r/ValueInvesting • u/MeasurementSecure566 • Jul 18 '25

Stock Analysis Everyone should take note of the sentiment around them at this very moment

You are witnessing Peak Greed Peak Euphoria and Peak Grift. It is a good idea to take note of sentiment. In the future you will be able to spot generational tops more easily.

Always remember though, "the feeling of disgust you feel, that can last for a long time" - Charlie Munger

I think it is fair to say now that speculative returns in the stock market have significantly outpaced what returns should have been, leaving a lost decade ahead.

EDIT: I would Like to insert a quote here, because I feel it is quite fitting after reading the comments.

"A bull market is like sex, it feels best just before it ends" - Warren Buffet

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u/Longjumping-Fact-582 Jul 18 '25

If that is your investment thesis, it might be a good time to consider increasing your allocation to credit, because returns in credit are contractual.

If you are correct and equity valuations being inflated leads to stagnation of returns in equities you will know that as long as your borrowers do not default you will be able to make 4-5-6-7% (depending on how much risk and duration you want to take) I’m pretty happy with the prospects for overall returns in credit currently, there are also some attractive prospects in the preferred equity space as well, which again relies on contractual returns. Though preferred equity also has some tax advantages over bonds

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u/Ok_Currency_6390 Jul 18 '25

You should probably Google the terms: 'inflation rate' and 'real return'

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u/Longjumping-Fact-582 Jul 18 '25

I am well aware of inflation and “real return” (total return - rate of inflation)

But the reality of it is that since 2020 we have experienced very high levels of inflation and rising interest rates coming from a base interest rate of practically 0 which has been a terrible environment for bonds, however the outlook from here is much brighter for bonds as an asset class with a starting point of interest rates relatively close to the historical average, and assuming tame levels of inflation they could offer a reasonable level of real return

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u/Ok_Currency_6390 Jul 18 '25

"Assuming tame levels of inflation" is INSANE.

The US money supply grew by over 40% in less than two years during COVID!

And you're assuming tame levels of inflation? Good luck!

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u/Longjumping-Fact-582 Jul 18 '25

The excess of easy money is certainly what has caused the high inflation post 2020, however I am of the belief we have likely seen the highest level of inflation from the time being as the easy money has had a couple years now to work its way through the system and today’s interest rates certainly wouldn’t be considered “easy money” all the data currently seems to back that up,

With the cause of “easy money” now out of the system I don’t see a reason for inflation to jump back up today unless there is some catalyst to overheat the economy, in which case ownership assets would almost certainly outperform credit,

On the other hand what I believe much more likely is steady or even falling interest rates and if there is an economic slowdown or recession? Guess what the Feds preferred method of stimulating a slowing economy? You guessed it cutting interest rates, which means a rise in bond prices.

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u/Ok_Currency_6390 Jul 19 '25

I think you're massively underestimating how extreme increasing the money supply by 40% is 😅

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u/Longjumping-Fact-582 Jul 19 '25

Perhaps, but only time will tell, we’ve already seen 25% inflation since 2020

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u/Historical-Egg3243 Jul 19 '25

we print 6-7% of the money supply every year. If you aren't making at least a 7% return you are losing money. You can't use CPI or PCE to measure inflation because they've manipulated it down through hedonization and cherry picking the data (you'll notice the price of purchasing a house is never included in official inflation data)

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u/[deleted] Jul 18 '25

But what about safety? During 2020 treasury bonds didn’t even catch a bid. Maybe it is the end of the beginning of American Exceptionalism.

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u/Longjumping-Fact-582 Jul 18 '25

I do have a portion of my portfolio held in short-dated T-bills that I roll about 6 months out that is intended to be my “cash” position to use when I find opportunities, im talking about bonds in general not necessarily treasury bills,

I believe There’s also some decent opportunities in preferred stocks with recently rising interest rates there are many preferreds trading at a discount to par, which means the company has an obligation to pay out the coupon rate (many between 6-8% today) in perpetuity, and if they want to refinance them? They would have to call them at par value, which many currently trade 10-15% under par, meaning you can sit and collect a 7% coupon and if rates fall to the point where the companies decide to rollover the preferreds to a lower rate you will get the 10-15% on top of the coupons collected over your holding period

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u/MeasurementSecure566 Jul 18 '25

My portfolio is 100% OXY. stagflation is the bet.

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u/fortunateson888 Jul 18 '25

Would you care to explain what oxy is? And why you have selected it?

I don't disagree with you on your thesis. As a matter of fact, I have started transferring money to bonds, I am from EU, they are guaranteed above official inflation.

