Hello there.

Happy Hump Day, y’all. It’s a brave new world out there, but don’t discount the boring.

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We’ve got tons of flashy options to pick from at the retail buffet these days, but have you tried the black coffee and white bread? Can’t knock the classics.

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While everyone and their mom has been throwing money at AI startups, some of the smartest old guard families are doing the exact opposite. They're buying up literally anything that can't be replaced by ChatGPT. Boomer-coded, but the strategy actually makes sense.

These wealthy families are betting on "heavy assets, low obsolescence" businesses that'll still exist in 10 years. Think stuff like dealerships, meat production, or even infrastructure. Warren Buffett used to talk about bubblegum in the same way. Might seem a bit random with a tech boom going on, but they’re functionally AI-proof and unlikely to experience any real repercussions from the potential bubble-burst.

The logic is pretty simple when you think about it. If you're planning to hold an investment for 10+ years, you need to know that the industry will actually still exist. And let's be real, nobody REALLY knows where software is going to be in a decade.

When everyone's freaking out about whether AI will steal their job, people still need to fix their trucks and feed their families. The parts and service business especially stays strong no matter what the economy does. While the fast and loud firms on Wall Street are trying to flip companies in three years, family firms can wait it out for the big payoff because they're not on anyone's timeline. Definitely a strategy worth considering if you’re in this for the long haul and don’t trust AI, or at least want to hedge your bets a bit.

Remember when private credit was lauded as the best place to park your cash? Yeah, so were Beanie Babies. Business development companies (BDCs), basically the public version of private credit funds, are trading at their biggest discount since the pandemic hit. Basically, investors think these companies' assets are worth way less than what the companies say they're worth.

So, private credit has been trying really hard to get regular people (not just billionaires) to invest with them. But now that these BDCs are public and anyone can see how they're doing, everyone's watching the price tank. When the market gets volatile, these publicly traded private credit vehicles get hit hard, and investors are pricing in some serious pain ahead.

The whole situation is kind of ironic. Private credit got huge because it was supposed to be this stable alternative to regular stocks and bonds. But the second it hits the public markets and has to deal with real-time pricing, everyone suddenly realizes it's not as chill as they thought.

BDCs are now trading well below what their underlying assets are supposedly worth, which either means the assets aren't actually worth that much, or investors are freaking out and overselling. Either way, if you were thinking about getting into private credit through these public vehicles to avoid the current market volatility, here’s your giant red flag. Maybe now’s not the time.

A lot can happen in a week!

Let’s take a quick look at who struck gold and who struck out since our last issue:

Apple Inc. (AAPL): +1.90%
NVIDIA Corporation (NVDA): +1.67%
Microsoft Corporation (MSFT): +1.44%
Meta Platforms, Inc. (META): +0.71%
Alphabet Inc. (GOOGL): +0.68%

Tesla, Inc. (TSLA): -9.61%
Micron Technology, Inc. (MU): -9.24%
Amazon.com, Inc. (AMZN): -3.52%
Broadcom Inc. (AVGO): -3.48%
Taiwan Semiconductor (TSM): -1.96%

That’s all for today. Write us and let us know your thoughts on the market, the newsletter, or the weather—we’d just love to hear from you.

Till next time,
— Brandon and Blake of Invested Inc.