You know that frustration is boiling over when an incredibly astute and successful investor like Saul opens a thread about it. As he points out, the Bear has been gnawing on us going on 18 months or so and the market just won’t do right. Right being rewarding us high growth types with piles of cash. So what happened? Well…let’s use the KISS system of analytical comparative analogies to discern what apparently we all have missed - and missed greatly at that.
Keeping in mind that for years and years of a nice fat bull market us high growth folks made money hand over fist. We were on a roll and all we had to do was, with only marginally reasonable accuracy, plunk down some cash on a high growing SaaS company and watch the bank account balloon. Easy Peasy - Lemon Squeezy. And then…just like that it didn’t work anymore and here we sit - victims, if you will, of that long trail of success. I think we can explain it in a three part series of really simple explanations as follows:
PART ONE:
Quite simply - we missed the Freeway Exit: the one that said: Hey You!..We’re not going to reward High Growth for a while and if you get off here you can make it to the gas station before you run out of profit. Can’t be any clearer than that. Now…to be sure it was hard to see that exit coming. After all - for almost a half decade all you had to do was just wait any little market storms and hissy fits out - and then things always returned to normal - that is, until one day they didn’t. Simple as that.
PART TWO
The Market Zigged and we Zagged, ignoring a generally accepted Investing Truth that while there is always somewhere to make money in the market you don’t fight the trend unless you want your portfolio to wind up like Jimmy Hoffa, Simple as that.
PART THREE
For those of you not with fully with me just yet lets take a fairly recent movie that mirrors our very situation: The Banshees of Inisherin; which, should put a explanation point on my above attempts to keep things simple. If you haven’t seen it, the movie is set on a "remote island off the coast or Ireland and stars Colin Farrell and Brandon Gleeson as two best friends who all of a sudden ain’t. Here is the trailer for the movie:
Now pay close attention to the first scenes in the trailer that sets the table:
Scene One in Pub:
Farrell: We’re still the best of friends.
Offscreen Comment: No you’re not
Farrell: Who says we’re not?
Gleeson: Sit Somewhere Else.
Scene Two
Farrell: Now…if I done something to you, just tell me what I’ve done to you
Gleeson: You didn’t do anything to me. I just don’t like you no more
And that pretty much kicks-off an entire movie about the rejected friend not accepting that things have changed and repeatedly attempting to figure out why the other friend just doesn’t like him anymore instead of just adapting and moving on. For the simpler among us - of which I am one, let me be more direct:
The market thinks we are Pepe Le Pew!
And therein lies the tale of the tape, the gist of it, the big reveal - so to speak: The market just don’t like growth no more, no how. But because during the last 5-6 years or so, high growth and the market had been best buddies - drinking buddies and had created the expectations for continuous and a never ending heaping piles of largesse - we didn’t think anything about it when the first tremors appeared.
And now we are deep in the loss poo.
Such is life with the better questions being what happens next and how do we prepare for it. The simplest answer might just be the best.
All the Best,