to do things more efficiently.

Now, it’s kind of the next step of if you’re a company like Amazon, and you’ve got a platform like Alexa, that you want to understand the recognition of what people are saying, and you want to go dig out the answers to that, and then serve it back to them, you might have a chip that you’ve designed yourself to do that as efficiently as possible. Back to the Tesla example that Rashed just brought up, you might want to be able to recognize other cars, bring it back to your neural network and say, Okay, put on the brakes, there’s a car in front of you, right now. If your alphabet and you’ve got servers all over the world, you might want to manage those operations to get power consumption to a minimum, based on the IT operations that you need to conduct there.

All of these are starting to emerge as companies are finding ways to get an ROI and actually putting the work into designing their own chips. But again, Dan, this is not easy. It’s not like you can go out there and spin this up for $100,000. A good chip design, just the design part of it, not talking about the manufacturing, just the design is probably going to cost you $30 million or more. And there’s only and plus the know how, and you know, the return on the application of whatever you’re doing out there. But you’re starting to see more and more big tech companies really, really interested in this space.

Dan Kline  18:59 These are very expensive employees, and there’s a lot of competition for their services. But Simon, is it fair to say that the manufacturing is going to largely stay with the companies that have done this before? Because even Apple, and Apple could literally do whatever they want, like, you know, if Apple wanted to buy, I don’t know, Canada tomorrow, there’s probably a price they could get it done. But Apple has made no hint, no sign that they’re going to consider doing this. They are going to be very involved, but they’re not going to manufacture. Is that kind of what we should expect to see?

Simon Erickson  19:31  Yeah, I mean, that’s kind of the eternal question, right of Apple wants to pump out more devices outside of smartphones to do you want to have the Apple Watch now that’s gonna have sensors embedded in it to monitor your blood pressure and your heart rate and all the other things are promising. Is it gonna be an Apple Car, we’ve talked about an apple car, I mean, all of these decisions aren’t just like,

Oh, hey, that’d be kind of fun. Apple being as global of a supply player as it is going to have to contract to get those chips produced. And it’s not simple to do it themselves. You know, when you think about the cost of a fab, a fabrication facility, I’ve seen some research and articles that say, Oh, you know, $5 billion, $10 billion? Oh, no, no, no, no, that’s more like $20 billion and two years. And you’ve got to have the right personnel and the training to scale all of that up.

And then you’ve got to continually make R&D improvements. So you don’t get lapped by the people who have been doing this for 30 or 40 years already. It’s complex. Dan, I think that it’s more likely, rather than seeing the designers go downstream and manufacture them themselves. I think you’re gonna see more and more exclusive contracts that have minimum volumes for price breaks.

Daniel Kline  20:34 I want to get to Steve on the why in a second. But Simon, we did a whole show on Intel a few weeks ago. I don’t remember the exact date. Is this the turnaround factor for Intel? Like, this is basically the person nobody wanted to take to the prom, and all of a sudden the phone is ringing off the hook. So Intel was a struggling company, and now they have capacity that is not easy to duplicate.

Simon Erickson  20:58  Yeah, this is Pat Gelsinger back at work again, right. Pat Gelsinger goes back to Gordon Moore, you know was kind of Moore’s Law, you know, the first leader of Intel to kind of push into the microprocessor heyday, 70s and 80s. It was just pump as many CPU chips out there and get them into computers as you possibly could, as PCs were finding their ways on everybody’s desktop.

Now we’re kind of in a world of Hey, everybody needs chips. Intel knows a thing or two about making chips, it’s already got fabs in the ground that they can more easily expand and somebody could build them brand new. And Intel’s new CEO, Pat is saying, Hey, we’re open for business, if we can put some capacity out there, you want to work with an American-based manufacturer. And I say that because there’s definitely political interests and America working with having its own domestic supply for this.

Hey, Apple, hey Tesla, hey, any tech company that’s in California wanting to produce ASIC’s and cutting edge chips, we’re ready for your business. And we’re going to launch Intel foundry services to capture a lot of those new revenues. I think it’s a good move by Intel. But again, this is hard. It’s competitive. Intel’s behind the curve on process technologies, but there’s a lot of business out there for the taking.

Dan Kline  22:10  Steve, I want to jump over to you here. So big tech is getting involved and on a more intimate level. What are some of the advantages that will come out of that? These sort of like very specific chips here?

Steve Symington  22:22   Right. I mean, this what they get is a specifically designed chip to reduce energy consumption for their own devices and products. Right. So if from the specific company whether it’s, it’s, you know, an Apple design ship that works very well with the rest of the, the design of their products, or you know, some sort of Google device or Lexus smarts because I see the light pop on over here, whenever I say that, but yeah, you know, any, any sort of smartphone or integrated cloud services, or they can design the chips to be optimized for their own products. But again, it’s a matter of designing it and, and outsourcing production, that manufacturing – it’s basically to work as efficiently as possible with their own tech.

