Pure Capitalism

Capitalism at Its Purest

Our Bullet No. 1 today is a tale of capitalism at its purest: Entrepreneurs figuring out how to solve someone else’s problem, and getting rewarded by those someone elses to do so.

It’s also a tale that anticipated the AI explosion nearly a year in advance. And there’s an unexpected twist along the way.

Perhaps most relevant to you right now, it’s a tale of how some of our readers bagged a 1,788% gain only days ago. (If you missed out, it’s not too late to potentially replicate that feat — or even exceed it. Read on…)

Our story begins in early 2022 with a problem — a big problem — facing computer graphics artists.

The process of generating sophisticated 3D computer imagery — be it in video games, CGI-animated movies, the metaverse, even architectural designs — is called “rendering.”

“Rendering is the process of simulating light rays across 3D surfaces, textures and materials to generate realistic images,” Paradigm’s venture capital veteran James Altucher wrote at the time.

Rendering requires a lot more computer power than you likely use in a day of word processing, web-surfing and video chats.

“In fact, it can take at least 24 hours to render one frame in a Pixar movie. And there are 24 frames in a second!” said James.

“In a standard 100-minute movie, that’s 144,000 frames. On one computer, it would take 400 years to render that many frames. Even with 400 machines, it would take an entire year.

“That’s why Pixar owns a massive ‘render farm,’ which is essentially a supercomputer made up of 2,000 machines and 24,000 ‘cores’ (think of each core as an independent ‘brain’ of a computer).

“Even with this massive amount of computing power, it still took Pixar TWO YEARS to render Monsters University.

“In Toy Story 4, the most complex frame in the movie took 325 hours to render. In order to make these chandeliers look realistic, Pixar had to simulate all the lighting bouncing around. Remember, this requires an insane amount of physics to compute.”

Don’t try this on your laptop at home…

Until recently, much of the computational power was furnished by cloud-computing providers like Amazon’s AWS and Microsoft’s Azure — who charged extortionate prices for tortoise-slow service.

Yes, CRYPTO Can Solve Real-World Problems

Now here’s the twist: The entrepreneurs who solved this problem did so via a crypto token.

As James explained to readers of his Early-Stage Crypto Investor, “The Render Network (RNDR) is a decentralized network of graphics processing units (GPU) anyone can use to render their 3D projects.

“Anyone can also lend their unused GPU processing power from their computers to earn RNDR. (GPUs are also used to mine crypto.)”

“There are 100X more GPUs outside of the cloud computing services,” James continued, “in millions of devices around the world (your computer has one). Most of them have some free time to contribute to a distributed network and make money.”

Compared with using “the cloud,” Render could slash both costs and wait times by 70–90%.

Little wonder that in short order, Render’s customers included the likes of Apple, Google — and even the aforementioned Pixar.

In the subsequent two years, RNDR enjoyed several boosts…

• Shortly after James’ recommendation in January 2022, Coinbase added Render to its platform
• In May of 2022, Fast Company named Render one of its World’s Most Innovative companies
• In May of 2023, Render Network founder Jules Urbach confirmed Render’s relationship with Apple. Given the anticipation of Apple’s Vision Pro headset, the buzz around RNDR was suddenly huge.
• Interest in Render’s offerings got an enormous boost from the explosion of interest in AI. As you might have inferred already, the high-end GPUs needed for rendering and crypto mining are also useful for AI.

Meanwhile, the broader crypto market experienced huge ups and downs — especially the collapse of the Luna token in May 2022 and the much bigger collapse of the FTX exchange in November 2022. In the space of 10 months, the price of Bitcoin sank from $43,000… to under $17,000. It took over a year after that tumble for Bitcoin to reclaim the $43,000 level.

But Render’s unique capabilities made it resistant to the fluctuations of the broad crypto market.

Last Friday, Early-Stage Crypto Investor readers got their instructions: Sell half their RNDR position for a gain of 1,788%... and let the other half continue to ride.

That’s what James Altucher and senior analyst Chris Campbell aim for with every trade in this premium crypto advisory.

And now is the ideal time to get into their next batch of trades — because James believes we’re on the verge of “the final crypto bull run.”

Coming from someone who was talking up Bitcoin at $114 in 2013, that’s a call you don’t want to take lightly. Get a glimpse inside James’ crypto playbook when you click here.

Markets Today: Watch the Dollar, Watch the Chips

As goes the dollar, so go the markets.

One of the tailwinds that’s propelled the major U.S. stock indexes to all-time highs this month has been weakness in the U.S. dollar.

The U.S. dollar index (DXY) has edged down from a high of 105 on Valentine’s Day to 103.9 this morning. All else being equal, dollar weakness translates to stock strength — especially for multinational giants selling their wares to foreigners whose local currency has more purchasing power.

“The dollar index has done risk assets a huge favor by consolidating for the past two weeks,” says Paradigm trading pro Greg “Gunner” Guenthner. “But this 104 level is a logical spot for a bounce, so I think it would be prudent to keep a close eye on the buck this week. If we do see a bounce, it could spell trouble for stocks.”

Another hint at what could be in store comes from one red-hot sector.

“Semiconductors have been soaring for weeks,” Gunner says. But after some lousy price action on Friday, “the group is finally starting to look tired.

“Looking beyond the mega-cap winners, we’re starting to see some cracks forming. How semiconductors act this week could have major ramifications on overall market conditions.”

