Author: Scott Buchanan

SpaceX: The. Biggest. IPO. Ever. Is. Ridiculous. Hype.

Scott Buchanan1 Comment

Here is a graphic that compares the size of the initial public offering (vertical axis) and the total company market cap (size of circle) of SpaceX to everything that has come before:

Elon Musk’s space launch/AI conglomerate spin-off SpaceX went public on Friday. Retail investors were all over it like a pack of starving dogs, driving up prices of SPCX from its opening $162 to $192 as of the close Monday. This has been grand theater, with Musk serving up signature visions of gargantuan total addressable markets, while investors are in fact getting crumbs of a money-loser. In the restaurant biz, this is known as selling the sizzle instead of the steak.

Let us pause for a reverent moment to savor the grand vision used to sell SpaceX: making humanity multiplanetary by dramatically lowering the cost of access to space. It extends beyond launch services into global communications (via Starlink), space infrastructure, in-space manufacturing, resource extraction, transportation, and ultimately a potential Mars economy—expanding from billions to trillions of dollars in theoretically addressable markets. Ooh, ahh, who would not want a piece of that?

Well, there are some problems here. It is hard not to splutter when trying to explain it, it is so bad for investors. I will just call out three issues I see:

( 1 ) Governance: You Own It But Can’t Influence It
The IPO float represents roughly 4-5% of total shares, so we the people only get a sliver of the company. But it gets worse. Public shareholders receive Class A shares with one vote each, while Musk holds Class B shares carrying ten votes each, giving him approximately 85% voting control. More unusually, the company bylaws explicitly prohibit shareholder proposals — meaning investors cannot even put advisory resolutions to a vote. This is governance subordination beyond what even Zuckerberg imposed on his investors.

( 2 ) Valuation: Priced for Perfection Without Profits
There is no price/earnings ratio because there are no earnings. At $2 trillion, SpaceX trades at approximately 20 times REVENUE. That price/sales is not unheard of for a small, fast-growing software company with almost no capital requirements (think: early-stage Amazon, Google, Palantir, etc.). But it makes no sense to apply it to a capital-intensive hardware and infrastructure business with negative GAAP earnings. Starlink is growing rapidly but requires continuous heavy capital expenditure to maintain and expand its satellite constellation. And SpaceX faces meaningful competition for orbital launches from Blue Origin, ULA (for military missions), maybe Rocket Labs, and the Chinese (for non-West payloads).    And, if you dig into it, over 90% of their proposed addressable market is not space at all, but enterprise AI (!!).     SpaceX pitches a total addressable market of $28.5 trillion, with AI opportunities alone accounting for $26.5 trillion. This is essentially the entire global GDP of the planet for a single year, and I guess they assume their pitiful Grok will claw back lots of market share from Claude, ChatGPT, and Gemini. As we said, priced for perfection.

( 3 ) Unbuilt Revenue Streams
SpaceX has announced contracts to provide AI compute services to other companies — potentially a significant revenue source — but the data centers required don’t yet exist. Investors are therefore paying partially for infrastructure that is neither built nor generating revenue, on a timeline that remains speculative.

OK, but we have seen shares of Musk’s other baby, Tesla (TSLA), remain at uniquely high price/sales and price/earnings, seemingly indefinitely. So, investing in SpaceX is much like investing in that shiny yellow metal called gold: there will never be conventional earnings payback, but there might well be some greater fool out there who will pay more for my shares than I did. This really comes down to a psychological head game, not fundamentals. Gold has in fact done very well over the years, and the pros learned the hard way not to short TSLA, not matter how unsupportable its price is.

Final comments on index fund buying to drive up the share price – one of the bull drivers for SpaceX has been the prospect that the huge company market cap (around $2 Trillion) would force index funds like NASDAQ and S&P500 to buy boatloads of SPCX stock, driving up the price. But it turns out this will not be such a big factor. These indices only take into account the publicly traded shares, not locked-up, non-traded founder shares. So, we are looking at around $100 billion in traded SPCX shares, not the full $2 billion, which is mainly shares controlled by Musk and venture capital. $100 billion is only about 0.15% of the total S&P500 market cap of about $70 trillion. This means fund purchases of SPCX should not by itself drive down prices of other companies.

It is true that inclusion in Nasdaq-100 and Russell indexes will force automatic buying of around $25 billion in SPCX shares from funds tracking those indices. That seems like a significant driver, but (a) everyone knows this, so it is already factored into today’s prices, and (b) index fund purchases will be offset by billions in sales from VC’s as they sell shares when their lock-up periods expire in a few months.

Side comment: Historically, the major indices have had a little gravitas about what companies to include. The Nasdaq-100 typically requires at least a 3 month “seasoning” period for an IPO to trade, and then waiting till the next regularly-scheduled reconstitution. Thus, it might take around six months for an IPO to make it into the Nasdaq-100 index. For SpaceX (and presumably for Anthropic and OpenAI IPOs), NASDAQ changed the rules to allow REALLY big IPOs to be included within 15 days. (This means that some other company will get booted from the Nasdaq-100). Russell caved even further than NASDAQ, with almost immediate inclusion in the Russell 3000.