Daniel Kline  23:12  We are very careful about saying the name of the Amazon device because it sets things people’s houses off and causes all sorts of problems. But I will point out that Simon mentioned that just creating the the Alexa interface, if I’m reading this correctly, cost $25 million plus. And to say that is a flawed interface. Well, I wouldn’t have had to just say what I did about it inadvertently getting set off. If it was already perfect. We only have a couple more questions. I’ve got one more for you guys. And then Simon, I wrote one for you to ask me because there’s sort of a black friday angle to this as well as we are heading into sort of my favorite season of the year. I don’t love holidays. But I do love the Christmas shopping season. And that is do you see these shortages being corrected? Is this a problem that’s going to linger like for years, and then I’ll talk about this a little but there are direct impacts of this we’re already feeling I’ll let Simon go first. And then Steve.

Simon Erickson  24:10 I think it lingers for several more years. I don’t think that this gets corrected in any means in the short term. And you see the actions being taken by by the big three, right? Big Three. I mean, the chip manufacturers Taiwan Semiconductors #1, Samsung’s #2, Intel’s #3, and Intel’s already said hey, we’ve got to capacity. We’re open for business with the foundry. Samsung is investing Oh goodness, what was it? I can’t remember the number off the top of my head but they’re already saying they want to put a $17 billion expansion in Austin, Texas for a fabrication facility and Taiwan Semi said they’re gonna put $100 billion 100 billion over the next three years and expanding their global capacity. All of these are tied to orders Dan.

And so when you see that kind of magnitude being put, you know into the wafer fabrication equipment and all the capex it’s going to work here, you’ve got to assume that these companies aren’t stupid. And they’re not just doing this for a six month correction and in demand. I mean, they’re planning decades out into the future, and pushing the prices down further and further and further, for more and more. consumer electronics that can do more and more operations per second and are more and more efficient out there. I think that this is kind of the new normal, in my opinion, I think that AI has changed the game. And the applications that utilize machine learning are so complex now that they can’t just cut it on the chips in the CPUs that were out there. This is kind of the renaissance of the semiconductor industry.

If you followed this industry for years, you’re cheering because you’re in the golden years again now. And it’s kind of an exciting time for investors as we look for things like profit margins and demand to ramp up in the coming years.

Dan Kline  25:49 And it’s important to remember that mainstream devices don’t get more simple. That doesn’t mean there isn’t sometimes a market for your jitterbug cell phone and your simplified television that only does television. But for the most part, just your basic device, even a person you know, using a flip phone, Maxx Chatsko joked that he still has a flip phone, I have no idea if that was true or not on our show, but it wouldn’t shock me. But even that flip phone is way more complicated than the comedically large Seinfeld-esque flip phone I had, you know, back in the 90s, that we’ve all experienced on some level.

So this isn’t sort of a genie you could put back in the bottle. Really the tipping point here is some sort of new invention we haven’t thought of. And I’m sure someone is working on that. But Steve, we’re going to take a couple of questions and comments, after your comments after my little section. And we appreciate all of you weighing in. But Steve, I know you wanted to give a little comment here.

Steve Symington  26:41 Actually no, we tackled all that and spoke to what I was going to speak to a little bit earlier in the show. I think Simon summed it up pretty well.

Dan Kline  26:51 I appreciate that. Simon, if you want to ask me the question I I threw out there, I’m gonna be very quick here because this is just sort of the actual, what happens in the real world impact of this. Like, we all know, if we tried to buy a car, my used car is worth more than I paid for it like six months ago, which is not typical by a lot. But Simon, let me throw it to you here.

Simon Erickson  27:12 It’s, this is another reason I love this show, Dan is because we get different angles from each of our advisors, you know, whether it’s Steve, who worked in machine learning you who worked in retail, me who’s been following semiconductors. I mean, we kind of get to all chime in and you get smarter about what’s going on out there together. My question for you as the retail expert on the team here is we said, hey, there’s a shortage of chips out there right now. I’ve also seen a lot of price increases kind of going into effect for consumer electronics, holiday seasons coming up, how does this impact the retail world?

Daniel Kline  27:39  Yeah, it’s going to be severe, and it’s going to be noticeable. Now, I do think because we’ve had a pandemic, and maybe people haven’t been spending the money. We’ve seen all the statistics on how much people saved and invested during the pandemic. So a lot of people won’t care if they pay $450 for a TV, they would have paid $350 for last year.

But things like computers, and oftentimes you replace your computer when you have to, not when you want to, we’re gonna see more expensive computers with less choice, I’ve experienced this, my son broke his laptop, and I basically used CNET’s, top 10 laptops under 500. And only one of the 10 was available. So that’s the laptop he got, we’re gonna see that on an intentional level at this Christmas season, where you used to see like HP would come out with a new laptop range, and they’d be like 75 different versions.

