Mad Hedge Technology Letter
August 4, 2023
Fiat Lux
Featured Trade:
(SELF-DRIVING CARS ARE HERE)
(TSLA), (FSD)
Posts
Isn’t it interesting that self-driving cars and the software that launched this phenomenon are not required to pass a driving test, yet humans are?
I am here today to challenge the basic premise that software backed by artificial intelligence can drive a car better than a human.
Take left turns without a traffic light:
Artificial intelligence has consistently failed to successfully complete this standard objective.
This somewhat riskier driving maneuver must take into account drivers on the other side of the road, which humans can do, but the back-tested data in the self-driving software cannot predict external variables that could come into play.
This is why the software malfunctions on a left turn when a bird defecates on the windshield believing it’s an accident worthy of a full stop and yes a full stop right in the middle of oncoming traffic.
These types of poor decisions occur more often than you think with this “cutting-edge” technology.
The truth is that self-driving car technology has been very slow to develop.
Elon Musk has been talking about Tesla's Full Self-Driving technology for years. In 2016, the CEO said that Tesla's driver-assist feature Autopilot will be able to drive better than a human in two to three years.
He also said that by 2018, it would be possible to remotely summon a Tesla (TSLA) across the country.
In 2019, he said that Tesla could have a fleet of a million robotaxis by the end of 2020 if the company pumped out hundreds of thousands of FSD cars.
FSD is currently under investigation by the federal government in 2023.
Twenty years on from the start, no real product to show for except many unintended road deaths and rich Silicon Valley software engineers that peddle this false theory that software is better at driving than humans.
What’s the current situation today?
100% self-driving technology amounts to little more than a bunch of glorified tech demos. FSD isn’t the real deal.
In demos, you see what the creators want you to see, and they control for things that they'd rather you didn't.
To an AI, a slight change could be catastrophic. After all, how is it supposed to know what an appropriate response to a slight or sudden change is when it doesn’t understand everything it’s looking at?
How will it handle when the weather goes from sunny to hail, or when there’s deer in the headlights at the edge of the road?
It is unequivocally wrong to believe that software is better at real-time driving than a human, and therefore this industry will never mushroom into what investors think it might.
Self-driving cars are a 2-ton weapon ready to kill pedestrians, cyclists, and little kids.
The interesting thing to look for is whether these venture capitalists and investors double down on failed technology and pull strings to get this circus on public roads with the rest of us.
It’s entirely possible that this could happen in limited areas like the states of Arizona and California.
At the very minimum, if all 50 states do green-light such technology, we will need to wait another 15 or 20 years.
It’s not as imminent as Elon Musk tells us.
Don’t believe self-driving is the secret sauce that will be the next leg in revenue for Silicon Valley.
The benefits of this are not coming any time soon.
Outdoing the smartphone is proving to be almost impossible. Who would have known that the smartphone would have such staying power and longevity?
Tech is still utterly reliant on smartphone revenue until someone can supplant it and package it nicely in a consumer-friendly way. The road to that type of achievement is littered with good intentions.
ANOTHER LONG WHILE FOR SELF-DRIVING TO HIT THE MASSES
Mad Hedge Technology Letter
August 22, 2022
Fiat Lux
Featured Trade:
(SELF-DRIVE TO HIGHER PRICES)
(TSLA), (FSD)
If you thought prices couldn’t go any higher and a reversion to the mean is in store, you are painfully wrong.
Sure, maybe you might catch the low inventory 10% sale on the old model, but I can guarantee you that the next iteration will be aggressively pricing itself higher.
If you think your next iPhone will be cheaper than the last, then please give me a call, I would love to debate.
Let me just lay down this one caveat by saying even if inflation falls to 5-7% and the administration calls it deflation or what-not, the aggregate inflation over the past few years will be felt at the individual level, but at the algorithmic stock market trading level, 5-7% is better than 9.1% meaning the stock market will slingshot higher.
Remember that trading is controlled by the algos, it’s around 87% of trading in 2022.
Pulsating price increases are on the menu at EV bellwether Tesla (TSLA) and my best friend Elon Musk’s company.
Elon announced just over the weekend that the price of Tesla’s Full Self-Driving system (FSD) will increase by $3,000 next month, the second time it has risen in price this year.
I can almost guarantee you there will be a 3rd increase by Christmas and 4th increase early in 2023.
That’s just the word out there on the streets.
Tesla began rolling out its FSD Beta software update release version 10.69. Consumers will see the price rise as of Sept. 5.
Every new Tesla vehicle comes with a driver assistance package called Autopilot, which the company says aims to reduce the driver’s overall workload.
That package contains features such as “Traffic-Aware Cruise Control” through which Tesla vehicles can automatically detect stop signs and traffic lights and automatically slow the vehicle down, as well as “Autosteer.”
These rely on eight external cameras fitted in the vehicle along with “powerful vision processing,” sensors, and various software to ensure the vehicle remains within a clearly marked lane and at the same speed as surrounding traffic.
Currently, Tesla’s FSD software costs $12,000 or consumers can purchase a subscription of $199 per month.
Since Tesla’s FSD system began rolling out in 2019 at a price of $5,000, Musk has regularly increased the price. In 2020 it jumped to $10,000 and in September 2021, it rose again to $12,000.
The strategic gambit sees no end.
Very much like the price of a dozen eggs at the grocery store, prices aren’t going down anytime soon.
Any short price reduction is met with a huge price increase in the future.
Technology is feeling many of the same headwinds such as supply chain headwinds, wage spirals for tech developers, stock compensation not logically based on lower stock prices, diminishing returns of technology, cash crunch on balance sheet, and explosive interest rates.
What does this all mean?
Technology, again like current Manhattan rental prices, becomes a luxury.
Your monthly broadband price will become more expensive upon signing the next contract.
Your iPhone and MacBook will get more expensive by the tune of 30%.
Your streaming subscriptions will become more expensive like Disney Plus and Hulu’s $4 per month price hike.
US tech companies producing these must-have items will pass 100% of cost increases to the end consumers knowing the end user cannot progress career and life without critical technologies.
Tech has checkmated us and more importantly, they bask in their strategic position.
Long-term they will still be very successful with much higher stock prices even if Google’s ad revenue tanks in the upcoming recession.
Tech will come back because it always does, and the US economy will not be in a never-ending recession once rates go back to 0.
Naturally, if this scenario plays out, only the Goliaths prosper, and everybody gets wiped out which is why we are seeing tech start-ups going to hell in a handbasket.
When observing the cream of the crop venture capitalist Marc Andreesen deliver $350 million to fantasist Adam Neumann to become a property manager, it’s clear that there are not enough good ideas in tech now and that interest rates are still way too low.
PREMIUM SOFTWARE FOR A PREMIUM CAR