Hot Money, Hard Decade
Miles Beckett@mbeckett
+4.6%
since Oct 1
The idea
I believe inflation and high interest rates are here to stay for a decade or more, so I built this around businesses that benefit rather than suffer from that world. About a third sits in hard assets like energy and gold royalties, a third in insurers and exchanges that earn more as rates stay elevated, and another chunk in toll-taker companies that can push through rising prices. A small bitcoin sleeve acts as insurance in case the dollar itself loses its footing, kept small enough that being wrong there costs little.
What it owns
- Oil, copper, and gold hold their value when the dollar's buying power keeps eroding. · Exxon MobilIts huge production base turns rising nominal oil prices straight into cash when inflation stays sticky., SPDR Gold SharesIt holds gold itself, which tends to preserve value when inflation is persistent and trust in the dollar wobbles., ConocoPhillipsIt produces oil cheaply enough to make money in most price environments, so a decade of persistent inflation lifting energy prices is mostly extra profit., Franco-NevadaIt collects a slice of gold revenue without paying rising mining costs, so persistent inflation lifts its income while inflating everyone else's expenses., Freeport-McMoRanCopper is a real asset that gets repriced upward when money loses value, and new supply is slow to arrive., Wheaton Precious MetalsIt buys silver and gold at fixed low prices and sells at market, so a decade of high inflation widens that spread.30%
- Insurers, exchanges, and brokers earn more interest on the money they hold when rates stay high. · ProgressiveIt sits on billions of premium dollars before paying claims, so high rates mean that float earns real money every year, and it reprices policies fast to keep pace with inflated repair costs., CME GroupIt collects a fee on every rate futures trade when everyone has to hedge, and also earns interest on the collateral traders post., ChubbIt invests a huge float, so every year rates stay high is another year of fat investment income on top of underwriting profit., Interactive BrokersIt earns the spread on client cash and margin loans, which grows directly bigger when rates stay high., MetLifeIt constantly rolls maturing bonds into new ones, so a decade of high rates means it reinvests at better yields year after year., Intercontinental ExchangeIt runs the exchanges and data feeds people lean on harder when rates and prices keep moving, and its fees rise with nominal activity.30%
- Businesses that pass rising prices straight to customers grow their profits with inflation instead of losing to it. · VisaIt takes a cut of every dollar spent, so when inflation pushes prices up, its revenue rises with them at almost no extra cost., Costco WholesaleIt earns most of its profit from membership fees it can raise over time, while inflation-squeezed shoppers trade toward its cheap bulk pricing., LindeIts industrial gas contracts pass energy and input costs through to customers, so inflation flows around it rather than through it., MastercardIts fees scale with the dollar value of purchases, so sticky inflation is a built-in raise as long as consumers keep spending through cards., Waste ManagementIts contracts often have price escalators tied to inflation, so persistent price increases feed directly into revenue while trash pickup demand stays steady.27%
- A small sleeve that pays off many times over if the dollar ever re-pegs to bitcoin. · iShares Bitcoin TrustIt holds direct bitcoin ownership that pays off many times over if the dollar ever re-pegs to bitcoin, and barely dents the take if that never happens., StrategyIt holds a large bitcoin pile funded with debt, so it moves harder than bitcoin itself in the re-peg scenario, though its leverage is a risk if bitcoin falls hard.6%
- Cash7%