Friday, March 5, 2021

The Chad Value Investor vs The Virgin "Growth" Investor

A correspondent writes in,

The aesthetics of CBS' value rotation trade is sartorial gentlemen smoking cigarettes and driving about their lumber forest land in rugged gas powered 4x4s, all fueled by their lucrative dividend stream while their principal safely compounds in the businesses they own at generationally low prices.

In the cities, teeming masses of buttcoin hodler bugmen fight over dwindling supplies of programming gig jobs and deal with intermittent power outages in their casual hoodie wear.

When the gentlemen are done for the day they return to their 8 children and one loyal wife plus doge. When the bugmen fatigue for the day they visit the local bathhouse and complain to one another about their hopeless plight.

Imagine doing a timber cruise on your logging roads in a manly vehicle like a lifted 4Runner or a Bronco or a Jeep Gladiator. You stop for a smokos break and take a quick measure of merchantable lumber volume. You're a frontiersman, a settler, a pioneer; in the woods in the tradition of great Americans like Teddy Roosevelt and Norman Maclean.

It doesn't matter what the market thinks your timberland is worth because the trees' little solar panels are capturing photovoltaic energy and turning it into product that gets more valuable the longer you wait to sell it. Wood is a Lindy miracle material that has been with us through all the Ages of stone, bronze, iron, and steel. Just as tobacco and even oil are Lindy.

Meanwhile, somewhere a dork's Tesla is catching on fire in his driveway. As he waits on indefinite hold with Tesla Insurance, he checks his Robinhood app and watches his portfolio of unprofitable fad stocks crumble. 

He didn't realize that even the profitable companies (the tech monopolies) were over-earning and trading at high multiples, which made the long thesis an error of double-counting, one that smart resource investors know better than to make. Already, storm clouds were on the horizon; catalysts appearing that would crunch the earnings and the multiples at the same time.

The only thing Lindy about the Tesla dork being short value against growth was that so many had made the same mistake before.

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