Now, there might be 75 different colors, there’s not going to be 75 different feature sets because the innards are going to be the same. We’re gonna see fewer are maybe even no really cheap large TVs, there might be some legacy ones that are out there that are really sort of dated technology. But I’ve talked about I spent less than $300, for 65 inch television, I might have been slightly more than $300. That legacy in my head grows as as time goes on, but a very inexpensive 65 inch television. I don’t expect that to be the norm. Now. That doesn’t mean you won’t see some advertised. But that would be more like the old doorbusters where you know break into a Walmart, it’s don’t literally break in, but you force your way into a Walmart when they open at 6am. And there’s one. whereas previously, in the past couple years, that was just something you could order online. If you paid attention during the holiday season.

Here’s the other thing that isn’t going to go away and we’ve had some sort of false relief here. rental cars are going to go back to being prohibitively expensive. So I booked a quick trip to see some friends in October. And I was shocked that rental cars were only about three times what I used to pay instead of seven times what I used to pay. I’m going to guess that as we get to the holiday season and people have to travel, those numbers are going to get bad again, because rental cars are low margin cars for automakers. They’re stripped down. They intentionally don’t have things that can break until you get to a very high end rental car. So these are real things. You’re going to see people not book trips because they can’t get to where they’re going. Once they get there. You’re going to see different types of trips.

Dan Kline  30:00 This could be good for Disney World, because that is a closed environment, this could be good for, you know, all-inclusives or cruises or cities like Washington, DC and Boston that have a lot of public transportation. That’s all supposition. But there’s going to be really real things that come out of this. Let’s get to your questions and comments. I wanted to take and you can throw the first one up there, I’m not even sure who it was from jt rahaga hoody says, along with the chip shortage, should we be concerned about dependence on China for rare earth metals? Well, I know absolutely nothing about this. So I’ll throw it over to Steve, who I think wanted to answer.

Steve Symington  30:34  Sure. I think the answer to that is, we’re already concerned about the dependence on China for rare earth, metals, mining, etc. I think if memory serves the China commanded something like 80%, of the global rare earth metals market in 2019. So I do believe that the US Department of Energy and the current presidential administration are both making that a priority. They have that in their crosshairs to bolster the United State’s position in the rare earth metals markets. So definitely some opportunities there for investors. But yes, I do think there is concern for the world’s reliance on China for that particular market thing, don’t want it to be cornered.

Dan Kline  31:26  And it’s important that there’s focus on this, sometimes things like this happen, because no one’s paying attention. And we’ve seen the ingenuity of US companies, when it comes to like the space race, we you know, we’ve had more advancements in the past five years than we probably did during most of my lifetime. So once you identify a problem, and there is a problem with chips, there is a problem with reliance on various places for various things. I’m actually pretty confident that private industry will do a good job, if not directly changing that. But getting us to where we want to go.

We’re gonna take a couple more comments here. If you want to throw the next one up, JT, I appreciate that. Good day, fellas. Simon, I was wondering about chips as a sector and the viability of a semiconductor ETF as a second investing layer to generalize and build on holding in a related June 2021 recommendation, thank you for not sharing the recommendation. That is we don’t share of course, our proprietary members-only content. So we very much appreciate thank you for doing that. So I mean, you want to jump in here.

Simon Erickson  32:29  We’ll get a demo song. And I might surmise that you’re you might be in Australia with based on the day. So whatever time it is for you, thanks for tuning into our show, if that is, in fact, the case,

Semiconductors. I mean, there’s winners. And there’s losers from this, there are some companies that I think are really the cream of the crop, when you look at this industry as a whole and an ETF, whether that is market cap weighted, or whatever else, they’re they’re quantitatively deciding the allocations of what’s going to that ETF is going to miss out on I think, picking individually, the companies and the stocks that are the biggest winners from this, you know, for me without getting too too specific of the names because I know that you mentioned you know, our June 2021 rec is very similar to this, you can see that there are applications that are very high in demand for very specific processes.

It’s not just something that says, Okay, everybody who’s got the capacity to go ahead and manufacture this. Chip design is is becoming very, very customized right now. And the benchmark is like we were talking about earlier, kind of the efficiency of power of how they’re being used out there. And Nvidia owned this for years. But like more and more, there’s kind of kind of this custom silicon is is taking mainstage again, as it’s becoming more and more demanding. So I guess, to answer your question around about way ETFs are great. I think there’s a lot of opportunity for this entire space. Just as an individual stock picker, I really get excited about particular names even more though.

Daniel Kline  33:59 Yeah, and Simon, I’ll give you a second to decide if you want to take the last two comments, either one of those, but I want to comment on ETFs The problem is when you buy into an ETF and there are some ETFs I like, you often end up owning companies you don’t really want to own especially when you’re in a space that has limited players. So I have some experience breaking down cannabis ETFs and I’ve never looked at one where I don’t go like oh, there are four out of 10 stocks here where I wouldn’t want to own if Simon gave me the money.

