As the Grunge movement was gaining strength in 1992, Dave Markey released his seminal documentary 1991: The Year Punk Broke. By "broke" he meant gained a larger audience as the film's star band, Nirvana, clearly did that year, but I will issue my own corollary for the financial markets. 2022: The Year Woke Went Broke. It is a nice rhyme.
So, what we learned this year was that all of the green ESG plays -- electric vehicles, solar -- were really just speculative enterprises powered by free money. Thanks to an extraordinary once-in-a-generation tidal wave of inflation, the world's central bankers have acted ... and money isn't free anymore.
The issue isn't that the entrepreneurs started these companies, it is that the investment banks flooded them with your capital while pushing the ridiculous apocalyptic narrative, aided by complicit folks in the financial media, that somehow the 4.5 billion-year-old Earth was melting. Ask the folks in Buffalo if they believe in global warming this week. But, the narrative went, by investing responsibly in sustainable businesses you could actually grow your account value and feel good doing so.
What a bunch of malarkey. The thing is ... I know these people. I know the shysters at investment banks and I know how they operate. They don't actually believe in any of this "ESG" environmental crap, they just wanted to collect capital-raising fees from companies and keep foisting shares of those companies on you, the retail investor.
And now, shamelessly, after an extraordinarily poor year for performance of any ESG asset--TSLA feels much of my scorn owing to my background as a sell-side autos analyst, but even Tesla's (TSLA) 65% year-to-date decline pales in comparison to the Pelotons (PTON) and Rivians (RIVN) of this market -- these ganifs are trying to use the four most expensive words on Wall Street to steal your money again in 2023.
This. Time. Is. Different.
No, it's not. I see absolutely zero reason why the non-energy portion of the stock market will begin to perform next year, when the macro backdrop is at least as bad -- and in some cases, like the U.S. housing market, actually much worse -- than it was on the final trading day of 2021.
So, I will continue to soldier on. Real Money gives me an amazing platform via which to propagate my ideas with cutely-named model portfolios, which started with the Granddaddy of them all, HOAX on Dec. 23, 2021. As HOAX turns in a 50% gain for 2022, while its benchmark, Cathie Wood's ARK Fund (ARKK) , will post a 68% decline for the year, please rest assured that I am nowhere near done. There are plenty of other cutesy four- or five-letter faux-ticker symbols to create, and I will keep doing so.
From HOAX to its most recent cousin, LOCO, every single one of the 16 model portfolios I have created has beaten its benchmark this year. PM me for more details on that. Just be aware, though, that I have no delusions of grandeur or megalomania, and I never try to whitewash capital losses by pointing to relative outperformance versus a benchmark. Losing money sucks. Period.
To avoid those losses, I just read the room, economically speaking. The macro rules the micro. Until the Federal Reserve starts cutting short-term interest rates--note that I wrote "starts cutting" not "stops raising"--U.S. stocks, as an asset class, will not be attractive. Energy is the lone exception, because those companies generate profit based on the value of an underlying commodity, which through a combination of lack of investment caused by ESG and woke idiocy, and Putin's insanity, has been woefully underinvested in for the past decade.
So, 2022 was the year that Woke Went Broke. Just don't listen to shysters who tell you 2023 will be any better for the ESG crowd. It won't be.
