G&R 4Q22 Letter; SP500 Earnings

Reading List

As the US shale fields reach their maximum output, world petroleum production is likely to begin a long decline. Natural resource specialists Goehring and Rozencwajg update their views on energy in their 4Q22 letter. Available here (free but registration required):

http://gorozen.com/research/commentaries

During the “Peak Oil” era around 2005-2008, before the huge burst in shale production, oil prices (in gold) were around 3x higher than today.

John Hussman (hussmanfunds.com) does a few things very well. In February, he updated his long-term valuation models, which have a very high correlation with subsequent actual market returns. Basically, the model reflects an average valuation on an average profit margin. Recently, we’ve had a very high valuation (inspired in part by very low interest rates), on a very high profit margin. His February letter was a standout:

https://www.hussmanfunds.com/comment/mc230221/

While recession watch is still on hold, nevertheless 4Q22 SP500 earnings and profit margins had a big decline.