Like that’s so I do think I’m not saying there can’t be an incredibly thoughtful well-done ETF that is a good passive investment for some people. I’m not Pooh poohing any one style I’m just saying there’s not that many to pick from here. And then you sometimes get to the weird thing like you know, like why Starbucks in this ETF for semiconductors? Oh, because designers drink coffee? Like could be a lot of weird logic as to how ETFs work Simon, do you want to grab either of those?

Simon Erickson  34:55  Question: So why are there so many foundries in the world? And why is the bottleneck with TSMC? Which is Taiwan Semiconductor, which is the largest foundry in the world? Yes. I mean, this is again, that kind of a step change, right? Taiwan Semi’s got contracts that it has to fulfill for each cut its customers out there, which are kind of all over the place. But smartphones is a big application for that. Apple is contracting with them. And so they’ve got a lock on that. Samsung wants to make its own smartphones with its own internal capacity. Intel’s making its own branded processors, I mean, kind of, there’s only so much to go around of the big hitters that are out there.

It’s not easy to just say, okay, we’re going to spend $100 billion in the next three years to keep up with Taiwan semi. I mean, if you want to have not only the manufacturing process, but like the design and kind of helping away the entire process from design to having a chip, you know, I should produce for you. It’s very complex, it’s very hard. And so the bottom that question kind of gets to that if there’s really only a handful of companies that can reliably do this, Taiwan’s Semi is almost 60% of the world’s global foundries capacity, you are working with them if you’re serious about making chips in volume today.

Daniel Kline  36:07 And it’s also important to remember that over the past year, Labor has been a concern. There have been reasons for factory slowdowns. And, you know, you can have all the people ready to work. And if you can’t get your raw materials because the truck drivers are, you know, are in the hospital or sick at home or are dealing with other issues. There are a lot of concerns that have sort of slowed this down. We’re gonna take one more comment from Max Lucas. Then we’re going to go into our next section where we’re going to talk about some really big changes with cryptocurrency in El Salvador. It involves McDonald’s, it involves Starbucks taking cryptocurrency, we’re probably not going to talk about that. But I found that fascinating. Max Lucas says I had a professor in college, I used to work for the US government identifying locations and plans to quickly ramp up rare earth mining if needed. Steve, why don’t you weigh in here?

Simon Erickson  36:58  I appreciate the profess in college. He used to work for the US government comments, there’s so many professors who work for the government doing interesting things like that. And that was actually my first job out of college was a professor who hired me, because we had government contracts for artificial intelligence and machine learning and feature extraction and all that good stuff. But yes, yeah, that’s really interesting. That, you know, I think we’ve had Maxx, I believe, didn’t graduate that long ago, but several years yet, and this is something again, that kind of reiterate the fact that this has been on the United States radar, to potentially be able to ramp mining and sourcing and all that good stuff for the rare earth metals industry, they are looking ahead, and I think we should take some comfort, at least in that.

Dan Kline  37:47  We are going to move on to our next topic, we would love your questions and comments, we’ll have a little bit of time at the end. So feel free if there’s anything else you want to ask us about. Within reason, we are happy to talk about that. I let go of the fact Simon that maybe they’re putting a fabrication plant in Austin, because they’ve they believe the hype about In and Out Burger, it’s good. But it’s not worth the $25 billion factory. But before we get to our next topic, we’re somewhere in the middle of the month, I’m not even sure what the date is anymore. But on the first of the month, our new picks came out. And let me let me pro wrestling style toot our own horn a little bit. I am really proud of how diverse our picks are, how many angles, we come at things from the fact that all seven of us are like-minded in one way that we care about the members and getting it right and putting all our work in.

But we’re so incredibly different in other ways and what we’re interested in what we follow, and that builds this unbelievably mutually supportive way of coming up with interesting picks that serve a really broad audience. So you might say, Okay, I’m really interested in what Simon just had to say about semiconductors. So I want to buy some of his picks. Or you might say, geez, I love the perspective Steve is bringing on this and his pics are, you know are, you know, very diverse and I’m interested in or maybe, hey, biotech is something I’m really interested in. But I don’t know that much about it. And I really like what Max is saying and healthcare. Wow. That’s the next frontier.

Dana is talking about it. Mobile payments. I’m super interested in that. Well, Matt Cochrane has done his homework, and he’s credible and or the global stage and emerging technology and Anirban Mahanti. Wow, he’s done his homework. So on the first of the month, Simon, what did our members get? And how can the people who are not members and I can’t believe you’re not a member? How can people who are not members sign up for 7investing?

