Tag Archives: technology

The oil of the 21st century

What do these cars have in common?

McLaren 720s, Fiat 500, Mini Cooper

Probably more than you think.

For one, they were all designed by the renowned designer Frank Stephenson, who has also worked for the likes of Ferrari, Ford, BMW, and Maserati.

But maybe more surprisingly, they share quite a bit under the hood too. That’s because, despite belonging to different brands and market segments, all three of these cars are likely facing production delays due to a global shortage semiconductor chips.

Semiconductors are present in almost all electronics and have been used in cars’ internal computers for decades. What is different today is that the chips going into cars are crucial components for advanced features like touch screens, navigation systems, driver-assist features and more. Concurrently, the adoption of electric vehicles is starting to accelerate meaningfully, driving further chip demand in the sector.

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Ātri braukt uz nekurieni

Izņemot, ja saucamais ritenis, izrādās velo trenažieris.

Mūsdienās gandrīz katrs jaunuzņēmums, kas ienāk tirgū, cenšas sevi pārdot kā nākamo lielo tehnoloģijas kompāniju. Dažiem no viņiem patiešām ir potenciāls būt revolucionāriem un mainīt pasauli. Lielāko daļa no tiem tomēr tiks atcerētas kā mežonīgas idejas, kas tolaik dažiem šķita daudzsološas, bet šobrīd šķiet smieklīgas.

“Peloton” ir nākamais šāds tehnoloģijas uzņēmums, kas pirms nedēļas publiskoja prospektu un iesniedza dokumentāciju savu akciju sākotnējam publiskajam piedāvājumam. Es nevaru prognozēt nākotni, bet man ir tāda jocīga sajūta, ka šis nebūs no tiem uzņēmumiem, uz kuru mēs atskatāmies ar cieņu un izbrīnu.

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Bitcoin, Bitcoin and Bitcoin

Last night JPMorgan Chase CEO Jamie Dimon took a shot at bitcoin, saying the cryptocurrency “is a fraud.”

Here’s the article: JPMorgan CEO Jamie Dimon says bitcoin is a ‘fraud’ that will eventually blow up

In the same time, people from the tech world are saying that “Bankers’ mistrust of bitcoin is still the greatest argument for it.”

Link: Bankers’ mistrust of bitcoin is still the greatest argument for it

Furthermore, Financial Times is posting graphs with a bubble forming pattern overlaying the Bitcoin price

Source: Charts that matter: Price of bitcoin set for a painful reckoning

Our take:

Bitcoin and crypto currencies is a hot topic right now. Most media outlets have to say something about the subject. That’s fine but how important Bitcoin really is?

Traditional asset managers for now cannot include in their portfolios cryptocurrencies. Bitcoin can rarely be used as a means to pay for goods in transactions. In most cases when vendors accept bitcoin as a payment they’re really using a third party service that deals with the bitcoin and pays the vendor in hard currency.

Most of the action is provided by individual investors. We can ask ourselves how many people we now that have some bitcoin? Our guess  – none. Situation may differ if you’re from thech industry. So is it really relevant?

To sum up, we view bitcoin as a new hot topic and probably a bubble, though our only strong position is that we don’t consider it for investments.

Note: Blockchain as a technology is a different topic that may prove to be very useful. read more

Facebook, Banking and Electric Cars

Facebook TV coming in mid-August, maybe..

Reportedly, Facebook is finally coming out with its iteration of on-demand TV. The company has reached out to its partners, asking them to turn in the first episodes of their inexpensive, short-form programs.

According to undisclosed sources, Facebook is funding some higher-end content. The newly released content is going to be accessible separate from the news feed, in a new “Video” tab, alongside user-generated content.

Facebook is looking to make something higher-end than Google’s YouTube, yet is not willing to compete with other original content providers such as Netflix, HBO and Showtime.

By taking such a step, Facebook is looking have a greater slice of the $70 billion television advertising market. According to verge.com, the ad-revenue generated from the content is going to be split between Facebook and the content creators.

It has to be mentioned that the social networking company expected the project to be ready to launch a month ago, but it has taken longer than anticipated and a possibility of further delays exists.

LINK: First Facebook TV Episodes Are Said to Be Ready for Mid-August

Infographic – Banking the unbanked

Did you know that 62% of adults worldwide have an account at a financial institution or through a mobile app? At first it might be difficult to put it into perspective, just think about it for a minute. The remaining 38% live without a bank account and choose to live with only cash.