Staid Standard and Poor’s alone has maintained its dignity here, refusing to compromise on its principles. For inclusion in the S&P 500, a company must be publicly listed for at least one full year, must show positive GAAP earnings in the most recent quarter and positive cumulative earnings across the trailing four quarters (this is going to be tough for a cash-burner like SpaceX), and at least 10% (not 5%) of its shares must be publicly traded. So, no S&P listing for SpaceX in the near future.

WWII Key Initiatives 5: General Zhukov Helped Save USSR By Mastering The Pincers Counterattack

Scott Buchanan1 Comment

This is the fifth in a series of occasional blog posts on individual initiatives that made a strategic (not just tactical) difference in the course of the second world war. There were many good generals in WWII, but for the most part they were good just by not being bad. Eisenhower, for instance, did a fine job as the supreme commander in the European theater, but that involved mainly being diplomatic and avoiding dumb mistakes, not strategic brilliance. Also, for the most part, no general was so good or bad that his conduct swayed the ultimate outcome of war.

I see Soviet general Georgy Zhukov as an exception here. The Soviet Union came very close to collapse under the weight of German assault in 1941-42. If the Nazis had won there and consolidated their hold over Russian resources, I doubt whether the Western Allies could have successfully liberated Europe; they barely hung on for the first few weeks of the 1944 Normandy invasion, and that was with most of the German forces off fighting the Russians. Zhukov is seen as the strategic mastermind behind four key Soviet victories in 1939-1942 that allowed the Soviet Union to survive, and then go on the offensive.

The first of these victories was a battle that no one remembers much anymore, but it had enormous strategic ramifications. In 1938-39, the Japanese kept expanding their occupation of territory at the border of China, towards Mongolia (a Soviet satellite). The Japanese had beaten the Russians in 1905, and trounced, massacred and occupied the Chinese all through the 1930s. So, they were pretty cocky. There were several inconclusive battles between Japanese and Soviet forces at the border. Finally, in August 1939, the newly-arrived General Zhukov decided to put an end to it at the Khalgin Gol river, which is otherwise in the middle of nowhere. The usual approach to achieving victory was to mass a huge number of your troops and hurl them at the enemy position. Sure, half your guys would die during the attack, but the rest might break through.

But Zhukov did something very different. Over the course of weeks, he stealthily built up highly mobile forces on the far left and right flanks, hiding the tanks under camouflage.  Then he opened the attack with an assault on the middle, aided by enormous artillery and air bombardment, while laying low on the flanks. After the Japanese had pulled their forces in to reinforce the center, he unleashed his armored columns, which raced around behind the Japanese force to cut it off. Since the Japanese declined to surrender, they were annihilated. Such is the power of a well-executed pincers attack, also known as double envelopment.

The magnitude of this defeat led Japan to totally abandon plans to further expand to the north, with two key consequences. First, the cessation of a threat from Japan allowed the Soviets to transfer troops from the Far East just in time to stop the Germans in the west. Also, Japan decided to expand instead to the south, which led to their fateful decision to attack Pearl Harbor in an effort to prevent America from interfering there.

An early objective of the Germans when they invaded the Soviet Union in June, 1941 was Leningrad, the second-largest Soviet city. The city was nearly surrounded by Axis forces by the time Zhukov arrived to take over in September. Zhukov restored discipline (threatening execution for unauthorized withdrawal), fortified defenses, and launched counter-attacks that stabilized the front lines, preventing an immediate German assault.  He oversaw the evacuation of 1.5 million civilians, the relocation of critical industry, and opening a critical lifeline for supplies. This allowed Leningrad to hang on by a thread for some 900 days of siege, and kept a significant number of German soldiers tied up there.

The Germans then refocused on taking Moscow, far to the east of Leningrad. They almost succeeded, getting to within 10 miles of the Kremlin. Zhukov was rushed to Moscow in October, 1941 to organize the defense there, which he did with his characteristic energy. He mobilized some 250,000 women and teenagers to dig three rings of defensive fortifications. After months of costly back and forth fighting, in the depth the coldest winter of the twentieth century, Zhukov unleashed a pincers counterattack, which forced the Germans back over 100 miles to avoid encirclement. One result of this victorious counterattack was that Moscow was saved. The other result was also extremely important – – in the wake of this major German defeat, Hitler dismissed the top German general and assumed direct operational command over the German army. This was a complete disaster. The centralization of command negated the German army’s greatest strengths: its flexible command structure and the professional competence of its General Staff.  Hitler’s refusal to allow tactical withdrawals led to the encirclement and destruction of entire Axis armies

The Germans in 1942 decided to focus their efforts in southern Russia, to seize control of vital oil fields in the Caucasus region. The city of Stalingrad, with its considerable industrial and armaments industry and its prestigious name lay along the way, so the Germans aimed to occupy it. The Soviets kept up a desperate defense in the city ruins, but the elite German Sixth Army kept advancing until they had taken some 90% of the city. But their almost-victory was turned into a stunning defeat. Zhukov, now in charge of the defense of Stalingrad, stealthily built up enormous forces on the far flanks of the Stalingrad front, where the Axis lines were thinly held by poorly-equipped Romanian and Hungarian troops. In a reprise of his Khalgin Gol maneuver, Zhukov sent his two flanking forces smashing through these lines, and meeting to seal off the 330,000 Axis troops in or near Stalingrad. The Germans tried to relieve this pocket, but the Russian winter and resources were against them. Soviet victory was complete, an entire German army was eliminated (killed/captured), and the initiative on the Eastern Front passed to the Soviets for the rest of the war.

