Baillie Gifford: “ASML could be the most important company in the world. The Dutch firm creates the machines that allow computer chip manufacturers to burn complex patterns of transistor circuitry – tiny on-off switches – onto the surface of silicon wafers. The process is called lithography. Founded in 1984 as Advanced Semiconductor Materials Lithography, ASML now has a 90 per cent market share of this market. It remains the only company capable of making the smallest transistors. Shrinking transistors makes it possible to pack more into the same area. Computers can then perform calculations more quickly and use less energy. ASML’s latest machines create ‘3-nanometre chips’. The designation is a marketing term rather than an accurate component measurement. But it corresponds to placing about 250 million transistors per square millimetre.”
Fred Wilson: “The largest tech companies will emerge from this downturn leaner and more profitable and growing more slowly. They will be mature businesses that behave like the blue chips that they are. I think these companies, like Apple, Amazon, and possibly Google, will see their stocks come back into favor ahead of everything else in tech. I am hedging on Google because I believe the massive advances in AI/ML that we are seeing right now may be a threat to their core search franchise. Startups are going to have a tough year in 2023. While many have gotten their burn rates way down, most startups still are losing money and will eventually need to raise capital in 2023. Because most startups avoided raising in 2022, there will be a glut of startup companies in the market for capital this year and while there is plenty of venture capital sitting on the sidelines waiting to be deployed, VCs will be much more selective, instead of funding everything that moves as we’ve done over the last few years.”
Matt Levine: “One cynical way to understand private investing generally is that private investment firms — venture capital, private equity, private real estate, etc. — charge their customers high fees for the service of avoiding the visible volatility of public markets. If you invest in stocks, sometimes they go up, and other times they go down. If you invest in private assets, they don’t trade; sometimes they go up (because companies raise new rounds of capital at higher prices), but the companies and the investment managers take pains to keep them from going down. This makes the chart of returns look much nicer — it mostly goes up smoothly — so the private investment managers can charge higher fees.”
Donald Boudreaux: “Politicians or administrators…might be sincerely motivated to impose tariffs in ways that improve the home-economy’s economic performance – that is, to impose tariffs that improve the home economy’s comparative advantages. But such politicians or administrators are flying blind. This point bears repeating: unlike market participants guided by prices, these officials literally have no reliable information to guide them. They will therefore be guided exclusively by their own biases and hunches. The pattern of comparative advantages is always changing, both within each country and across countries. And this pattern changes chiefly through market forces rather than through political forces.”
Bloomberg: “There’s only one thing you really need to know about investing in 2023, and it’s both stunningly obvious and invariably forgotten: There’s no free lunch…If you are investing in anything other than a safe inflation-protected bond there is a chance you will lose money. And if you are investing in anything that promises a bigger return than the broader market, you are also agreeing to the potential for a bigger downside. This should be the first thing people absorb when they learn about personal finance and are introduced to investing. But for some reason (greed?), even people who work in finance often ignore it. Understanding the risk/return trade-off is also the best way to protect yourself from financial scams.”
Eric Ashman: “When you do the math, in almost every case, you will find that accepting the lower valuation leaves you better positioned to reap the rewards of future exit scenarios than accepting more structure from your investors. Take the time to understand your waterfall. Appreciate that your investors have different goals and challenges that impact their proposals and recommendations. Find a way to get the cash you need in the bank, but navigate this path carefully.”
