“A speculator is a man who observes the future,
and acts before it occurs.”
— Bernard Baruch
While it is impossible to have any idea what will actually happen in the future, it is
probable you can consider what might happen over the next six months, year, two
years, and even ten years. Some events are more capable of being predicted
than others. If you have a student who has achieved ten years in a row of straight
A’s, one could reasonably predict that this particular person will do well
academically next year, or even for the next three years. If you were to make a
prediction on the won loss record of the New England Patriots after losing Tom
Brady as quarterback, well, you might have predicted success because of their
curmudgeonly, but highly accomplished head coach. Maybe it is space travel you
are considering a prediction about, or possibly whether or not marijuana gets
legalized federally. Sports betting becoming legal in a particular state is worth
pondering, along with on line casinos. Flying, self driving, and electric vehicles
are destined to take over the world, but a more worthy prediction might be the
adoption rate, and when might they accelerate here in the United States, or an
even bigger market like India or China? If you really want to get adventuresome,
over what specific time frame? You can literally think of almost any topic and get
into the projection game, and in most cases, it will have some application to the
financial world. In many ways, investing is putting on your fortune telling goggles
and trying to discern how the future plays out. In that light, let’s take a look at
someone who has done a great job of that over the last five years.
In case you are not familiar with Cathie Wood, she is the founder of the most
successful family of exchange traded products over the last five years, a group
called ARK Invest. It specializes in ideas revolving around innovation, and
because of their outstanding results, the fund family now is approaching 50 billion
dollars of assets. Interestingly, the founder spent a great deal of time working with
no salary and funding the business herself to get the funds off the ground. Her list
of winning stocks is long and deep and some of the biggest moonshots are found
in her portfolios- Tesla, Zoom, Pelaton, etc. My own opinion is her style is
completely different from how I approach investing, but I do admire her ability to
look into the future and make bets on concepts revolving around innovation in the
future. It will be interesting to see how her funds hold up in a market which may
become, shall we say, less placid. On that note, let’s take a look at what
transpired in the market this past week.
Early in the week, Fed Chairman Jay Powell pooh poohed any reaction to
inflationary pressures, and investors were unnerved by the thought of inflation.
Bond yields continue to creep higher, and oil also keeps levitating, receiving a
boost from the latest OPEC missive that production levels will remain constrained
for the foreseeable future. Here in Vegas, the casino industry awoke to the news
that the largest gaming company in the world, Las Vegas Sands, sold their
flagship Vegas properties, the Venetian and Palazzo hotels and casinos, along
with the convention center. The assets will be split between the real estate arm of
the MGM (a REIT), and Apollo Asset Management, the large private equity group
which will take control of the operating segment. The purchase price was $6.25
billion, and the Sands focus will now turn to Singapore and Macau, although some
believe Japan and other countries in Asia are prime targets. There are those who
believe the licensing requirements for Sheldon Adelson’s wife would be difficult to
handle in Nevada, and Asia is a better long term bet to improve shareholder
returns. My feeling is Vegas has had a tough go of it over the last year, and
selling at the bottom strikes me as a bit impatient.
I thought I would also share a rare interview with Liberty Media Chairman John
Malone. It is about an hour long, and you get some interesting insights from as
accomplished a businessman and investor as there is anywhere. Of particular
note was his thoughts on the global pandemic and how both political parties
needed to grow up and become adults. What was interesting was that Malone
was clearly very cheery during the interview, but when this topic came up he
turned sober pretty quickly. He also shared his thoughts on the current market
environment and the challenges facing many investors. It might be worth your
time to take a look. Thanks for your time and I hope you enjoy the weekend.
Thank you for reading the blog this week, and if you have any questions
about investing, please email me at information@y-hc.com.
Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock
have positions in the securities mentioned in the blog, Investing in
securities involves risk and the potential loss of ones principal. Past
performance is no guarantee of future results. All investment decisions
should be considered with respect to ones risk tolerance, return
objectives, liquidity needs, tax considerations, and one's overall
financial situation. The fact that Yale Bock has earned the right to use
the CFA designation does not mean Y H & C Investments will outperform broad
market indexes.