Spy enjoyed several glasses of Botanist Islay cask-aged gin this week with a veteran fund manager who took a particularly long time to blow out his numerous birthday cake candles. “Trying to explain what a bear market feels like like trying to explain to someone that doesn’t have children what it’s like to have children” he casually said to Spy. “No amount of words can explain it properly. It has to be experienced to be understood.” Or, as the less erudite but no less wise, Mike Tyson, put it, “Everyone has a plan until they get punched in the face.” Until a bear market shows its teeth, far too many wealth and asset managers confidently ask you to stay the course. But how many do the same, wonders Spy?
Spy understands people who want to buy Bitcoin ETFs. He also understands people who want to buy an ETF of companies involved in the crypto supply chain. But he cannot fathom why, of all the world’s trades, one would want to buy companies that have a bought a little bit of Bitcoin and stuck it on their company balance sheet. How on earth can this be a decent investment thesis? The Bitwise Bitcoin Standard Corporations ETF (OWNB) allows investors (and Spy uses that word in its broadest sense) to, ahem, speculate that simply because these firms are progressive enough to buy Bitcoin, they may also be successful companies due to their innovative flair. “Today, more than 70 publicly traded companies—from Strategy and Coinbase to Block and Tesla—own bitcoin on their balance sheets. And the number is growing. OWNB captures these firms in an index strategy, providing broad-based exposure to a significant, fast-growing trend.” Not for the faint hearted.
Janus Henderson has some rather wise advice for technology stock pickers. “Selecting stocks by size is not a strategy for stock picking. Technology is a scale market. So while you can simply buy the top ten largest stocks in an index, it would be a huge mistake to not invest in some of those winners absent in that top ten. Looking back ten years ago, the top ten holdings in 2014 and the following ten years, only three of those stocks relatively outperformed, but they did so spectacularly.” Investing is never as easy as it seems.
The eternal question: are US stock markets expensive? Spy has seen dozens of different ways to try and calculate this and seen many economists, fund managers, and analysts come up with a range of answers. For Spy, this stat, was a rather damming bit of evidence: a minimum wage American, at the beginning of 2025, had to work 83 hours just to afford a single share of the S&P 500. At the beginning of 2020, five years ago, it was less than half that at a mere 37 hours. No wonder Americans are feeling poorer.
Nothing like a little anniversary to get Spy thinking about the occasional dramas that carries on in global stock markets. Twenty-five years ago this week, the Nasdaq Composite index hit its dot-com-era peak after soaring more than 500% in just five years. Its subsequent collapse was rapid and utterly brutal. It lost more than 75% of its value over the next two and half years. However, over the next 23 years it rose more than 17 times. A lesson in staying the course, if there was one.
The above point plays rather well into the hands, of the analysts and portfolio managers at Capital Group. They have put out an interesting infographic that shows how we underestimate technology adoption, especially in the long run. Once a decent technology comes along, we adopt it like a discounted pandan cake.
Spy was utterly delighted to come across the most marvellous book this week. It is titled ‘The Basic Laws of Human Stupidity’ and it is written by Carlo M. Cipolla, a distinguished professor of economic history at the University of California, Berkeley. Spy found its findings hard to argue with. 1. Everyone underestimates the number of stupid individuals among us. 2. The probability that a certain person is stupid is independent of any other characteristic of that person. 3. A stupid person is a person who causes losses to another person while deriving no gain and even possibly incurring losses themselves. 4. Non-stupid people always underestimate the damaging power of stupid individuals and finally, 5) A stupid person is the most dangerous type of person. To cope with modern life, or possibly the modern era, Spy recommends it in your reading list.
Are you lucky enough to have some of those “boomer coins” stuck in your bottom drawer, wonders Spy? You know the ones that are shiny, come in ounces and are measured in carats. Gold hit an all-time high on Thursday above $3,000. Not bad for something John Maynard Keynes called “a barbarous relic”.
Spy’s quote of the week comes from Robert D. Arnott founder and chairman of the board of Research Affiliates, “When it comes to investing, what is comfortable is rarely profitable.” And in those simple words, there is all too much investing wisdom.
Until next week…
