Jason Hsu doesn’t believe that US efforts to manufacture advanced semiconductors in Arizona are going to be successful. He told us that last week and then this morning, as though on cue, Intel revealed a surprise $7 billion loss estimate for their chip fabrication business (expected loss was closer to $5 billion) and the stock dropped like a rock.

The problem here isn’t about expertise, per se. We have all the semiconductor know-how in the United States you could possibly ask for. The problem is that jobs “baking cookies” in a clean room are highly coveted in Taiwan, which means the very best and brightest want to take them and do this sort of work - for a reasonable salary. This is how Taiwan Semi became the fabricator to the world. You can read about its 92-year-old founder, Morris Chang, in a brand new profile feature at the Wall Street Journal, btw.

In America, the most talented engineers don’t necessarily want to work in a clean room in Phoenix, Arizona. They want to live in Atherton and work at Google, for even more money and stock options and prestige and work / life balance. They want to live in Cupertino and make things for Apple. I get it. So manufacturing chips at scale - and at a decent cost - in the United States, might not be the slam dunk it would appear to be if you’re listening to Pat Gelsinger (Intel CEO) or the Biden Administration.

I still think it’s good that we’re going to try. Manufacturing often leads to compounding gains on the engineering and inventing side. It’s not a one-way street from design to fab. Feedback from the fabrication end is absolutely vital for the designers. It’s not great if we unlearn how to do these things here. So, by all means, I am rooting for the American Microchip Renaissance.

Just don’t expect much in the near term.

Michael Batnick and I had this conversation and others with our friend Jason live on stage at the Future Proof Retreat. We talked about why advisors have given up on emerging markets and international stocks (easier to apologize for missing a rally in Asia than it is to say sorry for being underweight the S&P 500). We talk about TikTok and Apple and some of the other investing issues between the US and China right now. It’s a fun conversation and Jason is so smart. I hope you enjoy listening as much as we enjoyed recording it.

You can listen to the Jason Hsu episode at the link below on the podcast platform of your choice…

Hype Video

Speaking of the Retreat, the hype video just came out with highlights no one’s seen before.

You can watch it here:

We met a ton of advisors at the event, many of whom have started their own firm and are building a business. One of the key takeaways for me was how big the community of entrepreneurs in our space truly is. We are the Crown Jewel of the financial services industry right now. Ask anyone in asset management, financial media or fintech what they’re working on these days and they’ll tell you flat out they’re making something for the wealth space. Everyone.

Partly it’s because of the consistency of our revenues and the reliability with which we run our companies. There’s something nice about taking the chaotic element out of the capital markets and turning it into something more dependable. RIAs have their ups and downs, but the midsized and larger firms have gotten very good at mitigating these with rational cost structures. The downs aren’t as down as, say, working in M&A or leveraged loans or equity trading. In a bull market, we rise and in a bear market the asset values may fall but we stand and deliver while attracting new clients. Firms who can bring on new households and raise assets during a bear market get much bigger during the recoveries that follow. I call it “the slingshot effect” and since we founded our firm ten years ago, I have ample evidence that this is a real phenomenon.

No wonder everyone wants to sell us research, software, strategies, funds, technologies, services, events, education, consulting, access, etc. Wealth is the shit right now on and off Wall Street and it has been for fifteen years.

Special thanks to my friends from Advisor Circle who run the Future Proof events - that’s Matt Hougan, Matt Middleton, Chris Cherry and Nyle Bayer with Michael and I in the picture below.

I can’t wait for the next Future Proof Festival in Huntington Beach this September. If you work in or around the industry, missing this is unacceptable.

…and last night’s What Are Your Thoughts episode is blowing up right now too, in case you missed it. We took on the state of the stock market rally, my fervent wish for less Federal Reserve commentary, the breakout in oil stocks and a whole lot more. Check it out here:

OK that’s it from me. Hope you’re having a great week, talk soon! - JB