The "Beta Generation" -- August 17, 2023

Locator: 45489COMMENTARY.

A reader sent me a note about "investors" "investing" in MMFs. My not-ready-for-prime-time reply:

Yes, I was going to comment on that ... I get such a kick out of that.

First, it's really not "investing." It's a "savings account" or a "checking account." Or an ATM but it's not investing. For a number of reasons.

"Investing" for me always includes an element of risk. This -- the MMFs -- are a guaranteed 5% in most cases. There will be exceptions but for the most part this is not investing, and if it is, it's not in my definition of investing.

What I get a kick out of is this:

1. The same folks that let their money sit in regional bank accounts (savings, checking) for decades at 0.0001% interest are now thrilled to be earning 5% -- maybe 6% before it's all over.

2. Meanwhile, I can find any number of great blue chip companies beaten down in price that are paying 2%, and many much more than that, and which will definitely appreciate a whole lot more than the 2% - 6% spread that I'm willing to forego. Ford is paying over 5% right now, and is clearly beaten down ... my mom would have loved a 6% return on her money -- but I wouldn't exactly have called her an investor.

This is still the graph that haunts me -- a ten-year return --

And to think some folks are paying financial advisors to advise them to invest in MMFs.

You have no idea how great I think this market is right now. I can't invest fast enough.

The market may yet go lower.

But thirty years from now, this accumulation of shares will look incredible.

Long term:

1. Buffett once said: never bet against the US. I agree.

2. Short term: there's so much money on the sidelines ....

3. Short term: US 3Q23 GDP looking at upwards of 6% --- I know it won't come in that strong ... but a snapshot in time, today, 5.8% .... something must be working....

4. Long term: all those folks invested in China (now in serious trouble), Russia, EU, South America will continue to move their money to the US markets. So when I see money on the sidelines, it's not just money in US MMFs I'm talking about.

5. Now they talk about "real estate" could plummet and push the US into "deflation" like China is going through. It won't be long now and we'll be talking about the Next Great Depression.

But me?

I'm not satisfied with a 5% return. I doubt any "investor" would be. Shoot, even life insurance companies shoot for at least an 8% return.

You have no idea how great I think this market is right now. I can't invest fast enough.

I always come back to this: there are maybe two great universities in England; maybe four in France; maybe six in Germany. In the US, there are 25 mediocre-to-outstanding colleges and universities in the Boston area alone. The American entrepreneurial spirit has not wavered. Apple's computers coming out in September will have upwards of 80 cores; the original Apple computer had a single CPU. Those 80 cores are a mix of CPUs and GPUs. The tekkies know that Apple is light-years ahead of whatever else is out there. That doesn't mean Apple won't collapse as an investment but it tells me how far we've come in such a short period of time. Elon Musk -- builds an entire new automobile company using a mix of new technology in less than a decade, or whatever it was? The gazillion satellites overhead allowing GPS in our cars to be accurate to within 10 feet and that was put together by private companies. A government-agency and a private company raced to  "print" the entire human genome, and the private company won.

I can name upwards of twenty great STEM colleges/universities without even looking them up, starting with CalTech, Texas A&M, MIT, Harvard graduate schools, the USAF and USN military academies, UT-Austin, Cornell, at least two in Chicago, at least two in NYC, Yale graduate schools, Vanderbilt, Princeton, Johns Hopkins, Standard, UCLA, UC-Santa Cruz, Ann Arbor.

And this is what really gets me excited. The next generation: the Alpha Generation or maybe the better- or more aptly-named, the "Beta" generation! 

Does anyone really think the "beta generation" won't be filled with entrepreneurs?

Look how cool that is: he doesn't even use a foot pedal to "run" the needle. Finger-tip control leads to pixel control.

Forgive me, or excuse me, if I post this YouTube clip a few more times. 

At his age, I was struggling with "Tickle Bee." Our three-year-old twins are operating a Japanese computer-assist sewing machine that costs under $150 and the next generation sewing machine, at $100, will probable include AI-assist; play Tik-Tok videos while sewing; and, dispense a 12-ounce cup of one's beverage of choice.