Bookends 1998-2022
By Julien B. Booth
May 24, 2022
I hope this notes finds you healthy.
The World is not ending today. The Sun will rise again tomorrow.
My entire investment framework was set into motion during the run-up and crash of the dot-com (2000) Bubble.
It has been roughly 20 years, which is the general length of time it takes to forget valuable lessons.
What we are witnessing thus far in 2022 is the unwinding of many years, turbo-charged by Covid Stimulus, PPP etc., of market excesses. The amount of leverage, story telling (read: lying), disdain for fundamental research, and FOMO of the past 3 years has grossly exceeded even my expectations.
Crypto, PRE-revenue public companies, fake products, and “adjusted” earnings were but a few of the red flags. The NFT craze (see above $24,000,000 sale) rivaled Beanie Babies!
These behaviors will be permanent impairments of capital and hard lessons.
I have been fired by 2 clients in the past year for having a value based portfolio approach and/or not conforming to buying tech stocks. It was painful as the preservation of capital is my primary obligation as a fiduciary. I hate to see FOMO take over common sense.
The cycle of deleveraging is underway and it will be swift – the modern financial markets have no patience.
Quality businesses that we own (Berkshire, Goldmoney, Duke Energy, NVR et al.) are quite safe and will perform once the storm passes.
With 25 years managing capital under our belt, I know market disruptions are incredibly unpleasant.
I welcome your calls and concerns. My direct line is below.
We are grateful to work for “value people”.
Regards,
Julien B. Booth
Chief Investment Officer – Fixed Income & Real Assets
BRC Wealth Management
704-608-3100