• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing

Willful Blindness Has Defined the Investing World

This idol worship and top heaviness in the market has the effect of crowding out real innovation.
By JIM COLLINS
Aug 26, 2021 | 12:32 PM EDT
Stocks quotes in this article: NNOMF, TSLA

There are some disturbances in The Force, as today's market action shows. Stocks whipsawed down and the volatility index, the VIX, jumped after reports of a suicide bombing at the Kabul airport. With the much anticipated - not by me - Jackson Hole conference coming tomorrow, this is an interesting time in the markets.

The meta-problem here is this willful blindness that has defined the investing world in 2021. Don't ask questions! Don't challenge Janet and Jerome! Don't think for yourself!

It's just all a bunch of bull. Sorry for the mild profanity.

The problem is that this idol worship and top heaviness in the market has the effect of crowding out real innovation. One example is a name I have written about many times for RM, Canadian small-cap Nano One Materials (NNOMF) . Nano's shares have fallen 40% year-to-date despite a steady flow of new "bizdev" announcements, usually in the form of Joint Development Agreements between Nano and major multinationals. Nano's CEO, Dan Blondal, gave an amazing presentation at my firm's recent event, the Excelsior Capital Partners Management Access Conference.

Dan clearly explained that Nano's patented One-Pot process allows for production of battery cathodes that are much more robust than currently widely-used architectures. Also One-Pot allows battery manufacturers to streamline the cathode manufacturing process into what Nano refers to as M2CAM, metal-to-cathode-active material, which would erase the need for levels of refining. This processing is usually done on different continents, with raw and in-process materials, transported on ships powered by hydrocarbons, all over the world to their final production location, which, in the majority of cases, is China.

Meanwhile, market darling Elon Musk used Tesla's (TSLA) AI Day to parade a prototype of a robot that would be able to perform repetitive tasks and run at the mind-numbing speed of 5 mph. I proved the other night in Central Park that I can still achieve at least 6 mph over a reasonable distance. Not only is that not an impressive "spec," the major issue with Elon's presentation was, reportedly (I didn't watch, just as I won't watch Jackson hole tomorrow) that Tesla's "robot" prototype was actually a human dancing in a robot suit. Mind-boggling.

But that is the problem. If you find an experience to be mind-boggling, it is precisely because you are allowing your mind to be boggled. Don't.

Remember the following:

By any historically accurate measure - P/E, the Buffet indicator (ratio of S&P 500 market cap to U.S. GDP), Robert Shiller's CAPE ratio - U.S. equity valuations are at a cycle-high, or, as with the Buffett indicator, an all-time high.

Inflation is everywhere, driven by Janet and Jerome and their cadre of equally clueless global central banker friends. Bond pricing (and, by association, yields) are so out of whack with the actual cost of money that we are overdue for a crash. When governments artificially support prices for anything - stocks, bonds, commodities - there is always a correction.

There is no good outcome in Afghanistan. If the market is dropping today based on news flow from Kabul, I am sorry to say there will be much more to come. The Biden Administration has so badly botched the withdrawal that the consequences will be felt, both in Afghanistan and here at home, for years, not days. It's a shame for the folks in Afghanistan that will be slaughtered or oppressed by the Taliban, and folks in North America will undoubtedly express that at the ballot box.

Unhappy people vote for change and the markets love stability. The equity markets seem to love this orgy of spending driven by Schumer, Pelosi and the Democratic Party, and Canada's TSX Composite has rallied 17.1% this year as well.

In the next 30 days we will see California's recall vote (voting ends on September 14th) and Canada's snap election (September 20th.) Larry Elder has proven to be a formidable opponent for California's French Laundry-loving governor Gavin Newsom, and Erin O'Toole is offering a similar challenge to Trudeau and his frequently bizarre utterances.

So whether you think this "she-covery" is real or we are heading for another "she-cession," please pay attention to the immediate future. The time to react to potential market pitfalls is before, not, as the market frequently does, on the day of.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jim Collins' firm was Short TSLA.

TAGS: Economy | Federal Reserve | Interest Rates | Investing | Markets | Politics | Stocks | Terrorism | Trading

More from Investing

Market Holds Its Own Amid the Chaos

James "Rev Shark" DePorre
Mar 20, 2023 4:53 PM EDT

Let's check the rotation turning under the surface, the likelihood of rate hikes and why investors are scratching their heads over this action.

UBS Tries to Save the Day, but I Would Withdraw From Buying the Bank

Bruce Kamich
Mar 20, 2023 2:56 PM EDT

Is UBS Group AG a white knight or something else? Let's check the charts and take a gut check.

Market's Giving Us a Gut-Check, but Not Necessarily a 2000, 2008 Replay

Brad Ginesin
Mar 20, 2023 2:26 PM EDT

Here's why, despite the unravelling of several major banks, Apple can still be owned and AI is still worth investing in.

Trading Foot Locker Now Comes With a Risk

Bruce Kamich
Mar 20, 2023 2:08 PM EDT

Let's see what the outlook looks like after earnings.

How to Trade China's E-commerce PDD Holdings Now

Bruce Kamich
Mar 20, 2023 1:17 PM EDT

Previously know as Pinduoduo, weak consumer spending has plagued the stock.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:28 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    There are exceptions to conventional trading wisdo...
  • 05:43 PM EDT CHRIS VERSACE

    Latest AAP Podcast

    I'm joined by Real Money contributor Peter Tchir a...
  • 08:20 AM EDT PETER TCHIR

    Pre-CPI Thoughts

    I believe the risk to CPI is "asymmetric." It ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login