Embrace complexity theory in investing for understanding adaptive systems and making informed decisions.
Invest in semiconductor companies with extensive product catalogues for long-term value creation and resilience.
Explore potential of silicon carbide technology for investing in emerging technologies with growth opportunities.
Adapt portfolio strategies in high-valuation markets by balancing resilience and optionality in semiconductor and tech sectors.
Deep dives
Investing Philosophy Based on Complexity Theory
The podcast discusses the concept of complexity theory as the basis for their investing philosophy, emphasizing the importance of understanding complex adaptive systems and power law distributions in making investment decisions. They highlight the significance of embracing uncertainty and maximizing the probability of success by focusing on optionality and resilience in their portfolio construction.
Catalogue-Based Semiconductor Companies
In their portfolio, they prioritize investing in semiconductor companies with extensive product catalogues that offer long-term value creation, high margins, and steady growth. These companies, such as Texas Instruments and Microchip, are viewed as resilient positions due to their lasting relevance in various industries and their ability to create more value than they extract.
Silicon Carbide Technology and Optionality
The podcast explores the potential of silicon carbide technology, which involves using silicon carbide wafers for semiconductor production. Companies like Cree demonstrate the optionality in investing in emerging technologies that could reshape industries such as electric vehicles and renewable energy, offering significant growth opportunities.
Adapting Portfolio Strategies to Valuation Environment
In the current investment climate with high valuations and unprecedented market conditions, the podcast highlights the need to adapt portfolio strategies to maintain a healthy balance between resilience and optionality. They address the challenge of navigating valuation pressures while seeking opportunities in the evolving semiconductor and technology sectors.
The Evolution of Modern Treasury's Success
Modern Treasury has experienced exponential growth, with a 20 times increase in payment volume to $2 billion per month in 2021 compared to 2020, reflecting its remarkable success and market growth.
Investing in Cadence: A Strategic Decision
The decision to invest in Cadence was driven by its resilient position in the portfolio and its strategic importance in the semiconductor industry. Cadence's strong management team, led by Lip Tan, and its customer-centric approach were key factors influencing the investment.
The Vital Role of ASML in Semiconductor Innovation
ASML's pivotal role in advancing semiconductor technology, particularly through its development of extreme ultraviolet lithography systems, highlights the significance of innovation and collaboration within the semiconductor ecosystem.
Strategic Perspective on Growth and Duration in Investments
The discussion underscores the importance of strategic investments that prioritize long-term value creation over short-term hypergrowth, emphasizing the value of sustained growth trajectories and the benefits of leaving room for customers and partners to thrive within the ecosystem.
Of our 65+ sources for the TSMC episode, one stood above the rest: a wonderful Knowledge Project episode with Brinton Johns and Jon Bathgate of NZS Capital laying out the state of the semiconductor market. When coincidentally we met Brinton a week later, we knew fate was telling us we had to dig deeper. It turns out NZS has a lot more to teach Acquired than just about semis! Here we dive into their fascinating philosophy of "complexity investing", which was born out of their interactions with the world-famous Santa Fe Institute (of W. Brian Arthur and Increasing Returns fame!)... and of course we also throw in some semiconductor shop-talk for good measure. :)
Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
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