To be completely honest, “choice” might not be a word some associate with their spending habits. Only 7.7% of people living in Chad have a bank account, but they are not to blame with 0.49 bank branches for every 100000 people, it might just be normal for them not to have a bank account.

Nevertheless, the aforementioned 62% seems like a small percentage, taking into account how big of a role our bank accounts play in our lives, yet it is a lot compared to the 51% back in 2011 – the amount of growth is profound and an opportunity is there for those willing to take the risk and make bank by banking the unbanked, puns fully intended!

LINK: Banking the Unbanked is a $380B Opportunity

UK to ban new diesel and petrol cars, favoring electric cars

In a bid to fight air pollution, which according to the article claims 40000 lives annually, the UK government is going to ban new diesel and petrol cars from 2040. Other solutions for lowering the air pollution range from altering the routes of buses to reprogramming traffic lights, in order to create a smoother flow of traffic.

Clean air campaigners argued that the government is using the 2040 diesel and petrol vehicle ban to take the focus off the failed short-term policy. Sue Hayman MP, the Environment, Food and Rural Affairs spokeswoman said that “with 40 million people living in areas with illegal levels of air pollution, action is needed now, not in 23 years’ time”.

Earlier this month, we wrote about the iconic London Taxi going electric. Missed it? Click here!

LINK: New diesel and petrol vehicles to be banned from 2040 in UK read more

Musk’s Hyperloop might become reality

According to tweets by Elon Musk, aka. The Tony Stark of real life, on Thursday, “verbal” government approval for digging the world’s longest tunnel for his newest venture – The Boring Company, has been reached. The tunnel is to be dug from New York to Washington D.C. and is a part of another one of Musk’s ideas, Hyperloop.

For those who have been out of the loop, pun fully intended, Hyperloop is a high-speed transportation alternative, which would make the journey from NYC to D.C. in around a half an hour.

The fact that building a tunnel of such length is going to take an awful lot of time cannot be left out. After all, recently opened subway tunnel in New York was proposed in 1919 and was opened just in January 2017.

Nevertheless, if the idea comes to life, it is definitely going to save the people of the future a lot of travel time, making them healthier and more productive. According to MarketWatch, the time one spends on their daily commute affects their happiness, productivity as well as health.

LINK: Elon Musk Claims U.S. Approval for World’s Longest Tunnel read more

AI deep-learning briefly explained and why Nvidia has the upper hand

It seems that the abbreviation AI and the phrase “deep learning” get thrown around an awful lot lately. Understandably so, as presented in the chart below, the frequency of Google searches for “deep learning” has grown considerably in the last 5 years, one can easily see an exponential growth pattern. Everyone seems to want to find out what exactly it is and how to benefit.

The increase of interest reflects the change of focus of industry leading companies rather precisely. Nvidia, Intel, AMD and now Fujitsu have set out on a quest to create the best – most capable hardware for artificial intelligence. All of the aforementioned companies have come out or are coming out with AI optimized hardware.

Nvidia might have an edge over the other competitors, as it has already announced partnerships with Facebook and Microsoft. What is more, due to the fact that Nvidia started focusing on AI earlier than most of its competitors, developers are used to using their development interface. Which definitely doesn’t hurt Nvidia’s market share.

Link: As Nvidia Faces Tougher AI Competition, Its Head Start Will Prove Valuable read more

Google Glass – now for professionals

Remember Google Glass – the way ahead of its time, privacy nightmare – Google’s take on augmented reality that nobody has heard anything about in four years? Well, it turns out its making a comeback in the enterprise market.

Reportedly, Alphabet, the parent company of Google, revealed its plans for the augmented reality glasses on Tuesday. The new – Enterprise Edition of Glass – is going to be used by professionals who need a heads-up display while they work.

A company called Augmedix is offering the device as a part of their subscription service for doctors. Additionally, workers from companies like Volkswagen, General Electric and Boeing are utilizing Google Glass to keep their hands free while performing various tasks.

It is quite clear that one day such devices are going to be an integral part of the workspace in many industries.

Link: Google reinvents Glass spectacles for workplace read more


Our weighted average return in May was +0.76%, bringing our year-to-date return to +8.2%.

