1/ Observations of a retired stock analyst.
As someone who called a then coming super-spike era for oil markets in 2004, but failed to get off in 2008 until well into the downturn, the current innovation/Bubble stock gurus seem to be making many of the same mistakes I made.
As someone who called a then coming super-spike era for oil markets in 2004, but failed to get off in 2008 until well into the downturn, the current innovation/Bubble stock gurus seem to be making many of the same mistakes I made.
2/ The idea that your favorite innovation/Bubble stock never discounted 0-1% Treasuries is as dumb as when I said oil equities weren’t discounting $140 and “only” $90-$100/bbl (or something like that). The market is almost certainly discounting better conditions than you realize.
3/ The idea that we were using “conservative” normalized assumptions for oil equities I sincerely thought was true. However, it didn’t matter. When you are toward the end of massive bull market, no one else is using conservative assumptions.
4/ Your outlook can still ultimately come true. But exactly zero investors are interested in riding out a massive correction only to be proven right in 5, 10, or 20 years. Even the longest term “fundamental” investor would never voluntarily choose to stay for a structural unwind.
5/ In early 2008, an Internet bubble super star came to me and offered unsolicited, friendly advice about the mistakes he had made in 2000-1. He was spot on. I ignored him. I can remember sitting in his office to this day and thinking “thanks, but I am not you.” I was wrong.
6/ I love innovation, my Model 3, and all that new tech will bring us. Thank goodness for most of it. But the inevitability of future innovation does not mean corresponding equities are immune from hype or a down cycle. The Internet remains awesome, but its Bubble still burst.
7/ Perhaps innovation/Bubble stocks will get bailed out by the fact that we are coming out of a pandemic and global GDP growth is picking up? Maybe. I don’t know. But will they work as well when they are no longer the only game in town?
8 Last/ Value stocks are only values if returns on capital improve. I think we may be at the start of an ROCE super cycle for Old Energy. But if we are not, I won’t be turning to buy the “dip” in innovation/Bubble stocks. Perhaps I should do more work on other commodities?
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