Tag Archives: #ClusterOfBlessings

Life at Frontier Minus One

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Sanity prevails…

…at frontier minus one.

Rat race is within the underlying’s…

control.

Virtual / quasi / substantial / semi debt-free-ness…

exists.

Free cash-flow generation on the balance sheet is…

…common.

At frontier minus one, the narrative is …

…under control…

…as proven by self-determination of speed of change…

…and by exhibition of substantial growth.

Not at breakneck speeds.

Not by borrowing to the hilt.

Not by greedy behaviour.

Not by indigestible trajectory.

Not by a reckless ‘not giving a damn too bad if you’re not so fast’ attitude.

Life at frontier minus one…

…is somewhat balanced, with a flow.

Innovation at frontier minus one is achieved much faster

…than at frontier minus two, but much slower than at…

…frontier zero zero.

No tech company that wishes to thrive well into the future is currently functioning at…

…frontier minus two.

Either the transition to minus one has been made, or, it’s in the process.

Why not go for the jugular? Straight to zero zero.

Everyone has their role in this puzzle.

Imagine an older civilization going into battle.

There was a front line, paving the way, at immense cost.

There was a reserve support line, with artillery, first-aid, communication, and what have you.

There was a third line with supply, reinforcements, semi-trainees doing other stuff normally, etc.

There was aerial support, naval support, intelligence, research and analysis staff etc.

All combined to create an ensemble of actions.

Cut to now.

Warfare has changed.

Immense cost is still there, but immense cost to the front line, as in cost of life, has been reduced greatly, speak drone and missile warfare, supported by AI backed intelligence and analysis.

Point is, innovation, a different way of thinking, disruption and all their cousins will find a way to make things affordable, implementable.

That’s the way civilizations move forward.

Not for you or me to change. It’s the way of the world.

And that is what frontier minus one banks upon.

Meaning, to keep functioning at sustainable levels, slowly, painstakingly, in the process, simultaneously, finding a way, a connect, to frontier zero zero.

The connect can be of co-work. Amicable. Win-Win. You earn, we earn.

At frontier minus one, the world view is not to annihilate, but to…

…accommodate.

To win…

…together…

…in…

symbiosis.

Symbiosis

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Imagine…

…the most value you can imagine.

That’s what this word is worth.

Especially now.

What’s the truth?

Existential question.

First we had everyone and their aunties proclaim the death of core Tech companies.

Hmmm.

Core Tech companies, and their chief protagonists, thought otherwise.

Number of believers kept waning though.

Until recently.

Something started to reverse in belief systems.

AI was behaving fantastically utilitarian with a human holding the reins.

Meaning, there needed to be a human there, for practical purposes.

Frontier AI deployed engineers to be the human face. Or so one was told.

Came the trust issue.

Do we double up on our trust in this no track record magician who just showed up out of nowhere?

Do we entrust privileged client data to the unknown?

Do we strip ourselves naked, TWICE?

NO.

Everyone and their uncles have answered with an emphatic NO.

Who is the human handler – the go-between – the trusted face – the rein holder?

Someone with a track record.

Proven.

Tried, and…

trusted.

Self-propelling.

With no liabilities. Spell ZERO DEBT.

With copious FREE CASH FLOW to INNOVATE FREELY…

…to navigate the reins successfully and as per the requirements of an enterprise.

Who is this entity?

None other than…

…our own very well known…

CORE TECH.

Leaner.

Hungry to prove its point.

To have its raison d’être acknowledged, and paid for.

To earn and compound steadily.

Forget about dying. Let’s talk about long term thriving.

Then, we had the captains of frontier AI admitting, that yes, ‘we do need core tech handholding to be implemented successfully’.

Gone was the initial hubris, that ‘we had come to wipe out old thought patterns, and all old systems’.

Reality had dawned, and these captains at least had the decency to admit it.

Actually, they had realized that their existence now depended upon how much their infrastructure would seep through. And…

…that no one was trusting them enough to hand over the job of seeping through to them, but much rather, to trusted old compatriots, to Core Tech.

So they came forward to shake hands.

Good.

Symbiosis.

We want to move forward on the back of this symbiosis.

There will be gigantic and fast development on the back of this symbiosis.

We are looking at space travel, space colonization, disease control, climate change, cheap solar, cheap desalination, perhaps even alien integration and partnership – unimaginable perhaps a few months ago, but possibly conceivable on the back of this symbiosis.

There’s new talk which has recently emerged, from the other extreme, and needs to be discarded, like its mirror image on the opposite side of the bell curve. This is the talk of frontier AI dying out because of becoming unaffordable.

Well, in whatever shape it exists currently, frontier AI does have tremendous capacity to solve problems.

Let it do just that on the back of this symbiosis, and earnings will start to flow.

Core Tech won’t let it wither, frontier AI has now become their raison d’être too.

Don’t you see it?

Two universes are converging, each needing the other to survive.