A Few Caveats

What I wrote above was been gleaned from various tertiary sources, including Wikipedia, which reflect the common consensus in the West. In the interest of accuracy, however, I note that some of this brilliant, heroic story is a self-serving myth promulgated by the Soviets as a morale booster, and by Zhukov himself in his not-quite-truthful memoir.  There is good reason to believe that he takes credit for what was actually the work of others, especially in the planning of the Stalingrad counter-offensive.


Zhukov was mainly responsible for the planning and execution of the disastrous 1942-43 Rzhev offensive, where he threw division after division into fruitless attacks. This exercise cost the Red Army some 1 million casualties, while accomplishing almost nothing. This campaign was largely written out of Soviet history, and Zhukov carefully downplayed his role in it.
That campaign highlighted Zhukov’s famous utter disregard for human lives. Another window into that disregard comes from Dwight Eisenhower’s memoirs. Eisenhower records his surprise during a conversation with Zhukov, when the Soviet general explained matter-of-factly how he sometimes cleared a path through a minefield by making some of his soldiers run through the minefield in a line to get the pesky mines blown up. Soviet soldiers faced a 100% chance of being executed for disobeying orders, versus some small chance of making it through the minefield without getting their legs blown off. As Stalin once quipped, “It does not take much courage to be a hero in the Soviet army.”


Finally, the regime Zhukov defended was arguably as horrible as the regime he fought against. Nevertheless, I suspect the world that would have resulted had Georgy Zhukov failed would have been worse than the actual world of say 1945.


Marshal Georgy Zhukov at a post-war parade in Moscow. (Image source: WikiMedia Commons)

Urban Homesteader Starts with Garden Beds and Chickens

Scott Buchanan4 Comments

Somewhere in the vast metropolis that stretches from Boston to Washington lives a friend of ours with a long-term dream.  To protect her privacy, I will not give her name or town. For over thirty years she has wanted to do some form of homesteading, where you raise most of your own food, plus some extra to sell for cash. She and her husband contemplate moving someday to a rural area in the South, where they could buy cheaper land in a warmer climate to raise goats or pigs or cattle, and grow more extensive crops.

However, that move just never happened (so far), what with the usual limitations on jobs and finances. She decided a few years ago, though, to not just keep putting food production off forever. She is doing what she can, with considerable help from her husband, on an urban/suburban lot of just over a quarter acre.  He constructed numerous raised beds in an area that was formerly just grass, and had many trees taken down to admit more sunlight. She sprouts seeds into plants indoors, to get a head start in the spring.  

It started about ten years ago, with just two raised beds. Now the garden area looks like this:

….

Those are pictures I took near the beginning of May. By the end of May, the gardens had exploded:

Plantings there include potatoes, onions, squash, peas, peppers, garlic, tomatoes, strawberries, arugula, and lettuce. The brassicas such as cabbage, broccoli, kale, and cauliflower are covered with a tent; otherwise, cabbage moths can decimate these plants. In a rock bed they have horseradish and comfrey. They have four blueberry bushes. The next big project would be an asparagus bed.

For livestock, they put in chickens about four years ago. In the foreground is a self-contained coop with about 8 birds, and behind it is a second coop with a run behind it, which houses about 18 birds:

They are raising dual-purpose chickens, which are pretty good egg layers, and OK for meat. (There are some breeds that are champs at laying eggs, and others like Cornish Cross whose purpose in life is to grow to eating size in an astonishing 8 weeks). All told, they get some 7-10 dozen eggs a week, spring/summer/fall. This is enough for them to eat and have plenty to sell or give away. In winter, with the cold and shorter daylight, egg production drops to 1-2 dozen/week. To transform a walking, clucking bird with feathers into breasts and drumsticks is a task I will gloss over here, but that is something that homesteaders also must do.

The main ongoing work with their chickens is filling the 7-gallon waterers every couple of days, and throwing a scoop of feed onto the floor of each coop every day. These birds get a “salad” of greens at least once a week, for variety. Here is a shot of the “girls” eagerly pecking away at their dinner; I see at least one egg on the ground in the background:

Chicken poop is pretty nasty, but it is managed by a deep bed system. There are several inches of straw in the bottom of the coops and the run. The birds continually dig around in the straw and mix it. That seems to dilute and dry the poop enough that the “farmers” only need to change out the litter a couple times a year. It just goes on the compost pile, to become fertile planting soil.

Chickens seem to be the most popular animal for budding homesteaders. They are called the “gateway animal”, to get you started/hooked. They tend to require little management, and are versatile eaters, so you don’t need to feed them just purchased grain. Some homesteaders feed them select table scraps, and even raise worms to feed the birds. If you have a large yard or pasture, you can put chickens in a movable “tractor” coop during the day, to forage for insects and greens in the fresh grass under the tractor for that day’s position.

