Image Source: Pixabay
 

A few snippets today.

First is another stock looked at with a long-term lens. 
 

The stock is the outperformer in blue versus the S&P 500 in green. The drawdowns for the stock are consistently larger than for the index including down 8% more in 2008. It's a good bet that people panicked out of the various drawdowns, which was a mistake. It's been more volatile going up and going down, and that will probably continue. The name is not important so please don't ask. If you have any stocks that behave like this and you believe in them, then selling out of impatience during one of the periods it lags is going to be a bad decision.

Meb Faber posted this;
 

Sound familiar? Recognizing there is an excess is easier than knowing when the music will stop. There's pretty much no way to know beyond guessing and getting lucky. Like we said just the other day, there's really no way to completely avoid the AI group of stocks without risking getting left far behind the market but the net exposure can be managed to soften a blow that might be coming.

And here's a quote from Howard Marks via Bloomberg;

“Is it prudent to accept 30 years of technological uncertainty to make a fixed-income investment that yields little more than riskless debt?” he questioned. “And will the investments funded with debt – in chips and data centers – maintain their level of productivity long enough for these 30-year obligations to be repaid?”

I've never thought of it that way before, but it's fascinating. Think about it. The buildout that they are borrowing for today, he's referencing Alphabet (GOOGL) and Meta (META), will be long obsolete by the time that debt matures. 

This is a whole other line of thought for why 30-year debt is better to avoid. 

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