- From TFA: “lost 0.6%, or $40 billion, in the first three months of the year”
Sure, my (scrappy) portfolio went down by more than that percentually, so it looks like this Norwegian fund didn’t even get hit that hard.
- Good point, but I suggest if you think of this fund as basically the GDP of Norway than just another hedge fund, losing 0.6% in a quarter is slightly bigger deal than you make it. Like a G7 country's GDP contracting 2% in a year.
- Well no.
GDP is an output variable, Assets are resource variable.
If you own a forest. GDP is how much you cut the forest. Forest growth is growth of the assets. Norwegian wealth fund has similar time horizon as someone growing forest, several decades. Fluctuation in 6 quarters barely registers at the end.
- Isn't that what is happening with a lot of countries right now though?
- The only negative one is Mexico. GDP projections by the IMF [1] still are all in the green. The fastest droppers relative to size are China, Russia and the US but they still are net positive. (for now, next week who knows)
[1] https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/wo...
- Note the Mexican government has expressed skepticism about the IMF’s projections : https://www.reuters.com/world/americas/mexicos-president-say...
And I for one tend to agree, I hardly think Mexico’s GDP will experience growth lower than Canada’s and Canada is projected to have some growth. Compare media and reports from both countries and you’ll see a lot more worry and impact in Canada than in Mexico.
- But it's nothing like GDP.
- Maybe a naive question, because presumably more money is always better, but I do wonder what the endgame with this Wealth Fund is. Obviously a country is not like an individual, so it's not like the whole country of Norway can "retire" once its wealth fund has reached a certain size, because people within the country still have to perform services for each other and therefore work.
So there seems to be a limit in how much these trillions in assets abroad can benefit the welfare of the Norwegian people. This has always confused me a bit, but I'm not well-versed enough in economics to articulate it correctly.
Probably the same must be true for most export-oriented economies, just that there the assets abroad are held by companies and individuals instead of a government fund.
- It's called The Government Pension Fund Global (Statens pensjonsfond utland), aka Oil Fund (Oljefondet). As the name suggests, it's used to pay pensions.
How do we spend our savings? https://www.nbim.no/en/about-us/about-the-fund/
>Each year, the Norwegian government can spend only a small part of the fund, but this still amounts to almost 20 percent of the government budget.
>There is a broad political consensus on how the fund should be managed. The less we spend today, the better the position we will be in to deal with downturns and crises in the future. Budget surpluses are transferred to the fund, while deficits are covered with money from the fund. In other words, the authorities can spend more in hard times and less in good times. So that the fund benefits as many people as possible in the future too, politicians have agreed on a fiscal rule which ensures that we do not spend more than the expected return on the fund. On average, the government is to spend only the equivalent of the real return on the fund, which is estimated to be around 3 percent per year. In this way, oil revenue is phased only gradually into the economy. At the same time, only the return on the fund is spent, and not the fund’s capital.
- It provides leverage for a country that otherwise only has wealth stored mostly in tradeable natural resources (natural gas, wood, and fish) and real estate. The sovereign wealth fund exists to maintain the wealth of the country in the case that they are no longer able to trade natural resources or their housing market crashes and people are unable to sell their real estate for a profit anymore. It allows for them to have time to reorient their economy towards something new instead of everyone going into poverty and getting stuck there.
- Does the country rely on people selling real estate for profit? One of the greatest illusions of our era is that real estate prices must always go up.
- Across entire Europe real estate is the only investment vehicle without capital gains tax. Sometimes you have to hold the real estate for some years. The general consensus is real estate market owns you compensation for currency inflation and tenants own you mortgage payments. People become aggressive if someone starts tweaking with the system. That's also why the European companies with largest market cap produce crocodile leather belts, sunglasses, and software no one understands.
- > … in the first three months of the year
What does the cycle look like here? Maybe Q1 is a lull in a statistic that affects this loss calculation.
Maybe fluctuations of less than one percent are to be expected quarter to quarter.
- This is a nothing loss in percent terms compared to the decline of tech over the last 2 months
- So how big have the gains been? I take lot more than 40B? These valuations can't only keep growing to eternity.
- Oh dear. 2.35% loss for a wealth fund with very long investment horizon.
- It isn’t a loss until it’s realised - unless of course they have risk rules around the management of it that say if an asset declines x% you must sell.
- I mean ... 0.6% against a massive tech sell off, feels a very well managed fund to me :D
- Norway thinks they "own" some percentage of Apple, Microsoft, Tesla, etc. But is it really like that?
If, in the future, Norway will not deliver enough value to the USA in some way to justify that the USA pays them part of the value generated by those companies, why would the USA continue to do so? Wouldn't the USA just make their companies stop paying dividends to Norway or void Norway's shares in some way? There are probably many ways in which a country can prevent value flowing to foreign investors.
You might say "That would lead to a decline of foreign investments in the USA". True. But does the USA of the future care? If the "United States of AI" produces everything themselves, they might not care. They have a stronghold on ASML, TSMC is starting to build companies in the USA, they have Nvidia and all other GPU/TPU manufacturers, and they are investing big time into energy production.
What can keep the USA from becoming completely superior via AI and then stopping to deliver anything to the rest of the world?
- You do have a good core point, which is that foreign assets can often just be taken from you in a crisis (even if you're a state actor-- see Russia for a recent example).
But things are not as simple as you portrait them. Lets assume that all of Norway suddenly became a country full of completely useless rent-seekers living off of their wealth fund. Just nationalizing their US assets does not just mean that you are unlikely to see any assets that you hold in Norway ever again (or any exports of value, as you correctly identified).
It also means that every other nation is gonna become very "careful" in dealing with you, by reducing trade/cooperation/investments, because holding any US asset has suddenly become a liability (because it could be seized).
