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The Sunday Drive - 11/26/2023 [#86]

👋🏼 Hello friends,

Greetings from Saratoga Springs, NY! Let's take it easy and enjoy a leisurely Sunday Drive around the internet. 

🎶 Vibin'

There is much division in our society these days and I think it’s important to seek common ground and unity wherever we can. So this week, I’m vibin’ to the 1970 hit song Let’s Work Together by Canned Heat (H/T to the Forrest Gump soundtrack).

What’s noteworthy about this video from the UK television show Top of the Pops is that the young women featured dancing to the song are all now 70-80 years old. Quite a reminder that time waits for none of us. So keep dancing…


💭  Quote of the Week‌

“The more you practice the art of thankfulness, the more you have to be thankful for.”
– Norman Vincent Peale

”Gold is money. Everything else is credit.” – J.P. Morgan


📈  Chart of the Week

At the risk of appearing to continue to beat the dead horse…

The Chart of the Week plots the performance of the Russell 2000 (small cap) index against the performance of the S&P 500. The beginning of the series shows the epic outperformance of small cap stocks relative to large caps following the “tech wreck” of the 2000-2001 period.

With the significant outperformance of large cap tech stocks in the last several years, small caps have surrendered ALL of their relative performance gains from the early 2000s.

In my opinion, the stage is set for a powerful mean reversion and a period of meaningful outperformance of small caps in the coming year or two.

Be there, or be square.


🚙 Interesting Drive-By's

This week we have articles on Wall Street Surprises, Perspective, AI, and Progress:

💡 Byron Wein, Wall Street Seer of Surprises, dies at 90

At age 80, Byron Wien compiled “20 Life Lessons” from a long career as a Wall Street soothsayer. “Never retire” was No. 20. “If you work forever, you can live forever,’’ he explained. “I know there is an abundance of biological evidence against this theory, but I’m going with it anyway.”

“The hard way is always the right way,’’ was No. 4. “Never take shortcuts, except when driving home from the Hamptons. Shortcuts can be construed as sloppiness, a career killer.” [link]

🤔 Today’s Most Valuable Resource (It’s not Time or Attention) - from Tiago Forte

The scarcity of resources like land, time, and attention has shaped our society over the past decades. Now, we're entering a new era. In today's information-rich world, perspective is the most valuable resource. [link]

📈 Ownership and Access to Unique Data Will Decide Who Wins the AI Race

The race to build the biggest, baddest, meanest AI models is heating up as startups and tech giants alike swallow tens of billions of dollars to buy GPUs and train AI models in search of use cases that unlock enormous new revenue streams.

And while GPT-4 is currently leading the pack for general purpose models, competitors like China’s Baidu claim that their models are just as good, and many industry-specific AI models are also carving out valuable niches.

But what determines how well a model performs? And who has the ability to build the best models? The answer: companies that have access to the biggest and most unique datasets.

An OpenAI employee recently claimed that all AI models trend towards the same endpoint regardless of training tactics or strategy, and that the main differentiator is the dataset. To which Elon Musk replied: “data is the spice.“

This could partially explain why Musk purchased Twitter (Now X). On top of the tens of billions that Tesla is investing into AI, Musk now has access to one of the biggest text datasets in the world with X’s purchase. No wonder Musk highlighted Grok’s access to X’s posts as a unique selling point when announcing the chatbot.

Venture capitalist Chamath Palihapitiya highlighted some more companies that own datasets with “huge value“:

  • “Tesla’s real world environment data”

  • “Meta’s real people preference and behavioral data”

  • “Google’s search intent, YT behavior and Gmail”

  • “Amazon’s purchasing behavior”

As the race to build the most powerful AI models ramps up, expect those with the ability to produce and own unique datasets to capture most of the value. [link]

⚙️ The Cost of Progress - from Jack Raines

By most standards, humanity has made more progress over the last two centuries than at any other time in history. It took us nearly 12,000 years to go from a world population of 4 million people to 1 billion, then we exploded to ~8 billion in 200 years.

Despite this exponential population growth, the total number (not proportion!) of people living in extreme poverty worldwide is lower than it was at any other point in the last 200 years.

It’s hard to wrap our minds around just how quickly the world improved in the 19th and 20th centuries. Aviation technology took us from the Wright Brothers’ first flight in 1903 to the moon landing just 66 years later. Insulin and penicillin were both discovered in the 1920s. Polio was virtually eradicated by the turn of the 21st century.

The first transatlantic telephone service was established via radio in 1927. Less than 100 years later, 5.3 billion people around the world can talk to each other on the internet. The smartphones in our pockets have more computing power than the systems that NASA used to send astronauts to the moon.

Beyond scientific advances, we have made tremendous social progress as well. Just look at the last century in the United States: women gained the right to vote after the 19th Amendment was certified in 1920. Congress passed the Fair Labor Standards Act, which regulated the employment of minors, in 1938. Segregation ended with the Civil Rights Act of 1964. 44 years later, an African American man who was born in the era of segregation was elected the president of the United States.

We have more money, more knowledge, and more freedom than our ancestors had at any other time in history. We can live where we want, do what we want, and spend our time with whom we want.

Despite our good fortune, we have never been more miserable. [link]


👋🏼 Parting Thought

A view of the current state of the Real Estate market…


If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,