May marks our 16th consecutive month without an average monthly drawdown of over 1.3%. Moreover, during this timeframe, we have only had two months of negative performance (-0.10% in September 2016 and -1.29% in November 2016). This consistency of performance is not attributable to hedging strategies or active volatility management, but to successful asset allocation and choosing good investments.

For quite some time, we have profited greatly from our overweight in technology stocks such as Amazon, Google, Facebook and Netflix. In May, we took profits on many of these positions. As we were in the process of selling, we were quite aware of the fact that we might be selling too early (see our blog). However, there are times that you simply have to say ‘thank you’ and walk away for a while. For many of these stocks nothing has really changed since we were buying them heavily in December, yet all of a sudden, they are now worth 30% more. Recognizing how sentiment can change and to what degree it can propel a stock is a very important component of active investing. Not letting your imagination get away from itself is just as important. It is nice when everyone agrees with you – but it is times like these that you must apply the highest degree of self-critique and suspicion.

In terms of world affairs and capital markets, we both expected and welcomed Emmanuel Macron’s victory in the French presidential elections. Macron is driven, cosmopolitan, self-assured and capable. It is time for not only France, but for Europe as a whole to encourage these traits within their government bodies and corporate boardrooms. A return of European confidence combined with a good dash of insouciance could have tremendous results. We expect that this trend will continue and have been increasing our European investments.

Trump continues his dour carnival, but, amazingly, the market does not seem to care. Anything positive from Trump at this point would be a welcome surprise – especially US tax reform. Evidently, his dour inadequacy to the demands of his office is already priced in to US stocks. Casual observers might ask, “How can markets be trading at their highs with Trump as president?” Our response is “Imagine how much higher US stocks could trade if he actually did anything positive!”

The UK has elections this week, but we do not expect any decisions there to influence our overall investment strategy.

Please feel free to contact us asset@blueorangebank.com if you would like to hear more about our investment strategies.

On the behalf our portfolio management team, I thank you for your continued trust and support!

FULL DISCLOSURE: Please note that the opinions expressed in this blog should in no way be considered as investment advice or a solicitation to buy or sell securities.
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We Have Been Busy

This has been a fairly active month in terms of portfolio changes.

As mentioned previously, we have been busy selling off technology stocks and positioning ourselves in new companies and sectors that we believe will come to warrant the market’s attention.

We have already acknowledged that our sale of tech stocks might have been too early. However, we were heavily overweight the sector. The rise in tech equity prices, coupled with underperformance in other sectors, has resulted in a reevaluation of opportunity cost, and as such, we have acted accordingly.

One particular advantage of our absolute return investment philosophy is that we do not ever have to own anything. All components of our portfolios target a specific desired outcome and are also balanced so that we should rarely be forced to sell anything. As such, we would rather sell in a seller’s market, pause, and look to find the next set of opportunities.

Proper diversification means owning uncorrelated quality assets that will generate long term returns, while reducing portfolio volatility. As such we have recently moved money into to two sectors with very different characteristics that should nevertheless generate very nice risk-adjusted returns.

The first sector is US Energy Infrastructure. The second is the biotechnology sector (where we are increasing our exposure).

In US Energy Infrastructure, we are buying assets that have high barriers to entry and will continue to be in high demand to due the aggressive development of US hydrocarbon supply. The steady nature of cash flows and high dividend payments should mean that this sector will continue to attract investors that seek out bond-like returns in a low interest rate environment.

We have added to our biotechnology holdings because they have lagged the current market rally and because we believe that this sector will bring forth the most significant innovations of the foreseeable future.

It is worth mentioning that Dennis Gartman recently surrendered to the powerful move in technology stocks, now giving them precedence over his previous gospel of owning the producers of physical goods (LINK: Gartman on Tech). This is a notable reversal that ostensibly equates to a high priest changing religions. However, market sectors are not religions and we will take this as a contrarian clue to start investigating mining stocks and the producers of physical goods…
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Big Tech Is Doing Very Well

We have been taking some profits on big tech recently, but the numbers in this link show why big tech share prices have done extremely well over the past year:

LINK: Big Tech Earnings and Revenue Growth

Are you surprised that Facebook grew its profits the most? We’re not. It validates the point that their network is a brilliant platform that has only begun to be monetized. read more