We are at an exceptionally dangerous time in history.
Ever heard the saying, 'Buy when there's blood in the streets, even if the blood is your own'? This maxim, as old as investing itself, is attributed to the legendary Baron Rothschild, who amassed a fortune in the chaotic aftermath of the Battle of Waterloo. It suggests that the most significant opportunities often emerge from turmoil and uncertainty—conditions that are starkly evident in our current times. The way things are unfolding, I wouldn't be surprised if we soon find ourselves in a world where this metaphorical bloodshed becomes a literal reality. Indeed, such scenarios might precipitate market collapses that savvy investors can exploit for profit, but they also come with heightened danger and risk. In all my years, I have never seen chaos like what we are experiencing today, and I fear this may be just the beginning of a dark period for humanity.
The world seems to teeter on the edge of something monumental. Could we be hurtling towards a cataclysmic event? The signs certainly suggest so. From simmering tensions in major urban centers to a surge in violent crime, it appears that society is nearing a boiling point. Cultural clashes are intensifying across key cities in North America, Europe, and Latin America, spurred in large part by recent waves of migration. Crime is encroaching upon once peaceful cities.
At the time of writing, protests are escalating on campuses across North American cities, echoing the early signs of the 2020 riots. With tensions mounting, the potential for these protests to spiral into full-scale looting and rioting is a real concern. Meanwhile, tensions are also high in Europe, and with the Summer Olympics set to take place in Paris, this year could see an exceptionally eventful summer. However, the most pivotal event to watch is the US election in November, which could herald the onset of one of the most tumultuous periods in modern history.
Yet, my intention is not to spread fear. The primary aim of this newsletter is to analyze geopolitical events and their potential impacts on my investment decisions. It’s about preparation, not prediction. Despite this, I cannot ignore the foreboding sense that we may be approaching a particularly tumultuous period in history. The old adage of "blood in the streets" could become more relevant than ever. It is crucial, therefore, that we remain vigilant and well-prepared—not only to withstand the possible upheavals but to emerge stronger and more prosperous.
Speaking of prosperity, this issue explores a breakthrough technology that could, in my opinion, revolutionize the computing landscape—surpassing even the impact of Artificial Intelligence. This disruptive innovation has the potential to render today's most advanced computers obsolete, making them appear prehistoric. Those who master this technology will gain a significant competitive edge, ushering in a new era of digital dominance. The economic, geopolitical, and investment implications are enormous. Embracing this technology could position us at the forefront of an unprecedented technological surge.
Quantum Supremacy: The point at which quantum computers can perform tasks that classical computers practically cannot.
In 2019, Google announced that its quantum computer, named Sycamore, achieved quantum supremacy. This landmark achievement involved Sycamore performing a complex computation in just 200 seconds—a task that, according to Google, would take the world’s most powerful classical supercomputer, Summit, approximately 10,000 years to complete. While some experts, including researchers at IBM, have contested Google's claim, suggesting that the task could be performed on a classical supercomputer much faster with optimized algorithms, the demonstration highlights a critical point: quantum computing is nearing the stage where it can outperform the fastest supercomputers on specific tasks.
Quantum computing is emerging as a megatrend that holds immense opportunity, poised to become the norm and revolutionize various aspects of our lives. Imagine the advances in medicine, automation, and robotics, powered by quantum technologies. It's a megatrend that I am keen to leverage.
Understanding Quantum Computing
To appreciate this breakthrough, it's crucial to understand the differences between classical computers and quantum computers. Classical computers operate on a binary system using bits that can only be either zero or one. This binary coding means that complex problems require vast numbers of bits processed at high speeds.
Quantum computing, however, introduces a fundamental change in how information is processed. Utilizing subatomic particles like electrons or photons, quantum computers use quantum bits, or qubits, which can exist in multiple states simultaneously. This capability allows quantum computers to process information at speeds unattainable by classical computers, dramatically improving the efficiency of predictive analytics, pattern recognition, and complex optimization tasks. This is not just an upgrade—it's a huge technological leap.
My Top Pick for the Quantum Computing Revolution
The economic implications and investment opportunities surrounding quantum computing are colossal. Every major technology company globally is racing to harness this power, signifying that quantum computing could be the most compelling and disruptive investment opportunity today. As this technology moves from the fringes of theoretical research to mainstream application, now is the time to position for what may be the most significant profit opportunity in a generation.
One direct way to invest in the burgeoning field of quantum computing is through IonQ, a pioneering, pure-play in this sector. Founded in 2015, IonQ emerged from over 25 years of academic research with initial seed funding of $2 million from New Enterprise Associates, leveraging licensed core technology from the University of Maryland and Duke University.
IonQ leverages something called advanced trapped-ion technology to position itself as a leader in the quantum computing industry. This innovative approach uses electromagnetic fields to trap individual atoms, manipulating them with lasers for precise quantum computations—a method that significantly enhances scalability and qubit operation fidelity. In February 2024, IonQ underscored its industry commitment by opening the first dedicated quantum-computing manufacturing facility in the United States, located in Bothell, Washington, further advancing its production capabilities.
To facilitate widespread access to this cutting-edge technology, IonQ offers its quantum computers via cloud services, enabling researchers, developers, and organizations to experiment with quantum algorithms without the need for their own infrastructure. Additionally, IonQ develops essential software tools that support users in programming, executing, and optimizing quantum algorithms, making these complex processes more accessible and effective.
