External Obsolescence: Tech Investors’ Newest Nightmare?
The definition of external obsolescence principally applies to real estate. One real-estate firm explains that “...external obsolescence is something outside of a property, off-site, that negatively affects its value. Definitions of external obsolescence often include the chilling term “incurable,” and examples are trains, traffic, commercial properties, institutional properties, geologic conditions, and industrial installations.”
Mega Cap Stocks: Making Money in Large Cap Growth
“Didn’t we just learn that pouring trillions of dollars into technologies with uncertain profit profiles we didn’t fully understand was a bad idea? Tech investors seem to be most aggressive when they have the least visibility on the IP and valuation provides them with no margin of safety.” -Zac M., KCR Subscriber...
Warren Buffett, Apple, E. Coli & the Big Burrito Beat Down
Mr. Buffett recently extolled the powerful economic moat of one of the world’s most iconic companies: Apple. Berkshire spent a bit over $30bn to acquire their Apple stake, which now sits at 936 million shares.
Alternative Assets & the 60/40 Portfolio Crisis
This paper will demonstrate the following: 1. 60/40 Asset Allocation models have come under crushing stress over the last several months 2. Combined, popular alternatives like private equity, private credit & venture capital strategies are often merely leveraged, high-cost variants of “60/40” with lagged reporting, in our view
The Marshall Plan: Drawing From the Lessons of History
I need not tell you gentlemen that the world situation is very serious. That must be apparent to all intelligent people. … In considering the requirements for the rehabilitation of Europe the physical loss of life, the visible destruction of cities, factories, mines, and railroads was correctly estimated, but it has become obvious during recent months that this visible destruction was probably less serious than the dislocation of the entire fabric of European economy. … I need not tell you gentlemen that the world situation is very serious. That must be apparent to all intelligent people. … In considering the requirements for the rehabilitation of Europe the physical loss of life, the visible destruction of cities, factories, mines, and railroads was correctly estimated, but it has become obvious during recent months that this visible destruction Today we provide a brief review of the short-term spikes in some of the stock market’s most speculative stocks.
The Death of the Dollar: Bitcoin, Gold & their Miners
“The Fed has shown some mettle over the last year but historically I would not say [Federal Reserve chair] Jay Powell is a profile in courage … one area I’m comfortable is I’m short the US Dollar” -Stanley Druckenmiller “Bitcoin is a store of inflation and a hedge against value.” -Anon
Earnings Quality and Stock Returns with Value as a Tailwind
In April last year, KCR penned What is Accounting Quality and Why it Matters. The work discussed the abysmal state of financial reporting and used our earnings quality score to demonstrate that high-quality firms trounced low-quality firms’ performance.
Electric Vehicles Are Bringing Out the Worst In Us
A(nother) Rant About America’s Blossoming Love for Battery Powered Vehicles In November last year we published Tesla Gas Mileage & The Philanthropic Rush to Ruin. The rant tried to explain how the all-or-nothing approach to ditching gas-powered cars for battery electric vehicles was a mistake. Citing research from environmentalists, we highlighted the impending economic, social and environmental crisis from lithium. Subscribers recently sent us articles from The Guardian and The Atlantic published in January of this year. While taking different approaches, both explain that battery electric vehicles
Rank Speculation Returns: A Crisis of Concentration
At the start of the year, KCR penned ARKK vs. QQQ in the Dot.Com Bust and Specious vs. Spurious Correlation. The point of both papers was to warn readers that after speculative peaks, stock prices drop swiftly but then rally violently. Post-bubble price patterns were impossible to predict but precise in their message: speculative counter-rallies among the “fallen generals” of speculative cycles were the rule, not the exception...
Equity Valuation Methods Matter
Happy Friday everyone! This piece is going to be brief, brutal, and to the point. Over the past two years, some readers have complained that the cheapest stocks that dotted our top-ranked companies “were at the peak” and destined to collapse. Counter to intuition, some have come to believe expensive stocks are safer than cheap stocks. For many of these names, earnings did not peak, the world did not end, and many of these stocks ran higher...
Common Stocks and Uncommon Profits
In 1958 Philip A. Fisher published Common Stocks and Uncommon Profits in the hope of giving investors a systematic process to follow when seeking out great companies. Widely respected and admired, the book creates a process for an investing philosophy focused on growth. Our team shares some variant of Buffett’s quip that Berkshire Hathaway is “85% Graham and 15% Fisher.” 85% of Buffett’s investment process comes from...
Ways Innovation is Aiding the Food Insecure
All too often, discussions of new and next-gen tech focus on effects on consumers and markets in more developed parts of the world. We thought it worth highlighting examples of cutting-edge tech being created and implemented to deliver immediate aid to communities and populations that need the most help.