turning Robinhood money into sci-fi energy and compute moonshots is exactly how you should billionaire.
The difference between a great business and a mediocre one is often that the great business keeps compounding capital at high rates of return for decades, while the mediocre business cannot. Most people underestimate how powerful this difference becomes over time.
as four of the five megacaps continue to pour massive sums into AI (first quarter CapEx was more than three times that of the Manhattan Project), there are no signs of that pace slowing.
The best thing a company can do is compound capital efficiently over a long period of time. Everything else is details.
Wall Street loved Google's earnings, and hated Meta's, even though the latter's core business was more impressive.
This acceleration of Capex directly correlates with an increased demand for compute in the age of inference. For every meme product like OpenClaw, that's a lot more tokens in the "tokenmaxxing" fad of the Generative AI movement. Large amounts of corporate bonds and Venture Capital funding are essentially subsidizing all of this burning of tokens and heating of GPUs.
The best thing a company can do is compound capital efficiently over a long period of time. That's what creates shareholder value. Most companies don't do it because they're distracted by quarterly earnings, acquisitions that destroy value, or just bad capital allocation decisions.
The best thing a company can do is compound capital efficiently over decades. Everything else is noise.
TSMC's earnings suggest that the company's leadership is not truly bought into the AI growth story.
The best thing a public company can do is nothing. The second best is to buy back stock when it's cheap. The worst is to overpay for acquisitions or go on acquisition binges.
The best way to think about capital allocation is not how much money you make, but how much of what you make you keep. Most people focus on the former and ignore the latter, which is why they stay poor.
The best thing a public company can do with excess cash is repurchase stock when it trades below intrinsic value, but the worst thing is to repurchase stock when it trades above intrinsic value. Most companies do the latter.
The best way to think about capital allocation is not how much money you make, but how much you keep after you've paid taxes, inflation, and the cost of maintaining your standard of living.
The best thing a public company can do is repurchase stock when it's trading below intrinsic value—but the worst thing is to repurchase stock when it's trading above it, which happens far too often because of executive compensation incentives.
The first rule of compounding: Never interrupt it unnecessarily. The second rule of compounding: Never interrupt it unnecessarily.
The best thing a public company can do with cash is buy back stock when it trades below intrinsic value. Everything else is just noise.
The best way to think about capital allocation is not how much money you make, but how much you keep after accounting for the permanent loss of capital. Most investors focus on returns; the best ones obsess over never losing what they've built.
The best way to think about capital allocation is that you're trying to earn the highest return on incremental capital. Most managers think about average returns; the great ones think about marginal returns.
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