CFA, CFP, CDFA, CEO and CIO
Welcome,
Mark Twain once said, “history doesn’t repeat itself, but it often rhymes.”
Incy wincy spider climbed up the waterspout, down came the rain and washed the spider out, out came the sun and dried up all the rain, and Incy wincy spider climbed up the spout again.
Human nature never changes, just as Incy climbed back up the spout, some investors have forgotten the past and are climbing again.
(JAMFX) Launched
December 1999
A classic end to the 2000 internet bubble was the Jacob Internet Fund, launched in December of 2000. This young manager was the talk of the town, he could do no wrong, until the rain came down and washed his profits out.
Remember stocks like Pets.com, Webvan, Boo.com, Worldcom, Global Crossing or Books-A-Million? They are all gone, but wow did they move up (and man did they drop). New paradigm, earnings do not matter, these were game changing companies… until they were not.
(ARKK)
But much like Jacob’s fund, she is heavy in the latest high-flyers such as Tesla, Zoom and Bitcoin. Will she suffer the same fate? Time will tell if the rain washes Ms. Woods (and those high-flyers) out.
Bitcoin versus Gold
As we spoke of last month, many investors are concerned with inflation. As the chart below may show, Bitcoin has been pulling funds from gold investors for some time. Gold usually spikes when investors are concerned with inflation, but it has not moved, until recently.
Are investors realizing Bitcoin is not a store of value? Are they realizing that gold, while boring, may be the best store of value if you are concerned with inflation? Not sure of the answer yet, but it is a developing story.
Could it be time to initiate a gold hedge? Maybe, but as the chart below shows, stocks perform quite well in a low to rising interest rate world with commodities coming in a strong third.
The bible talks of false prophets. I have enjoyed listening to all the prophets talk of the latest investment trends. Will crypto change the world? Yes, for sure, but that does not mean you will earn a return.
As a fundamental investor it is impossible to tell what “coin” will win; you simply do not have enough data. Some will do well, but many will fail. These current prophets (and profits) will fade, and fundamentals will prevail (they always do). Though clearly not as artful as “Incy Wincy Spider,” please indulge my final thoughts in the form of this rhyme.
Disclosure
The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice.
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