Through strategic partnerships with academia, research institutions, and industry leaders, IonQ continues to pioneer new applications and improvements in hardware technology. These collaborations not only drive the field forward but also solidify IonQ's role at the forefront of the quantum computing revolution, ensuring it remains central to the industry’s expansion and the development of solutions that could one day revolutionize various sectors including finance and health—areas closely aligned with your interests in geopolitics and economic impacts.
Financial Information
IonQ has reported substantial financial growth and positive trajectory in its latest earnings. For the quarter, the company recognized $6.1 million in revenue and $22.0 million for the full year, marking a 98% increase from the previous year's $11.1 million. This performance not only met but exceeded the high end of their financial forecasts. Additionally, IonQ recorded $6.7 million in new bookings for the quarter and a striking $65.1 million for the year, reflecting a 166% annual growth from the $24.5 million booked the prior year. Their cash reserves are robust, with cash, cash equivalents, and investments totaling $455.9 million and no debt as of December 31, 2023.
Despite these strong revenue and bookings growth, IonQ continues to operate at a loss, with a net loss of $41.9 million and an Adjusted EBITDA loss of $20.0 million for the fourth quarter of 2023. The full-year figures were also in the red, with a net loss of $157.8 million and an Adjusted EBITDA loss of $77.7 million, though these were within the company's projected financial outlook. Looking ahead to 2024, IonQ expects to generate revenue between $37.0 million and $41.0 million and forecasts bookings between $70 million and $90 million, while anticipating an Adjusted EBITDA loss of approximately $110.5 million. These projections underscore the company's ongoing investment in scaling its technology despite the current financial losses.
Revenues
Downside Risks
Quantum computing is an undeniable megatrend that presents a significant opportunity, and IonQ stands out as a prime candidate for those looking to invest in this burgeoning field. I particularly like the fact that IonQ is currently the only provider with quantum computers accessible through all major cloud services—Amazon Web Services, Microsoft Azure, and Google Cloud. This exclusive position enables IonQ to offer Quantum Computing as a Service (QaaS), ideally situating it to capitalize on the quantum computing revolution. While it's important to note that IonQ has yet to achieve profitability and investment success is never guaranteed, the strategic importance of quantum computing technology cannot be overstated. Companies and nations that harness this power will have a formidable advantage over their competitors, ensuring continued investment and interest in this transformative technology.
For now, IonQ will remain on my watchlist as I await a favorable pullback before incorporating it into my portfolio. This strategic patience allows me to observe its performance trends and better position ourselves for potential entry points. IonQ's pioneering role in the quantum computing sector presents a promising investment opportunity, and timing my entry correctly could maximize returns as this technology matures.
Final Thoughts
As we mark the first anniversary of Something to Consider, reflecting on the past year brings both pride and perspective. This newsletter began as a medium to document global events and track my investment journey through these turbulent times. Surprisingly, despite numerous challenges, the stock market has shown remarkable resilience. While I anticipated a major bear market, it has yet to materialize; however, my conviction that we will experience a major bear market remains steadfast. Meanwhile, my portfolio is defensively positioned for that eventuality.
Currently, economic indicators continue to signal caution. Notable layoffs in major firms such as Tesla, which recently announced a 10% reduction in its workforce, and Luminar, which is cutting 20% of its staff, underscore ongoing corporate struggles. Additionally, Starbucks reported a dismal first quarter, and the year saw its first bank collapse with the failure of Philadelphia-based Republic First. These events paint a picture of a market teetering on the edge, suggesting that now more than ever, strategic portfolio management is essential.
My stock picks have experienced fluctuations along with the broader market trends. While a large number of my positions have declined in the past month, my substantial cash reserve—over 94% of the portfolio—is a comforting buffer that allows me to sleep soundly at night, confident that I can withstand any market volatility. I saw success with my Newmont position, which was assigned at $42/share, yielding a 29.46% return including dividends and call option premiums. Additionally, I initiated a small position in Luminar (LAZR) this month, which at the time of writing has already appreciated by 30% in less than five days. I'll delve deeper into Luminar in the next edition.
I continue to implement my strategy of leveraging my cash reserves to generate income, which I then use to take small, speculative positions in high-risk, high-reward stocks. This approach allows me to maintain my substantial cash holdings while still participating selectively in potentially lucrative market sectors. The various cash instruments I utilize in my portfolio are currently yielding between 4.30% and 5.25%.
Below, you'll find a detailed table outlining the portfolio's composition as of May 2024. Cash and GICs continue to make up the bulk of the portfolio, offering a solid foundation and ensuring that the portfolio remains robust amidst uncertainty.
Portfolio Composition
| As of March 2024 | |
|---|---|
| Category | Portfolio Weight |
| Cash and GICs | 94.05% |
| Trailblazers | 1.43% |
| Defensive Picks | 3.50% |
| Crypto | 1.02% |
| TOTAL | 100% |
Remember that the content of this newsletter is neither a stock recommendation nor investment advice. This is just something to consider. You can access my watchlist and portfolio through the link below. By clicking the link below you accept all responsibility for any potential losses that might result from buying any of the stocks mentioned in this newsletter.