Tag: Quantum Computing

Melt up?

It’s a slow week for stocks in Japan, with the market losing ground in part due to the selling of names that went ex-dividend on 29 September, and also out of concern over a possible US government shutdown.

29 September was the cut-off date to receive the next dividend for many Japanese stocks. Prices are often driven up before the ex-dividend date, only to fall after it has passed as investors sell, safe in the knowledge that the next dividend payment will be delivered. It’s really a non-event for long-term holders.

A US government shutdown could lead to a delay in the release of key economic indicators such as jobs data. How can we possibly know when to panic sell our stonks if we don’t know how many jobs were added/lost last month in the USA?

Despite the relative gloom, the focus for Q4 is increasingly on a potential melt-up for markets as liquidity continues to flow. Tech stock valuations are admittedly high compared to the 20-year average. However, compared to the last 5 years, the premium is significantly lower. People looking for the bursting of the AI-driven bubble may have to wait a while longer. This article suggests that Wall Street strategists, including Jim Paulsen, are starting to look at high valuations as a kind of “new normal”:

“There’s something weird going on with valuations from what they used to be — that is, there’s an upward trend in the valuation range,” said Paulsen, who now writes a Substack newsletter called Paulsen Perspectives.

Will gold keep going?

People keep asking me if gold can keep rising. The best answer I have is: unfortunately, yes. Gold ripping to all-time highs, while exciting for goldbugs, is not a good sign overall. There’s a distinct lack of trust in governments and central banks to manage their debt and spending situation.

The dollar certainly doesn’t like it:

DXY US Dollar Index

As for the yen? Well, the dollar index is down almost 10% YTD and USD/JPY is still at 148. If you are waiting for a stronger yen, you’d better hope the BOJ gets back to raising rates soon. Your mortgage won’t thank you if they do, though…

Talking of gold, here’s a chart for people to really hate on!

SPY/GLD

That came from this post by Nick G: “The price of equities is completely unchanged since 2005. All that has changed is the value of the denominator.”

So, priced in gold, the S&P 500 went nowhere since 2005. All “gains” were just the dollar losing value. And that includes dividends, apparently!

No wonder people are hyper-gambling on crypto and tech stocks…

Here’s an interesting (perhaps triggering) opinion piece on financial repression and why you want to own gold, silver and Bitcoin in the face of what’s still to come.

Speaking of which…

All eyes are on Bitcoin now as we enter Q4. If stocks remain strong into year-end, what will Bitcoin do? No price predictions from me, but I see a melt-up before a melt-down. This year’s theme has been long-term holders (who bought at rock bottom prices) enthusiastically selling to institutions that are hungry to secure their share of the network. If the OG’s put a pause on selling, look out above.

I’m hearing lots of talk of an extended cycle, a move to a 5-year cycle, and even a supercycle. I heard these same things in October 2021. I’m not saying the theory is wrong, but it was very wrong last time. I’ll believe the 4-year cycle is no longer relevant when I see the evidence. Until then, sign me up for a Q4 meltup followed by a treacherous 2026.

Quantum Leap?

I wrote a post in late 2024 about Quantum Computing. Almost nobody read it. Very few people are discussing QC or even aware of what it is. For me, it’s turning into a no-brainer satellite holding. Incredibly volatile, but with massive potential. Don’t bet the farm, but maybe study up a bit?

Here’s a nice thread by Charles Edwards on the subject. And yes, QC poses a future threat to Bitcoin, which will need to be addressed.

The Quantum stocks have risen significantly over the last couple of years. There will be scary drawdowns for sure, but likely more meltups to come.

Stay cool.

Top image from Freepik

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.

Is Quantum Computing the next megatrend?

Last month, I read a fascinating article about punters in the NFL. What was particularly surprising is how Australians now dominate punting in American football.

I looked up the word ‘punt’ and it has four distinct meanings: a narrow, flat-bottomed boat, to kick a ball upfield, to speculate or gamble and the basic monetary unit of the Republic of Ireland, before the Euro.

You can probably guess which one I’m interested in.

As regular readers will know, I favour a core-satellite approach to asset allocation. The core is a diversified portfolio, mainly denominated in your base currency and matched to your risk profile. Satellite holdings give things an extra spice, or maybe even, an extra kick. If 20% of your investments are in satellites, that 20% may also be broken down into traditional assets, such as commodities, niche stock market sectors – such as biotech, or alternatives. You may even want to take a small portion of the 20% and have a punt on something truly speculative. Imagine if you took a punt on AI a few years back.

The art of the punt is to find a candidate for the next megatrend and allocate a small amount of your wealth to it. If you are wrong, it’s money you can afford to lose. And if you are right, the returns are asymmetrical.

Megatrend: a long-term, large-scale shift that can impact economies, industries, and the way people live. Megatrends can be driven by technological advancements, demographic changes, or global policy shifts. Some examples of megatrends include: the rise of the internet, the ageing population, the shift to renewable energy, rapid urbanization, and technological breakthroughs.

That overview came from Google’s AI, by the way.

Earlier this month, Google caused a stir when it introduced Willow, a state-of-the-art quantum chip. Willow has been in development for 10 years and has reached the stage where it can ‘perform a standard benchmark computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion (that is, 1025) years — a number that vastly exceeds the age of the Universe.’

Does that sound like a megatrend? It sounds like a punt to me! The key thing about technologies like this is that the pace of development is exponential. Nothing happens for years and then massive progress is made in a short period.

A few years back, a friend dragged me to a quantum computing seminar. He was attending to show support to one of the presenters. My friend is a finance pro and I’m a pretty good generalist and I remember clearly how, about a minute and a half into the presentation, we looked at each other like, WTF?????

Needless to say, I will not attempt to explain how QC works. Do your own research, as they say!

Here’s a nice friendly BBC article to get started with.

And, here’s a great thread by Charles Edwards. It helpfully identifies four stocks that punters can buy if they want to get exposure. They are IONQ, RGTI, QUBT and QBTS.

Please note: This is not investment advice. These stocks are a punt! You should not put a large chunk of your net worth into them. Also, they have gone up a lot since the Willow announcement. They will exhibit a ton of volatility and there will probably be better entries in the future. Funnily enough, three of them were down big just last night. I have seen threads detailing how QUBT barely has a business. Three of them might amount to nothing. Maybe all four companies will go bankrupt. However, one of them might develop the ChatGPT of quantum computing.

So, buyer beware. Do as much reading as possible and, if you decide to get involved, only play with money that is truly available for a punt. There is no need to rush into anything and you don’t need to invest a lot to spice up a well-diversified portfolio.

And, unless it’s really your thing, don’t go to any quantum computing seminars!

Top image by benzoix on Freepik

Disclaimer: This should go without saying, but the information contained in this blog is not investment advice, or an incentive to invest, and should not be considered as such. This is for information only.