Anthropic derivative investment ideas
Dear Financial Samurai,
That party like it's 1999 feeling is back. Enjoy it, but stay disciplined. It's times like these when investors start losing their minds, and sometimes, all their money.
The S&P 500 closed at 7,399, surpassing my year-end target of 7,300 in just four months and eight days. I'll likely raise that target given earnings momentum, but I won't pretend the temptation to take profits in my tax-advantaged accounts isn't real. Mid-term elections, persistently high energy prices, and delayed knock-on effects from oil shortages make another correction highly probable.
The only _relative_ value I see right now: Bitcoin, software names like Microsoft, financials, gold, and commercial real estate. Almost everything else is ripping. Deploying new capital in public markets is tough. So I've had to think of new ideas.
Some Anecdotal Color on Private Market Strength
Friday at 8 a.m., I was shown a double-layer SPV for Anthropic shares, 10% effective fees, 20% carry. I had to take my kids to school for their semi-annual learning celebration (which was awesome). By 10 a.m., the full ~$400M allocation was gone. The fees sting, but if Anthropic reaches a $3 trillion market cap, which I'd put at 70% odds within two years, buying at a $900B valuation still yields roughly a 2.2X net return.
Separately, a fellow dad got into Anduril's seed round by meeting a founder at church, playing golf, and hitting it off. Despite closing a round at $60B this year, secondary trades are reportedly happening at $100B.
You don't need private deals to build serious wealth. The Mag 7 and semis / memory companies most recently, have proven that. But keeping a broad mind and being in the right zip code helps.
That's part of what drove my new post: The Startup Grind Will Make You An AI Maximalist _._ Your luck tends to increase if you are where the action is.
Derivative Ideas on Anthropic's Growth
There are no sure things in investing, but Anthropic has emerged as one of the most promising AI companies. So from the hot tub, I've been thinking through different ways to gain exposure to the broader AI buildout through public markets, whether through companies with Anthropic exposure (GOOGL, AMZN, NVDA, MSFT, ZM, CRM, SKM) or through various public venture capital funds.
Based on reports and seeing a recent investment offer, Anthropic may announce another funding round this month at a materially higher valuation (from $380B earlier in the year to $900B+). If that happens, companies and funds with exposure to Anthropic could see changes in their underlying asset values and portfolio weightings.
Here is another derivative idea involving Fundrise. As a reminder, I've been a Fundrise affiliate since 2015 and invest in their products. Our investment philosophies are aligned, and I've met and spoken with Ben Miller, its CEO and co-founder, many times over the years. However, these are my own personal opinions and observations, and I have not talked to Fundrise about this idea.
Fundrise Real Estate Product
Fundrise disclosed that its primary real estate product benefited from investments tied to AI infrastructure and technology exposure, contributing to a 10.1% gain in Q1. That technology exposure is their venture product post listing.
In addition, on February 16, Fundrise announced it made a senior secured bridge loan tied to the development of a nearly 3,000-acre, 5GW AI data center campus in Hubbard, Texas. The loan carried a 12.55% annualized fixed rate and a projected 18.1% IRR over a 10-month hold period.
The continued demand for AI infrastructure, data centers, and power capacity needed to support ongoing AI development is compelling. Of course, these investments also carry meaningful risks, including execution risk, financing risk, valuation risk, tenant concentration risk, and the possibility that AI-related infrastructure becomes overbuilt if too much capital floods the sector too quickly.
Meanwhile, an ultra-high-net-worth friend told me he generated roughly a 8X return from a data center-focused fund over six years. I wish he told me about it beforehand. He plans to roll his distributions into the firm's latest vintage because management believes demand for data center capacity remains strong.
Relative to many public equities today, where valuations are elevated, certain infrastructure-oriented investments seem worth studying on a relative basis. At the very least, the day-to-day price volatility is less pronounced than what we're currently seeing in some parts of the public markets.
I welcome all pushback on my Fundrise real estate thesis, as I'm sure I'm missing something. Please don't invest any money you can't afford to lose and make sure you follow a disciplined asset allocation to alternatives. I'll be chatting with Fundrise in a couple of weeks and can provide an update.
A Top 1% Net Worth Is Easier Than You Think
I'm a public school grad who did mediocre on his SATs. No fancy pedigree, no Ivy League door-opener, no rich parents. As a result, I've come to believe that reaching a top 1% net worth is up to 10X easier than earning a top 1% income.
Why? Because investing has no gatekeepers. Anyone can think through an idea and act on it, like I've presented above with my Anthropic derivative ideas. My ideas can still blow up in a bad way, but at least I have an equal shot.
As Mance Rayder in the Game of Thrones once said, "The freedom to make my own mistakes is all I've ever wanted."
Check out my new post, which resonated with many of you: Which Is Easier? A Top 1% Income or Top 1% Net Worth
On Selling
One last thing: learn to sell. Everyone is a salesperson whether they realize it or not.
Based on my position, I'm not good at it. No TikTok rump shakes, no YouTube presence, no daily Twitter platitudes. I watch creators with sub-$1M portfolios build massive followings and make far more from their persona than their actual investment returns, and I respect the hustle.
But I've taken a laissez-faire attitude. Do what you want! I'd far rather make money from my investments and do my own thing than be a dancing monkey for the public.
To each their own.
If you want more wealth and more opportunities, get better at selling. Or hire someone who can do it for you. Check out: Learning To Sell Is Just As Important As Learning To Invest
To your financial freedom,
P.S. My 1-on-1 consulting sessions are closed until after summer. And this will be the last month I'm sending signed copies of my USA Today bestseller, __Millionaire Milestones_ _, to readers who complete a free Empower financial review. Here's the_ _post with details and instructions_ _if interested.
I just booked my flights back to Hawaii for the month of July. After a great year in the markets so far, I'm determined to enjoy this summer to the fullest. In the meantime, if you want to help others achieve financial freedom sooner, you can forward this newsletter and have them_ _sign up here.
P.S. 2: Whoever sent me a customized Louisville Slugger bat, thank you! The box doesn't show who sent it, so please let me know if you did so I can properly thank you. I promise to use the bat to defend my family in case of an intruder.
Slicing Through Money's Mysteries
2309 Noriega Street
San Francisco CA 94122