The Game Has Changed – What About You?

[00:02:18] Investment discipline includes 8 criteria developed by Bill Smead reflecting great investors, concentrated portfolios of 25-30 securities, and low turnover. It is a negative art based on eliminating things rather than finding things that fit, and markets change over time.

[00:14:47] Various investors needed to outperform by 40% to beat the index at some point. Volatility is unpredictable and there is no ability to price momentum. Understanding individual investment values is unique and cannot be commonly attached to a group.

[00:21:27] This text discusses the Jevons paradox and the relationship between technological innovation and energy consumption, arguing that as technology advances, energy consumption increases. The author also emphasizes the importance of having a framework for understanding an unknown future and the impact of energy consumption on economic growth in different parts of the world.

[00:23:53] "We've never used less energy doing all these great things in human society with all the ingenuity and all the innovation and all the technology available to us and Devin's really you know his the paradox he he created really pushes back on the scarcity of supply argument as well as the um lack of demand argument because we always have more and more and more."

[00:26:47] Investing in renewable energy and solar is necessary due to high energy needs. Market is picking winners and losers, but the need for more of everything is present. Lithium batteries are a great technology but require a lot of energy consumption and deplete metals. Combustion engine paired with electric motor is a feasible hybrid model.

[00:36:33] The fear of repercussions for owning certain investments causes portfolio managers to allocate capital based on what is profitable and to avoid "bad commodities." This is leading to a lack of competition and oligopolies in certain markets. Taxing these investments could make them acceptable across society.

[00:41:05] "There are those who want to invest in funds that invest in oil and those who don't correct? To your point it appears to be becoming binary where you have  a cohort of investors saying oh no no i don't want fossil fuels in my portfolio and then that's actually creating this huge inefficiency."

[00:44:05] The NBA has evolved to favor the three-point shot due to its efficiency, with players opting to shoot from beyond the arc rather than take shots from closer to the basket. Similarly, in investing, easy money strategies like the S&P 500 may no longer be the most rewarding, with riskier investments like commodity-driven businesses and those that align with ESG frameworks offering better returns.

[01:01:06] Bear market rally may be misleading, as companies' revenue growth decline due to inflation. Market participants are uncertain about their investments. Potential opportunities in commodity and cyclical businesses, but overall caution is advised.

[01:06:48] The next decade will be tough and require perseverance. It will be challenging for all investors and necessary to diversify and stay educated.