“Despite record 1Q 2022 results and continued capital discipline, the disconnect between the energy sector weighting in the MSCI Wold Index relative to the oil market value is at its widest level since 2000“.
It is from Harding Loevner, using Circle K (owned by Alimentation Couche-Tarde) in Norway (which has electrified faster than other countries) as their case study.
Positives – charging takes a lot longer = higher conversion to spending customer + longer in store.
“About 15% of gasoline customers venture inside to make additional purchases during their car’s few minutes at a Circle K pump, while 40% of EV drivers do so during the 20–30 minutes their vehicle is charging.“
Negatives – three quarters of charging is done at home.
Most investors, including me, have limited experience of inflationary risk.
This paper, from 2021, is an excellent guide – looking at passive/active strategies across asset classes over the past 95 years.
As we have seen it is tough – unexpected inflation is bad for traditional assets (bonds, equities). Commodities do well but depends which ones. Trend following and active equity are the best protection.
It may seem simple but often the main thing that makes stocks go up is defying the fade in forecasts.
This is true of mega-cap tech stocks.
Despite consistent forecast for deceleration they have maintained 20-30% growth for over a decade now.
NB solid line is actual revenue growth average for AMZN, AAPL, CRM, FB, GOOG, MSFT, NFLX and the dotted lines are average sell-side forward forecasts at those points in time.
Jim Grant has been publishing the Interest Rate Observer since 1983 (that is nearly 40 years!).
He is a noted contrarian, who has witnessed market booms and busts and all manner of human folly in-between. Always armed with a sharp mind, a wonderful network and a skilled pen.
This was a nice recent interview with him on his views especially on the impact of rising interest rates.
“That’s what we try to do at Grant’s. We try to imagine how a hardened consensuses of opinion could change—how people think that there’s no alternative but the way things are, and how that could change. So yes, there will be trouble ahead, but also a lot of interesting things to do.“
