7investing Blog - 7investing 7investing
Stock Tips Mobile Menu Dropdown Icon

It’s encouraging to see some green in the market during these past two months. Investors are slowing coming back out of the fetal position and are noticing that inflation’s coming down. And that’s giving them confidence to put money money to work into risk-on assets like stocks again.

Yet this will be a gradual process. There’s still healing required from 2022, and still a ton of money on the sidelines. At the end of May, more than $5.5 trillion of American assets was still parked in money market accounts.

While getting a 5% APR to keep your cash in the bank might sound good today, this will also be the first capital to return back to equities. The S&P’s 17% YTD return will soon switch the investor psychology dial from ‘fear’ back to ‘greed’.

I expect this is good news for the financial services sector, as well as larger tech companies who will benefit from exposure to the Nasdaq and related ETFs.

All of the above is context that’s influencing my upcoming stock recommendation. Looking forward to sharing it on August 1st.

Very interesting to see Oxford Nanopore exploring an opportunity to bring nanopore sequencing as a consumer-facing diagnostic for infectious diseases. This could provide rapid-response to outbreaks like COVID, but in a way that’s low-cost and with an extremely fast turnaround time.

Oxford is headquartered in the UK and is traded primarily on the London Stock Exchange, though international investors can buy ADRs through the ticker “ONTTF.” I think the have an innovative leadership team and are responding adeptly to the medical world’s growing need for low-cost, fast-response, consumer-friendly diagnostics.


Zoom out from the headlines of the current week, month, and year.

The power of compounding can change your entire career.

I just spoke with Pulak this morning about his long-term investing approach and how it was influenced by evolutionary biology.

Similar to our 7investings principles, he follows three pillars:

  • Avoid big risks
  • Get a fair price
  • Never sell

This has led his firm Nalenda Capital to amass very large position sizes in the best-in-class business. He has two funds, and the large position in each has reached 29% and 20% allocations. Overall, the average return on invested capital of the companies in his funds is 41%. That is incredibly high.

I’ll publish the full conversation to our podcast next week. Very enlightening, and further explains how individuals can vastly outperform larger institutions.

A few quick notes here from what I believed was a pretty interesting discussion between Cathie Wood of ARK and her mentor Art Laffer.
  • Leading indicator of issues in the banking system is a rise in Credit Default Swaps CDS. This started happening all the way back in the Spring of 2021.
  • SVB’s biggest issue was that its assets were all long-term investments and its liabilities were all short-term. This became a big problem when the yield curve inverted.
  • Other banks have the same problem and will similarly capitulate. Most troubled banks made two faulty assumptions: 1) they invested flood of 2020 COVID stimulus funds into long-term, held-to-maturity bonds that yielded just 1.6%; and they 2) believed that deposits would never go down and that borrowers would never shift assets back to cash.
“You never want a liquidity crisis to become a solvency crisis.”
Art joins other economists such as Mohamed El-Erian in thinking Jay Powell is inexperienced and doing a pretty terrible job at the helm of the Fed. The Fed should provide long-term monetary and fiscal policy guidelines. Instead, it has provided short-term shocks that disrupt the stability of our financial system.

Softbank just amazingly posted a $7 billion loss in the most recent quarter, as market mayhem has wreaked havoc on its tech-heavy investment portfolio. That’s a huge number; and it shows the magnitude of how dramatically things have gone wrong for it this year.

My takeaway from the story is that Softbank will be ‘trimming the flowers’ — i.e. selling a lot of good companies in order to offset its losses. It has committed to playing defense and a stock buyback until the global macro improves, and is still looking for the right time to bring its $32 billion acquisition of ARM back into the public markets.

Intel’s move into FPGAs was defensive; it didn’t want to cede share of its Xeon CPUs to AMD. But I still think it was a good move, to keep up with these computationally-demanding AI accelerators.

Intel To Broaden FPGA Lineup And Make Them At Home

Really interesting behind-the-scenes look recently from Aurora Flight Sciences — the subsidiary of Boeing with which Virgin Galactic recently partnered for two of its next-gen mothership design and tooling: https://www.aurora.aero/2022/10/05/behind-the-scenes-tooling-design-for-virgin-galactic-motherships/


Recall these motherships will each be able to handle up to 200 flights per year (so 400 total), with the first expected to enter service in 2025.



This is really neat: Genomics PLC to Provide Polygenic Risk Scores

The UK is doing DNA tests on 5 million people, to connect the dots between genetic anomalies and genetic conditions. If you opt-in to see your results, they will send you your “polygenic risk score” — which is your likelihood of developing cancer, Alzheimer’s disease, arthritis, diabetes, and more.

Can be incredibly useful to be aware of that proactively, in advance of showing symptoms later on.

I took a look this morning a how quickly Tesla’s been ramping up its electric vehicle global production. Simply amazing that it’s increased deliveries of its Model 3 from zilch five years ago to 300,000+ per quarter today. Elon knows how to execute!

There was something else I found interesting too. With all of the expansion during the past year at its Shanghai, Berlin, and Austin Gigafactories (Hook ’em!), Tesla is now producing at only 54% of its capacity for its Model 3 & Model Y. If it were to reach 100% utilization — meaning it can churn out all of the vehicles it’s currently capable of — it could be manufacturing 1.8 million Model 3/Y cars per year.

The Takeaway = There’s about to be a lot more Teslas on the road in the years ahead. Buckle up.

Krzysztof and I are trying out something new for the podcast next week. More of a freeform wide-ranging discussion on general topics that interest us rather than deep focus on a specific company or industry. We’ll be interested to see if it finds an audience.

There are 30 self-driving taxis buzzing around San Francisco between 10 at night and 6 in the morning, which is part of GM’s autonomous taxi beta project: https://getcruise.com/rides/

Electrek reports that initial feedback has been positive and that rates are already 20% less than UBER. There are expectations that rides will become even cheaper as the program scales.

I’m having some fun this morning and am running a Twitter poll to see how you feel about the AI/human relationship in 2042.

This was prompted by a rabbit hole I’ve been furiously digging myself into. Yann LeCun’s — an AI pioneer and now one of Meta’s (Nasdaq: META) chief scientists — has had an about-face lately. He recently published a paper stating our current approach to AI is the wrong one. He says that reinforcement learning is a brute-force attempt to predict the next steps in action-based sequences; when in reality we should be designing inference models that are trained in a cognitive architecture that responds to inputs from the world around it.

The “narrow AI” versus the “AGI” debate rages onward. But this time, it’s from one of AI’s most influential voices.


What: China’s Passenger Car Association recently increased its forecast for “new electric vehicles” that will be sold in the country during 2022, from 5 million units to 6 million. NEVs include battery-powered vehicles (BEVs) and also plug-in hybrid vehicles (PHEVs). There were 571,000 NEVs sold in June and then 564,000 sold in July, increasing at 144% and 129% (respectively) in year-over-year comparisons.

Here’s how the market share looked for those numbers in July. Keep in mind that some of these vendors — like Tesla and NIO — are only selling BEVs and don’t offer PHEVs:

  1. 29% – BYD
  2. 7% – SAIC Wuling
  3. 5% – Tesla
  4. 2% – Xpeng
  5. 2% – Volkswagen
  6. 2% – Chery
  7. 2% – NIO
  8. 52% – Everyone else.

Impact: I’m really intrigued by this as an investor. China’s EV market is not only growing rapidly, but it’s extremely fragmented and doesn’t have a clear-cut winner yet. It opens the door for companies we’re familiar with like Tesla, but also less-familiar companies like BYD, Xpeng and NIO. I’ll continue monitoring the sales reports, to see who’s winning share in this intriguing industry.