Tariff Impact vs. DeepSeek
Making sense of the Trump Tariffs
I've been trying to make sense of the Trump Tariffs for the past few months.
More importantly, how it could impact real estate market.
It's a complex issue with a lot of guessing required.
As much as I would love to know what's going to happen, it's all a guessing game at this point.
In times like this, it's important to remind ourselves to approach it with a timeline.
This Thursday: I'm hosting a webinar on the 2024 predictions, how they panned out and how things have evolved since 2024, register here to attend: https://lu.ma/454enhnaWhat's a timeline approach?
We all understand the concept of a timeline.
When it comes to making long term decisions, it helps to map them out on a timeline.
If you're a visual person like myself, it helps to visualize something or "see it".
Understanding how an investment map out on a timeline helps clarify the attention and questions we need to consider and ask ourselves today.
For example, real estate is usually considered as a long term asset for the wealthy.
Can you invest in real estate for the short term?
Of course!
There are lots of ways to do that:
Flips, private lending, AirBnB, etc.
These are very much a shorter term real estate investing strategies.
On the other end of the spectrum, long term real estate assets are buildings that wealthy investors own for years.
Commonly, the assets are even passed on from generation to generation.
This approach focuses on the long term.
On a timeline, it could be 20 years or even longer!
When a timeline is over 10+ years, the immediate concerns such as Tariffs mattered less.
This is because over the long term, fundamentals will matter more than the short term market volatility.
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Let's use DeepSeek as a different example.
DeepSeek is created by a group based out in China.
In case you haven't heard about it, it's a direct competitor to ChatGPT, the famous AI tool that's been all the rage in the media for this past 2 years.
Up until DeepSeek was released, ChatGPT was a clear leader in AI.
The challenge with ChatGPT is that it's extremely energy extensive.
It uses a ton of power -
According to a report by Goldman Sachs, a ChatGPT query needs nearly 10 times as much electricity as a Google search query!
In addition to being "power hungry", it also uses expensive GPU chips from Nvidia, again, lots of them.
This is what fuelled the AI boom in the past 2 years.
Now, there's this potential competitor called DeepSeek.
What's rattling the financial news yesterday, was how DeepSeek could impact the entire AI industry.
This is because DeepSeek uses much less energy, more efficient and potentially more superior than ChatGPT.
That means, less needs for Nvidia GPU chips.
The result was a market crash of over 1 Trillion dollars lost in 1 day.
On a timeline in the short term, the market reacted to the "problem".
On a longer term timeline, if DeepSeek is indeed superior to ChatGPT, the race is on!
If I were to guess, at some point ChatGPT WILL have to compete and come up with more efficient and competitive product, that means, less potential demand for GPU chips.
This is an early development, it will take some time to play out.
As an example, from a timeline perspective, there's going to be challenges for the long term, and volatility for the short term.
It makes investing in Nvidia long term a tougher call than real estate.
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Now, does it mean it will be fine in the short term if Tariffs are implemented?
No!
It will absolutely impact our projects in some ways.
However, it's important to keep things in perspective.
Until I have a clearer picture of what's going to happen with Tariffs, I am staying the course.
Never make a long term decisions based on short term noise.
They're called noise for a reason.
Because in 10 years from now, most people won't even remember what happened in few weeks of a political drama.
For the record, am I concerned? Yes.
Am I running like a chicken with it's head cut off? No.
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I will be going over all 10 predictions I made for 2024 in my upcoming presentation - Review of 2024 Economy & Market Predictions
If you want to see how those 2024 predictions panned out and how things have evolved since 2024, register here to attend this upcoming webinar: https://lu.ma/454enhna
If you like my work, I invite you to share it with others.
Eric Chang
Calgary, Alberta
January 28, 2025
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