#25 - Power Plays and Principles

Author

Graham Schroeder
September 27, 2024

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This week, China implemented a stimulus package, OpenAI shifts away from a non-profit model, Microsoft works to reopen nuclear plant, and why you should have principles in your life.

Market Recap

  • Microsoft $MSFT Makes Bold Energy Moves

    • $MSFT signed a 20-year agreement with Constellation Energy ($CEG) to restart the Three Mile Island Unit 1, providing 835 megawatts of carbon-free electricity by 2028. It will mark the country's first-ever restart of a previously retired nuclear power plant. The company plans to invest about $1.6 billion to bring the plant back online.

    • Microsoft’s massive collaboration with Brookfield Renewable ($BEP) aims to deliver over 10.5 gigawatts of new renewable energy by 2030, supporting its cloud and AI growth.

    • These energy deals ensure Microsoft has the necessary power infrastructure for its ambitious expansion, while benefiting key players like Constellation Energy and Brookfield Renewable.

  • Stock Surge for China's E-commerce Giants Following Stimulus Package

    • The People's Bank of China unveiled monetary stimulus measures, including interest rate cuts and reduced reserve requirements for banks, injecting over $140 billion into the economy to stimulate growth.

    • Alibaba, JD.com, and Pinduoduo saw significant stock increases—7%, 11%, and nearly 10%, respectively—after China announced its first stimulus package since the pandemic.

    • Despite a recent regulatory crackdown that cost Chinese tech firms $1 trillion, companies like Alibaba are recovering, with shares up 23% since the beginning of the year.

  • OpenAI's Transition to a For-Profit Model

    • OpenAI is undergoing a significant restructuring, shifting from a nonprofit organization to a for-profit company while keeping a nonprofit arm that focuses on charitable goals.

    • The transition comes during a period of leadership changes, including the abrupt resignation of Mira Murati, Chief Technology Officer, along with other high-level departures.

    • The shift is partly designed to attract more investors, with OpenAI attempting to secure up to $6.5 billion in funding from firms such as Microsoft ($MSFT), Apple ($AAPL), and Nvidia ($NVDA).

The Rising Demand for Whiskey: A Smart Investor’s Choice

Why are 250,000 Vinovest customers investing in whiskey?

In a word - consumption.

Global alcohol consumption is on the rise, with projections hitting new peaks by 2028. Whiskey, in particular, is experiencing significant growth, with the number of US craft distilleries quadrupling in the past decade. Younger generations are moving from beer to cocktails, boosting whiskey's popularity.

That’s not all.

Whiskey's tangible nature, market resilience, and Vinovest’s strategic approach make whiskey a smart addition to any diversified portfolio.

Freedom Fund Portfolio

Freedom Fund Background: I created the Freedom Fund as a public brokerage account in October 2022 to show that anyone with a Social Security number and a bank account can begin their investing journey by contributing a few hundred dollars a week Every week and month I post on X (@GrahamInvesting) public updates about the purchases, exits, dividends, and growth of the fund if you want to follow in real time. The biggest obstacle people have to investing is just getting started so I decided to start a new account at $0 to start from nothing with you.

Principles for Life & Work

Over the past two weeks I listened to the audio version of “Principles: Life and Work” by Ray Dalio a book I read a few years ago. The book is broken down into two parts: the life principles, mainly about how to approach personal challenges, growth, and decision-making, and the work principles, which focus on building effective teams, decision-making processes, and a culture of transparency. Dalio created these “principles” over time for a structured, thoughtful approach to handling life's complexities. And for making decisions based on logic, reality, and learning. Below is a high level overview of the principles discussed in the book:

  • Radical Truth and Radical Transparency - Advocate for a culture where the truth is always sought and practiced. Push to give and receive direct feedback. Transparency in communication and decisions is key to building trust and improving outcomes.

  • Pain + Reflection = Progress - Personal growth and improvement come from experiencing pain, figuring out what caused it, and learning from it. Real growth doesn’t come from doing the easy things.

  • Embrace Reality and Deal with It - Facing facts and dealing with reality as it is will get you further in life than wishing things were different. Success comes from understanding and working with the real world, not avoiding it. Whether in business, life, or personal development, it’s important to avoid sugar-coating problems or living in denial about obstacles.

  • Be Open-Minded - Be open to new ideas and accept that others might have better insights. This principle encourages individuals to actively seek out different perspectives and challenge their own biases.

  • People Are Wired Very Differently - People have different strengths, weaknesses, and decision-making processes. By acknowledging and working with these differences, you can maximize the potential of your team and business.

  • Systemize Decision-Making - Decision-making should be systemized wherever possible, removing emotion and bias from the equation.

  • Own Your Outcomes - Own your successes and failures. People should own their decisions and learn from them to continuously improve. No one likes individuals who make excuses every time. Own the mistake

  • Fight or Flight - Not every battle is worth fighting. Choose your battles wisely and know when to let go in order to focus energy on more important challenges.

  • Use Feedback Loops - Constantly evaluate performance and use feedback to improve. Use feedback loops to analyze actions, outcomes, and adjust strategies accordingly. This principle is about embracing trial and error as a necessary part of growth.

  • Make Decisions as Expected Value Calculations - Weigh the expected outcomes and probabilities of success. In life and business, focus on maximizing long-term gains over short-term wins. It’s particularly important in investing and business, where the outcomes are uncertain but the risks must be managed strategically to ensure long-term success.

Embracing principles allows individuals to cultivate a mindset of truth, continuous learning, and objective decision-making. These principles are not just guidelines for success in business, but also for personal growth and self-improvement. By accepting reality, seeking and using feedback, and making decisions based on careful risk analysis, we can navigate the complexities of life with greater clarity. Progress in life comes from reflection. Success is achieved through disciplined actions and plans.

The purpose of this newsletter is to encourage you and our other 77 Gazette subscribers to start and stay consistent with your personal, professional, and financial journey.

Thanks for investing your time reading this.

Disclaimer: Graham’s Gazette provides information and resources related to investing, financial topics, and personal growth for educational and entertainment purposes only. The content presented is not intended to be construed as financial advice. Readers are encouraged to conduct their own research and consult with qualified professionals before making any financial decisions. Graham’s Gazette and its creators do not assume any responsibility for the accuracy or completeness of the information provided nor do they guarantee any specific results from such use of information.