Wisdom Is Worth Listening To

Sometimes, Wisdom Is Worth Listening To

Last week, while traveling in Morocco, I made a mistake that left me pretty sick. Someone had warned me not to put ice in my drink, but I didn’t listen. I learned the hard way that sometimes the people who have been there before you know a thing or two.

It got me thinking about investing and financial planning.

You don’t have to learn every lesson the hard way.

In the financial world, I’ve seen people make costly mistakes because they believed they knew better than the people who had already experienced similar situations. Investors chase the latest hot stock, take unnecessary risks, or ignore the importance of diversification because they believe this time will be different.

Financial planning is about more than making money. It’s about learning from experience, understanding risk, and making decisions that give you the best chance of reaching your goals.

That doesn’t mean blindly following someone else’s advice. It means recognizing the value of experience, asking the right questions, and understanding the potential consequences before making a decision.

The same principle applies to retirement. You may only retire once, but a good financial advisor has helped people navigate that transition many times. Learning from those experiences can help you avoid mistakes you didn’t even know were possible.

Sometimes, the most valuable financial decision isn’t finding the next big investment. It’s avoiding a mistake that could have been prevented.

Dream Bigger, Sleep Better.

Sometimes, the best way to move forward is to listen to someone who’s already been there.

Click here to schedule a meeting — I’m here to help you take the next step toward financial freedom.

Colin Symons, CIO Lloyd Financial Group

The market has a tendency to freakout, particularly in an area that’s already had a huge move, along with some recent stress. I think that describes Thursday’s AI freakout. Anything can happen, but I would doubt this story spells the end of the AI story.

The Financial Times story corrected an earlier story saying OpenAI annualized revenue is more like $50B, not the $70B previously reported. Big deal, right? The devil is in the details, though. The $70B number is still true, it just includes revenue from partners, and the $50B number is more fair to use in comparison to Anthropic. It’s not that revenue suddenly disappeared, or OpenAI is suddenly slowing, it’s just more detail on the numbers.

OpenAI also said they are growing at a rate of 77% to 107%, depending on the customer segment. Both of those rates are faster than what most analysts are using for a growth assumption for the company. The ‘scary’ number is also more about OpenAI than the industry at large, if you want to view it as a problem.

For example, perhaps Anthropic is currently growing faster than OpenAI, at least right now. Maybe open-source models are taking share. I’m not sure this new number means much, and it’s more an OpenAI story than an industry story. It’s certainly possible for OpenAI to struggle while competition leads.

One more time, this is more of an accounting story than an industry demand story. OpenAI doesn’t count revenue generated through cloud partners, while Anthropic does. Thus, that $20B adjustment is a still-fair estimate to compare the two companies. On the flip side, OpenAI is adding $10B in ARR in less than three months, which seems awfully good, but for now, fear rules.

That’s not overly surprising, given the broad concerns in the system, right now. The question is what happens from here. We have earnings coming up shortly, and they should be strong. The selloff just hit a bunch of owners and reset expectations lower, so I’d think a bounce over the next month or two is likely.

Assuming that’s true, what happens after that? Nobody knows, but I am starting to worry that semiconductor expectations may be hitting ceilings if we bounce back strongly from this. Companies like Samsung and Taiwan Semi (TSM) have recently reported good numbers, and the short-term reaction wasn’t encouraging. Is that because markets have been stressed or because we’re running out of ready buyers? It’s a worry.

Over time there tends to be a limit to how big the spread can be between semiconductors and other parts of the market. Let’s say semiconductors bounce hard from this news and earnings, all of which is likely deserved. The rest of the market has been hit much harder over the last few months. Do they get to run with the ball as the year draws to a close?

Put simply, a story like this is quite likely one to buy. Assuming we get my expected bounce from the story along with good moves from earnings reports, the outlook for holding semiconductors may eventually get harder going into next year. I’ve largely been a steadfast bull on the AI trade, and you can’t count gains that haven’t happened yet, but I can envisage a scenario where, for the first time, I may not be so eager to own the AI trade, or at least semiconductors feeding the AI ecosystem.

Trump announced an immediately effective energy ceasefire between Russia and Ukraine, where they would stop targeting energy infrastructure. Trump also announced he lifted sanctions on Russian diesel exports.

European diesel futures fell as much as -8% amidst Trump’s energy-truce announcement and Russia’s export release.

Rate-hike expectations across eight major economies have gone down to 539bps from 717bps, according to Bloomberg.

The bond market is closed today, though stock markets are open. There are also no economic reports and volume is likely to be weak.

Bottom Line: Pretty quiet action with bond markets closed.

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