"Clowns to the left of me, jokers to the right, here I am ... stuck in the middle with you."
Joe Egan and Gerry Rafferty coined that phrase while playing together as Stealers Wheel in the 1970s, and it describes the year we have had at my firm, Excelsior Capital Partners.
My investment strategy is based on not following the herd, and sticking in the middle, outside the lanes of the clowns and jokers. But these fools never stay in their own lanes, and that upsets me. So, I do the opposite of what they preach.
It's the day before Thanksgiving as I write this, and I really want to celebrate and just read stories about Jamal Hinton and Wanda Dench continuing their awesome, if initially unintentional, T-Day tradition. But I can't. Instead I am bombarded by stories in the financial media that serve only to push a ridiculous narrative.
I read one on CNBC.com that triggered such a violent gut reaction that I was glad I wasn't in Arizona at the Cheesecake Factory with Wanda and Jamal when I read it.
The article stated: "'Exxon, Chevron, and ConocoPhillips's threadbare tax disclosures leave investors, watchdog groups, and the general public in the dark about the companies' secretive tax practices,' Daniel Mulé, policy lead on extractive industries and tax at Oxfam America, said in a statement."
I have no words. OK, maybe one or two. Why is Oxfam, an organization that was created, I believe, to alleviate hunger, having one of its members quoted about integrated oil majors on a financial news site? I am wondering what the group possibly missed in Exxon's (XOM) 144-page 2021 10-K. A simple search shows the word "tax" was mentioned 223 times in XOM's 2021 10-K. That's "threadbare" tax disclosure?
Really?
But, apart from the excellent stuff I read daily that is written by my fellow Real Money contributors, that is just the type of stories we see daily.
Not only are XOM, (CVX) and (COP) "warming the planet" with their "greenhouse gasses," now these oil industry execs are apparently meeting in some Star Chamber-type lair to come up with "secretive tax practices."
Everyone on Earth tries to pay lower taxes. Anyone who has ever walked into an H&R Block has actually done just that. But these narrative-pushers try to fill your screen with these bizarre conspiracy theories about open and transparent public companies.
It is absolute, utter crap. I decided many years ago to take the other side of the trade. And, oh yeah, is it working in 2022.
Exhibit A is my HOAX model portfolio. I benchmarked it against financial media darling Cathie Wood's ARK Innovation Fund (ARKK) .
I have to be a little careful, because of the proprietary trading I do for my clients, but here, in the spirit of Thanksgiving, is a link to the initial, never-updated version of HOAX.
So, without any reinvestment of the bountiful dividends it pays (The ARK fund has never paid a dividend) here are the figures since HOAX's inception on Dec. 23, 2021.
HOAX: +54.44%
ARKK: -63.30%
Yeah, that feels good. HOAX doesn't have COP, but XOM and CVX are core holdings. Believe me when I tell you, that despite the rantings in the media, those names will not be "divested" by HOAX's portfolio manager anytime soon. That, of course, is me.
But that is not what you are getting from certain financial media sites. Climate hysteria. Check. Trump-bashing. Check. Those whose flagship funds have fallen more than 60% this year. Check. Stories about actual returns from actual investments? Crickets, man, crickets.
So, that is my message to you. Ignore the clowns and the jokers and stick to companies that produce cash flows from the assets that they control and then, finally, return a portion of those cash flows to you via dividend payments. It will make the turkey taste better tomorrow.
Happy Thanksgiving.