But you don't have to take my word-- just look at which nations do this kind of "nationalizing foreign-held assets on a whim", and note where you would put them on a "failed-state-cleptocracy" leaderboard-- you will note that the correlation is quite high, and getting the US high on that leaderboard seems not very desirable to me.
- You ommitted the part where the US becomes self-sufficient via AI (no more need for foreign labour) and does not care whether other nations become "careful" in dealing with them.
- On what time horizon does this happen? Because this sounds like a wishful utopia to me.
I would expect current progress in AI to deliver the equivalent of a veritable army of consultants for very cheap, available to basically everyone within a decade or so. But that is not gonna make foreign labor worthless (or labor in general-- maybe a lot of whitecollar/creative work, we'll see). But trade is always gonna have value until the earth is perfectly homogenous, simply because it allows you to get value from both being better at things than other nations (=> export) AND from being worse (=> import).
If you are gonna go full autarky, you are going to be left behind by countries that don't, because all the spread-out efforts will struggle to compete with nations that put actual focus on things, and in-housing everything will drive up costs and prices tremendously.
- In this scenario domestic non-oligarch population is equally obsolete. Oligarchs from definition are permille of total population.
- jeez...lay off the toilet bowl crack
- Good idea.
If the US voids foreign property rights, then the rest of the world will have no problem with voiding US property rights in retaliation.
Including, for example, the cash that a lot of US companies hold in Ireland to avoid US taxes? :)
And ... any claim to ASML shares? ASML is a Dutch company in case your LLM forgot...
- The cash held in foreign countries is only worth something if those countries produce something of value. If the US keeps outpacing Europe in terms of production of real stuff, there is nothing to get in Europe for the US:
https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...
As for ASML, read up on the ownership structure and why ASML for example cannot sell up-to-date tech to China. ASML is actively expanding and operating production and R&D facilities in the United States. So the USA will not be dependent on the Netherlands for photolithography.
- > read up on the ownership structure
The ownership structure only holds if the US respects other ownership structures, eh?
> If the US keeps outpacing Europe in terms of production of real stuff
What real stuff, social networking?
No, because ASML is building production facilities on US soil.The ownership structure only holds if the US respects other ownership structures, eh?
Name a thing that the USA will not be able to produce themselves. The USA is pushing hard for complete production independence.What real stuff, social networking?- > Name a thing that the USA will not be able to produce themselves
Coffee and planes that stay in the air.
But to be more serious, the US (and Europe maybe to a slightly lesser extent) wealth is propped up on cheap labour overseas like the Roman empire was on slaves. It is absolutely possible to change that, but it's not as painless as you seem to think.
- The concept of "labour" will be a thing of the past. Probably within one or two generations. Everything will be done by intelligent machines.
- > No, because ASML is building production facilities on US soil.
You mean there are news about ASML trying to build production facilities on US soil?
- > Name a thing that the USA will not be able to produce themselves
Smartphones. Computers. Servers, switches. Anything that relies on an advanced chip. Anything that needs cobalt or lithium or coffee or cocoa or any other material not found in sufficient numbers or quality in the US. Ships. Hell, planes while we're at it (Boeing suck ass). Anything that needs to be affordable (like clothing).
- Again with people of limited knowledge and intellectual assuming GDP means anything relevant to the point they're making, but it doesn't.
Exhibit A, almost 9% of GDP is tourism. Not only is that not productive in any sense of the word, that will crater thanks to Trump and ICE Gestapo wannabes arresting random people for minor administrative errors. Nobody sane wants to visit the US now.
Exhibit B, you assume higher GDP means something good. In the US, a good coffee, with tip and tax, can cost you $10. In France, it's 1.50-2€. GDP numbers would make you believe the US is 5-10 betters, but in reality, there's no difference other than Americans being scammed out of their money with very high prices.
Exhibit C, anything that happens in any of the US health insurance companies. Record profits, high market caps, etc. but you'd struggle to find anything of any value happening there.
- There IS a big difference: The USA is able to make the most advanced AI. And that is the one thing that will count.
Out of the 4 neccessary ingredients (photolithography, wafers, LLMs, energy) the USA already has LLMs and energy. And is pushing hard to bring photolithography and wafer production inhouse too.
No other country currently has a good shot at it.
- You probably missed Mistal and DeepSeek.
And of course you're making the assumption that AI will be a revolution on par with the industrial one, which is still to be proven.
- Neither Mistral's nor DeepSeek's AI are on par with what US companies like Google, OpenAI and Grok have.
Plus, both rely on US GPUs.
So far, it seems like there is no possible future in which the US can be overtaken in AI matters. The USA is already leading and investing the most into the future.
- > Plus, both rely on US GPUs.
... american components, russian components ... all are made in Taiwan.
> The USA is already leading and investing the most into the future.
Wasting resources on the current investment hysteria. You already forgot about blockchain.
- money is only routed via Ireland, not kept there :)
- >Wouldn't the USA just make their companies stop paying dividends to Norway or flat out void Norway's shares?
What are you on about?
- that's not exactly how public companies work :)
- AI tastes like crap.
Using AI instead of lithium inside batteries shows disappointing energy generation.
Other examples easily generated via AI if you want to spend the time.
- Sounds like communism to me
- ... wat
- You seem to be under the Trumpic-delusion that the US exists in a bubble and all of it's successes are it's own.
If the US decides to do that, the US dollar will be removed as the global standard and the entire planet will flock to China who will, in very short measure, annihilate the Americans.
- Annihilate how?
- Economically, militarily, whatever is necessary in this new world where the US becomes a pariah state.
31 points by impish9208 4 hours ago | 49 comments