Ferg's Finds

This is a short weekly email that covers a few things I’ve found interesting during the week.

Article(s)

The End of The Beginning - James Aitken

If you are buying assets on their merits (intrinsic valuation - how very quaint), you can be a successful investor without being a perpetual forecaster.

In fact, one of the most liberating experiences for an investor is to be asked 'what's you're forecast of X?'

And to reply 'I don't have one'.

A Solid Foundation is Buying at a Low Valuation - Ian Cassel

To find a 10-bagger first find a stock that can double in three years with conservative fundamental assumptions and no multiple expansion.

Podcast/Video

Amazing interview getting these three together: Geopolitical Uncertainty – James Aitken, Louis-Vincent Gave, and Marko Papic (EP.440)

Felix Zulauf: Build Dry Powder Until Fall & Then Get Long For A 2-Year Rally In Stocks

Quote

“70 cents of every dollar went to US equities and US equities are driven by very few firms.”

-Nir Bar Dea (Bridgewater CEO)

I am often asked ‘how is Europe going to fund the purchases of the ever increasing amount of bunds and joint-EU-bonds they are going to issue?’

The answer is staring us in the face: they will fund it out of the S&P500.

-James Aitken

Tweet/notes

I still don’t think the majority have grasped that US telling the Chinese to GTFO.

As I touched on in my last piece, a solid rule for the next decade is to invest along with Chinese capital flows or in things the Chinese need. It’s hard to see how Chinese equities and gold don’t benefit from the US telling China to GTFO of US assets.

Charts

Are we somewhere between 1973 and 1974?

Something I'm Pondering

I'm pondering the order in which things gain traction in past commodity bull markets.

I was surprised Brent, silver, and gold all ended up with a similar annualised real return at the end of the 1970s.

Silver declined until 1972 before staging a catch-up and ultimately matching gold's performance on the back of Silver Thursday (the Hunt brother's attempt to corner the market).

Oil also lagged gold before the oil embargo spiked prices. While the embargo itself was lifted after about five months, oil continued higher on the sharp deceleration of productivity (this is worth a read: Federal Reserve History: Oil Shock of 1973–74)

Gorozen outlined this sharp deceleration of productivity here, which I think has important parallels to shale today.

I hope you’re all having a great week.

Cheers,

Ferg

P.S. If you’re interested in my story and why I started this Substack, you can read the story here.