HAZ Research

Research + Engineering + Business Analyst

[HAZ Research @hazresearch]

"risk comes from not knowing what you're doing"

~ some famous investors

[HAZ Research @hazresearch]

@fchollet What's your favorite beaten down saas that suffers this narrative?

I can gather you like Adobe. Is there something else top of mind?

[HAZ Research @hazresearch]

@realroseceline I thought it was funny. Maybe different sense of humor 🤪

[HAZ Research @hazresearch]

@alex__pitti @RetiredLifeNC It's not if you mortgage your future and bet on it. Sure sounds that way from the emotional tone lol

[HAZ Research @hazresearch]

If you strip it down to a simple thought experiment, I'd simply restate my question as: if you only bring the money and hire other people to do the job for you, and retain all the upside, are you maker or taker?

Where I'm going with this is I'm thinking out loud whether they are just ignoring the divide between the ownership class vs the rest on purpose. Framing it as maker vs taker makes it sound a lot more heroic, but possibly too simplistic

[HAZ Research @hazresearch]

@leighdunsford @karlstefanovic No that's actually a genuine question, I'm not trying to be adversarial. If your only job is to fund startups with other people money, are you maker or taker according to their viewpoint? I'm curious to hear your thoughts too

[Rose Celine Investments 🌹 @realroseceline]

Making money vs building wealth

I think one of the most misunderstood concepts in investing is that there are two completely different ways to make money.

The first is through repricing when you buy something for less than it is worth and wait for the market to agree with you. The stock rises, the valuation gap closes, and you make a profit. (Ie $ADBE, $PFE, $NVO, $BBW etc).

The second is through compounding when you buy a business that becomes more valuable year after year. Revenue grows, earnings grow, cash flow grows, and intrinsic value grows. (Ie $MELI, $RMS, $CRWD, $APM, $AMZN, $WING, etc).

At first glance these appear to be the same thing because both can make money. Underneath the surface they are entirely different games. One is driven primarily by valuation while the other is driven primarily by business performance.

Repricing depends on the market changing its opinion. Compounding depends on the business improving its economics. One asks whether the stock is cheap today while the other asks whether the business can be dramatically larger ten years from now.

Many of the companies being discussed today fall into the first category. They may very well be undervalued. Some may rise 50%, 100%, or even more as sentiment improves and valuation multiples normalize. I do not disagree with any of that.

What I question is whether that is where extraordinary wealth is created. Making money and building wealth are not always the same thing. One is often a transaction while the other is a process.

A stock that rises 100% because sentiment improves has largely reached the finish line. The valuation gap has closed and the original thesis has played out. The investor is now faced with another decision and another search for the next opportunity.

A great business is different. The finish line keeps moving farther away because the business itself keeps creating value. Every year management reinvests capital, expands the moat, increases earnings, and raises intrinsic value.

One investment eventually asks you to sell. The other begs you not to. That distinction sounds subtle but it changes everything. One depends on being right about valuation. The other depends on being right about the business.

The greatest fortunes in investing were not built because investors repeatedly discovered undervalued stocks. They were built because investors found businesses that could compound for decades and then had the discipline to leave them alone.

The irony is that the stock market trains people to think like traders while the largest fortunes are usually built by owners. Most investors spend their time searching for discounts while exceptional investors spend their time searching for compounding machines.

The most expensive mistake in investing is not overpaying. It is owning something that merely works when you could have owned something extraordinary. Opportunity cost is invisible, which is why so few investors appreciate how powerful it really is.

The goal is not to maximize returns on the next trade. The goal is to maximize the length of time that you never have to make another investment decision. Find a wonderful business, make one good decision, and then get out of your own way.

Happy Father’s Day,
🌹

[HAZ Research @hazresearch]

@realroseceline @Muzzlebuster @theFInvestor @CapexAndChill @DimitryNakhla High quality thinker, and a bitch

[HAZ Research @hazresearch]

@lngspt @realroseceline Selection bias speaking

[HAZ Research @hazresearch]

@adrewrogers Question: I remember last year you were looking into Duolingo for a bit. Mind sharing the reason you didn’t pull the trigger?

[HAZ Research @hazresearch]

@WillBiddy_ Organic growth is actually decelerating..which is a matter of fact and not even bears making up narrative.

For this to have "incredibly bright" future and not a melting ice cube, looks like the current data put the burden of proof on the incredibly bright future side

[Nathan Lambert @natolambert]

Not enough people studying SFT methods. It’s a foundation of post training with limited literature that seems very serious in an empirical sense.

[HAZ Research @hazresearch]

@Waithakaaa @inwoodcapital Sure. Give me 20 billion dollar book with 2% annual fee. I'm happy to run it for you

[HAZ Research @hazresearch]

@techwith_ram No those were the mainstream problems from the ML research community back in those days. There is no need to apply mystical label on the guy. He is good, but not a visionary

[HAZ Research @hazresearch]

@TravisHoium What's yours if I may

[HAZ Research @hazresearch]

@codetopeople @lennysan So how do we tell the people with good lived experience from the have not?

[HAZ Research @hazresearch]

@FromValue Perhaps... sometimes... because you bought them by mistake?

[HAZ Research @hazresearch]

@zacharylipton @GoogleDeepMind @JeffDean @demishassabis You have a fair share of acting like a poser yourself in the past sir pufferfish

[Susan Zhang @suchenzang]

in feb 2024, deepseek math dropped this on arxiv but no one in the west paid close attention because they were just another chynese lab