Three Things (8/30)

Berkshire Hathaway hits $1 trillion

Warren Buffet’s Berkshire Hathaway is the first non-tech company to reach $1 trillion in market cap. In the 1960s, Buffet took control of Berkshire and converted it into a conglomerate of ‘old economy’ businesses: insurance, railroad, retail, manufacturing, and energy. Since the 60s, the company has grown nearly 20% a year and has even outpaced the S&P 500’s returns year-to-date.

Buffet’s conglomerate is seen as a bellwether for the economy given it holds companies like Dairy Queen, Duracell, and BNSF Railway. So, the trillion dollar breakthrough is a sign of optimism at a time when investors are feeling uncertain. Buffet’s approach to investing focuses on building an ‘all weather,’ value-oriented portfolio, which contrasts how many invest today with eagerness for expeditious growth. Berkshire Hathaway’s trillion dollar milestone has proven that long-term, value investing does indeed still work.

GDP revised upwards

Gross domestic product grew at a 3% annualized rate during the second quarter, which was slightly higher than initially reported. The upward revision revealed that personal spending grew 2.9% versus the originally thought 2.3%. While growth has certainly cooled so far this year, the stronger increase in consumer spending is another data point that should help soothe recessionary concerns.

Uncertainty around the state of the economy has led investors to latch on to new economic data for decision making, as weak jobs data in early August led to a 3% market pullback in a single day. Stronger advances in purchases of goods and services reaffirms that inflation has cooled. The upwards revision of GDP certainly pleased investors and gives them confidence that the Fed will now focus on the other half of its dual mandate, employment.

OpenAI is seeking a $100B+ valuation

OpenAI is in talks to raise several billion dollars in a new funding round that would value the company above $100 billion. It received its last biggest infusion of capital in January of 2023 when Microsoft invested $10 billion. Venture capital firm, Thrive, will lead the new funding round that could put OpenAI at a dramatic advantage compared to its AI startup competitors.

Although ChatGPT is currently a market leader, maintaining the pace at which OpenAI has been processing data and training models is an expensive endeavor that requires additional funding. A $100 billion valuation would make OpenAI one of the world’s most valuable venture-backed startups, which is an exciting prospect and simultaneously a high-pressure title. Today AI businesses aren’t generating nearly as much revenue as investors and tech companies are putting into it, which means OpenAI has a lot of work to do in order to justify a potential $100 billion valuation.

Disclosures:

As of writing: OpenAI is a 4% position in the ARK Venture Fund.

Advisory services are offered by Titan Global Capital Management USA LLC (“Titan”), an SEC registered investment adviser. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. Newsletters provided by Titan reflect the opinions of only the authors who are associated persons of Titan and do not reflect the views of Titan, or any of its subsidiaries or affiliates. They are meant for educational and informational purposes only, are not intended to serve as a recommendation to buy or sell any security and are not an offer to buy or sell a security. They are also not research reports and are not intended to serve as the basis for any investment decision. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. Any third-party information provided therein does not reflect the views of Titan or any of its subsidiaries or affiliates. All investments involve risk, and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and clients may lose money, including their original investment and principal. Any rewards or free trials offered through Titan's client referral program are subject to full program terms & conditions.

Titan newsletters are curated digests of business news stories delivered daily. Titan newsletters’ goals are to make business and financial news accessible to all. The Titan newsletter team has editorial independence. Authority over all news decisions that appear in Titan newsletters, including what news we cover, our tone, and any accompanying media, lies with the Titan news team. Titan newsletter editors conduct daily research through a variety of primary (e.g., press releases, financial reports, public statements, economic data, social media accounts, interviews, etc.), and secondary sources (e.g., Fortune, The Wall Street Journal, The New York Times, Bloomberg, CNBC, TechCrunch, Jalopnik, Business Insider, Fox Business, etc.). The editors then determine the stories to be featured, covering a mix of headline news as well as less reported, yet relevant stories. Titan can’t cover everything, but the Titan newsletters aim to deliver a well-rounded serving of news. Titan newsletters make every attempt to report the facts fairly and accurately and provide “Takeaways” based on our understanding of the trends, our business experiences, and our personal opinions. We deliver the crucial information and our unique perspective so you can assess the news critically. Titan newsletters may contain forward-looking statements, which reflect the author’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Smart Cash is offered by Titan as one of its RIA product offerings. Titan's Smart Cash strives for tax optimization; after-tax yields are estimates, and actual outcomes may vary. Yields are subject to market conditions, will fluctuate, and are not a guarantee or forecast of future earnings. While Titan can provide general tax information and guidance, any information provided should not be taken as tax advice as Titan is not a tax professional. Consult a tax professional for personalized tax advice. View Smart Cash risks and disclosures at titan.com/smart-cash-disclosures.

Various Registered Investment Company products (or “Third Party Funds”) are offered by third-party fund families and investment companies on the platform as one of many potential investment options available to Titan’s clients, that may or may not be recommended based on an individual client’s investment objectives and risk tolerance. Certain Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. The Third Party Funds that are available on the platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund. Please review the Third Party Fund’s prospectus, available on www.titan.com, in its entirety for a full list of risks associated with investing in the interval fund before making any investment decision.

Investments with exposure to crypto assets are only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns, as they still carry inherent risk associated with cryptocurrencies. You are solely responsible for evaluating the merits and risks associated with the use of any information, materials, content, user content, or third party content provided before making any decisions based on such content.

If there are substantive errors when published, corrections will appear in the following day’s material or within a business day of discovery of the error. When Titan or the author of a newsletter owns stock in a company mentioned, we’ll disclose it at the bottom of our newsletter.