In the end, they become one universe.

Companies will merge. Synergies will multiply. Mega projects will be achieved, faster, more bombastically.

Earnings will flow.

Where do you want to be?

Remaining a doomsdayer will not help you.

Get into the flow.

Invest into debt-free, free cash-flow generating core tech as value deepens.

Look for debt-free, frontier minus one, free cash-flow generating semi AI companies, research these thoroughly for any red flags, and if those found are manageable, put in some funds.

If you find a frontier tech with manageable debt and a reasonable balance sheet, with a PEG ratio (price to earnings ratio divided by earnings per share growth percentage for the fiscal) somewhat under control. ok, put in some money there too.

Get out of the doomsday mindset.

Put your money to work, and then lock it in for another twenty years. Leave the compounded proceeds to your children.

Now.

Let the crashes come. There will be compounding post crashes too. Just look at the monthly chart of an IT index from 1995 to today. Dot-com peak looks miniscule and low compared to the levels of the monthly chart today.

Enough talking. Do the recce and then let’s talk.

Cluster of Blessings

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Hey.

We realized…

…that what we’re doing…

…is anti-fragile in nature.

How, you ask.

Since what we’re doing is in stocks. Equity. Robust at best. Not anti-fragile.

?

Well, take a definition, and expand it a bit, and the definition starts to make broader sense. One draws on the definition, and creates a utility for that definition in one’s own line of work. That’s what we’ve done. Creator of the term anti-fragile, Mr. Taleb, could turn around and say, hey, you’ve just taken my thing and used it in your thing. Of course we’ve done that. We stand on the shoulders of giants, giants like Mr. Taleb. And now we’ve got his thing, projecting onto our thing, making something new out of our thing. Bottomline, we have a thing that is anti-fragile, and Taleb gets credit for his thing starting to develop universality, at least across another asset class.

So how are we doing stocks in an anti-fragile manner?

We benefit from chaos, volatility, uncertainty, fear and the like.

How?

Before these conditions cause mayhem in stocks, we have gravitated, in a growth market, over the years, to exhibit meaningful holding power. Both mentally, and financially. So, what do we possess before topsy turvy conditions, like now? Holding power.

What else are we armed with?

Liquidity.

Liquidity is a state of mind. Our state of mind causes us to be liquid at the right time.

Next.

We have…

…high conviction. In a basket of market players. Our due diligence regimen, over decades, has allowed us the means to recognize such stocks. In these, we have developed what?

High conviction.

We are itching to buy these underlyings, at huge…

…margins of safety.

Cut to current conditions. Chaos, volatility, uncertainty, fear, war, maniac, missiles, nuclear threat and what have you.

The margin of safety that we look for starts to abound. We accumulate high conviction underlyings, over multiple buys, ending up with low buying averages.

As conditions amplify, buying averages get lower. We are benefiting from chaotic conditions in that our buying averages are getting lower and lower.

Perceptions change for the better. They always do. Gone is 1929, where it took the better part of two decades for circumstances to change. Till 2019, one used to talk about max 15 to 18 months being the length of a bear market. Information flows very fast. When efficient, whenever that is, markets are then super-efficient. Factoring in is taking days, perhaps only a day. A change in perception is incorporating very, very fast. Frankly, we’re talking months, not even years. And, we’re mentally and financially prepared, with our holding power, for a time-frame measured in years.

Comes the turnaround. Sooner than later, such are the times.

Our low buying averages multiply fast. In fact, very fast. The lower they are, in our high conviction holdings, the faster they multiply. We start to hold many 2-baggers in 3 to 6 months, for example.

Now we call the shots. In fact, our very low buying averages do.

We can choose to pull our principal out, full 100%, at 2x, 3x, 4x, 5x or what have you, depending on our muse.

The moment we go cost-free, we have moved into 100% margin of safety. Nothing can break our cost-free-ness (except ourselves). We can choose to leave our cost-free-ness to our children, by which time it will have majorly compounded. Since we have no principal invested in our cost-free-ness, we won’t be in a hurry to liquidate it. In fact, we won’t even be looking at it.

We’re calling our low buying averages anti-fragile. The lower they get, the more anti-fragile they behave in the aftermath of chaos. We’re adding an allowance towards fast incorporation of change in perception to the definition of anti-fragile, because of which our inherently anti-fragile low buying averages get to benefit from their anti-fragile nature (thanks again to Nassim Nicholas Taleb for giving us the framework of anti-fragility).

And what are we calling our cost-free-ness? I mean, it is seeming to be beyond fragility. It is giving benefit beyond any scale. Generational benefit. I don’t have a name for this effect, yet.

Our cost-free-ness has generated generational well-being. It has allowed us to not liquidate it, by the state of mind it has caused in us. It has allowed itself to be passed on.

Hmmm. Taking a phrase from Nichiren Buddhism, it is our…

…cluster of blessings…

…that we pass on…

…to the next generation.