Mining Economics & What Drives the Bitcoin Price: Volatility vs. Information Efficiency
September 2022 Reading Length: 4 pages
Murray Stahl on Grant’s Interest Rate Observer: Inflation’s got legs (Originally Published 8/5/2022)
August 2022 Reading Length: 4 pages
2nd Quarter 2022 Commentary
July 2022 Reading Length: 27 pages | Listening Time: 1 hour 24 minutes

Even though there is now general acceptance that serious inflation is among us -- not that there was a choice in the matter --the public conversation presumes it is a temporary matter. Therefore, the focus of the Quarterly Review is again on the inexorable economic forces leading to a lasting inflationary environment --- because, hey, if we don't tell you now, the markets will tell you later, anyway.     This review adds several additional factors that both led to the anomalous 40-year disinflationary environment  (accompanied by 40 years of unprecedented financial asset inflation) that has just ended and which are themselves forces in the transition to a structurally different economy. Decades-long patterns are being disrupted, requiring different approaches going forward.

Updated Interim Q1/Q2 2022 Commentary
May 2022 Reading Length: 13 pages

We have been writing about a pending shift to an inflationary era for several years now, and of the importance of pre-positioning portfolios for this largest of risks facing investors. Paradoxically, although what was an almost isolated contrarian viewpoint has by stages become well accepted, investors have yet to recognize the extent of the threat. That is because the public discussion remains anchored around short-term considerations and still does not recognize or mention the long-term structural underpinnings that can drive 10 or 20 years of elevated price levels and currency debasement. Many are looking to the inflationary 1970s for answers, with the presumption that Fed interest rate increases will succeed again. That cannot be the case, and this compare-and-contrast review will describe a couple of the vastly different features and limitations of the 2020s versus the 1970s.
Shortly after our recent Q1/Q2 Interim Commentary, a transaction involving one of our largest and longest-held positions, Texas Pacific Land Corp., was announced. Attached, an updated Commentary with some context for the nature and purpose of the venture, which is not necessarily obvious from the summary description. This strategic alliance with two renewable-energy and energy-efficiency focused cryptocurrency mining firms highlights the value of TPL’s land position beyond the oil and gas royalties it generates, and may be a model for future transactions that could contribute significantly to TPL’s future growth.

1st Quarter 2022 Roundtable Discussion
May 2022 Reading Length: 57 pages

This quarter, our co-founders address client questions posed directly to them, covering a variety of topics ranging from the energy sector, to the economic and market environment, to the impact of geopolitical events on a variety of markets, and several in between.

Anthony Pompliano Interviews Classical Value Investor Peter Doyle, Co-Founder of Horizon Kinetics, LLC on the Best Business Show
March 2022 38 minutes and 45 seconds
4th Quarter 2021 Commentary
January 2022 Reading Length: 31 pages | Listening Time: 1 hour 37 minutes

Over the last several months, our views on inflation have graduated from being considered alarmist by many, to mainstream. Not based on an analytical framework, but simply because the monthly CPI figures, at 6% and 7%, became newsworthy. Yet the reasons cited in the financial media are not the critical ones. A pandemic-mediated-supply-chain-labor-shortage based 7% is newsworthy, but not our concern.  Of concern is whether the 7% inflation level is merely an early indicator that long-term structural inflationary forces that have been in place for many years will continue to build for many years, more likely decades, to come.  If that seems extreme, so too has the past 40-year disinflationary era been extreme. That was a distinct product of non-repeatable disinflationary structural forces, enumerated herein, that have pretty much run their course.  Our concern is how to protect capital and earn adequate real returns in a change-of-era type inflationary environment, the type we are likely to have.

Diamonds Are An Investor's Best Friend: Contrarian Investing Ideas (Recorded on 11/2/2021)
11/16/2021 Watch Time: 51 minutes
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3rd Quarter 2021 Commentary
October 2021 Reading Length: 28 pages | Listening Time: 1 hour 16 minutes

Among some recently forwarded client questions: ‘Have we run out of new ideas?’ Huh? No, we have plenty, though we might have a different view on what constitutes “new”. And, suddenly, many questions about inflation – though we’ve been writing about this impending risk for quite a while – since one suddenly can’t escape inflation ‘news’. How severe do we think it will be? How can one hedge against it or participate in opportunities created by inflation? Also, questions about the energy sector in general and, of course, Texas Pacific Land Corp., since it the largest holding in many accounts. How are energy companies positioning themselves in this new environment? Why is TPL better? Is it better? Finally, some questions around cryptocurrency investing and mining.

