Well, it's a quad-witch Friday -- or as our own Sarge Guilfoyle argues, a "triple-witch" day -- so I would expect some gyrations after a bullish start.
As if we need more gyrations. Already this year has been an exercise in valuing the real vs. the imagined; separating facts from, as my flagship model portfolio is titled, the HOAX. My HOAX portfolio, by the way, is up 31% since Dec. 23, while its benchmark, Cathie Wood's ARK Invest fund (ARKK) , is down 61% in that timeframe. HOAX has been driven by a very simple idea that investors can follow:
- Focus on the real world, while big-tech funds like ARKK seem to focus on some imaginary fairy world, where disruption rules the day.
- Also, focus on companies -- like those in HOAX -- that pay dividends. ARKK companies do not.
- Finally, focus on companies that provide G.A.R.P. -- the old fund manager's acronym for Growth at a Reasonable Price. ARKK companies provide Cash Reduction at Abysmal Prices (you can figure out the acronym for that; sorry, I couldn't help myself).
This is all especially relevant as the U.S. economy is in terrible shape. We now see that manufacturing output contracted in May -- yet another economic data disappointment. These are not normal times. In the energy space that is particularly true, as the WTI/Brent Henry Hub troika of $114/$117/$7.28 shows us.
If investors in the environmental, social and governance -- "ESG" -- movement hadn't raised the cost of capital for energy companies while their counterparts in government were making energy exploration much more difficult with ridiculous climate change-based restrictions on drilling (especially onshore), hydrocarbon prices would be falling into a slowing economy. But they aren't.
I am pragmatic, not dogmatic. Investing is a real-time, iterative process. I am looking forward to launching HOAX 3.0 next week -- the refiners are a not represented in HOAX and HOAX 2.0, and I am not chasing the coal stocks (20% of HOAX) at these levels -- and there will be more model portfolios from me as the summer progresses.
Finally, I want to point you to some of my own products I'm putting out on this wild Friday. I have a new transactional site, www.excelsiorcapitalpartners.com powered by Shopify, that includes Jim Collins' Yield Signs, which publishes every Sunday night, with occasional updates, pending the markets; The Model Portfolios, which currently numbers at seven and will expand and be updated; the ExCap DAILY newsletter; Bespoke Research Reports, long-form notes for OHM Research in São Paulo and elsewhere in the world, and CEO Interviews.
It's a long weekend -- check them out.
