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Word is Bonds: CES, Why I'm Obsessed With Munis, & What It All Means for Tech (and You)
Lisa Su of AMD, Adena Friedman of Nasdaq, Cristiano Amon of Qualcomm
Hey, it’s 2023! I return to this Fortt Knox newsletter grateful for the start of another year and ready to tie together a few topics that appear to have very little to do with each other: the Consumer Electronics Show, layoffs in tech, and municipal bonds. O.K. Let’s do this:
The massive Consumer Electronic Show descended on Las Vegas last week, and I decided I’d try something different: covering it remotely. Instead of going, I interviewed AMD CEO Lisa Su, Nasdaq CEO Adena Friedman, Qualcomm CEO Cristiano Amon, and Amazon SVP of Devices and Services Dave Limp from the East Coast.
If there was one common thread through the conversations, it was these leaders’ determination to continue spending on core strategic priorities in 2023, despite an economy that’s forcing them to make tradeoffs. How so? In the case of AMD, the consumer spending slowdown has rocked the PC market, choking off a major source of the chipmaker’s revenue growth. Nasdaq has had to contend with a freezing of the IPO market. Qualcomm faces a smartphone slowdown. Amazon’s e-commerce headwinds have prompted layoffs, many of them in the devices and services group.
But even as they slow or cut spending in some areas, they’re all trying to keep funding the initiatives they believe will grow when this slump ends. For AMD that includes chips built to handle inference for artificial intelligence. For Nasdaq, technologies to root out fraud. For Qualcomm, technologies to enable next-generation car interfaces and automated driving. And for Amazon, extending the company’s reach into the car, where consumers spend lots of time and money.
What’s that got to do with layoffs?
For everyone who’s not a CEO, keeping your job will depend, more than it has in a while, on providing a strategic benefit. In the job market of the past several years, it was mostly enough to be educated, eager and talented. Now it’s important to also be valuable in a business area with revenue growth and profit possibilities. Do you understand the business well enough to know what those areas are? Are you growing your capabilities in those areas? Time to study up.
Which brings us to municipal bonds.
What’s a municipal bond, or muni for short? To oversimplify a bit, it’s a loan you make to a city or state with the promise you’ll get repaid with interest. Many munis come with the promise that tax revenues will be used to pay them back, so they’re seen as pretty safe. On the investment spectrum, munis are close to the opposite of an unknown tech startup that’s going public with dreams of being the next Google. Munis are generally seen as boring. Stable. They’re so boring that the monthly income you get from that muni or muni fund is usually exempt from federal taxes. If you live in the state that you loaned the money, it’s probably exempt from state taxes, too.
The reason why I’m thinking so much about munis lately is that the whole market — the whole economy — is shifting its treatment of risk. All of a sudden, with the Federal Reserve raising interest rates, munis are both offering decent yields and very attractive protection from taxes. That’s happening as those same rate hikes send speculative growth tech stocks to painful lows.
Meanwhile, at a personal finance and career level, I’m also facing new tradeoffs and possibilities. How do I put the right amount of time and attention into finding investments with the highest likely return for the least risk? And if I do that right, doesn’t it open me up to continue pursuing riskier strategic growth areas?
Our last decade was about “Building the Brand of You.” I bet the next one is more about “Managing the Portfolio of You.”
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