Regulations on selling slaughtered meat are onerous, but it is easy to sell fresh eggs. In their township, chickens are allowed, but no roosters. (No one wants to hear crowing at 3:00 AM). So, our friend’s chicks that hatch out as males end up going to “freezer camp” just before they fully mature. Livestock such as goats and pigs are legal. Our friend wanted to raise a couple of pigs (pigs can also put on weight at an impressive rate, mushrooming from a 50-pound piglet to a harvestable 400-pound hog in 6-7 months). Her husband, however, declined to support that odiferous project.

Growing food is one thing, preserving it for later eating is another. She wrote me:

I can everything. Fruit, jams, veggies, potatoes, meat, fish, and meals. I have chili in jars, along with lamb stew, and onions for Frech onion soup. I make spaghetti sauce too. Yes, I’ve canned our own homegrown chicken.

Since [the storage room] stays cool in the winters (60ish F) I can store hard skin squash and keep fresh potatoes for frying or baking til January or February. I also dehydrate herbs/veggies and meat and fruit. Some veggies don’t can well, they get mushy like zucchini.

“Canning” in this context does not mean sealing into metal cans like you see in stores. It usually means putting the food in special glass “Mason” jars, heating them in a hot water bath (or, better but more work, in a pressure cooker) to sterilize the contents, then sealing them with a lid. Seems like a lot of work, but I am told by friends from the old South that canning your vegetables was a normal household activity there well into the 1960s or so.

Finally, our friends have a beehive on loan from a neighbor. Zoom in to see the bees going in/out at the bottom:

I found it inspiring to see what this couple was able to accomplish in the way of food sufficiency in a quasi-urban setting, and I wish them well in their quest to relocate to where they can grow their own red meat and hear their rooster crow.

Guide to Using Microsoft’s Free “Scan Document to PDF” PC App

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Regarding Free PDF Scanning Apps for Windows 11

According to Claude:   Windows 11 includes a built-in “Windows Scan” app (free in the Microsoft Store) that lets you scan documents directly to PDF — simple and reliable for everyday use. “Adobe Scan” offers a free mobile companion but also works via browser. For more features, “NAPS2” (Not Another PDF Scanner 2) is a popular open-source option with batch scanning, OCR, and direct PDF export. “IrfanView” with its scan plugin is another lightweight choice. For advanced control, “VueScan” offers a free version with core functionality. Most modern all-in-one printers also bundle free scanning software compatible with Windows 11.

Why I Chose “Scan Document to PDF”

My HP scanner software seemed pretty snoopy, not localized to my own PC. Not that I have anything dire to hide, but I’d rather not have my private affairs shooting off to a server who knows where. So I tried the built-in Windows “Scan” function for scanning documents on my trusty ink-jet printer/copier/scanner. It would run pages through the feeder, but then freeze up.

I’ve had mixed experiences with free software, often it gratuitously installs crap-ware on your PC. But surely not Microsoft… so I downloaded the free “Windows Fax and Scan” app mentioned by Claude. It did work, but was a bit clunky and limited. You have to first save a file in some graphic image format like PNG or JPEG, then go to Print, and choose “Microsoft Print to PDF”.

But then, I installed another free Microsoft app, “Scan Document to PDF”.  That seems like a sweet spot here. It seamlessly scans to PDF, but has a good deal of extra functions that are intuitively accessible. It can save files as images like jpg if that is what you want. You can activate OCR to make a scanned document searchable. You can scan individual pages, and decide which ones to bundle into a pdf file. You can brighten or rotate pages, etc.

Go to https://apps.microsoft.com/detail/9nwn2l7ncwlx?hl=en-US&gl=US (or go to the Microsoft Store and then to the app) to download and install. Finally, here are the user instructions I typed up as a reminder for my own use:

INSTRUCTIONS FOR “SCAN DOCUMENT TO PDF” ON WINDOWS 11 PC

( 1 ) Click Start icon, to left of Search bar at bottom of Windows screen. Click on Show All, for a list of all programs. Scroll down to Scan Document to PDF and click.

( 2 ) Check scan settings showing on left hand side. Can adjust them here, or by clicking Profiles button.    Paper Source: Glass for one sheet on scanner, or Feeder for auto feeding pages.    Resolution: Suggest 300 dpi.      Bit Depth: Color for a color scan, or usually Grayscale for a black & white final document (sometimes gives better resolution than the “Black & White” setting). 

( 3 ) Click Scan button (top left) to initiate scan. (Note: on the side of that button is a dropdown for options like setting up Batch Scans.)

( 4 ) Scanned pages will show on screen. To save them all as one PDF, click the Save PDF button. Default pdf file destination is /Downloads/ folder. (To save only selected pages into the final PDF, click on the dropdown on side of that button)

MORE OPTIONS

( 5 ) BEFORE SCANNING: (A) You can set up a different Profile of scan settings (scanner device, feeder, resolution, etc.) by clicking on Profiles button.  (B) Click on OCR button to make final pdf searchable (not just a static image).

( 6 ) AFTER SCANNING:  (A) Click Import to import pages from existing PDF, that you can then add to newly scanned pages.  (B) Click Image button and select a page to crop, brighten, rotate, make black&white, etc.

