February 2024 - All the World's a Stage

We are big believers in facts as the basis for investment. Facts are generally and remarkably easy to find and understand. So, lets address some facts about being “Magnificent” and other observations presently driving the IIC crazy.




February 21, 2024

The stock market continues to roar higher. Many investment professionals, the Investor Intelligentsia Class (IIC), are in a dour mood. In the mind of the IIC, only fools and certainly not professionals, are throwing good money after bad, pushing stocks to astounding levels!

The Magnificent 6 (Tesla no longer qualifies) are...,are…, are so big! How can that be?? Something must be done! That’s crazy!Surely, a crash like 2000 is about to crush the Untethered Investor Class(UIC)!

First, anything can happen in the short term. That’s just a fact. No forecasting skill involved in that observation. Something is going to happen next, but the IIC’s forecasting record sucks, so, what chance do any of us know what’s next? Second, it’s not just the UIC class that owns huge chunks of these crazy “overpriced” companies. The richest people in the world are clearly part of the ‘Untethered’ crew too! That’s why they are rich and the IIC are… working. No one calls Bezos, Cook, Hwang, Page & Brin, Gates, or Zuckerberg idiots (well sometimes), and yet most of their wealth continues to be invested in these crazy big companies. Stupid huh? They just keep getting richer!

I have developed a complicated algorithm for this: 

IIC = “informed advocate”, wrong, frustrated and working. 

UIC =disinterested, happy and rich! 

Pick your program, I guess? 

We are big believers in facts as the basis for investment. Facts are generally and remarkably easy to find and understand. So, lets address some facts about being “Magnificent” and other observations presently driving the IIC crazy.  


  1. Collectively, Nvidia, Meta, Microsoft, and Amazon have contributed 149 of 260 points that the SPX has rallied this year (57%). Meanwhile, Tesla and Apple have subtracted 30 points between them. Alphabet has contributed 6 points. Clearly, there are differences in performance, and investors are discriminating about where to allocate capital.  
  1. Nvidia is up 46% this year. Valuing the company at a new record of $1.79 billion. Up $600 Million in 45 days. That’s a lot! Its profits are exploding too, giving enough people out there the confidence that much more is to come. Ok look, there are pumpers of the stock and dumpers of Nvidia, just like there were for Tesla. Will history repeat? Who cares? Should we dump everything because some people are crazy for Nvidia right now? Baby out with the bathwater advice anyone?
  1. The IIC rave about the fact that the Mag 7 are so huge compared to everything else. This is bad! Big is bad. Big can’t get bigger! Everything must fit in a box! Below shows the combined weighting of the 5 largest stocks in markets around the world.

Below are the combined weighting of the 5 largest stocks in markets around the world: 

  • S&P 500 23.95%
  • Toronto 22.31%,
  • Europe’s leading blue-chip index     29.57%,
  • London 31.98%,
  • Swiss 60.47%,
  • DENMARK 82.37%,
  • MSCI CHINA 32.75%.  


Gee, I don’t know, seems like a lot of stock markets around the world have the same problem? Maybe the fact that the rich keep getting richer is a universal phenom and it applies to the companies they own too? Big is not new. Big is, or there would not be small! As I have said before, there is a class of intelligentsia that either don’t do the work/think for themselves and/or just repeat what the loudest voices scream. I’m keeping my voice down. Really.  

We think the majority of investors continue to vote in favour of these magnificent companies because they continue to make by far the most profit. Massive, big profits, growing faster than almost everything else. Seems like a good thing?The reason for this ‘magnificence’ is that they are literally inventing the future, and everyone likes that. It’s that simple.  

Meanwhile back at the ranch... 

Economic activity in the U.S. continues to surprise to the upside. Globally, things also seem to be picking up a bit in spite of all the screaming. 

Robust U.S. grow this attributed to rising home prices, rebounding consumer sentiment charged by a robust jobs market enjoying rising wages, an encouraging stabilization in manufacturing activity and massive government spending —all augur well for near-term US growth prospects. Contrary to the market timers, the economy keeps on trucking. Go Amazon! 

These are all good news stories, but there is a problem; Investor Intelligentsia would have you believe that good news is really bad news. It means interest rates won’t go down! Everyone wants lower interest rates! Why? Clearly these high rates are not stopping this economy! Someone is enjoying high returns. 

Nonetheless, the nattering class bark out the daily economic forecasts like a bingo hall operator. They are apoplectic when the various economic numbers do not meet their projections. Good or bad, they usually miss! It's remarkable they get paid. I think it's all just for fun. Surely, they are really entertainers. Pity the actor who must predict that which no one has ever consistently been able to accurately forecast. The weather forecast says 80% chance of rain and 20% of the time it doesn’t rain. The weather man gets paid nonetheless.

At the beginning of the year, I wrote that we would be more discriminating, challenge our thinking more vigorously, basically, make sure we don’t do anything stupid. So, we are all thinking hard. I’m presently working remotely in Costa Rica. The house we have rented is in the mountains, but we hear the powerful surf in the distance. It is wonderful, but very hot. This means I sit in the shade and mostly just think, which is really, the job I am paid to do. So far, after a week of thinking and reading, I remain convinced that the businesses you own are the best in the world, and regardless of what anyone says, I can think of no reason to change strategy.

That is not to say that we do not worry. Portfolios continue to march higher and, as I recently wrote, having everyone pile into the boat on one side can cause problems. There will be a correction at some point. That’s when people start listening to some “new” issue/idea the IIC are screaming. Life will go on, as will the business you own. Prices may correct. We hope. Which is not a forecast!