“The S&P 500 forward price-to-earnings ratio, at 22.6x, is in the 99th percentile over the past 20 years." -Mark Haefele, Chief Investment Officer at UBS Global Wealth Management.
“Risks of disruption to Russia’s crude oil and refined product supply has been treated as a non-factor in the oil market despite evident indications about higher frequency Ukrainian strikes… 94% have been hit by weaponized ordinances meaning 5.3 million b/d of Russia’s 5.62 million in total capacity have suffered strikes.” -Cornerstone Analytics’ founder Mike Rothman, one of the world’s foremost oil experts.
Reflection Time
Last week, I committed to creating a comprehensive review of nearly all of the numerous styles, sectors, stock and commodities that have been given “airtime” in these pages in recent years. Unsurprisingly, given the nature of markets, a number of them have been “airballs”. For those of you more familiar with baseball than basketball, that refers to my various whiffs. However, even with those, there are some interesting backstories that render a few of them more like a fielder’s choice.
As you will soon see, this is a rapid-fire summary. It has to be considering the extensive number of securities covered in this note. For those of you who actually own them, you should be sure to check out these updates, particularly Part III of this series that will run tomorrow.
Frankly, I bit off somewhat more than I could chew, at least comfortably, by taking on a project to compile most of the positive write-ups, as well as gain realization advice, we’ve given to individual equity securities, including midstream (pipelines), since Haymaker launched back in early 2022. For those of you unfamiliar with the less than friction-free history of this newsletter, here’s a brief recap.
The maiden issue of my original publication, the Evergreen Virtual Advisor, nicknamed EVA, came out in the summer of 2005. It is very hard for me to get my mind around that it was 20 years ago as I vividly remember writing most of that issue in a hotel lobby over in Hawaii. My family and I were there for my best friend’s wedding who finally took his vows at the not-so-tender age of 50.
My main point in that inaugural edition was to make the case that stocks were a better buy than homes were at the time. It seemed to me that conditions in the housing market were already becoming somewhat frothy while stocks struck me as undervalued. The S&P and the NASDAQ were still recovering from the 2000-2002 ferocious bear market that cut the former in half and took the latter down about 80%. (Of course, that could never happen again, right!?!)
Frankly, most disagreed with my views. Home prices were rising at an unprecedented rate and, also frankly, they kept appreciating until sometime in the first half of 2007. During those nearly two years, my warnings about what I believed was an immense housing bubble intensified. Of course, the caca began hitting the fan in the summer of 2007 when some hedge funds got in trouble over their sub-prime mortgage portfolios.
From 2005 through early 2022, I wrote EVA under the auspices of the firm, Evergreen Gavekal, for which I was initially the Chief Investment Officer (CIO), then, eventually, the Co-CIO. The period from early 2022 until March of this year was challenging for me as Evergreen’s external compliance/legal entity placed an increasing number of restrictions on specific recommendations. However, I did my best to work with them to provide readers with enough guidance to ascertain what I liked and didn’t like. But it was, for sure, a tough balancing act.
Once I retired from Evergreen this past March, the handcuffs were off. Ergo, I have been able to provide much more specific analyses, though as you all know I have repeatedly suggested that readers do their own research.
Many of these reprised names go back to the earliest days of Haymaker and even a bit further back. There weren’t many specific issues highlighted to start with and most of those remained favored positions for quite a while. Despite the limited number of early highlights, there is a lot to cover which is why we’re running this in three parts, starting last week; here’s the link to that edition.
Frequently, when positively framed names ran up in price, I would suggest taking some gains. Sometimes, that worked very well. Other times, like with many of the gold miners this year, it was a case of cutting back into a nearly vertical move. (As a relevant footnote, the major sell-downs I proposed with the gold miners way back in the summer of 2020 were very timely; these also emboldened me to recommend re-accumulation during their nasty thumping over the next two years, when many gave up on them.)
My first order of business was to try to assemble most of these into a list. (Rather than overwhelm you with that list, we’ve provided another link at the end of this issue.) Unquestionably, I’ve overlooked some, but, in time, I hope to fill in the blanks. Over the years, there have been a plethora of bullish ideas, despite that I’m often criticized for being too conservative.
Yet, I’m not giving up on my overarching gradual-buying/high-cash-reserve stance. After all, this is a very, VERY pricey stock market. It continues to amaze me how richly U.S. shares trade given the almost endless list of challenges and risks, not to mention increasing societal conflict and one of the riskiest geopolitical situations perhaps since WWII. (Yes, I do remember doing bomb shelter drills during the Cuban Missile Crisis and how wrenching the late 1960s were for America.)
To make this process easier for you to digest, I’ll be somewhat facetiously breaking these securities down into four categories (note that because of the length of this overview, we are again not running our usual macro/big picture section again):
Ex-spouses (fortunately, I have no firsthand experience with those but I’ve seen plenty of bad juju from others)
Mothers-in-law (enough said)
Sons-in-Law (not bad, but was hoping for better)
Precious Partners
Because the last category is quite extensive, we’re dividing this into two parts – again! However, there will be a number of profit-harvesting suggestions included in it so you’ll want to be sure to check it out.
Take a deep breath and here we go: