The Greatest Error in History – OWTW

The following quote from John Hussman caught our attention (h/t to @SeekerRisk for the annotated chart):

With that in mind, we often get asked the question along the lines of, “Markets seem over extended. How about buying some puts to provide downside protection?”

We always encourage folks to stick with their trading strategy. If you are a value investor, then look for value situations and don’t be concerned about what happens with the S&P, Nasdaq, etc.

If you are a genuine long-term investor and come across a basket of stocks that you believe will be significantly higher on a 5-10-year time frame, then you shouldn’t be worried about what the Nasdaq or any other stock index is doing. If you can’t find much value, then raise cash, sit and wait for the next “disaster” to happen. If there is lots of value to be had, then go fully invested.

🤯  YOU CAN’T MAKE THIS UP…

The administration that has been openly hostile to the fossil fuel industry is now begging OPEC+ to pump more oil to contain raging inflation.

With each passing day we find it harder to argue against there not being an energy crisis within the next 5 years and for this crisis to not be a short-term/transient thing. That is, the price of oil, gas, and coal are going to at least double within the next 5 years and stay “up there” for a good few years.

We wish we could change the course of events unfolding, but since we are simply humble money managers sitting here in our underpants navigating the world, we must do what we must do… and that is to place our capital for the inevitable and now imminent.

🚢  SHIPPING: TRULY BREATHTAKING

Speaking of inflation… have you looked at shipping costs lately?

And mind you, this chart is from before China partly shut down the world’s third largest shipping port (over a single covid case, no less). This FT piece provides an excellent overview of what’s happening in the shipping industry right now:

So the fact that longer-term prices are now rising at levels that Xeneta’s CEO Patrik Berglund describes as “truly breathtaking” suggests that increasingly what we’re seeing happening to the cost of shipping freight — the means by which 80 per cent of imports reach consumers — reflects supply-side constraints that are often more difficult to resolve than high demand.

So what does this mean for price developments?

We are sceptical that efforts by the likes of Joe Biden to challenge anti-competitive practices will have much of an impact on costs. The White House is also not targeting freight rates, but other charges. Clearly a lack of capacity can be addressed by building more ships. But, as Xeneta points out, while 300 new vessels are on order, they won’t be online for a while yet.

It’s almost ironic that shipping has been left for dead by most investors and inventories are at historical lows. Financing has all but dried up, and the lefties have designated anything that makes life worth living as the enemy… and that includes shipping. And here we are today…

🔫  GOT GUNS?

Americans have never loved their guns as much as they do now. As Newsweek reports:

Data from the FBI’s National Instant Criminal Background Checks System suggests a sharp uptick in gun sales in the last year and a half. In 2020, the FBI conducted background checks for nearly 40 million gun purchases. That’s compared to about 28 million background checks in 2019, and 26 million in 2018. In 2010, the FBI conducted 14.4 million checks. Through the first six months of 2021, it has initiated more than 22 million background checks.

And as much we hate saying “this time is different,” it does seem to be different this time around:

In gun scares in the past, when we’re worried the government’s going to try and confiscate our guns, you see a group of people, most are either gun enthusiasts or people who already own guns, want to get more,” Weeks said. “This time it’s very different. We see almost nobody like that buying a gun,” he added.

We continue to believe more — not less — civil unrest is in store for the US. It’s why we keep holding onto the gun stocks in the Insider portfolio. And in case the Biden administration moves to both remove the ability to purchase guns and then to take away those guns already owned, these stocks will make Tesla’s current valuations look cheap.

👕  MERCH ALERT: IT’S ONLY MONEY TEE

Party on.

It's Only Money Shirt
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