Thread by @StuLoren

1/ Here's my 2022 and beyond #investing outlook (mostly covering #stocks) and general thoughts on the #macro backdrop, #markets, #valuations and #risk. Lot's of good analysis is publicly available, so will try to keep this brief and different.

"Navigating the Low Tide"

2/ Investing 101

3/ Investing 201?

4/ How’s that Working Out Lately?...

5/ “Only when the tide goes out do you discover who’s been swimming naked.”

- Warren Buffet

6/ Since the 2008 Global Financial Crisis, Investors have Benefitted from a Rising Tide of Liquidity

7/ As well as Accelerating Flows into Passive Products

8/ Which have Tilted Equity Markets Toward Majority Valuation Agnostic Ownership

9/ Price Insensitive Investing has Unsurprisingly Lifted Large-Cap U.S. Stock Valuations

10/ Flows into Products Constructed by Market Cap Lead to Market Caps Detaching from Earnings: By Design, the Big Get Bigger

11/ But Recent Inflows are Unlikely Sustainable

12/ And Under the Surface, Not All is Well

h/t @jared

13/ If Liquidity Made Everyone a Genius, Then Tightening Financial Conditions

14/ Will Turn Geniuses into . . . ?

h/t @charliebilello

15/ Reminder: As Valuations Rise, Investing Gets Harder

16/ Company Insiders Seemingly Know This

h/t @VincentDeluard

17/ Yet Retail Investors Maintain Rosy Outlooks

18/ Even Great Companies can be Bad Purchases at the Wrong Price and Valuation

19/ How Many Waited 16 Years for MSFT’s Recovery? And how Many Actually Bought During its Trough?

20/ When the Consensus Gets Crowded, it’s Usually a Good Idea to Think Independently

21/ Picture the Market and Valuations in Gartner “Hype Cycle” Terms

22/ Innovation Trigger through Peak Expectations

23/ Trough of Disillusionment

24/ Slope of Enlightenment through Plateau

25/ If We’ve Passed Peak Liquidity, What are Some Ideas with Undemanding Expectations?

26/ The Growing Electrification of Industry has Yet to Electrify U.S. Utility Stocks

27(a)/ Despite Scientific Advances, Biotech had a Bad Year; Even Worse for AAV Gene Therapy Firms

27(b)/ See more of my thoughts on biotech investing here:

linkedin.com/pulse/road-les…

28/ We’ve Overconsumed, Overinvested in and Overvalued Stuff We Simply Want, Relative to Stuff We Really Need

29/ Conventional Energy CapEx has Declined Below Replacement Requirements – Even in a Rapid Transition Scenario

30/ We’ve also Underinvested in Industrial Metals

31(a)/ See more of my thoughts on resources underinvestment here:

linkedin.com/pulse/history-…

31(b)/ And here:

linkedin.com/pulse/esg-road…

32/ Defense Stock Valuations Don’t Reflect Global Instability: Part 1

33/ Defense Stock Valuations Don’t Reflect Global Instability: Part 2

34/ Global Defense Spending to GDP is Low, but Rising

35/ See more of my thoughts on investing in defense firms here:

linkedin.com/pulse/history-…

36/ If Videogames are Central to the Metaverse, they Don’t Trade Like it

37/ Plenty More Examples, but Main Point is: If the Tide is Going Out, Being Passively Long the S&P 5(00) May Not Provide the Most Attractive Risk/Return Profile

38/ See more of my thoughts on the S&P 5(00) here:

linkedin.com/pulse/sp-500-s…

39/ If the Tide is Going Out, the Extreme Froth in Long Duration Growth is Unlikely to Respond Well to a Fed Tightening Cycle

40/ A Lot has Changed in the Past 18 Months Since High-Risk Growth Went Vertical

41/ 2022 Reminder: Just as the Best Returns Rarely are Consensus Longs, the Biggest Risks Rarely are the Most Expected Problems

42/ If the Tide’s Going Out, Figure Out Your Competitive Advantage

h/t @mjmauboussin

43/ And Figure Out Your Investing Horizon

44/ As Always, Please Reach Out to Discuss Markets and How We May be Able to Work Together Managing Portfolios.

Hope Everyone has Great Holidays and Happy New Year!

*See Below Disclosures

45/ For a PDF Version of this Thread, Please See the Below Link to My Post on LinkedIn

*It also Includes Source Attributions on Each Slide

linkedin.com/posts/stuart-l…