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No One Ever Runs the Math on Government Programs 🙄
If you divide $21 billion by 12,000, you get $1.75 million per “affordable housing” unit, and that’s if a government project actually came in at budget, which is about as likely as a team of unicorns finishing the construction.
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Bernie Madoff Times 40
OpenAI, maker of ChapGPT, now has a market valuation of 840 billion dollars. For reference, this is the same as the valuation of the entirety of McDonald’s, Coca-Cola, and Verizon combined…for a company that has yet to earn a single dollar of profit! In fact, the company is estimated to lose around $50 billion over the next three years. Sure, ChapGPT is popular now, but will it remain so as it starts to charge for more features or bombard users with ads? Will business executives still want to pay the hefty price tag for A.I. when it can’t show clear returns on investment? How will rising cost of memory and energy affect profits? Any sensible, math-oriented investor would be running for the hills, but hype and FOMO (fear of missing out) are powerful drivers of insane short term valuations. At least some A.I. companies like Nvidia are showing cash flow and profits, but it seems no lessons have been learned from the 2000 tech bubble.
Speaking of Nvidia, after a solid earnings report, it’s now by itself worth about 1/3 of all the companies in the entire EU stock market. Yet, Nvidia’s free cash flow yield is about 2.3 percent. In other words, proportionately it’s generating less cash than a company could earn with a basic money market account. Of course, it’s been growing like gangbusters, but how much bigger can it get when it’s already worth 4 1/2 times as much as the entire Walmart corporation?! Plus, when you’re talking about the tech field, you never know what new advances are around the corner that could render your technology obsolete. Think Blackberry, Intel, Cisco, AOL, Yahoo, MySpace, and countless others that are now a shell of their former selves…if they exist at all.
When you hear scary stories about A.I. replacing 80 percent of jobs or similar bullshit, realize that most of these predictions are coming from the likes of Jensen Huang, who’s trying to sell Nvidia equipment, and snake oil salesmen like OpenAI’s Sam Altman, who makes Bernie Madoff’s exploits seem like stealing pennies.
Not to be a smartass, but how did inflation drop while tariffs were passed onto consumers?
Prices aren’t dropping. They’re simply increasing at a slower rate than under Biden. For example, if prices went from 100 to 110 to 115 in each of two years, the inflation rate decreased from 10% to 4.5%, but the overall number still went up. In other words, prices are just starting at a higher base. Plus, massive productivity gains are being made by A.I. and other tech advances. So prices should be dropping, but taxes offset the productivity gains. Note: corporate and payroll taxes have a FAR greater impact on prices than tariffs. Tariffs just add another business cost to the list.
… should have been “which is about as likely as a team of unicorns replacing Santa’s reindeer.”?