A $1 Trillion Tailwind For Stocks May Now Be Fading

At Porter & Co. we are determined to be your best source of investing, economic, and financial insight, and your first choice for information about what to do with your money… in the entire world, bar none.

This is Porter & Co.’s Sunday Investment Chronicles. Every week, the Porter & Co. research team pores over thousands (and thousands) of articles, reports, social media posts, analyses, regulatory filings, and anything else we can get our hands (and eyes) on to understand what’s happening in the world of investing and finance – and to uncover the most original, compelling, and double-head-fake ideas…

… and we curate the best of those here. We do it all the old fashioned way: Hours of reading and brainpower (no AI curation here). We read everything – for you.

In Case You Missed It… What We Published Last Week

Porter cleared away a lot of confusion about Bitcoin valuations with Monday’s Daily Journal. 

He wrote that Bitcoin’s price and its intrinsic value are understandable (and predictable) using standard economic metrics. Much of the jargon out there about it is pure nonsense, he said. Adding, even if you’ve never understood the first thing about the internet or Bitcoin, you can easily understand (and predict) the price of Bitcoin.

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On Wednesday, using The Hershey Company’s quarterly earnings release as a jumping off point, Porter reminded readers about the simple beauty of investing in a business like Hershey. He wrote:

I’ve been recommending Hershey stock at below 15x trailing earnings consistently since late 2007.

That strategy has produced annualized gains of around 15%. That might not seem like much, but over 20 years, it adds up. And it’s very difficult, if not impossible, to beat. I respectfully doubt more than 1-in-10 of you have produced annual returns higher than that in your truly passive investments over the last 20 years.

But that’s not all.

The even better part of owning Hershey is the low risk and the constantly growing dividends. With volatility less than a third of the S&P 500 (beta: 0.29), you can safely lever this stock 2x…”

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On Thursday, The Big Secret On Wall Street team discovered that the three-best performing Best Buys from the last two-plus years have been what Porter referred to as vice stocks – which have outperformed the S&P 500 77% to 41%. 

We wrote that vice stocks – booze, cigarettes, gambling – historically act as safe havens in times of economic turmoil, because addiction isn’t tethered to the market’s performance:

There’s also a batch of hidden vice stocks that offer vice on a much larger scale, if you’re into that sort of thing… Regular vice stocks bank on people being addicted. Hidden vice stocks bank on society being addicted and continue to perform during recessions because the entire economy can’t break the habit… even if PC police or the TV talking heads disapprove.”

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On Friday, Porter ended the week with a discussion about Porter & Co.’s property and casualty insurance section of The Big Secret On Wall Street. He focused on the AXIS Capital turnaround, but led off by saying:

… our average return has been 66% over the last three years, with an average holding period of about 18 months. That’s more than double the S&P 500’s returns over matching periods. And we had no losing positions…”

Have you done well with our P&C insurance-company recommendations? Please take a minute to let us know. It only takes a minute: [email protected].

The Best Things We Read Last Week

Out of the hundreds of sources of investment, finance, and economics news and insight we regularly review – our Bloomberg terminal, hedge-fund letters, annual reports, the financial news media, Securities and Exchange Commission (“SEC”) filings, investment newsletters, newspapers, X (Twitter) threads, conferences, podcasts, and more – here’s what we’ve read that we think you might find interesting.