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Friday, November 6, 2026

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Fajasy on X

Here’s how I’d position for growth with sticky inflation, U.S. stocks close to their most expensive since 1881, and AI spending that’s turning to debt: → Less in U.S. index funds: If the CAPE’s history holds, U.S. stocks will return less over the next 10 years than the S&P 500’s 7.1%/year average after inflation since 1871. That doesn’t mean you should stop dollar-cost averaging into your retirement accounts or sell what you own, but there are better risk/reward opportunities than an index this concentrated in U.S. large-cap tech. → Value stocks, emerging markets and real assets: Charles Gave favors all three in an inflationary boom. Growth × Policy favors emerging markets and real estate in its current phase, and value stocks, emerging markets and commodities if the real rate rises above 1% (it’s ~0.8% now, and headed above 1% if the Fed hikes again in December). According to Barclays, whose CAPE for U.S. stocks is 39x, the UK (18x) and China (14x) trade at less than half that. → TIPS over nominal Treasuries: In October, 10-year TIPS yielded 2.78% above inflation on average and nominal 10-year Treasuries yielded 5.13%, so TIPS come out ahead over the next 10 years if CPI inflation averages more than 2.35%/year (5.13% minus 2.78%). CPI inflation was 3.7% over the 12 months to September, so inflation would have to slow well below today’s pace for nominal Treasuries to win. → Gold over nominal Treasuries: Gave favors gold over bonds for as long as the gold/IEF ratio stays above its 7-year average. It’s 61% above it now, so gold would have to lose ~38% against $IEF to flip that reading. → More cash than risk-on alone suggests: Risk-on underweights cash, but with the S&P 500/WTI ratio swinging with every Iran headline, I’d keep more, since Gave’s inflationary bust favors cash and energy and avoids long-duration stocks and bonds. In short, I’d own less U.S. large-cap tech, more of what an inflationary boom favors, and enough cash to act if Gave’s reading flips to a bust.
@convequity

Convequity on X

Marvell buying Lumentum is easier to understand strategically than financially. Four days after $MRVL announced its all-stock acquisition of $LITE, I understand why both sides want it. I remain unconvinced by the shareholder economics at the announced $115bn enterprise value. Smart bulls long $LITE after mid-2026 for its UHP CW story, but we don't. Lumentum's ultra-high-power laser advantage depends on the optical architecture customers choose. Moving the light source closer to the optical engine can reduce losses and change the power required. Today's component bottleneck may become less valuable as the system design changes. External lasers still offer cooling and replacement advantages. Broadcom $AVGO uses them too; its strength is coordinating switch silicon, optical engines and packaging. Huawei's Hi-ONE takes a different route with a built-in light source. Both reinforce the importance of controlling the broader design. That helps explain Marvell's motivation. In AI clusters, weaker networking can leave expensive accelerators idle. A cheaper networking component may never compensate for the lost compute. Buying Lumentum gives Marvell more control over the optical technology it needs to compete. But shareholders have to fund that integration. Marvell holders exchange roughly one-third of the combined company for Lumentum. Lumentum holders receive a fixed number of Marvell shares, leaving them exposed to Marvell's share price and the combined company's execution. We have always being negative on $MRVL vs. $AVGO. Always a tier 2 mgt in both vision and execution. The expected first-half-2028 close is a nightmare for a catch-up strategy. Both companies can keep developing products, but the benefits of combined ownership remain deferred. Broadcom and Huawei have time to advance their designs and deepen customer deployments. By closing, the competitive gap could be wider. I would assign no value to an NVIDIA $NVDA rescue. NVIDIA already has investments and partnerships with both companies. It can access their technology without acquiring the business; a takeover would still depend on price and regulatory clearance. The strategic rationale is understandable. The shareholder case needs customer wins and earnings that justify the ownership exchanged, integration costs and time lost. I remain skeptical.

Investor Letters

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INVH · long

Invitation Homes INC

Invitation Homes owns more than 85,000 homes valued at $43 to $48 per share, versus a roughly $30 share price, with occupancy above 96%.

INVH $16B
Value Investors Club 5 clicks

Research Roundup Vol. LII

Dell’s AI-server demand and Microchip’s data-center components lead updates on Cirrus Logic and STMicroelectronics, alongside a weekly…

STM $41B
Monte Independent Investment Research 1 click

Adobe 3Q26 Update

Adobe’s fiscal 3Q26 revenue grew 13%, while ARR growth slowed to 9.3% excluding Semrush.

ADBE $93B
Speedwell Memos 2 clicks

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