Did You Know - What you demand is what someone can supply?
This is the first post of the second half of the year, and I'm glad to be writing it this early. For starters, I trust you’re having an exciting start. Hold on to whatever you're dreaming of and working towards. Time is your ally, and you need to believe that. As I arrived at my workplace this morning, an elderly man named Frank was out for a walk, and we had a short chat. He told me he just came out of surgery and had metal inserted into his knee. He was walking just fine and said, "Well, at 87, I'm glad to still be this active." I paused in amazement and asked, "Sir, what is the secret?" He laughed and replied, "I don't know, maybe walking a lot." I got into the office and prompted a colleague to look outside and guess Frank's age; he guessed "mid to late 70s." That was close, but even he could not believe Frank was in his late 80s, looking strong and walking faster than most young people I know. So you see, if you do it right, time is indeed your ally. Let's not rule out luck, but we also cannot deny that luck plus preparation and discipline is one hell of a combo. So keep at it and take on the second half of 2026. Now that I have given you some of Acha's booster energy, let's dive in.
I like to keep things simple because it's said that if you can't explain something simply enough, you probably don't understand it. When something is demanded, supply somehow finds a way to meet that demand. The reason you're able to keep buying what you buy, be it food, music, clothes, etc, is that there continues to be demand, which creates a need for supply. There you go, we're back to talking about markets again. When you strip life down, it boils down to markets (exchanges). If you're going to school, you’ve likely paid for that and are exchanging your time for the experience. If you're meeting a friend tonight, you prioritize that and exchange another experience for that meeting. We are constantly weighing what is important and exchanging some things for others. The main idea here is that demand creates a need for supply, which brings me to my next critical paragraph.
I recently read an article AI demand about the demand for AI compute, and it somewhat cleared some of the doubts I had been having. You don't need to read the full article; it simply says that Alphabet (Google's parent company) reports that the demand for its AI services far outweighs what it can currently supply. Berkshire Hathaway is investing a massive sum of money into Alphabet, potentially because it sees a clear market that can be addressed there. An exchange needs to happen as demand continues to rise. You may have heard of ChatGPT, but many people stop at the app and consumer level. A lot is going on beyond ChatGPT, and inquisitive minds didn't just end at being amazed by what ChatGPT could do; they went further to see how they could benefit from such a revolutionary technology. To keep it simple: businesses are demanding more from Google's AI services, and Google is well-positioned to provide the supply to fill this demand. That is to say, Alphabet/Google is going to be more valuable because of this new market. It's that simple, and the detailed dynamics need not bother you. Alphabet, which is currently priced at $361 a share, will over time be worth more as it scales and addresses this demand. So what does this mean? It means that despite the noise, you realize a market is worth addressing and buy into Alphabet. It doesn't happen overnight, but over time, it plays out. This may seem simple, and I do acknowledge that a lot more nuance should be applied as other factors play a role. However, the central idea I present is what matters, at least to me. This is my thesis, coupled with the fact that Alphabet meets my criteria for a valuable company free of "stupid debt." It is a sound company, inside and out. And if I had any doubt, I would just say to myself, "I always hear people say, ' Google it."
This post is long enough already, and I think I've cleared the idea I wanted to express for myself and for the regular readers of my nuggets. As for my capital allocations, Alphabet is a bit expensive, yet worth it. I tend to like assets that have low debt, a product or service already in demand, and a valuation that is lower than what the market gives it credit for. Time is your ally, just as it is mine. It's almost midnight, and I have to sleep, so gracias, amigos. I'm on a 154-day streak on Duolingo learning Spanish. It's not the learning that counts, but the fact that I've shown up consistently for 154 days. Habits take time, but time itself is the genie, my friend. Go on and grab the next half of this year by the horns!
Thanks!
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