Simon Erickson  39:39 Yeah. And, Dan, I’m so thankful that you framed it the way that you did because our mission at 7investing is to empower people to be better investors. To more confidently invest in the stock market into your future. And so the returns are great, right, our picture outperforming the market, but there’s also a lot of people out there that are also slinging ideas. You can see him on Twitter, you know, substack everybody’s got You know, hey, buy this stock today and look how much money I made on the stock last month, here’s my personal portfolio, whatever it might be. The second layer of what we’re really trying to do, the empowering piece of that is to kind of transfer everything that we look at from all the knowledge that we have coming from this team, right?

And you mentioned several of them, you know, several advisors on this team, we’ve got graduate degrees here, and we’re really tearing into what’s going on out there in the market. How do you analyze a company, you know, what should you be looking for. And we’re trying to couple all this together. And I guarantee that anybody who reads our recommendation reports to come on the first of the month, watches our deep dive videos for our team talks about the picks on the eighth of the month. And it also tunes into it to watch our podcast where we talk with, with industry experts, we’ve just published one with Rocket Labs CEO Peter Beck, just today. I mean, if you if you follow everything that we’re doing out there and we’re trying to accomplish, you will become a more empowered investor, you will make you know, more informed decisions about your own investing.

And I think that the educational piece of this, you know, we want to make sure that we’re we’re ringing that bell and pointing out that’s a big piece of what we’re trying to do. Because I think it’s more and more important for people to take advantage of this and learn more about the stock market and take control of investing their own money. That’s kind of the goals we’re trying to achieve. And so the first of the month, like you said, to kind of wrap it up here full circle, is when our new recommendations come out. I’m so thankful you pointed out it’s a diversity of picks from Dana and Massa kind of biotech things to retailed artificial intelligence to semiconductors, whatever it might be. We’re turning over a lot of stones out there and looking really, really deep and a lot of companies.

Dan Kline  41:31 Yeah, I’ll point out that I’m a better investor. Because of this, like I spent half a day this week looking at a pre-public offering space company, because I know a lot more about space from doing shows with the two of you guys. And I’m not saying it’s one that might ever make it to the top of my you know, this is my pick, but it might like you know, and your exposure to that your ability to deal with that. And that’s something I think we give our members if you’d like to join it is 7investing.com/subscribe, you can either pay $49 a month, or the true value $399 a year, if you are an active student, we have an $84 student option. And if you are an active student that doesn’t show up as .edu email or something that triggers our system, just send Steve Symington an email at info@7investing.com maybe include like a picture of your student ID with a couple of things blocked out or you know, just we will figure it out.

We are not trying to make it all that difficult. But there are limits with technical issues that is of course info at 7investing.com. But we’re running out of time we will get we see a couple of comments. We will get to those at the end of the show. But I want to get the last topic in here. And that is Bitcoin has officially become legal tender in El Salvador. Simon, I gotta be honest, I don’t know where to go with this, because I’m not sure what this means. So why don’t you give us the 10,000-foot overview, and then I will try to jump in with some sensible questions.

Simon Erickson  42:58  You know, yeah, it’s such a fun story. It’s something that Steve and I actually get a chance to talk with our partner crypto EQ about every single month, we put our conversations up for subscribers to view those two. But yesterday was the first day that Bitcoin actually became legal tender in a country. And the country was El Salvador, right? El Salvador Central American country, about a $30 billion GDP. And what it means when it’s legal tender, is if you have a shop, if you have a coffee shop or any other business in El Salvador, you now need, you are now required by the government to accept two forms of legal tender. One is US dollars and the other is now Bitcoin, you have to have a way to accept that. And El Salvador through its platform, I believe it’s called Chico is now accepting Bitcoin for any kind of commercial transactions.

Why does that matter Dan? Well, because the country really wants to make a lot less friction for digital payments. They think Bitcoin is the way to do this. And they want to find a way to kind of stop just using cash for transactions out there. Let’s do this more efficiently in terms of commercial transactions, trying to boost its GDP and cryptocurrencies could be a really interesting way to do this.

So I’ve got a couple of questions here. So the first one is, how do you have a legal tender that you have no regulatory control of? That seems to me, like a really big red flag on this one. I mean, this is right now the legal tender aspect. There’s some ambiguity to that question, because right now, this is focusing on the commercial transaction side of it, right? El Salvador has laid out some some legal protections for Bitcoin. They’re saying, if you live in El Salvador, and you are investing in Bitcoin, you don’t have to pay any capital gains on it. So Dan, if you me and Steve all move down to El Salvador we buy some Bitcoin and make a million dollars on it this year. We don’t pay any taxes on that as an investment. So that might be bringing some people who are really interested in mining or trading cryptocurrencies in El Salvador.

And then of course, the bigger picture it’s not a fiat currency it’s not a national currency that’s you know, controlled, so to speak, like the Fed controls or influences the US dollar and monetary policy and inflation all those things, is basically saying, hey, Bitcoin is much as part of a much larger blockchain that has its own market-based approach to controlling the price of that, we’re going to tether on to that rather than try to control it from a government policies a little different than a traditional currency that you see that a government issues for its own national borders.

