On My Mind
On my mind this week are, unsurprisingly, the ongoing events in Iran and the Middle East. Analysts, asset managers, politicians try to make predictions about oil prices, shipping traffic, durable damages to physical assets, potential outcomes of the conflict and many other events influencing markets.
During times like these I try to stay away from too much noise. More often than not, we fool ourselves into thinking we know exactly how things will play out, when the reality is that there are simply too many variables to model accurately.
The magnitude of this crisis, exceeds those in the past. In the 1990 Gulf War only about 5% of global oil supply was removed from the market temporarily. The current complete shutdown of the Strait of Hormuz is the issue here trapping roughly 20% of daily global oil supply and 20% of LNG supply. The solution of free markets to higher prices is usually demand destruction. A crisis like this will be solved at least partially “naturally” at some point.
There is one thing I am certain of, however, no matter how this crisis will play out: Governments will further accelerate strategic on-shoring of critical industries and energy infrastructure. This crisis once again shows how vulnerable a globalized world has become to regional shocks.
Worth Noting
Warren Buffet in 2017 said about Bill Ruane, co-founder of the Sequoia fund: "A truly wonderful human being and a man whom I identified 60 years ago as almost certain to deliver superior investment returns over the long haul".
Since its inception in the 1970s, Sequoia has famously outperformed the S&P 500 by running a concentrated, long-only equity strategy.
Sequoia Fund Top 10 Holdings
(As of their latest reporting, representing over 60% of the total portfolio)
Rolls-Royce Holdings PLC (Industrials) - 12.4%
Alphabet Inc. Class A (Communication Services) - 8.2%
Liberty Media Corp - Formula One (Communication Services) - 7.1%
Universal Music Group NV (Communication Services) - 6.0%
Eurofins Scientific SE (Healthcare) - 5.6%
Capital One Financial Corp (Financial Services) - 5.3%
Constellation Software Inc. (Technology) - 5.3%
Elevance Health Inc. (Healthcare) - 4.9%
Charles Schwab Corp (Financial Services) - 4.4%
Intercontinental Exchange Inc. (Financial Services) - 4.3%
I am quite surprised, but they announced their decision to transfer the mutual fund into an actively managed ETF strategy. The new Sequoia ETF (NYSE: SEQ) is expected to become available late 2026. This ETF could potentially become an interesting addition to The Tiny Family Office portfolio, and I will be watching it very closely.
I wish us all a safe week.
Thank you for reading along.