What we’re reading (5/30)
“This Record Stock Market Is Riding On Questionable AI Assumptions” (Wall Street Journal). “Nvidia’s profits are rising about as fast as its share price, so if there is a bubble, it’s a bubble in demand for chips, not a pure stock bubble. To the extent there is a mispricing, it’s more like the banks in 2007—when profits were unsustainably high—than it is to the profitless dot-coms of the 2000 bubble. The threat to Nvidia’s share price is therefore about threats to its earnings. There are four risks: 1) Demand falls because AI is overhyped […] 2) Competition reduces prices […] 3) Nvidia’s biggest supplier, Taiwan Semiconductor Manufacturing, might want a bigger slice […] 4) What if scale doesn’t matter?”
“Lazy Work, Good Work” (Collab Fund). “John D. Rockefeller was the most successful businessman of all time. He was also a recluse, spending most of his time by himself. He rarely spoke, deliberately making himself inaccessible and staying quiet when you caught his attention.”
“Yes, Walmart Store Managers Really Can Make $500,000 A Year” (Bloomberg). “The world’s largest retailer is rethinking one of its most important roles after falling behind the competition. A couple of years ago, Walmart’s attrition rate for store managers spiked to almost double that of other big-box retailers such as Home Depot Inc. and Target Corp., according to data from human resources analytics company Revelio Labs Inc. Departures first ticked up when Walmart cut management ranks in the late 2010s, saddling those who remained with more work and longer hours, according to two former managers who declined to be named. At the time, the company was more focused on improving conditions for its hourly workers, investing billions in upgrading their wages.”
“You Can Thank Private Equity For That Enormous Doctor’s Bill” (Wall Street Journal). “Years of dealmaking has led to sprawling hospital systems, vertically integrated health insurance companies, and highly concentrated private equity-owned practices resulting in diminished competition and even the closure of vital health facilities. As this three-part Heard on the Street series will show, the rich rewards and lax oversight ultimately create pain for both patients and the doctors who treat them.”
“Home Insurance Was Once A ‘Must.’ Now More Homeowners Are Going Without.” (Washington Post). “Most uninsured homeowners are those who have paid off their mortgage and are no longer required to have insurance. Among those who own their home outright, the CFA estimates roughly 14 percent are uninsured, with low-income and minority homeowners especially at risk. Among mortgage holders, only 2 percent opt to go without coverage. Experts say this trend is driven by the escalating threat of climate change — which has forced insurers to make larger and larger payouts — and skyrocketing housing prices. Both trends are pushing the cost of policies up. On average, home insurance policies rose 11.3 percent in 2023, according to S&P Global.”