Daniel Kline  45:24 Just a couple of more questions here, Simon, as we wrap this up, but do you worry about the volatility of it? We’ve seen Bitcoin move by 1000s of dollars and put this into context of like, you walk into the store in El Salvador, you’re buying a refrigerator, and that refrigerator, when you buy it cost $1500. But that money is only worth 12 $100, by the time you get it, given the cycle for manufacturing or refrigerator. If it’s not in stock, there’s a lot of supply chain issues that could cause by that much volatility, the dollar is never that volatile.

Simon Erickson  45:54  But think we’re where we are in the world though Dan. The US dollar has not, US has no interest in making Bitcoin illegal currency, or legal tender for transactions from the US for that very reason. The dollar is stable, but we’re talking about South America, Central America. I mean, think about what’s going on in Venezuela right now the devaluation of your currency every single week. Basically, could Bitcoin become kind of like a euro equivalent of a Central or South America where you can do it, you know, exchange cross border with no fees? You know, and no deflation every week or every month from the from the national currency? Yeah, I mean, maybe it does. And El Salvador is really putting itself on the map, literally and figuratively, with that of saying, Hey, we’re gonna be first and Come, come pay with stuff with Bitcoin within our national walls.

Daniel Kline  46:42  Perhaps we’ll be moving our headquarters to El Salvador, this is a we often talk about which of our locations would be the best as sort of a running gag with us. Simon, does this make El Salvador a haven for illegal payments?

Simon Erickson  46:56  I mean, it’s an interesting question. It’s a tough one to answer, Dan. I mean, if you followed the story with Coinbase’s CEO on Twitter, just these past couple of days, there’s kind of a lot of pushback with the SEC, and cryptocurrency exchanges. And then that kind of opens up Pandora’s box of you know, what is the role of regulators? How can you clamp down on illegal activity, which no country wants that to be happening, money laundering and stuff like that, while still encouraging innovation and something that could provide a lot of interest for your country? I think that it’s a tough one to answer because I think that the same could be said about money laundering and cash, right? Is it better to have Bitcoin than cash? Even if you know, you don’t have a complete control over everything right now, we can see bitcoin wallets out there.

We know the Satoshi has a Bitcoin digital wallet, that hasn’t had any transactions since it was formed back in the early days of cryptocurrency. But it’s really, really impossible to track where or who that person or persons is. And so it opens up the questions of is this going to be money laundering? Is there going to be bad things are going to happen from this? Keep in mind that was the first use case of Bitcoin was illegal activity and money laundering. And now countries, if they’re going to adopt things like this, they’ve got to put some kind of controls in it. So that it knows at least a higher level, what’s going on with the currency. That’s trading hands across the country.

Dan Kline  48:17 Probably worth pointing out that where Simon and I both live Simon in Texas, me in Florida, when you say SEC, if it’s not in the context of an investing show, that is not the context people would think they would be going towards the all-powerful Football Conference. I say this on the eve of the NFL season, starting one last question here. Is this something we’re going to see in other countries, and maybe even with other cryptocurrencies?

Simon Erickson  48:44  Yeah, I mean, there’s other countries as well, Steve helped me out reminding me I think Uruguay was one of them that Spain was looking at it, some some other countries in Europe, were considering it. I’m not sure as far as legislation, how far a lot of that’s gotten. El Salvador got to put the flag, you know, down and say, Hey, we were first but it kind of opens the door that if another country out there has proven this works, and you kind of see the benefits of it. Yeah, it makes it a little bit easier to sell for other countries to follow suit.

Steve Symington  49:11 I think it’s only a matter of time, too. And yes, that’s that’s definitely it’s gonna happen. But yeah, I think we can fairly say with a fair amount of certainty that it’ll happen. We’ve got a handful of questions and comments we are going to take, there might be time if you want to get a couple more in. Mike Fee. We’ll take the big one JT, sort of a few up there. China started accumulating rare earths around 30 years ago and have a big head start. The problem is that these are being hodled, to use a millennial term, but I have no idea if I pronounce that correctly. Not a millennial – by this Chinese government and won’t be sold at any price. I have to look up slang terms that come up on that one

Simon Erickson  49:54  Dan, I’m gonna go. We’re gonna need a check on that.

Daniel Kline  49:58 Our resident millennial has often referred to himself not being a good millennial. So maybe maybe one of our extended friends watching this could send us a pronunciation but feel free to jump in Steve. Sorry to step on you there.

Steve Symington  50:09  Yeah, that first-mover advantage can’t be understated. And we talked about that a lot with the stocks that we mentioned. But I think it might be a slightly different ballgame when we’re talking about world superpowers. So it’d be interesting to watch it play out, but we’ll see.

Daniel Kline  50:27  That assignment anything you want to add there? Oh, that’s perfect. Yep. huddle.

