Market Update and the Stocks I Follow
These violent delights have violent ends
During the start of the war I ended up selling a bunch of my positions and rotating into US chemicals names like LYB and DOW. Since then I have been digging into several new stocks, so I figured it was time to recap the names I follow, where I stand on each of them today, and share a few thoughts on the market.
The Markets
Today’s markets are showing more and more signs of being in an unsustainable place. Anything connected to semis and AI has either run up several hundred percent in a few years, or it is trading at all time lows as the market decides entire categories, SaaS being the obvious one, are about to be made worthless. Rarely have I seen so much conviction priced into so many names in both directions at once.
My investing style has always been contrarian to some extent. Yes, valuation and cashflow are key; however, so is the market’s perception of reality. I don’t believe for one second that good investing comes down to being better at analysing how fundamentals are going to develop. Instead the value lies in the divergence between where fundamentals will actually go and what everyone else thinks. That gap is where the money is, and right now it is unusually wide.
The reason it is so wide comes down to one thing the market is still struggling to price; for the first time we are not automating physical work, we are automating cognition itself. The last great boom, the internet, connected everything but never really moved the productivity needle. This time is different. I have a hard time seeing how disconnecting thinking from humans doesn’t lead to enormous productivity gains long term, and an equally hard time seeing how it doesn’t reshape who, and what, actually holds value in the economy. That second part is the one almost nobody is underwriting properly.
Layered on top of that is a world coming apart at the seams. I don’t think many price the Iran disruption and global unrest realistically. Europe is struggling, key value chains that feed into Asia are severely weakened, and trust is deteriorating globally. So we have the single most powerful productivity force in a century colliding with the most fragile geopolitical backdrop in decades, and the market is trying to hold both in its head at the same time. It isn’t doing it well.
From this worldview I will walk through every position I hold, have held, and am considering holding; which names are insulated from all of this, which ones quietly benefit, and the one or two that frighten me more than I would like to admit.