TJ Terwilliger

Start: 2.5% yield
Grow: 8% annually
Time: 20 years

Yield on cost: 11.7%

That's how dividend growth builds wealth.

Resulting: judging a decision by what happened next, not by the quality of the decision itself.

Bad choice, good result? You got lucky.

Good choice, bad result? You had bad luck.

Factors, quants, and algorithms have turned the market into one big self feeding loop.

Use it to your advantage.

Companies providing AI are expensive.

Companies using AI aren't.

Nadella was right. The benefits need to spread.

And when they do, the AI users might be the better bet.

So where's the opportunity?

Not in the companies spending billions to build AI.

In the companies using AI to improve margins and grow earnings.

They're cheaper. Less risky. And profitable.

Another interesting fact?

Companies building AI are valued at a premium to the market.

Companies using AI are cheaper than the market.

The companies using AI for actual benefit could be an interesting place to invest.

Building AI is expensive.

Using AI isn't.

Lots of companies are using AI, but only about a third are seeing actual ROI.

This feels like past bubbles—railroads, radio, the early internet.

Satya Nadella says it isn’t a bubble if the benefits spread beyond the infrastructure builders.

Some companies are starting to report benefits:

And it's not clear that any of them are getting an advantage.

The hyperscalers are spending massive amounts of money on AI infrastructure and models.

"For this not to be a bubble... it requires that the benefits of [AI] are much more evenly spread … not just economic growth driven by capital expenses."

- Satya Nadella, Microsoft CEO

Even the CEO of one of AI's biggest winners is worried.

Here's what the data shows: 👇

The average return of the S&P 500 is about 8.5% per year.

But it's hardly ever 8.5% in any single year.

Lots of companies are using AI.

About a third are seeing returns from it.

Everyone understands the first order effects.

Great investors think beyond the first order.

Diversification works...

to a point.

Super Bowl Ads as a Bubble Warning | Acadian Asset Management

Credit to Owen Lamont for drawing attention to this

Full article here: www.acadian-asset.com/investment-...

Worth the read if you want to understand how advertising waves predict market bubbles.

Bottom line:

Super Bowl ads are a sentiment indicator.

When companies fight for attention during the biggest TV event of the year, they're often fighting for your investment dollars too.

Stay alert.

AI dot com's founder also co-founded Crypto dot com (yes, that 2022 Super Bowl advertiser).

The pattern is repeating.

If this wave of AI ads is followed by a wave of AI IPOs later this year, we're in for a wild ride.

But there's a catch.

You have to act fast.

Many Dot-Com Bowl advertisers never made it to IPO. The window closed after March 2000.

OurBeginning, E-Stamp, Epidemic... all missed their shot.

For companies, a Super Bowl ad kills two birds:

1. You advertise your product
2. You raise investor interest in your shares

Research shows Super Bowl ads can boost stock prices the next trading day.

For pre-IPO companies, it builds the hype you need.

That's what makes this year different.

PitchBook put it perfectly:

"The two largest AI startups duking it out during America's most-watched cultural event signals a new phase: the fight for mindshare and legitimacy as both prepare for massive IPOs."

Not always.

Super Bowls in 2021-2022 had multiple hard seltzer ads. No hard seltzer bubble followed.

Ad waves matter when they reflect speculative buying by retail investors.

Or when they're paving the way for IPOs.

This year, some are calling it "the AI Bowl."

Both Anthropic and OpenAI bought spots.

Plus AI dot com, Genspark, and 11 others.

But here's the key question: Does every wave of Super Bowl ads signal a bubble?

Fast forward to February 2022.

Super Bowl LVI became "the Crypto Bowl."

FTX ran that infamous Larry David ad.

Crypto dot com featured LeBron James with "Fortune favors the brave."

Nine months later?

Crypto prices collapsed. Sam Bankman-Fried was in handcuffs.

Super Bowl XXXIV in January 2000 featured 14-19 internet-related ads.

It was called "the Dot-Com Bowl."

Pets dot com with its sock puppet. E*Trade with three different spots.

11 days later, Pets had its IPO.

The market peaked on March 10, 2000.

Pets dot com shut down by November.

Super Bowl ads might be the best bubble indicator we have.

15 AI companies advertised during this year's game.

That's not a coincidence. It's a warning sign.

Here's what history tells us:

The Investor's Manifesto:

Pricing power is the most important (and most overlooked) factor in dividend growth.

No pricing power = inflation erodes margins = dividend cuts eventually.