ON MIKE’S MIND
Everyone’s mind seems to be on the horserace this week between ChatGPT and - coming up fast around the bend - DeepSeek.
But I’ve been thinking about how baseball is like investing.
Hear me out…
Yesterday, I was honored to help with an organization I’m deeply involved in, where we help economically challenged kids attend baseball camps. It got me reflecting on my times as a ball player, a salesperson, and now as an investor as they related to some core principles of baseball.
Why?
Because in baseball, as a hitter, you must learn to deal with failure daily. Nobody hits 1000 percent, after all, not Ted Williams, not anyone. So even if you’re good and hit two out of three, you must integrate the reality that you will miss one of three.
And here’s the key - you will never succeed if you obsess on that one whiff. And you’ve got to play as a team.
So you go to baseball camp, find the best coaches, learn how to play as a team - and you keep your eye on the ball.
That’s a great way of explaining what we are doing at…
THE PREMIUM LEVEL OF THE CO/INVESTOR CLUB
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This way, we ramp up our success rate working with All-Stars rather than swinging in the dark - or in the semi-light.
That said…
…we, of course, welcome all our free newsletter readers.
But I must say that being just a reader is like sitting in the bleachers.
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THE MARKETS
DeepSeek majorly disrupted our estimates of what AI will be capable of, causing a massive re-evaluation of many tech companies:
S&P 500: -1.28%, DJIA: +0.27%, NASDAQ Composite: -1.63%
VIX saw a spike on Monday of 22.51 but has now fallen to 16.43
The Fed held interest rates at 4.25-4.50%, citing sticky inflation over their 2% target
The 10-year yield fell 7.4 basis points to 4.543%
NVIDIA’s lost $589 Billion in market cap on Monday
DeepSeek’s claims at chip efficiency put a serious damper on forward earnings growth
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Stories The Club is Watching
WISE WORDS
"Show me the incentives and I will show you the outcome. Never underestimate the power of incentives - they are the single most powerful force in organizational behavior." - Charlie Munger, Speech at Harvard Faculty Club (1995):
“Disruptors don't have to discover something new; they just have to discover a practical use for new discoveries.” ― Jay Samit, Disrupt You!
"The AI revolution will be 'painful'—but worth it. It's essential to engage constructively with the technology to navigate its complexities." - Reid Hoffman, Co-Founder of LinkedIn
Reflections on the Week…
Happy New Year!
Farewell, Year of the Dragon—bold, ambitious, and full of fire. Welcome, Year of the Snake—wise, intuitive, and maybe a little sneaky (but in a good way).
Speaking of things that may or may not be sneaky…
DeepSeek is making waves with its use of NVIDIA chips. Did they break trading regulations? Maybe. Maybe not. This is a Schrödinger’s cat situation—we won’t know until someone fully opens the box.
Either they’ve cracked a revolutionary way to squeeze every ounce of power from each chip or they’re selling a dream that’s too good to be true (cue the Theranos flashbacks). Reality is probably somewhere in between, but regulators are already on the case.
So, what does this mean for us as investors? Regardless of whether DeepSeek’s claims hold up, the broader takeaway is bullish for the AI industry. We’re seeing continued growth in AI-driven solutions, data centers, and infrastructure expansion—all feeding into a stronger, more tech-driven economy. Consider this week a teaser for the next few years.
And this isn’t just about one company—it’s about a much bigger game.
The U.S. and China are in a high-stakes battle for technological dominance, with semiconductors at the heart of it. Trump’s semiconductor tariffs are part of America’s effort to pull manufacturing back home while China continues pushing for self-sufficiency in chip production.
Meanwhile, Apple’s Q1 2025 earnings report showed an 11% year-over-year revenue decline, with Tim Cook calling it “the most competitive market in the world.”
Translation? The fight for tech supremacy is intensifying, and the companies (and countries) that control AI and semiconductor advancements will shape the global economy for years to come.
Want to dive deeper into the DeepSeek drama and how they might be rewriting the efficiency playbook? Check out this podcast…
The Savvy Investor…
Boom’s Supersonic Test Jet Breaks Sound Barrier for First Time - Bloomberg
Fed rate decision January 2025: Fed holds rates steady, takes less confident view on inflation
India continues an IPO boom despite a market slump
Greystone Value’s Q4 Investor Letter
RLH Capital’s Q4 Investor Letter
Fidelity Director Weekly Asset Allocation Review
Letter to MTN's management team
Publisher’s Note: Miami Dreaming
I'm fresh back from Miami Beach - got some great sunshine and out on the water - much needed after the Malibu fires around my house in LA. Saw many of my alternative investment friends who were in South Beach for the iConnections Global Alternatives Conference.
Here's the buzz: change is happening at lightning speed. DeepSeek shook foundational ideas about the cost of AI llms - as well as US dominance in the field. Everyone is watching the tariff situation closely as well. What's clear to everyone, other than an almost religious obeisance to Bitcoin, is that investors must keep one eye on the big enduring trends and one fixed on political winds. This is no time to sleep or watch from the sidelines.
That said - there remains one enduring truth: find great companies run by top-tier teams on a growth curve. And get in early.
Or, as Mike recently reminded me of the Peter Lynch quote, “I think you have to learn that there's a company behind every stock and that there's only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.”
Remember to join as a Premium Member, so you don’t miss out on some extraordinary investment opportunities that follow this sage guidance. Become a Premium Member here.
Have a great week,
Adam
If you have not already upgraded your membership…
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