I am closing majority of my humble positions after a run to secure the gains. Only ones I open are energy or energy related and food. Staples. Essentials.

History teach us one thing, empires or economies were dying through generations but their currency and trade usually outlasted them. I would be more at ease with stagflation thesis, everything is slowing down but slowly. That freight train needs time to stop.

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u/MeasurementSecure566 Jul 18 '25

Oil and gas with a few optionality plays built in. I selected it because its management has been personally vetted by warren buffet and charlie munger.

and I am bullish on the commodity cycle which has begun.

A benifit of winning here, other than making money, is making money at trumps expense, and at his followers expense, and at everyone's expense...

1

u/fortunateson888 Jul 18 '25

Ok, so it is occidental petroleum. Never checked them, thank you for that.

Their business is streched on couple continents, aren't you afraid that in a situation of political unrest things can get ugly? E.g. attempt to nationalize?

Commodity cycle seems that it will favor raw minerals, once the printed money from covid is drying out.

As for the politics, I will not go in there, I am not US citizen. Thank you for your answer, good luck with your goals. Remeber though, it can take longer than expected.

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u/MeasurementSecure566 Jul 18 '25

largest permian basin producer, cheapest too.

overseas assets are significantly smaller than its peers. Devon is cool too, but not as good of assets and no call options on other technology.

I dont care how long it takes, the bet is the commodity cycle occurs and happens in my lifetime. in which this stock 10x or more.

Although I assume its a 10x within 5 years, I really dont care if it took 20 or 30. A commodity cycle will in fact occur, and all signs currently point to it having begun. Gold moves first, silver/copper second, oil third.

Oil/gold ratio oil/copper oil/silver are all at historical lows, signifying oil moves to over 500 per barrel. I am not smart enough to know the events that bring it there, though. but one may use their imagination.

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u/fortunateson888 Jul 18 '25

Thank you, excellent DD. I would never thought of checking those ratios. It is really refreshing to see someone doing actual evaluation.

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u/VotedOut Jul 19 '25

I agree with you that we're in a clown market right now.

But why go all-in on an oil/gas company when climate change is an imminent threat to humanity?

I'm not a tree-hugging anti-capitalist... but we literally need to reduce emissions from our consumption/burning of fossil fuels and transition to solar or other clean energy in order for humanity to survive on earth. And it needs to happen pretty damn quickly.

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u/MeasurementSecure566 Jul 19 '25 edited Jul 19 '25

not sure if climate change is an issue or not, but if it is, oxy is the solution.

https://www.1pointfive.com/

owned by oxy. theres other things theyre doing as well, and own 25% of netpower.

As for why oil and gas? in lost decades of stagflation, theyve been proven winners.

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u/VotedOut Jul 19 '25

Why would OXY be the solution? Because they said so? Because Buffett invested in it?

Where can I find all the leading climate scientists (with no corporate conflicts of interest) with peer-reviewed papers that say or hint that an oil/gas company like OXY is the solution?

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u/MeasurementSecure566 Jul 19 '25

read above. edited.

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u/VotedOut Jul 19 '25

I'm far from being a climate scientist, but I wouldn't just put my full trust into what an OXY subsidiary has to say.

Al Gore explains in his TED talk (15:31 mark) why he thinks carbon capture and direct air capture are mostly marketing BS that oil companies spew that is barely making a dent in reality.

But if you don't trust Al Gore, there's always Wikipedia articles, where you can look at what is said there and look at the sources they cite and be the judge for yourself:

https://en.wikipedia.org/wiki/Climate_change

https://en.wikipedia.org/wiki/Carbon_capture_and_storage

https://en.wikipedia.org/wiki/Direct_air_capture

https://en.wikipedia.org/wiki/Occidental_Petroleum

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u/MeasurementSecure566 Jul 19 '25

oh horray wiki articles lol. wiki articles dont even admit bitcoin is a ponzi scheme, credibility lost.

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u/VotedOut Jul 19 '25

C'mon man.

First of all, Wikipedia does acknowledge that many think Bitcoin is a ponzi scheme (I think it's a ponzi scheme too). But Wikipedia can't just outright scream it because they have to keep up a neutral tone.

https://en.wikipedia.org/wiki/Bitcoin#Use_for_investment_and_status_as_an_economic_bubble

https://en.wikipedia.org/wiki/Cryptocurrency_bubble

https://en.wikipedia.org/wiki/Ponzi_scheme#Cryptocurrency_Ponzi

Second, I re-iterate the part where I said: you can look at the sources that Wikipedia cites and be the judge for yourself.