AMD: Technology Sector
AMD got my vote as soon as I found it named a chip K5 after kryptonite to take on Intel in a move that shows both respect and fearlessness against its competitor. The technology sector is usually known for names in consumer electronics or excitement-focused social media like Apple or Facebook respectively but I think that type of technology is mainly effective because it is serving people who otherwise are very poor at technology. Not everyone can make products like that. So most technology is always going to be somewhat inaccessible in my view much like classical music was at the time even when it was the most popular music in town. There also is technology like Google. Some in Silicon Valley have described Google to be like the authorities, so if Google wants to buy your company you just listen to them as you would listen to the authorities. Google is really a humble algorithm if you remember how that page started out and they are trying to innovate with cars and what not because that’s what they like to do. I wouldn’t say they are like the police. I would say they are like the neighborhood watch, it’s all bark and no bite when Google decides you are spamming people for example. Then there is what I want to talk about which is the whole telecom and fiber optics complex which employed physics PhDs and brutally collapsed in the wake of 2001 market and national security disasters. That never really came back. Market capitalizations are nowhere near how they were before for companies like Lucent and even mainstream leaders like Cisco never achieved the promised stratospheric growth. It’s hard to argue the market is efficient when you are aware of this subsector, particularly when you see executives in those companies now underemployed despite potentially being quite wealthy on stock options. It’s really not about retraining these people but understanding what happened between the market and the real economy in that run-up and crash. Soros likes to talk reflexivity about how market expectations create their own reality but I think uncle Soros should focus on what he is good at which is shorting the heck out of currencies and exposing little countries as pathetic imposters before mercilessly throwing them against a wall while draining their social security nets of savings. Fundamentally I think there is sufficient evidence to believe the market is efficient so what changed is we reached the limits of efficiency much like there are limits to arbitrage. The limit to efficiency is the technology frontier itself where let’s say physicists suddenly stopped being able to make important discoveries and now spend all day asking for money for particle colliders or debating topics of religion with no relevance really to their field. Something similar happened to the market in the run up to 2001 where these superb real technology companies just didn’t deliver fast enough the value proposition they promised, and then no one could help them when the tide went out.
Why did it crash in 2001? I think this is the convergence of two different dynamics. American power was described as a bubble by Soros and it was similar. There is a limit to power itself where for example, the USA went into Afghanistan. These two bubbles popped at around the same time when the world realized through a confluence of ugly and evil events really that markets are efficient but no more rational than the participants, like garbage in garbage out.
So that brings us to today where we relied briefly on debt collateralization before it blew up, and then onto high frequency trading to correct the markets, letting machines correct biases intrinsic to behavioral biases in human judgment when they buy or sell stocks or any securities. This worked until what everyone should have noticed which was the flash crash, a crash over the course of a day which reverted itself. That reminds me spookily of volatility like before the great crash before the Great Depression where the volatility makes no sense whatsoever but makes more sense still than why the markets are rising at all when middle class wages are in stagnation and poor groups of people are reverting to Marxist type theories in their behavior: for example Marx theorized that the far-right was inevitable among certain majority demographic groups which also did not have enough money as their businesses were bound to run out of money by capitalism alone so they had to form groups based on their ideologies. So what do we do, not help each other in the name of capitalism? No, we must indeed help each other in the name of capitalism.
How do we make the markets smarter than ourselves beyond participating? We form more complex relationships between ourselves obviously. And we make ourselves smarter. The relationships are a way of trade while the brain cells firing away are a way of production. I can’t emphasize how many otherwise impressive people flunk their life goals because they lack production to produce the items useful to defend themselves and their ideas, for example their intellect may defend their ideas, and just focus on so-called dealing with people. If you want a lot of money and wisdom deal with people all day. If you want glory though and to build great works you need a lot of alone time too.
Finally there are video game companies and there is the key to why I am not worried about a market crash. Our video game segment is so sophisticated now where my younger brother can run around his character dodging guards at the Vatican in his videogame and then in Counter Strike he does the same thing while I’m waiting for my turn to move my phalanx in Sid Meier’s Civ2. So I guess we have a new set of brains out there and young people are our hope, I am not of this young generation I speak of who are good at these video games.