kyce

Software is becoming the death of value investors. Whether AI makes these companies obsolete is still unknown, but there’s a reason these companies are trading so cheap. Watching this next AI/Energy bull run take off while being stuck in IGV, MSFT, ADBE, PLTR is already an unpleasant experience for many. Value Trap.

Wanted to share my long term US stock market conviction: (long yap opinion post) During the 2022 bear market, I let myself be convinced that: high inflation, excessive monetary spending, and the historic speed of rate hikes would cause a prolonged bear market. I even believed that we could be entering a Japan Style stock market top, never to recover to new highs for 30 years. I bought into the fear of US dollar losing its reserve currency status, (has not happened and no other major currency is even a close competitor/option for now), I thought democrat (Biden) policy of over-regulation and war on energy would cause a major recession (democrats in USA are still 10x better than the disaster of European regulation and energy nightmares, Europe is not an option for now), and plenty of other semi legitimate, but ultimately irrelevant macros fears I realize now, that none of these fears matter in the grand scheme of my long term thesis. They simply will offer me an opportunity to buy current cycle and sector leaders at a discount and wait 1-3 years for the ensuing bull market to generate massive returns. (perfect example recent Iran war petro dollar US hegemony fears crisis blah blah blah ) HINT: its all noise AGAIN. The real thesis is that inflation (2% target/year but real inflation probs more like 3-5% annually) and excessive US government monetary spending guarantee that the stock market will go higher. Even if real growth remains flat, or minimal, simply repricing stocks to reflect a newly inflated currency will be a constant upward pressure on prices. (in combination with the factors below) As long as the United States continues to lead the world in innovation and the free-est, safest business markets, (its not Europe, not ME, and not China, HAS to be US for now) then the US stock market will continue to move higher long term. We are energy independent, we are food independent, we are geopolitically and militarily independent, and we have the easiest, least regulated, most liquid markets on top of the largest consumer base in the world. (once again not Europe, not ME, not China, its not even close in my opinion). Simply put, the large structural forces behind the great economic success of the United States from 1950-2000s remain completely in place right now. There are some differences, but the US is still dominating across most fronts. Additionally, the US is currently in position to massively dominate on the innovation frontier. AI, Space, Energy, Defense, Social Media, Robotics, Quantum. All sectors with large runways looking 5-10years + and the USA is once again home to most of the leading companies in those fields. There will be pockets of innovation across the world, and other top countries often have a handful of companies that dominate a certain field, but the largest amount of the best companies remain centered in the United States, and the largest growth of new MEGA companies is currently happening in the United States. It is simply still the obvious best bet to headquarter your company in the United States, and I do not see any other countries in a similar position to challenge that right now. This alone generates massive conviction for me in investing the US markets for the foreseeable future. Even if Oil prices rise again, the ceasefire ends with Iran, and the US economy slowed or even has a recession, these large structural factors remain in place and I would use this as an opportunity to buy more names and indexes are deeper discounts. End.