Key insights
- The author expresses concerns about inflation, populist politics, and potential market downturns due to Fed policy errors. The portfolio reflects a mix of value stocks (BRK.B, FRFHF), inflation hedges (SHEL, ADM, EPD, NUE), beaten-down SaaS (FDS, ADBE, SSNC), and healthcare (UNH). A significant allocation to short-term Treasuries (VGSH) and inflation-protected securities (VTIP) serves as a hedge against market volatility. The author favors FDS and UNH due to their strong
I based this on some conflicting macro hypotheses as well as some different investing philosophies.
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I don’t trust myself as much as I trust Buffett/Abel and Prem Watsa (BRK.B and FRFHF) - 39%
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I’m worried about inflation and populist politics (SHEL, ADM, EPD, NUE) - 17%
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SaaS has been beaten down so much, some of those softwares have a better moat than their price says (FDS, ADBE, SSNC) - 14%
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Healthcare will always cost a lot in this country and UNH has been beaten down a lot - 7%
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In case markets go to shit - VGSH, VTIP - 23% - and they could go to shit either thru inflation rising and interest rates with it OR some weird Fed tightening cycle because Warsh doesn’t know what he’s doing
I was a big believer in VOO until I read the inelastic market hypothesis and wonder how the math of passive flows inflated some companies to extraordinarily prices. So I’m back to some stock picking, some leaving it to the value investors I trust.
My favorite stocks are FDS and UNH — they are sooo beaten down and have such a good history of net free cash flow and seemingly impenetrable moats, I like them a lot.