Rashad asks, What is the members live stream every month? It is the third Friday of every month at I want to say 11am. Eastern time. That is correct. So that is a call just for our members. Why is that important? Because they can ask us about specific picks, we’ll provide some updates, we’ll give you some color. I know that my pick this month, I wrote an update the day the pick came out because some big news came out. So people are going to have questions about that.

This is a really fun conversation with our members where you know, any questions you have, we’re going to try to answer them. And sometimes that’s during the call sometimes that Steve collecting the questions and answering them after the fact that sometimes it’s going wow, this is resonating so much that maybe it should be a 7investing Now topic that we do. But it is really a chance for you to interact with us. And it’s the best hour and a half of the month, I think it’s it’s fair to say it is a ton of fun because we get to interact with our members.

Simon Erickson  51:30  Can I add a little bit just as a kind of a little bit more flavor to what we’re talking about. So Dan is pick this month, right? We’re not going to go out and talk about the pick on anything that’s public facing like this show, we reserved the names of the recommendations in the reports for subscribers. And after you read the report, if you say, hey, Dan, I’ve got a really good question for you about your pick this month. What do you think about x, y and z?

I mean, you get a chance to interact directly with each of the advisors. And this is the chance to do that on the third Friday. And Dan responds directly, right. It’s not just a pick that’s a report that goes out into the ethers, it’s kind of like goes back to the empowering, we’re talking about early. I love the third Friday of every month is my favorite part of the month, actually.

Daniel Kline  52:07 Yeah, and a lot gets done in that call. But a lot also gets sent to us at info at seven investing.com where we, you know, later on take those questions or put them into the call or decide what to do with them. I know someone asked a really pointed question that Steve forwarded to me as an email. And it was just the right move to answer the person. So I and the person wrote me back. It’s an Oh my god, I can’t believe you’re answering me.

Well, there are times we’re going to answer you directly. They’re going to times I’m gonna say hey, we’ll talk about this on the show. And you can here’s how you can find it. But we try to be incredibly responsive to our members. Because we know you know that that that is our family. That is who it is you know, making keeping the lights on and that is really important here.

Mike Fee says illicit activity makes up less than 2% of Bitcoin transaction volume. My only question and push back on that Mike, is I’m guessing most people doing illicit things don’t check off the box that say they’re illicit. So I’m gonna guess that there’s some level of subjective and probably a line, where some people would consider it elicit and some people wouldn’t I think there’s a lot of that when it comes to taxes and sort of how all this we we are in to quote an old boss of mine. We are in the first inning of a nine-inning game here. We are, are barely cracking. I mean, I remember not long ago and it was like a major news story when a pizza place in Cambridge mass, took Bitcoin and had an ATM for it. And of course, people who bought those pizzas are now kicking themselves because they spent, you know, $100 bitcoins, and they’re worth $40,000 now, whatever it is.

We will close before our finisher with a comment from our friend, Max Lucas, because it is a good one. Wouldn’t it be a much bigger deal if a country that controlled its own currency allowed Bitcoin to be legal tender? El Salvador did not control their own currency before Bitcoin. Very good point. Simon, your thoughts here?

Simon Erickson  53:56  Right. And this is the quintessential question, right? Like wasn’t wasn’t Bitcoin created to escape government control? Right. And you look back at the Bitcoin white paper, what was it 2008? Dan, you know, when it’s first kind of hitting the scene, it was created to get away from inflation and federal, you know, federal banks that were influencing the controlling the currency that was a national currency. I mean, this is kind of a whole reason that you had a decentralized blockchain that was completely market-based.

And now all of a sudden, you’ve got enterprises that want to start using blockchains because it’s more efficient than all of the toll booths and the middleman, you know, financial transactions that take place. Now you got people that are wanting to buy this and send it now you’ve got commercial transactions that are taking place in El Salvador. I mean, Bitcoin is coming up on some difficult questions of what is it? And where is that balance between control and regulators and, you know, central banks versus decentralized and it just, it’s out in the hands of the market? I mean, yes, it’s a good question. I cannot profess to have the answer to this right now. It’s an excellent question of what is the impact? And what is El Salvador want to do bigger picture? Other than just open this up for transactions within this country?

Dan Kline  55:06 We won’t have a definitive answer to every question because this is still, of course, an emerging story. We are nearing the end, JT Street, it is time to hit our finisher. And it is a bit of a zig based on what we’ve talked about earlier. Where do we think the US workforce will make the biggest gains over the next two years, 3.7% said benefits 48.9%. That’s the big winner said locational flexibility 29.5% said schedule flexibility. 18% said wages, I’m gonna weigh in with a quick comment here. And then Simon and Steve can jump in, I’m gonna say you’re wrong on locational flexibility, because the vast majority of the American workforce can’t do their jobs from home, if you work in a factory, you can’t bring your little part of the chipmaking or the automaking process home.

It is a relatively rarefied class of worker who can work at home. And I don’t know what percentage of the workforce that is. But most of the people who work at your supermarket or your Target or you know, there are still a lot of jobs, your bartender cannot mix all the drinks at home and then have someone come pick them up. It just doesn’t work that way. Simon, any thoughts here on this one?

Simon Erickson  56:12  Did we say biggest impact? What was the wording of the question again?

Daniel Kline  56:15  Yeah, biggest gains over the next two years? So where will we’re you know, we’re seeing the world right now due to labor shortages, tilt towards workers in a number of ways. But long term, and I have a really definitive answer here. But I’ll let you guys weigh in first.

Simon Erickson  56:29 I don’t know if it’s possible to combine A and D. But it seems like benefits and wages are going to move together in a big change of how much people are getting paid, and how much they’re being given. If they want to work at home versus not have come to the office. That’s a huge impact in my mind.

Dan Kline  56:43  Steve, I’ll let you jump in.

Steve Symington  56:45  Yeah, I’m tempted to say locational flexibility. And with that comes schedule flexibility. But you are right in that not as many people as you think can work remotely. But that is an increasing thing. But I would say benefits and wages. wages first, hopefully, because people are having trouble hiring workers. And they’ll realize that they need to pay them more for certain jobs in order to actually fill those spots. So yeah, that’s where I go.

Dan Kline  57:13 We are seeing gains in wages. I forget the number last month, but it was something like 4.6%, it was a meaningful number. We’ve talked anecdotally about fast food places paying more than $15 an hour because they can’t hire people. But I actually think it’s going to be benefits. If you say biggest gains. Why is that? Well, if I give you $1 an hour raise, you know that’s meaningful, but it’s a couple $1,000 a year, if I give you free college tuition, that might be worth $100,000. And I actually think when it comes to benefits, there are some things companies can do that they can just kind of flip the script on what it costs.

Starbucks isn’t paying $30,000 a semester for people to go to college, you know. So there are deals like that, that can sort of change how we do things. I do think schedule flexibility is sort of a benefit. You’re going to be able to have your people who have to work, use technology to say hey, my kids home Tuesday, can you take – and I think we’re gonna see AI and technology do that. But I do think benefits are going to be the low hanging fruit here. And Simon feel free to make a final comment.

Simon Erickson  58:19  Just Just one more on the fact check, Dan, we have been in fact check I believe the pernix correct pronunciation is hodl. We’ve gotten a fact check it is pronounced hodl for Hold on. Apologies. I said hodl earlier a correction to my mistake earlier in the program.

Daniel Kline  58:34  Hodl actually sounds like a place from Lord of the Rings.

Simon Erickson  58:39  And also wanted to say that it’s the eighth of the month. So our team deep dives just came out earlier today. We emailed all of those out and we’ve unlocked them now for our subscribers, which is where our team describes the opportunities and the risks for each of our recommendations this month. Our own JT Street shares some countries in the UAE pay for housing for their employees. That’s actually true in a lot of places. When I worked for Microsoft, my Indian colleagues lived on like a college like campus, they had dinner together every night and like a cafeteria style setting. Because where the residential areas were didn’t make sense. I actually am kind of a big believer that we’re going to see more of that.

That some of this unused office space is going to become what I call co-living. Co-living a little different than CO working because you need locked doors and you need a little bit more safety. But I do think that’s going to be a thing where you have a relatively small like think like a train sleeping cabin where you are there Monday through Thursday because you work for Netflix, which wants to have those creative things in the office. So I do think we’re living in a really interesting time.

But of course, we’re going to be figuring it all out on an abacus because we don’t have enough chips to make the cell phone we all desperately want. For those of you who are setting your calendar. I will be taping a show with Anirban Mahanti that’s going to mostly air next Wednesday, we’re going to talk investing mistakes and we’re going to look at five big pandemic questions. You know, we can call them recovery stocks, call them whatever.

Dan Kline  59:25  But we’re going to get the global perspective of poor Anirban who has been in lockdown in Sydney, Australia for a really long time. So we’re taping that a little bit later today, it’s gonna air on the 15th. But I wanted to give a bit of a heads up because we put a ton of work into that show. But with that, we are nearing the end. Here we are at the end here. If you’d like to get in touch with us, you can email us for young people. That’s what I was about to say like a letter but you don’t know what a letter is either. Like my son doesn’t email which I find baffling.

So for those of you who use email, it is info@seveninvesting.com for those of you who’d like to get in touch with us on Twitter, we are @7investing you can of course private message us there. You know if you want to share something with us if you want to tag any of us, we always appreciate that. And of course you can follow Steve on TikTok but he keeps that that info private. There’s a lot of dancing with bears. It is it is not pretty. I know that is a joke. Thank you. JT Street. Thank you Sam Bailey for forgetting the show set up for Simon Erickson and for Steve Symington. I am Dan Kline. I will see you on Friday.

 

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