The Ingredients Are In Place For A “Blow Off” Top

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

With gold on the threshold of $4,000 per ounce – which it reached shortly after publication – we devoted Monday’s Daily Journal to an examination of “Why Gold Keeps Going Up.”

One explanation we cited is this:

We’re in the early stages of a reset in the post-World War II global monetary order, in which hard money – like gold – ultimately replaces the U.S. dollar and U.S. Treasuries as the bedrock of the international monetary system. This trend began after the 2020 COVID money-printing spree… where Treasury bonds collapsed as gold soared in value.”

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On Wednesday, we continued Porter’s exploration of Asia and its markets from the week before, with a Journal about some of Japan’s biggest, oldest, and most successful businesses. 

Porter reported that Asia is controlled by only a few dozen families. And the most powerful families do not operate in the open, but instead through an enormous web of holding companies. They control banks, insurance companies, and have privileged access to government capital. 

They are masters at discretion, he wrote. They are the uncontested masters of long-term strategy. They do not measure results quarterly. They measure results by the century. 

And the lesson Porter took away is that these Japanese companies maximize their return on invested capital in ways no other businesses in the world can.

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Thursday’s Big Secret On Wall Street continued on the theme of Japanese companies.

There are perhaps five companies in Japan that have such superior influence, Porter wrote, leading up to the second full recommendation of the month in Porter & Co.’s flagship publication. 

This company isn’t a normal holding company, he explained. It is part of Japan’s strategic plan to acquire and retain critical energy, metals, and food. That’s why it is granted capital at the world’s lowest rates. 

One thing that drew him to the business is that its investing style is a lot like Warren Buffett’s, except instead of the insurance companies putting up the free capital, as in Buffett’s case, in Japan it’s the banks and the government.

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It was a week full of recommendations for our Partners and paid-up subscribers. In addition to the Big Secret, Marty Fridson unveiled his latest Distressed Investing research on a convertible bond issue by an American icon that many believe has fallen on hard times… because technological advancements have moved faster than its own innovations. Marty writes that investors are concerned that the company’s main business “is on the wrong side of history and condemned to permanent decline.” But he and his team explain how storied brand is reinventing itself – and that it will be a survivor and not a future Jeopardy question.

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Also on Thursday, Tech Frontiers editor Erez Kalir poured out a magical essay on modern-day finance and how crypto, stablecoins, and digital wallets are not just the future… they are here, now… and things are changing fast. He wrote, in his recommendation of a company he calls a “piggybank for Ehtereum”:

Over the coming decade, blockchain’s share of institutional capital is likely to expand dramatically as the asset class becomes normalized within large portfolios. A reasonable estimate is that blockchain assets will represent 5% to 10% of global institutional assets by 2035… Two complementary forces will drive this growth: the migration of existing financial instruments (e.g., bonds, funds, currencies) onto blockchain rails, and the accelerating adoption of Bitcoin, Ethereum, and other blue-chip blockchain assets as inflation hedges and strategic reserves. 

For individual investors, this represents a once-in-a-generation realignment in the global asset allocation framework. Those who secure meaningful exposure now – before institutions fully re-weight toward blockchain – will stand to benefit from an epochal trend.”

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In Friday’s Daily Journal, we ended the week with more insights into the Asian trading market, on the heels of Porter’s recommendation of a Japanese holding company the day before…

Porter began the previous week by drawing a line connecting Warren Buffett’s early days of investing with what is happening in some Asian markets, such as Korea and Japan. As Buffett did in the 1950s, unlocking valuing rather than chasing future earnings, Porter wrote:

This kind of investing isn’t about luck. It is simply mastering capital allocation. 

Today, huge Korean chaebols and Japanese keiretsu – large business conglomerates – are going through this same evolution, divesting non-core units amid massive economic transformation.”

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.