PhD Chemical Engineer Finds New Career Booty Hooping

Scott Buchanan1 Comment

I read Straw Dogs, a critique of modern society by English political philosopher John Gray, shortly after it was published in 2002. (No relation to the movie with the same name). Wikipedia summarizes the author’s view as, “Gray blames humanism, and its central view of humanity, for much of the destruction of the natural world, and sees technology as just a tool by which humans will continue destroying the planet and each other.”  I cannot recommend the book as a whole – the reader is left in a state of despairing passivity. My AI justly notes, “Critiques of John Gray’s Straw Dogs: Thoughts on Humans and Other Animals generally center on its extreme pessimism, logical inconsistencies, and rhetorical excesses.”  

All that said, the book did contain many interesting observations. One line of thought that struck me at the time was that, with increasing efficiencies in the production of basic goods and services, more and more human effort will go into simply entertaining or “distracting” each other:

The days when the economy was dominated by agriculture are long gone. Those of industry are nearly over. Economic life is no longer geared chiefly to production. To what then is it geared? To distraction. Contemporary capitalism is prodigiously productive, but the imperative that drives is not productivity. It is to keep boredom at bay. With wants so quickly sated, the economy soon comes to depend on the manufacture of ever more exotic needs.

I was reminded of that line of thought when, at a recent gathering of PhD chemical engineers, I heard that one of our number has become somewhat well-known for a late-career shift. She goes by the name Andrea Hulamyhoop these days. (I happen to know her real last name and approximate age, but she wishes to keep those private).

Her father was a chemical engineering professor, and she earned a PhD in the discipline at Princeton University. She was just going along living a fairly normal sort of life, with a regular job, when without warning, it happened:

Then one day, she saw a girl hula hooping. “She looked really free and happy, and I thought, interesting, maybe I’ll try it.” A few minutes at a time quickly became an obsession. Turns out, there are whole online communities of hula hoopers who share tips and support. Conferences. And many shows and events looking for a pro to dazzle and inspire audiences.

“The hula hoop has changed everything in my life,” she says. “I didn’t know I could become a fit, sporty person. I didn’t know I was one. I love performing, and I love people, and I love parties.

“I always thought my life was a bit OK. My kids were grown up. I was enjoying my job,” she says. “But you know, we kind of think, is this all there is? And then to realize there’s this whole world — it’s been incredible. I’m happier than I’ve ever been in my life.”

Andrea Hulamyhoop doesn’t just swirl a hoop around her waist. She can twirl multiple hoops around multiple body parts, with style. She is perhaps best known for her appearance on America’s Got Talent in 2025, where she smashed previous records by bending over and twirling a hoop around her rear end for just over an hour and fifteen minutes. The crowd went wild.

The physics of this feat seem almost impossible, but seeing is believing. Andrea gives a gracious tutorial here.

When I asked who is the most famous holder of a Princeton chemical engineering PhD, both ChatGPT and Claude insisted that former GE president Jack Welch is more well-known than Andrea the butt-hooper, but I doubt that is true below a certain audience age bracket. She has some 17,000 Instagram followers. I’d be willing to bet that in a crowd of under-40’s today, if you asked “Have you heard about the guy who was president of GE in the 1980’s and 90’s?” or “Have you heard about the gal who can twirl a hula hoop on her butt?”, Andrea Hulamyhoop would win.

All this brought back to my mind the notion that as a society we are able to afford to devote a great deal of time to sheer entertainment, rather than growing potatoes.   A comment by a certain @petesounds9321 on Andrea’s epic 2025 AGT YouTube showed he had evidently not read Straw Dogs:

“I’d say we need more scientists than hula hoopers but hey…maybe I’m way off.”

Chipmaker Stock Prices Explode: The Latest Bubble?

Scott Buchanan3 Comments

The share prices of many semiconductor chip companies have gone nearly vertical in the past month. Here are five-year charts for Micron (MU) and AMD, as of the close Monday:

Micron (MU) 5-Year Stock Chart

Advanced Micro Devices (AMD) 5-Year Stock Chart

Many analysts have been taken by surprise by the magnitude of the recent surge and prices. There has been no sudden, truly new news to drive this shift. It has been known for over a year that there is a huge shortage of memory chips, allowing Micron to charge high prices for its products.  But apparently the official quarterly announcement of earnings and projections substantiated that narrative. The bears have been claiming that memory chips are a cyclic business, where chip shortages are followed by building more manufacturing capacity, which inevitably leads to overcapacity and a crash in memory chip prices. It has happened repeatedly, and therefore the current Micron stock party would end in tears after a couple of years. But the bears have been beaten back to their caves for now. Micron was up another full 7% yesterday.

AMD, which specializes in central processing units (CPUs), also released good earnings and strong projections. But the real share price driver there seems to be the new narrative that the shift from the shift to agentic AI will require a higher ratio of CPUs to GPUs.  GPUs (graphic processing units) are the engines that do the core large language model (LLM) AI calculations. But apparently an increasing number of CPUs will be required to coordinate the activities of the GPUs:

AI agents—or the Agentic Era, as called by analysts—need more CPUs per GPU because they are responsible for the orchestration of AI workloads and the required data processing in order for the agent to accomplish its task, or, more simply, CPUs organize the steps of the workflow for the agent.    Traditional LLM models—not agents—required a CPU:GPU ratio of 1:4 to 1:8, but analysts anticipate this ratio to shift toward 1:2 or even 1:1 in the coming years.

