Crescat Capital: December Performance Update

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It is time to gird for full Modern Monetary Theory. With the democratic sweep in place, we are about to experience even more of the double-barreled fiscal and monetary stimulus that we saw in 2020. Overwhelmingly today, such policies have served to incite animal spirits toward financial assets. Investors are already positioned, all in, on both stocks and bonds in the US creating a highly imbalanced market. The problem is that money printing married with fiscal spending is crashing head-on with an emerging commodity supply problem that will likely stir up rising inflation which is bearish for both equities and fixed income. Get ready for a volatile 2021, the year of reckoning for twin asset bubbles as the world attempts to emerge from the Covid-19 pandemic.

MacroVoices #253 Art Berman: U.S. Oil Production Still Set for Steep Decline in 2021

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Erik Townsend and Patrick Ceresna welcome Art Berman to MacroVoices. Erik and Art discuss:

Saudi Arabia’s production cut decision and what this means

Will U.S. shale industry recover?

Expected decline in demand in oil

Analysis of current comparative inventory report

Pandemic and U.S. consumption recovery – what does this mean for gasoline?

Perspectives on previous prediction of a big decline in U.S. production in Q1

Can OPEC compensate for loss of U.S. production?

Lag times between getting the rig started to actual oil production and what this means

Price vs. Comparative inventory yield curve

Smead Capital Management: From the Impatient to the Patient

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"The stock market is a device which transfers money from the impatient to the patient.”

—Warren Buffett

As we enter 2021, it appears that Buffett had things upside down in 2020. The things which had gone up the most by the end of 2019, went up the most in 2020. We invest on behalf of clients who want to avoid stock market failure and history shows most investors are impatient and are like a car stalled on the railroad tracks.

Fortunately, it is for these critical junctures in the stock market which disciplines like ours were created. First, we believe valuation matters dearly. It didn’t matter in 2020, in fact, you were better off to buy the most expensive securities carrying the highest possible risk during the year. Historically, valuation is a driver of alpha and usually makes a roaring comeback when a “frenzy” (like Charlie Munger describes today’s stock market) breaks and shifts the capital to those who are patient.

John Polomny: Making Predictions Is Tough, Especially About The Future. AIA Weekly Update 1-2-21

 

The title of this video is a riff on one of Yogi Berra's famous quips about predictions. We had a great Q4 with our stock picks and an awesome year overall. I review the portfolio's performance and discuss some things I am watching for in 2021.

Jim Rogers: Legendary investor warns of stock market bubbles in 2021

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Famed investor Jim Rogers, the founder of the Quantum Fund, recommended investment in silver in the New Year as its price is substantially lower than historic high.

The financial commentator made the advice in a recent joint interview with the Korea News Plus and E-Trend, a YouTube channel focusing on economic and stock market news.

“Silver is down 50 percent from its all-time high. Gold is down 10 percent from its all-time high, less than 10 percent. I will buy both, but I will buy more silver than gold,” he said.

“I have been buying travel, entertainment, tourism, wine, and restaurant companies because people did not go out and could not go out, but in 2021, people will go out again, and people will travel again,” he said.

Louis Gave: Inflation Will Come Back With a Vengeance

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Yes, I think inflation will come back with a vengeance. One of the key deflationary forces in the past three decades was China. I wrote a book about that in 2005; I was a deflationist then, as my belief was that every company in the world would focus on what they can do best and outsource everything else to China at lower costs. But now, we’re in a new world, a world that I outlined in my last book, Clash of Empires, where supply chains are broken up along the lines of separate empires.

 Let me give you a simple example: Over the past two years, the US has done everything it could to kill Huawei. It’s done so by cutting off the semiconductor supply chain to Huawei. The consequence is that every Chinese company today is worried about being the next Huawei, not just in the tech space, but in every industry. Until recently, price and quality was the most important consideration in any corporate supply chain. Now we have moved to a world where safety of delivery matters most, even if the cost is higher. This is a dramatic paradigm shift.

Dave Collum: 2020 Year In Review

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Imagine, if you will, a man wakes up from a year-long induced coma—a long hauler of a higher order—to a world gone mad. During his slumber, the President of the United States was impeached for colluding with the Russians using a dossier prepared by his political opponents, themselves colluding with the FBI, intelligence agencies, and the Russians. 

A pandemic that may have emanated from a Chinese virology laboratory swept the globe killing millions and is still on the loose. A controlled demolition of the global economy forced hundreds of millions into unemployment in a matter of weeks. Metropolitan hotels plummeted to 10% occupancy. The 10% of the global economy corresponding to hospitality and tourism had been smashed on the shoals and was foundering. 

The Federal Reserve has been buying junk corporate bonds in total desperation. A social movement of monumental proportions swept the US and the world, triggering months of rioting and looting while mayors, frozen in the headlights, were unable to fathom an appropriate response. The rise of neo-Marxism on college campuses and beyond had become palpable. 

The most contentious election in US history pitted the undeniably polarizing and irascible Donald Trump against the DNC A-Team including a 76-year-old showing early signs of dementia paired with a sassy neo-Marxist grifter with an undetectable moral compass. 

Many have lost faith in the fairness of the election as challenges hit the courts. Peering through the virus-induced brain fog the man sees CNBC playing on the TV with the scrolling Chiron stating, “S&P up 12% year to date. Nasdaq soars 36%.” 

The man has entered The Twilight Zone.