From: allin
Predictions for investments and asset performance in 2024 include a range of economic and technological shifts, from commodity booms to the rise of decentralized finance and the potential re-evaluation of high-value tech companies.
Best Performing Asset Predictions for 2024
Multiple predictions point to shifts in where the most significant gains will be made in the coming year.
Commodities Businesses
David Friedberg predicts a big commodities boom in 2024 [00:20:43]. This expectation is based on several factors:
- Underinvestment There has been underinvestment relative to demand over the past 18 to 24 months, coming out of COVID [00:20:49].
- Inventory Rebuild Rising interest rates have led many to sell down inventory, necessitating a build-up of stock and supply [00:21:02].
- Cash Inflow Cash previously held in treasuries is expected to flow back into commodities markets as yields decrease [00:21:11].
- Economic Activity Strong and robust economic activity is also expected to bolster commodity businesses [00:21:19].
Uranium ETF (URA)
Friedberg also identified the Uranium ETF (URA) as a strong contender for the best-performing asset [00:52:01]. The rationale includes:
- Global Shift There is an inevitable global shift towards nuclear power, with China alone building approximately 150 nuclear power stations [00:52:27].
- Demand Drivers Demand is being driven by ESG (Environmental, Social, and Governance) initiatives and geopolitical conflict [00:52:31].
- Deregulation Significant deregulatory efforts globally are aimed at getting nuclear power back on track [00:52:39].
- Historical Performance The URA ETF bottomed out at $19 in March 2023 and was up 50% since then, doubling over the previous five years [00:53:16].
Energy Stocks
David Sacks suggests energy stocks, particularly due to the risk of escalating global conflicts [00:54:51]. Potential conflict zones include:
- The Middle East [00:55:04]
- The ongoing Ukraine war [00:55:06]
- Tensions between Venezuela and Guyana over offshore oil reserves [00:55:17]
- Potential war between Ethiopia and Egypt or Iraq, which could disrupt the Red Sea [00:55:36]
Consumer Comfort Services
Jason Calacanis anticipates that “consumer comfort services” will be the best-performing asset, as consumers, facing austerity measures, will opt for small luxuries [00:56:12]. Examples include DoorDash, Airbnb, and Uber [00:56:29].
Bitcoin
Chamath Palihapitiya identifies 2024 as the most important year for Bitcoin, anticipating the approval of several Bitcoin ETFs [01:10:08]. This development is expected to enable mainstream adoption, integrating Bitcoin into the traditional financial lexicon by year-end [01:10:37].
Worst Performing Asset Predictions for 2024
Conversely, several assets are predicted to face significant challenges.
Private Late-Stage Tech Software Companies
Chamath Palihapitiya predicts that private late-stage tech software companies, particularly those in SaaS, will be the worst-performing asset [00:54:03]. This is seen as a “spread trade” against public software indices [00:53:40].
- Valuation Reset Terminal valuations in public markets are being reset [00:53:52].
- Stagnant Growth Growth rates are not sufficient in private companies [00:53:56].
- Dilution Even if valuations stay flat, dilution from stock-based compensation will negatively impact returns [00:54:16].
LLM Startups
Jason Calacanis predicts that LLM (Large Language Model) startups will be the worst-performing asset, citing massive overvaluation and the rapid advancements of open-source models [00:58:14]. The market is seen as having too many players and too much parity, leading to anticipated valuation drops of 50-80% [00:58:33].
The “Magnificent Seven”
David Sacks speculates against the “Magnificent Seven” tech stocks (Apple, Microsoft, Amazon, Google, Nvidia, Tesla, Meta) [00:57:18]. He suggests that their huge gains, largely based on the AI investment and technology narrative, may not be sustainable or exclusive to these companies, and the broader S&P 493 may catch up [00:57:52].
Vertical SaaS Companies
David Friedberg anticipates that vertical SaaS companies will be hit hard [00:58:48]. He suggests a short position on these companies and a long position on cloud providers offering AI tools and platforms [00:58:54].
- Custom Solutions The ability for enterprises to cheaply and quickly build homegrown solutions using generative AI tools poses a significant threat [00:33:04].
- High Costs Vertical SaaS businesses that charge thousands of dollars per seat per year are particularly vulnerable [00:33:29]. For example, a company paying $5,000 per seat per year for a data management tool could easily recreate it with internal engineers at a much lower cost [00:59:52].
- Price Compression This trend will lead to significant price compression, impacting the high gross margins traditionally enjoyed by SaaS companies [01:04:32].
Broader Economic and Investment Outlook
The Soft Landing Gets Bumpy
Sacks believes the “soft landing” scenario for the economy will become very bumpy in 2024 [00:49:13]. He notes excessive market optimism and pricing in of significant Fed rate cuts in late 2023, suggesting an overoptimistic outlook [00:49:52]. This ties into market trends and economic forecasts for 2024.
Decline of Professional Sports Valuations
Chamath Palihapitiya asserts that 2024 will mark the peak in valuations of professional sports franchises [00:34:48]. Several factors are cited:
- New Competitors The emergence of new leagues (e.g., LIV Golf challenging PGA) forcing established leagues into mergers [00:35:25].
- State-Backed Influence Countries using their balance sheets to jumpstart professional sports businesses (e.g., Saudi Arabia in soccer) [00:35:36].
- NIL in NCAA The explosion of Name, Image, and Likeness (NIL) deals in the NCAA, where college players earn more than some professional counterparts [00:35:55].
- Streamer Churn A significant uptick in churn among streaming services (Netflix, Hulu, Amazon), which are the primary entities capable of paying premiums for sports rights [00:36:18].
Smartphone Market Slowdown
Jason Calacanis predicts a major slowdown for smartphone manufacturers, particularly Apple [00:36:46]. Consumers are increasingly skipping generations of phones, and companies are finding it difficult to encourage upgrades due to high prices and potential “austerity measures” [00:37:20].
Monetary Policy and Regional Banks
David Sacks highlights that the biggest business deal of 2024 will be whatever the Federal Reserve decides to do to replace or extend the Bank Term Funding Program (BTFP) [00:38:29]. The BTFP, a temporary program, was crucial in bailing out the regional banking system in 2023 [00:38:40]. Regional banks remain vulnerable due to impaired commercial debt portfolios and require continued liquidity as long as the yield curve remains inverted [00:39:16]. This falls under market dynamics and asset diversification.
AI-Driven Discovery and Deflation
David Friedberg is excited about the 2024 progress of predictive models driven by AI, leading to the discovery of novel molecules, materials, and production methods in bio/pharma and chemical engineering [01:09:02]. This will not only introduce new products but also significantly reduce manufacturing costs and environmental footprints, contributing to deflationary pressures [01:09:27]. This also relates to developments in technology and AI for 2024.
Efficiency via AI and Outsourcing
Jason Calacanis’s most anticipated trend for 2024 is efficiency, driven by AI advances and outsourcing [01:12:27]. He notes that high salaries and preferences for remote work in the US are pushing companies to build robots and AI, and to outsource work globally at lower costs [01:12:17].
OpenAI Valuation Decline
Chamath Palihapitiya holds the contrarian belief that the enterprise value of OpenAI will decrease in 2024 [01:09:09]. This is based on two key factors:
- Latency Current AI tools suffer from high latency, making production-quality code difficult to build [01:09:30].
- Cost The cost per million tokens on current platforms is economically untenable for building sustainable products [01:09:07]. Palihapitiya predicts that future cloud services will offer millisecond latency and significantly lower pricing for AI compute, multiplying market capability and pushing existing proprietary models under pressure [01:09:33]. This perspective also impacts AI investment and technology.