I think OpenAI is one of the most important companies in a generation, but on a tangent, I remember the first time a company broke a $1T market cap, and it was a significant moment. Nowadays multi-trillion-dollar valuations are becoming more common — I wonder how much it reflects inflation vs companies being genuinely bigger than they used to be. If it’s more about inflation, then we can expect to see dozens and hundreds more in the coming decades. Founders: recalibrate your ambition for the new era.

It is pretty much all inflation. Just look at the gold price over the same time frame. Gold did not become more productive or scarce. In fact, we have more of it now than we ever had.

It's inflation, and it's an important lesson as to the dynamics of financial markets in the context of a high debt regime.

Regardless of what officials say, the only way out of the looming debt crisis in developed nations is to turn on the money printers and inflate the debt away. That's literally the only way out.

Next look at how concentrated inflation gains become in financial assets. Corporate valuations are the first thing to inflate (wages last, and at a much lower rate especially as you move down the income ladder).

Finally recognize that the concentration of wealth in the stock market has made the market itself too big to fail, meaning central bank intervention whenever things get too gruesome. Enter moral hazard at the government backstopped casino.

All of this leads to one conclusion: put all of your money in the stock market. Literally just buy the S&P, ideally a 2x levered S&P index ETF given historical studies of optimal leverage, and just let it ride...

Half inflation, half hype.

2018 when Apple was first across the threshold, it’s P/E was around 20. Currently near 40.

Then inflation has cut the dollar in half in a bunch of categories. So that would put it at $4T with no growth at all.

Another way to look at it would be to think of this openAI news as announcing they have a $250B valuation if you’re fixated on pre-covid prices like I am. :)

> I remember the first time a company broke a $1T market cap, and it was a significant moment

But then again 1T today is 700b back in 2018. It's like 6 figures salaries, they don't hit like they used to.