All that to say demand for AMD‘s chips is projected to increase.

So far, so good. But apparently being swept up in the whirlwind of exhilaration is the share price for lowly Intel (INTC). Intel was the leading manufacturer of processor chips back in the day, but it missed the boat on GPUs and just cannot seem to execute at global standards. In recent years, Intel has mainly been famous for ever-slipping deadlines on producing high performing chips. Its earnings have been approximately zero for some time. The good news is it now has a foundry business. The bad news is that the foundry business loses around $2 billion a year. The foundry has pulled in a few large customers, and after their experience there, they all run screaming for the exits. But wait, there’s been an announcement that Apple may contract with Intel to produce some low-end chips. Whoopee!

Intel (INTC)  Five-year stock chart


Folks who look at technical behavior of stocks rather than the fundamentals of the business seem somewhat skeptical about the current surge. Terms like overbought are thrown around. I read an article claiming that hedging activities in the options market is creating an artificial, temporary demand for these high-flying stocks:

It is also fairly clear what has been driving these overbought conditions at the index level: aggressive call buying is creating a gamma squeeze across several stocks, such as Micron (MU). This occurs when aggressive call buying forces dealer hedging flows, resulting in purchases of the underlying stock. The more the stock rises, the more call buying tends to increase, and the cycle builds on itself.


My take on this spectacle

I can get the fundamental bull case in general for Micron stock. I bought into it about six months ago. Even that far back, it was clear that the demand for memory chips far outstripped the supply, so Micron could not help minting money for the next year or two. It was one of my fairly rare successes in stock picking. Sadly, I only bought a little bit, because I was influenced by many negative articles claiming that memory chips are a cyclic business, so this boom would end like all the previous Micron booms, with a glut and a crash.

There seems to be a solid bull case for AMD as well. For pitiful Intel, however, I see its price chart as a sign of market FOMO.

Where these stock prices go from here, I have no idea. My observation over the years is that this level of enthusiasm is usually followed eventually by, “What was I thinking?”, and a return to earth. However, in the meantime, tech stock prices often run up longer and further than I would have thought possible.

Usual disclaimer: Nothing here should be taken as advice to buy or sell any security.

100,000 Glyphosate Lawsuits: Why Roundup Does Not Kill Your Weeds Like It Used To

Scott Buchanan3 Comments

I don’t like wasting time bending over and pulling out weeds, one by one. Much more efficient to go squirt squirt and eliminate lots of weeds at a time. But I realized in the past year that the Roundup I spritzed on the weeds in my mulch beds and sidewalk cracks just wasn’t killing them like it used to. The weeds would shrivel a bit, but then many would bounce right back. So, when I went to Home Depot to buy some more this week, I looked at the ingredients on the label. What?? Where is the glyphosate? For decades, “Roundup” was synonymous with glyphosate.

Glyphosate has several desirable properties as an herbicide. You spray it on the leaves, and it kills the plants right down to the roots. However, it has minimal residual toxicity in the soil, so it is unlikely to kill any plants you did not spray, and you can replant quickly in a soil patch that you had cleared with glyphosate. Farmers love it, because you can buy genetically engineered strains of crops like corn that are immune to glyphosate, so you can spray your fields to kill weeds without harming standing crops.

The glyphosate story is much bigger than homeowners bending over to pull weeds. The chemical has become indispensable for current agriculture. Global glyphosate sales are about $10 billion per year, and its impact on crop productivity is enormous. A 2017 study (apparently not paid for by Monsanto) predicted dire effects of discontinuance:

World prices of all grains, oilseeds and sugar are expected to rise, especially soybeans (+5.4%) and rapeseed (+2%). The welfare impacts are mostly negative, with global welfare falling by $7,408 million per year. Land use changes will arise, with an additional cropping area of 762,000 ha, of which 53% derives from new land brought into cropping agriculture, including 167,000 of deforestation. These land use changes are likely to induce the generation of an additional 234,000 million kg of carbon dioxide emissions.

What’s not to like about glyphosate? Well, maybe it causes cancers in humans. This is a contested claim, and I don’t have the expertise to penetrate the arguments. Because glyphosate makers like Monsanto and its successors Bayer have deep pockets, lawyers on contingency have swarmed like killer bees to file lawsuits, over 100,000 of them, of which about 60,000 remain active globally.

National security issues have muddied the waters here. For instance, Robert F. Kennedy, Jr. led a landmark legal case against Monsanto in 2018, securing a $289 million jury verdict (later reduced on appeal to $20.4 million) for a school groundskeeper who developed non-Hodgkin’s lymphoma after prolonged exposure to Roundup. That case energized a bazillion further lawsuits. But now Kennedy is going along with the current administration’s position that it is strategically necessary to maintain production and responsible access to glyphosate: farmers demand it, and Bayer operates the only plant in the U.S. producing significant amounts of elemental phosphorus, which is a vital material for defense and, increasingly, for lithium batteries.