How to Potentially Benefit from Rising Inflation through Equities - CFRA Research
10/18/2021 Listening Time: 12 minutes
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2nd Quarter 2021 Commentary
July 2021 Reading Length: 36 pages | Listening Time: 1 hour 34 minutes

No momentous new thoughts to introduce this quarter; there’s been more than enough of that these past few years. Instead, taking a cue from our portfolio and relationship managers, we’ll try to address some recently posed client questions: The hottest phrase-driven topic: is the inflation we’ve been writing about for so long just going to be “transitory”, the Federal Reserve’s new position? What are our thoughts on ESG investing in general, and is there a bubble developing in this sector? In a related question, how will Bitcoin mining, widely portrayed as consuming a huge and ever-increasing amount of energy, be tolerated in an increasingly ESG-aware world? (Spoiler: as is often the case in areas of more complexity than we realize, the obvious conclusion can be precisely wrong. Instead, how about Bitcoin as an eventual ESG-centric asset?) And finally, after so many years hidden away outside the indexation vortex, are we concerned that Texas Pacific Land Corp, now included in dozens of and ETFs, is at risk because it might be kicked out of indexes? (?!)

Ayako Hirota Weissman on Grant’s Interest Rate Observer – Reveille in Japan
June 2021 Reading Length: 2 pages

The case for investing in (a particular non-indexed set of) Japanese Equities (Originally published on May 28, 2021)

The Risk Not Seen: What Investors Miss About Inflation – Real Vision Live with Steven Bregman
June 2021 Listening Time: 1 hour 20 minutes

Originally recorded on May 26, 2021 on Real Vision Live with Ed Harrison.  Real Vision managing editor Ed Harrison welcomes Steven Bregman, president and director at Horizon Kinetics LLC, to discuss the subject on every investor’s mind—inflation—and what’s lost in the current narrative. Bregman covers everything from quantifying meaningful measurements of inflation, money supply and debasement, and how that translates into structural supply shortages.

James Davolos - The Inflation ETF, Dollar Debasement & 'Predictive Attributes' (Originally Aired on OPTO Sessions)
June 2021 Listening Length: 62 minutes

James Davolos explores the inflation ETF, dollar debasement and predictive attributes.
Note: The Fund launched at $25/share and traded at $29.50 the day this session was recorded (5/5), equating to an inception to date return of 18%. However, performance tracking was initiated at a price of $25.25, so in the interest of being conservative, a 17% YTD return is quoted in the recording. Standardized performance can be found at https://horizonkinetics.com/products/etf/infl/#performance

1st Quarter 2021 Commentary
April 2021 Reading Length: 33 pages | Listening Time: 1 hour 43 minutes

We’ve been getting many more questions in recent weeks about the Texas Pacific Land Corp (TPL) and bitcoin positions. Interestingly, we also received a great many questions about them only a year ago, when the share prices were much lower than many clients felt comfortable with. Now there’s some discomfort with – or, at least, curiosity about – their being so high. The questions touch on valuation, position sizing, and business risk, but all end the same way: is it time to take profits or trim the positions? The short answer is no. But to answer properly requires more than just a company review. Those questions really touch on critical decisions every investor makes, yet makes so reflexively most of the time that they’re not really carefully considered: the validity of price targets (vs. valuation models) and how price targets can actually lead to bad decisions; the opportunity cost of disrupting the power of compounding by ‘locking in profits’; of how an investment that is up 10x can actually be less expensive than when it was purchased. This quarter, we describe some of the reasons we are not concerned about the size of our positions in TPL and bitcoin, and our views on wealth creation vs. preservation in a portfolio context. And the Three Important Things people miss about inflation.

