The Band-Aid / Finance’s “Disinformation Moment”

Well that GameStop problem didn’t take long to provoke a reaction. I thought it would be a few more days before I have anything interesting to say…but, on the other hand, the GameStop “problem” didn’t even exist a few days ago… So things were and are, definitely, evolving quickly. The financial system responded aggressively this … Continue reading The Band-Aid / Finance’s “Disinformation Moment”

Changing the Game / What’s Going On in the Market

What’s happening in the market is fascinating. While Capital Flywheels had already been concerned about rising excess in the market and warned about potential volatility, the mechanism by which this is all playing out is actually quite different from what I was expecting. In case you have not been paying attention, retail investors (i.e. non-professionals) … Continue reading Changing the Game / What’s Going On in the Market

Competing Against the Past, Competing Against the Future

Three years ago, Capital Flywheels wrote a post titled “Why Amazon is so Hard to Compete Against“. Specifically, I argued that Amazon’s greatest advantage is not the commonly cited ones of scale or cash flow or brilliant management… (those things make it even harder to compete against Amazon)… …but rather Amazon’s greatest advantage is that … Continue reading Competing Against the Past, Competing Against the Future

Tidbits #25 – The World Reminds the US They Exist

Happy holidays, and thanks for reading! 🎄🎁🦌 🗺 Geopolitics Russia has hacked entities across the US, creating a historic mess…it will take time before the US realizes the full scope of the attack and what has been taken. #1 How to Understand the Russia Hack Fallout THIS WEEK NEWS broke that United States government agencies and … Continue reading Tidbits #25 – The World Reminds the US They Exist

Cloudflare (+Fastly), Computing, and the Future of the Internet

Capital Flywheels added Cloudflare to the Paper Portfolio as part of the December 2019 update. Over the past year, Cloudflare has done quite well (~+315%) and ranks as one of the top performers in the Paper Portfolio: A year ago, Capital Flywheels highlighted how Cloudflare was already playing an important role in keeping the internet … Continue reading Cloudflare (+Fastly), Computing, and the Future of the Internet

Paper Portfolio – December 2020 Update

Entering the month, the Paper Portfolio maintained a defensive posture given election uncertainties. We began to take this defensive posture starting late in the summer, which allowed us to escape the volatility of August, September, and October largely intact. When we chose to further maintain our defensive positioning during the last update, Capital Flywheels argued … Continue reading Paper Portfolio – December 2020 Update

Paper Portfolio – November 2020 Update

The Paper Portfolio’s continued defensive positioning during October turned out to be an appropriate move. The Paper Portfolio returned 1.36% vs -2.65% for the S&P500, despite being skewed towards well-owned names. This brings year-to-date returns to 74.38% vs 2.64% for the S&P500. The initial shift into a defensive position at the end of August helped … Continue reading Paper Portfolio – November 2020 Update

The Coming Economic (R)Evolution

Five months ago during the early stages of the unfolding pandemic, Capital Flywheels published Recession of a Different Kind shortly after the market bottomed after falling 35% from all-time-highs. In the face of significant uncertainty, massive unemployment unseen since the Great Depression, and unparalleled economic collapse within recorded history…Capital Flywheels took a leap of faith … Continue reading The Coming Economic (R)Evolution

Paper Portfolio – August 2020 Update

Like June, July was a fairly volatile month with investors trying to decide which way to go. The Fed’s continued loose monetary policy supports value reflation trades, but economic growth remains weak with elevated unemployment. Weak economic growth tends to support secular growth stocks (more certainty) and companies with strong balance sheets (more defensive / … Continue reading Paper Portfolio – August 2020 Update

World’s Two Most Interesting Companies Today…or the Intersection of Computation, Energy, and Human History

Open any (literally any) history book and you will find that historians (and people) believe the course of human history has been defined by an endless list of critical factors, events, and circumstances that ultimately defined the outcome. This is true for very long arcs as well as very short arcs. For example, this is … Continue reading World’s Two Most Interesting Companies Today…or the Intersection of Computation, Energy, and Human History

Paper Portfolio – July 2020 Update

The Paper Portfolio did very well in June. Initially, the Paper Portfolio lagged the index early in the month as investors furiously bought stocks related to economic reopening (including a number of very questionable bankrupt companies like Hertz)…the Paper Portfolio, unfortunately, has limited exposure to that theme. But, fortunately, our timely addition of Boeing allowed … Continue reading Paper Portfolio – July 2020 Update

Taking the Offensive: Why Strong Balance Sheets Offer More than Just “Safety”

“The greatest victory is that which requires no battle.” Source: Sun Tzu, The Art of War Over the years, Capital Flywheels has repeatedly emphasized the importance of strong business models as well as strong balance sheets. While most investors pay lip-service to both, Capital Flywheels believes that these two factors are the primary sources of … Continue reading Taking the Offensive: Why Strong Balance Sheets Offer More than Just “Safety”

Renewal Through Restructuring

There is no doubt that COVID19 is causing significant disruptions across our economy. This is a time of elevated fear and uncertainty, not least because many businesses may struggle to remain open. Many businesses will likely shut down or require restructuring. In modern Capitalism, Restructuring (or bankruptcy) has become a dirty word. Restructuring is often … Continue reading Renewal Through Restructuring