Naturally, Bayer denies that glyphosate is particularly harmful. The firm continues to sell the product to farmers and landscape professionals, but it has removed it from retail bottles of Roundup you see on Home Depot shelves, in an effort to reduce exposure for further litigation.

What have they substituted for good old glyphosate? I found a brew of three other chemicals. I can report reliably that this mixture is much less effective, especially on grasses and on well-established weeds. The Internet backs up my observations. The Iowa State garden extension has a great table of the real-world effects of all common herbicides.

So, what to do? For grasses in my backyard gravel patch, I am spraying multiple times. If that doesn’t work, I may try covering that area with a black tarp for a month to kill the grass. I have considered buying a propane flamethrower weeder, but that seems only effective on the same things the current wimpy Roundup kills (small/young broadleaf weeds).

For mulched areas, I am incentivized to keep up with fresh mulch to keep weeds from growing in the first place. For larger weeds, I have now found myself bending down low, grasping them close to the ground, and actually pulling them out by hand.

Placebos Really Work (Sometimes)

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This Simpsons episode has forever colored my gut response to placebos:

Crowd: We need a cure! We need a cure!

Dr. Hibbert: Ho ho ho. Why, the only cure is bedrest. Anything I give you would be a placebo.

Woman: [frantic] Where do we get these placebos?

Man: (points at truck) Maybe, there’s some in this truck!

(Crowd knocks over truck and a box of killer bees from it break out and attack the crowd.

No, but seriously – the placebo effect is real and important. If you take some pill which you believe might be efficacious (whether it is a sugar pill, or just some regular medication that happens to have no real biological, mechanistic relevance to your condition), voila, the symptoms (especially pain) may abate. This is nothing to sneer at – if you or a loved one is suffering serious pain, any relief is desperately welcome.

I think part of it has to do with our expectations of the pill itself, and part with the healing effect of another human being (doctor/nurse) expressing empathy and caring as he/she carefully dispenses the sugar pills.  Studies show that loving interactions with other people can help release endogenous opioids in the anterior cingulate cortex, which really do soothe pain. When a mother comforts her child who just fell down, or a friend listens sympathetically about your recent disappointment, there is actual brain chemistry going on.

In a placebo/drug trial, “people are exposed to an environment and procedures geared toward improving one’s health…You must visit a clinic at certain times and be examined by medical professionals. You undergo procedures or receive special medication. All this can profoundly impact how the body perceives symptoms because you feel both consciously and unconsciously that you are getting the attention and care needed to heal.”

Since I don’t think I can improve on it, here is an excerpt from an essay I prompted from Claude, asking about where placebos do and don’t work, and proposed mechanisms:

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~ ~ ~ ~ ~~ ~ ~ ~~ ~~ ~ ~ ~ ~ ~ ~ ~ ~

Where the Placebo Effect Appears

The placebo effect is most robustly documented in pain management. In landmark work by Levine, Gordon, and Fields (1978), patients who received a placebo after dental surgery experienced significant pain relief — relief that was partially reversed by naloxone, an opioid antagonist. This demonstrated that placebos could trigger the release of the body’s own endogenous opioids (endorphins), producing measurable analgesia through a real biochemical pathway.

Beyond pain, placebos have demonstrated consistent effects in:

  • Depression: Meta-analyses, including the influential work of Kirsch et al. (2008, PLoS Medicine), found that a substantial portion of antidepressant response in clinical trials was attributable to placebo, particularly in mild-to-moderate depression.
  • Parkinson’s disease: De la Fuente-Fernández et al. (2001, Science) used neuroimaging to show that placebo administration triggered genuine dopamine release in the striatum of Parkinson’s patients — a stunning demonstration of expectation-driven neurochemistry.
  • Irritable Bowel Syndrome (IBS): A 2010 study by Kaptchuk et al. (PLOS ONE) found that open-label placebos — patients told they were receiving sugar pills — still produced significant symptom reduction in IBS, suggesting conditioning effects persist even without deception.
  • Anxiety and asthma: Both show moderate, well-replicated placebo responses, particularly when tied to elaborate therapeutic rituals.

Where Placebos Fall Short

The placebo effect is not universal. It is largely absent or clinically negligible in:

  • Objective tumor biology: While patients may report feeling better, placebos do not shrink tumors, alter cancer markers, or extend survival in oncology trials.
  • Bacterial infections: No degree of expectation reduces bacterial load or alters antibiotic sensitivity.
  • Type 1 diabetes: Endogenous insulin production is not restored by belief.
  • Bone fracture healing: Structural tissue repair proceeds independently of psychological state.
  • Vision and hearing loss caused by structural damage: Nerve regeneration does not respond to suggestion.

The distinction broadly tracks a line between subjective, brain-mediated symptoms and structural or infectious disease. The nervous system can modulate what it controls; it cannot manufacture what biology has lost.

Proposed Mechanisms of Action

Several non-mutually exclusive mechanisms have been proposed:

1. Expectation and Predictive Processing
The leading cognitive account holds that the brain is a prediction machine. When a patient expects relief, the brain updates its internal model accordingly, and downstream perceptual and autonomic systems adjust to match the prediction. Tor Wager’s neuroimaging studies (Science, 2004) showed that placebo analgesia correlated with reduced activation in pain-processing regions (anterior cingulate, insula), consistent with top-down suppression of pain signals.

