A Pullback Or…?

It was a couple of weeks ago when we made a tongue in cheek comment that Nvidia CEO’s signing a woman’s boobs at a tech conference could be a sign of a market top:

Don’t get us wrong — we’re not questioning Jensen Huang’s expertise. The man clearly knows silicone. But when CEOs are elevated to “rock stars” in the mainstream, it’s probably safe to say we’re closer to market tops than bottoms.

Nvidia topped out a few weeks later and is down 25% since. Now, who knows, maybe this is just a pause and pullback in this crazy world and it’s all blue skies and plain sailing here on out. Or maybe it’s not.With investors in Nvidia and other Magnificent 7 stocks rushing for the exits in recent days, we’re inclined to say it’s the latter.On that note, it’s curious that money leaking out of Magnificent 7 in recent weeks doesn’t appear to be going into bonds or treasuries, which is what usually happens in a “risk off” move.While it’s hard to say for sure where all this capital is going, it’s pretty clear where it’s NOT going — and that’s energy.In fact, hedge fund positioning in energy is now at decade lows (h/t @Josh_Young_1 for the chart). Talk about a hated asset!We probably sound like a broken record at this point, but it’s one of the reasons why we are so excited about the opportunities in energy.
 All Things Transitory…Feels like a lifetime ago, when — back in February 2020 — we started warning that COVID lockdowns will bring about inflation and shortages. Fast forward to today, and this pesky stuff is now an almost daily reminder in our daily lives. We set up a dedicated inflation channel in our Insider private forum, where members can share their own experiences with all things “transitory.”Rather than pointing out the “problems,” let’s today discuss some solutions, shall we?Insider member Theo recently asked a great question in our Slack channel:

Do you have any strategies to fight inflation in your daily lives? What I find hard, and I do see it a lot in my social circles, is that it’s not so easy to track how should you change your lifestyle in order to be least impacted. Of course “spend less” is easy to say, but I was curious for more creative tips.

Here are some of the responses from other members.From member Dancebuff:

I definitely buy in quantity when things are on sale that I know we use. I got a Costco membership as the organic raspberries alone made it worth it. Coincidentally Amazon Prime days are tomorrow and the next day for products you may be considering.

This from Kathryn:

I suppose it depends on where you live @Theo, and also what you have control over and what you don’t. I have no control over the cost of insurance (except shopping around and making choices on coverage) and no control over costs of medical, etc. What I can control somewhat is the cost of food, so we have a garden and this saves me a lot of money. We also have a well established relationship with our butcher and buy our meat in bulk from him. This has given us superior quality and the cost is the same or cheaper than supermarkets. We go out less to restaurants but have friends over more. Keep track every month on exactly what you spend and what percentage of your budget it takes up and then find the categories that you can reduce and still be happy.

From Philip:

Keeping a list of discretionary purchases and waiting for a discount to be offered; Black Friday is an obvious one but many software packages for example periodically offer deep discounts. It might be possible using the Internet Archive to look back at websites to see what sort of Black Friday discounts they offer.

And this one from Geoff:

Also, review bank and CC statements for monthly and annual subscription auto-renewals that you no longer want/need. I carved out over $100 a month just by doing this.

And as member Anissa pointed out, there are positives to inflation as well 

Confessions Of A Russian Propagandist
It’s almost a cliche thing to say but our mind is truly either our best asset or our worst enemy. And that’s doubly true when it comes to investing.Case in point — an Insider Newsletter reader recently got upset about a particular video we shared.For some context, it was a video from a press conference where the Russian military stated their opinion. Additionally, we specifically said that “it doesn’t matter if you believe it or not, because they believe it and that matters.”As the late Charlie Munger once said:

The human mind is a lot like the human egg, and the human egg has a shut-off device. When one sperm gets in, it shuts down so the next one can’t get in. The human mind has a big tendency of the same sort.

In a world driven by media sound bites and agenda-driven perspectives, being cognisant of that has never been more critical.You’ll be a much better investor if you are able to distance yourself from the noise and view all newsflow from the perspective of trying to understand the various incentives, biases, and subsequent actions at work. Because at the end of the day, it’s what drives capital flows (and as such, asset prices).
 Weekly HumorFirst off, some “evolutionary humor” from Insider member Clint:As coal investors, we got a good chuckle out of this one…Have a great week!More By This Author:Bad News For Nvidia Bears A Giant Sucking SoundMarkets Out Of Whack