The Japan Special Opportunity Strategy White Paper
May 2021 Reading Length: 18 pages

Historically unprecedented regulator-mandated policy and rule changes in Japan are now altering a 75-year insular cycle of protected corporate structure. Offered up: a uniquely diversified, non-correlated, and classic deep-value investment opportunity – with a known and near-term value realization catalyst. Part 1 – The Japanese Market You Know and the One You Don’t Part 2 – How the System was Built and Failed, and the Slow Beginnings of Its Rehabilitation Part 3 – The Making of a Generational Opportunity Part 4 -  Japan Special Opportunity Strategy

Fireside with Murray Stahl on Opportunities in Japan
April 2021 Listening Time: 41 minutes

Murray Stahl shares his outlook for opportunities in a unique non-indexed sub-set of the Japanese equity market - with Grahamian Value

1st Quarter 2021 Commentary
April 2021 Reading Length: 33 pages | Listening Time: 1 hour 43 minutes

We’ve been getting many more questions in recent weeks about the Texas Pacific Land Corp (TPL) and bitcoin positions. Interestingly, we also received a great many questions about them only a year ago, when the share prices were much lower than many clients felt comfortable with. Now there’s some discomfort with – or, at least, curiosity about – their being so high. The questions touch on valuation, position sizing, and business risk, but all end the same way: is it time to take profits or trim the positions? The short answer is no. But to answer properly requires more than just a company review. Those questions really touch on critical decisions every investor makes, yet makes so reflexively most of the time that they’re not really carefully considered: the validity of price targets (vs. valuation models) and how price targets can actually lead to bad decisions; the opportunity cost of disrupting the power of compounding by ‘locking in profits’; of how an investment that is up 10x can actually be less expensive than when it was purchased. This quarter, we describe some of the reasons we are not concerned about the size of our positions in TPL and bitcoin, and our views on wealth creation vs. preservation in a portfolio context. And the Three Important Things people miss about inflation.

James Davolos Interview on ETF Strategies to Hedge Against Inflation (Originally published @ZacksResearch - ETF Spotlight Podcast on March 11, 2021)
March 2021 Listening Time: 58 minutes 44 seconds

02:30 - Quadratic’s $IVOL | 25:31 - Horizon Kinetics’s $INFL

On the Possibility of Outlawing Cryptocurrency
March 2021 Reading Length: 6 pages
James Davolos On Protecting Yourself Against A Paradigm Shift In Inflation (Originally Published on The Felder Report dated February 24, 2021)
March 2021 Listening Time: 65 minutes
Peter Doyle on the Joe Robert Show: Starting & Growing Your Bitcoin Portfolio
February 2021 Listening Time: 59 minutes

Originally Published on February 16, 2021 on the Joe Robert Show

Revisiting an Old Friend – The Thesis for a Defensive, De Minimis Investment in Bitcoin
February 2021 Reading Length: 6 pages

Exactly four years ago, in February 2017, we posted this proposition: that every client, as a matter of prudence and self-protection, should own a very small amount of bitcoin. It was such an unorthodox idea, was considered so risky and ill-advised by conventional portfolio management standards, that great care was taken to introduce it.  The essential complaint, of unbounded risk, was addressed by the essential answer of bounding that risk:  to purchase a de minimis amount that could do no harm in the worst case, yet could – like an insurance policy – be of life changing benefit when it might be needed. In the excitement of the moment, today, what with billionaires suddenly announcing billion-dollar purchases of bitcoin, and news media therefore wondering about it once more, but with more wonder and less dismissal in their tone, it is perhaps timely that this original proposal be posted again. The reasons laid out for its need, the description of its existence, why it is worth something (or anything) at all, and how to use it, have not changed.

Japan Special Opportunity Strategy - An Uncorrelated, Unrepeatable Graham Classic Value Opportunity
February 2021 Reading Length: 2 pages
Horizon Kinetics Launches Inflation Beneficiaries Exchange Traded Fund (INFL)
01/12/2021 Reading Length: 2 pages
View Press Release
4th Quarter 2020 Commentary
January 2021 Reading Length: 33 pages | Listening Time: 1 hour 22 minutes

A period of transition, from the last 10 and 20 years to the next, may be upon us. Of the three major indexed asset classes, cash and bonds are now guaranteed by the Federal Reserve's 2% inflation policy, to lose value. The total market value of the U.S. stock market, relative to GDP, is one-third higher than the Internet Bubble peak. With zero stock market appreciation and normal GDP growth, restoration of normal valuations could take one or two decades. None of the three indexed asset classes offer positive expected return. And that's with 2% inflation. The debt creation rate, though, has matched the money creation rate, which is several times higher than the CPI. A monetary inflation tipping point might have been reached this year. A commodity inflation tipping point might also be pending: key global commodity prices rose at double-digit rates last year. The question is not whether or not inflation will appear. The question is whether a portfolio is at all prepared if it does appear. That requires alternative, non-correlated asset classes and inflation beneficiaries from outside the indexed asset class sphere.

