We are in the midst of a bubble unlike any we've seen since the dotcom days at the turn of the century. I'm talking about the "ESG" bubble.
Environmental, social, and corporate governance is the bond that's connecting the unholy alliance behind this bubble -- the confluence of government "green" policymakers, complacent journalists in popular media, and corruption on Wall Street.
I am just so sickened by this era of technocrats, as I look up from my screen and watch my model portfolios decimate their ESG competition, feeling nauseated. But shouldn't I be celebrating? Nope, I am too much of an empath for that, and, man, are the Western world's governments foisting some stupid policies on us these days.
There is no Earthly reason, for example, to buy an electric vehicle when oil remains plentiful and underexploited on this planet. But governments make it harder to drill for oil and you pay the price at the pump ... and in your electricity bill, which is undoubtedly mostly composed of kilowatt hours generated by combusting hydrocarbons. Electric cars will remain a niche, to be sure a very cool one, and a fun one to drive. I enjoy driving EVs, even the Model 3, maybe especially the Model 3. (That is until my friends at VW give me a Taycan to test drive, but there is just no existential reason for them.)
One more time, as I sit on my 95th runway in the past six months, the planet is not melting.
So, to think that every compact car, minivan, SUV, pick-up (none of which Tesla (TSLA) makes) will be an EV is just the height of folly. The Wall Street banks have benefited from this con immensely -- surprise -- and Goldman Sachs (GS) and Morgan Stanley (MS) were the underwriters on TSLA's last offering.
They are shorts, especially on a green day like today in the markets. And not because they do business with Elon Musk of Tesla fame; because for all the slings and arrows I have thrown him, he is not a technocrat. He does things. He just picked the worst time in the past 30 years to open plants into the world's two highest labor cost countries, the U.S. and Germany. Money furnace, anyone?
But Elon will be fine, even if TSLA is belatedly re-rated to where it should be, which is somewhere in the $200-$300/share range (pre-split). He'll be fine and the other original equipment manufacturers, whom I spent more than decade following, will still be clueless jackasses who buy emissions credits from Tesla.
So, it's good to be the smartest guy in the room, and in autos, Elon clearly is. In energy it is Mike Wirth at Chevron (CVX) . I have been an Exxon (XOM) guy for years. You would have to pry XOM from my -- and my clients' -- cold, dead hands ... but Chevron just does it better.
Buying the Leviathan Mediterranean assets from Noble (NE) in the depths of the Covid funding crisis for energy companies was a stroke of genius. Who knew that Vladimir Putin would upend Europe's natural gas supply network and gas supplies would have to come from off the Shores of Israel, of all places? Mike Wirth comprehended that possibility. Brilliantly.
So, anyone who tweets "Buy Netflix (NFLX) " should be ignored. Of course. But the sharp ones who created shareholder value and return that value to shareholders -- and that includes Tim Cook of Apple (AAPL) as much as it does Mike Wirth -- should be lionized.
For your portfolio, just cut out the technocrats and embrace the capitalists. They exist in Silicon Valley, Texas and China. But they do not exist in Washington. So, if your portfolio is composed of names that are dependent on government funding or support to generate profits ... get a new portfolio.