2. Endogenous Opioid and Dopamine Release
As noted above, placebo responses involve genuine neurotransmitter release. Opioid pathways mediate placebo analgesia; dopaminergic pathways mediate motor and mood improvements in Parkinson’s and depression. These are pharmacologically real events, not metaphors.

3. Classical Conditioning
Repeated pairing of a treatment context with active medication can produce conditioned responses where the context alone triggers the effect — even in the absence of the drug. This mechanism may explain why open-label placebos still work (Kaptchuk et al., 2010) and why placebo responses are stronger in patients with prior treatment experience.

4. Therapeutic Relationship and Meaning
The quality of the patient-clinician relationship independently predicts outcomes. Warmth, attentiveness, and ritual amplify placebo responses. This “meaning response,” as medical anthropologist Daniel Moerman (2002) termed it, suggests that healing is partly a social and symbolic act.

References

  1. Levine, J.D., Gordon, N.C., & Fields, H.L. (1978). The mechanism of placebo analgesia. The Lancet, 312(8091), 654–657.
  2. Kirsch, I., et al. (2008). Initial severity and antidepressant benefits: A meta-analysis of data submitted to the Food and Drug Administration. PLoS Medicine, 5(2), e45.
  3. De la Fuente-Fernández, R., et al. (2001). Expectation and dopamine release: Mechanism of the placebo effect in Parkinson’s disease. Science, 293(5532), 1164–1166.
  4. Kaptchuk, T.J., et al. (2010). Placebos without deception: A randomized controlled trial in irritable bowel syndrome. PLOS ONE, 5(12), e15591.
  5. Wager, T.D., et al. (2004). Placebo-induced changes in fMRI in the anticipation and experience of pain. Science, 303(5661), 1162–1167.
  6. Moerman, D.E. (2002). Meaning, Medicine and the ‘Placebo Effect’. Cambridge University Press.

Allbirds, Inc. Attempts Pivot from Making Wool Sneakers to AI Computing

Scott Buchanan1 Comment

A native New Zealander, Tim Brown had two separate ambitions: to become a professional soccer player and a designer. On the soccer (“football”, outside North America) front, he succeeded beyond expectations. He played on the New Zealand national team between 2004 and 2012, often as captain or vice-captain.  Brown executed a personal pivot in 2012. After retiring from soccer, he enrolled in the London School of Economics to learn the business skills needed to launch an idea he had been mulling for several years. This was a shoe made mainly of wool.

He wanted to give a boost to New Zealand’s declining sheep in industry (battered by competition from polyester textiles), and wanted to promote something more sustainable than the plasticky shoes that he was always being asked to endorse as a professional player. There seemed to be plenty of room in the half-billion dollar per year footwear industry for something more environmentally friendly.

Brown launched his idea on Kickstarter in 2014, raising over $100,000. He and his partner started selling the Allbirds Wool Runner in 2016. Their green vibe was perfect for that era, and their shoes became wildly popular among the Silicon Valley VC set. They were seen on Larry Page, Barack Obama, Leonardo DiCaprio, and a whole gaggle of Hollywood actors and actresses.

Allbirds expanded its product line, and opened brick and mortar stores on several continents. Allbirds went public in 2021, and its market value ran up to $4 billion. But then the novelty of wool shoes wore off, sustainability became less urgent, and it became widely known that these “Wool Runners” are too flimsy to actually run or exercise in. They are more like slippers, and folks outside of Hollywood or Silicon Valley were not eager to pay $150 for a pair of slippers. Also, better-capitalized competitors muscled into the sustainable footwear market. Sales slid down and down, management conflicts erupted, and founder Tim Brown left to pursue other interests. On April 1, Allbirds announced it was selling the remnants of its shoe business for an ignominious $39 million.

So far, the story is unremarkable – – as with so many other startups, idealistic founders have initial success, but eventually go under upon scale-up. But there is an interesting plot twist. Instead of just going chapter 7 BK, paying off creditors, and returning a few pennies to investors, the company is using the shell of its former business to generate capital and transform itself into a new AI venture of renting out computing centers for AI usage. I assume the managers wanted to keep their jobs as managers, and cooked up this scheme to traffic on the current AI hype.


Apparently, these guys know nothing about GPU centers, so they’ll have to hire folks with expertise. Some unknown investor is backing them to the tune of $50 million, but they will have to raise much more than that to compete in the AI server business. That will horribly dilute current stockholders. They are directly competing with much better-capitalized behemoths like CoreWeave and Oracle, that can raise money on better terms. No moat, no expertise, almost no capital. But, hey, it’s AI, and so the company stock BIRD soared 600% on the news of the computing pivot.

I give them modest odds of succeeding bigly, but sometimes a mission pivot like this does come off. I’m thinking of the 1960’s when Berkshire Hathaway, facing declining earnings from its core textile business, under the leadership of Warren Buffett shifted into insurance. That generated the “float” that then enabled the purchase of other profitable businesses. We shall see if Allbirds (soon to be “NewBird”) management can likewise preside over such a seismic business shift.