Peter Doyle on Daniel Prince's Once BITten! Podcast
November 2020 Listening Time: 1 hour 24 minutes

Bitcoin Co-Existing with Fiat Currency and the Banking System
November 2020 Reading Length: 3 pages
3rd Quarter 2020 Abridged Commentary
November 2020 Reading Length: 23 pages
3rd Quarter 2020 Commentary
October 2020 Reading Length: 37 pages | Listening Time: 2 hour 02 minutes

Revised to include supplemental information, this quarter’s review is about the energy sector. Investors fear a permanent failure to recover (if not an impending collapse) due to the fossil fuel divestment movement and alternative energy growth. Stock prices already reflect that outcome. Yet, the most comprehensive multi-factor analyses of long-term global energy consumption do not result in that outcome, despite projected rapid multi-decade expansion of alternative energy. That’s a wide and consequential divide. Within that divide there are enormous information advantage possibilities, and we believe it presents one of the most extraordinary of investment opportunities. Neither set of expectations takes account of the historic – and worsening – structural oil & gas supply deficits. The greater near-term danger is a long-lasting oil price shock. The sheer volume of information available from innumerable sources on this complex set of topics can be overwhelming to those seeking to make information-based decisions. This review addresses misconceptions about both conventional and renewable energy. Finally, we discuss two positions that have been mentioned time and again; one provides exposure to the energy sector with a royalty model that limits risk; the other provides (among other potential benefits) a hedge against inflation, which we view as the highest risk to investors.

0:00 – Energy
6:50 – Fact-Based Investing (Nifty-Fifty and Tech Bubble)
13:35 – Fossil Fuel and Renewable Energy Research
18:20 – U.S. Energy Information Administration (EIA) Projections
26:34 – International Energy Agency (IEA) Projections
29:10 – British Petroleum (BP) Projections
31:00 – Renewable Energy Facts - Interruptible
33:34 – Renewable Energy Facts - Carbon Intensity
46:30 – Renewable Energy Facts - Takeaways
49:24 – Renewable Energy Facts - Other Factors
1:04:09 – Natural Gas Supply and Demand
1:09:00 – Oil Supply and Demand
1:17:30 – Fracking
1:27:35 – Are Investors Leaving Oil?
1:31:15 – Texas Pacific Land Trust
1:47:03 – Cryptocurrency
1:53:47 – Addendum: Raw Materials - Supply Limitations and Environmental Impact

Peter Doyle on Modern Value Investing - The Pomp Podcast
October 2020 Listening Time: 55 minutes

The link below is an interview with Anthony Pompliano, host of the Pomp Podcast, and our co-founder, Peter Doyle. Peter discusses, among other things, inflation beneficiaries, bitcoin and risks associated with passive index investing.

0:00 – Background of Peter Doyle, Horizon Kinetics, and the Firm’s Investment Thesis
3:44 – Value investing in the Current Macro Environment
7:10 – Hard Asset and Asset-Light Focus (Texas Pacific Land Trust)
10:00 – Inflation (Monetary and Fiscal Stimulus)
18:55 – Fixed Income and Equity as Part of a 60/40 Portfolio
23:30 – Energy
25:50 – Bitcoin and Mining
39:15 – Financial Exchanges
40:20 – Venture Capital, Private Investments, and International Markets
43:10 – Bitcoin - Institutional Acceptance
46:08 – Final Questions

The AMAGF IT/Social Media Stocks – Some Factual Observations
October 2020 Reading Length: 8 pages

Some factual observations about the S&P 500 and technology stocks. Investors assume that an index like the S&P 500 gives broad exposure to “the market.” The 5 largest positions, 1% of the names, all technology, are now 22% of the Index market value. That 1% has accounted for close to half of the S&P 500 market value increase in the past five years. There are now two essential possibilities: The IT companies fulfill analysts’ 5 -year growth forecasts – higher even than the past 5-years’ growth – and easily double their index weight. At a 45% to 60% or higher IT weight, the S&P 500 is then a technology index of record-high valuation multiples. The IT companies don’t fulfill those expectations. The figures in this review quantify a few central competitive, regulatory and financial accounting risks, all of which are impending and any of which can seriously reduce the growth and profit margins of these mega-cap companies.