Old DNA, New DNA – OWTW

⚒️  WHEN YOU FIND YOURSELF IN A HOLE…

When you find yourself in a hole, the popular saying goes, stop digging. Not the European pointy shoes, though. They start digging even faster:

In fairness, it’s not just the EU. Across the Atlantic, we have this:

As we commented in a recent issue of Insider Weekly:

Continuing to bet on renewables is akin to “doubling down” or a martingale strategy. It would be a great idea if the technology worked (i.e. it could replace fossil fuel usage and not materially change our standards of living). But physics dictates that it cannot. Yet the “renewable/green” ideology is so strong that “doubling down” on the technology will continue… and the energy crisis that is beginning to show is just the start.

Now, here’s the thing…

Because ideologies are so powerful and grounded in belief — not evidence — they typically change only when there is a revolution. And for a revolution to happen things have to get very bad (or very good for our investment portfolios).

Don’t worry! $200 oil will go a long way to changing people’s points of view. Granted, that isn’t so good for society at large, but it is for us, tucked away in our little corner of the world, minding our own business and positioning for the inevitable.

At the end of the day, we all have to do what we can with what we have. Our sincere hope is that you are managing to do the best you can with what you have in order to protect your loved ones and benefit as best you can.

📈  GROWTH VS. VALUE: STILL EARLY DAYS

If you’re a long-time reader, our “value over growth” mantra will be well familiar to you.

In short, we believe the decade-plus long era of growth stocks outperforming value (driven by low interest rates) is now officially over.

We’ll have more to say on the “growth” part of it in a moment, but this chart beautifully illustrates just how early into this shift we really are.

Considering just how out of whack the growth portion of this cycle was, it’s not unreasonable to say we’re in for a decade of value.

🤷  ALL THINGS TRANSITORY…

Feels like a lifetime ago, when — back in February 2020 — we started warning that lockdowns will bring about inflation and shortages. Fast forward to today, and this pesky stuff is now part of our daily lives. We recently set up a dedicated inflation channel in our Insider private forum, where members can share their own experiences with all things “transitory”.

You might want to stock up on wine. Member Andrew reports:

Just caught up with a pal who is a wine producer here in Portugal.

He has tons of wine, enormous demand, staff waiting to work, but cannot get wine bottles or labels!

The biggest bottle supplier in Europe is in Portugal, they can produce regular green colored bottles but cannot get the ingredients that make clear glass bottles.

Why? UKRAINE! of course.

And if you thought double-digit annual increases we’re seeing across the board are wild, how about hyperinflation in cardboard, courtesy of member Sean:

For example, the price of cardboard boxes has been increasing 15% a month every month for almost a year, and pallets are getting increasingly more expensive now too.

We always try and look at cheaper options for our clients, but it just seems impossible to find any nowadays.

But hey, a little sympathy please for the pointy shoes who never saw all this coming.

🧬  OLD DNA, NEW DNA

Let’s now turn to a handful of popular buzzwords. You’ve probably heard them recently:

Growth, accelerated tech, exponential growth, logarithmic growth, exponential logarithmic growth

You’ll notice that they’re all variations of “this time it’s different,” and they are always followed with outrageous suggestions and positioning. Case in point:

In any decent craze one psychological element is elevated: if you don’t “get it,” you are demonized. You can sit there all day long and ask the question, “how is a JPEG of a monkey not worth… well, nothing?” And you’ll be told that you don’t get it. Here, in Cathie’s words, you are “old DNA” and “stuck in the past.”

We humans are social creatures, and nobody wants to be old or stuck in the past. You’re not with the in-crowd. Who wants that?

Let’s check in on Cathie’s “new DNA,” shall we?

Yikes!

Cathie Wood makes the exact same mistakes investors made en-masse during the dot-com bubble. Technology can, will, and has changed society. But it doesn’t change the laws of economics. This reality is already becoming apparent in her returns, but there is still a long way to go.

🤣  WEEK’S HUMOUR

And the Putin price hike narrative was born…

Have a great weekend!

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Gordon knot
Gordon knot
1 month ago

This article makes so much sense that I’m having a hard time getting my head around it.