Q2 2022 Macro Presentation: Bad Moon Rising

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Our Macro Presentation this quarter is titled “Bad Moon Rising” for reasons that are, unfortunately, apparent to everyone. While we hope to strike an appropriate tone in this presentation, we also want to maintain long-term context and a healthy humility with respect to what we can predict and what we can’t.

Warren Buffet said in 2021 that his “unwavering conclusion” is to “never bet against America.” We agree. The engines of capitalism and prosperity – relative population growth (fertility and immigration), rule of law, financial markets, democracy, abundant natural resources – remain very much intact. Nassim Taleb, in his book, "Antifragile", discusses the brief (albeit powerful) success enjoyed by fragile systems. Like the Sword of Damocles in Greek mythology, fragile systems can, over a short period of time, seem great. Damocles feasted, partied, and sat on the throne of King Dionysius. The entire time, however, a sword hung above the throne, held by only a single hair of a horse’s tail. Such a fragile system can be rapidly undone. There are fragile economic systems in our world today.

Our system, however, has not only endured but strengthened over time because it filters out the weak businesses and business models and strengthens what is strong. New businesses model “best practices”. Technology is harnessed in order to improve competitiveness, from the steel plow and the cotton gin to the new cancer drug and the new iPhone. These characteristics give us long-term optimism on America. As fiduciaries, our goal is to be smart about preserving wealth in the short term while betting on these facts over the long term.