As it happens, though, the PHLX Semiconductor index (SOX) is up nearly a half-percent today, back in record territory.

That’s good enough to help propel the Nasdaq over 16,000. Nice, but still not quite the record territory of late 2021. The S&P 500 is pancake-flat at 5,070 while the Dow is in the red and back below 36,000.

Watching precious metals continues to be like watching paint dry — gold at $2,034 and silver at $22.44. Crude remains locked in a trading range, up 64 cents at last check to $78.22.

The real action is in crypto: Bitcoin burst past the $52,000 barrier when we wrote you yesterday, and now it’s blown beyond $56,000 for the first time since late 2021. (What did we say about James Altucher and “the last crypto bull run” a few moments ago? Oh yeah, this.)

The big economic number of the day is durable goods orders — that is, orders for anything designed to last three years or longer. It tumbled 6.1% last month, substantially more than expected.

But this number is frequently skewed by month-to-month volatility in orders for aircraft and military hardware. If you strip those out, orders for “core capital goods” rose 0.1% — as expected. That said, the December number was revised sharply downward.

Dockworkers Strike? (And Right Before Election Day)

Heads up: Workers at major East Coast and Gulf Coast ports might go on strike right before Election Day.

Port operators represented by the United States Maritime Alliance are at odds with the International Longshoremen’s Association, which represents about 70,000 dockworkers.

The current contract expires in September. Three months ago, union leadership warned about 45,000 rank-and-file to “prepare for the possibility of a coastwide strike in October 2024.”

According to the trade publication FreightWaves, a strike would impact 36 U.S. ports, including three of the five biggest — New York-New Jersey, Savannah and Houston. Since 2022, labor disputes at West Coast ports have had the effect of moving a lot of cargo to the Atlantic and the Gulf.

The National Retail Federation is on edge and has offered to mediate. “Even the threat of a disruption can have a negative economic impact on the covered ports,” says NRF CEO Matthew Shay.

Hmmm… The last thing the Biden administration wants going into the election is a strike that would disrupt supply chains. The White House dodged a bullet last year when UPS came to terms with the Teamsters at the last minute… as well as the year before when Congress and the White House imposed a deal on the freight railroads and their unions.

The Mailbag: Politics (Again)

“Cut out the political opinion or I will cancel my subscription!” a reader writes after a passing remark early in Friday’s edition.

“Am a proud, liberal, Progressive Democrat. I happen to like Morning Joe you dumb****! See the bullcrap opinion and I ignore the rest of the email.”

Dave responds: So you missed the part a few paragraphs later where I called out Donald Trump along with all the other 21st-century presidents for pushing Russia, China and Iran into each other’s arms?

Your loss. We’re equal-opportunity offenders around here…

After Emily called out the Biden administration’s latest student-loan forgiveness scheme on Saturday, we heard from an aggrieved academic. Specifically, Emily’s line ‘Can you stomach any more of Team Biden’s bright ideas?’ inspired the following…

“I can barely stomach YOU. How did you pay for college? What privileges might you have had? If taxpayers aren't willing to pay for education (which is not being well supported for public K–12) then they will pay the much more dear consequences of having a bunch of idiots trying to decide how to vote, with no data to make their judgements.

“More than 40% of college graduates have job insecurity, and now some people want to blame the universities for that. Good luck with that.

“Broaden your reading.”

Emily responds: I qualified for federal student aid because, growing up, my family’s income could be described as lower-middle class (emphasis on “lower”).

To keep costs down, I went to a local community college for two years and then transferred, as a commuter student, to a state university. Go, Towson Tigers!

I worked various part-time jobs while I was getting my bachelor’s degree — including a couple work-study gigs, plus a long stint as a waitress.

I paid for a portion of my tuition, gas, clothing, incidentals and my own health insurance because, back then, a legal adult couldn’t stay on parents’ health insurance policies. 

My parents took care of food, shelter and — as long as I was getting good grades — car insurance.

To pay for my final semester, I signed for a $3,000 federal student loan, which I paid back in $146-monthly installments after graduating.

As for privilege, that’s a complicated question… and answer.

The main privilege I had was having an intact, supportive family. But we also moved a lot when I was a kid: Florida, New York, Michigan, Florida again, Indiana and, finally, Maryland.

But I think our reader — who, I see, works in academia — might be referring to racial privilege?

One could describe me as ethnically diverse, having a Puerto Rican father… and an Appalachian hillbilly, Scotch-Irish mother.

My maiden name is Reyes, and having a Latino last name, in some instances, was probably a net negative. Regardless, I’m proud of my heritage.

In general, reader, I made my way through college with some government assistance, yes, but also a lot of hard work. I took nothing for granted. And I paid back my debt.

And Dave adds: I’m old enough and fortunate enough to have gotten a four-year degree at a state school before administrative bloat totally took over higher ed — the proliferation of associate deans, vice chancellors and assistant provosts whose jobs didn’t exist back then.

The only reason those jobs exist now is the massive subsidy the higher-ed complex has received in the form of… student loans.

Were it not for student loans, college costs would not have grown 169% from 1980–2019… while the average earnings of workers ages 22–27 grew a mere 19%. That’s according to a Georgetown University analysis of government figures. And both of those figures are after you adjust for inflation.

Like the health care cartel and the military-industrial complex, it’s all destined to collapse in a heap, likely as not before this decade is out. If this Wall Street Journal article is to be believed, the process is already underway. Bring it on.

Best regards,

 

 

 

 

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets