I Know Nothing

The late Andrew Sachs was brilliant in the episode “Communication Problems” in Fawlty Towers.

“I know I know I know.”

John Cleese: “So why you say I know nothing?”

“I know nothing. Nothing. I forget everything. I know nothing. I am from Barcelona.”

That is certainly how the current stock market makes me feel.

Is it priced for perfection?

Is there a huge bubble going on? Sell all stocks and run for the hills?

Usually, it is better to stay calm and carry on. Most long-term investors can attest that the most expansive decisions have been selling too early in stocks.

Coin Confusion

The fact is the US companies are having another great earnings season. S&P 500 earnings growth is bound to end up above 10% again for Q3 2025 earnings.

Not to be sniffed at. This is the fourth straight quarter that earnings growth for the index is above 10% according to John Butters for FactSet.

Meanwhile Rachel Reeves in the UK gave another speech today showing why she is unfit to be finance minister. For myself, I wouldn’t trust her with £10 to do my grocery shopping, but Keir Starmer has entrusted the UK finances to her for some reason. The Conservative party and the Labour party have both broken manifesto promises, spend and pretend and tax voters increasingly. Who is next to be voted in and trusted by the public to give it a go?

Trump in his first term unleashed animal spirits. In his second term however, voters are not exactly trusting him with the economy either. Ordinary Americans want zero percent inflation for a couple of years...

I would prefer to keep politics out of it, but politics influence everything.

But as Peter Lynch said if you spend 10 minutes on macro, you are likely to have wasted 9 minutes...

The Americans as always will try to grow themselves out of any problems. The way they have been scaling their AI companies globally by giving the product away for free initially, Silicon Valley style, is amazing. No other country does "going global" like they do.

The EU does what it does best. Tax and regulate anything that moves until it stops moving. In other words, when in a hole keep on digging.

The stellar gold and silver performance this year is an indictment of fiat currencies. Central banks make their paper currencies less competitive to real assets the lower they bring interest rates.

In the stock market at the end of October, the price earnings (PE) ratio of the S&P was above 30. Quite a lot. The forward PE for 2026 is only 24.5 or so according to Gurufocus.

The stock market is held together with duct tape by earnings growth. Earnings better not disappoint going forward or God forbid we hit a recession.

One lesson from the dot com bubble though is that in the good times money chases the recent winners. Warren Buffett hit a home run with the old economy stocks he had bought around 1999 and 2000 in the following couple of years. So, some money is likely flowing out of the rest of the market into AI darlings. Buyer beware...

On the stock market I know nothing. I forget everything. I know nothing. I am from Barcelona.

After all I make plenty of mistakes and a lot of my stock picks disappoint.

One thing I do know though is that when Warren got control of Berkshire Hathaway, he had nice positive free cash flows coming in most years that allowed him to diversify and start new positions and build the conglomerate the company is today.

The monkey and crayon experiment started in 2019. So, my retirement is closer now then it was then.

It is time to pick something to invest in the UK again.

So, I want something that brings in cash every year to build my own mini-Berkshire Hathaway. Plus, the crayon portfolio is more growth and quality than high yielding, so it helps with the diversification...

& it is not that I have a lot of other UK investment ideas as we speak.

The UK 10-year Gilt (UK bond) yield is only 4.45%. I am not lending the UK government money below 5%. The 30-year is 5.23% which is acceptable but still doesn’t give me a warm and fuzzy feeling...

The FTSE 100 index (UKX) dividend yield is 3.13%. The UKX has been known to have higher dividend yields in the past. Meh. The Bank of England is still destroying UK asset values with active quantitative tightening as well.

As for the more midcap FTSE 250 index (MCX) the dividend yield is 3.48%. Not exactly yielding towards 5% either... Double meh. The way passive is winning from active is also better news for the biggest companies rather than the mid and small caps.

What else am I looking at on my shopping list?

I am keeping an eye on a potential purchase of Burford Capital Limited (BUR), the PE ratio is below 10 but the dividend yield of 1.32% is a rounding error. Some people buy this for the Argentina case upside, but the judges in the US seemed less inclined lately to make Burford’s pay day. TripleS Special Situations recently wrote on this one on Substack...

Another one that looks slightly interesting is Ashtead Technology (AT.) as it is cheap as chips now. The token dividend yield is only 0.4%, however. Plenty of Substack coverage on this one like from Heavy Moat Investments...

.

Recently I have been writing on Substack on stuff that yields closer to 10%.

The UK is uniquely positioned in that there is no dividend withholding tax on UK listings. A nice 100% of the dividend goes into the investors pocket in a tax-free account like the stock ISA.

Bank and insurance companies are leveraged black boxes as we all found out in 2008 and 2009.

If an insurer can leverage that black box a little and share it with the shareholders that might work. Legal & General Group PLC (LGEN) forward PE ratio is 10. The dividend yield is 9% now. Not quite 10% but close enough to pay some bills every year and re-invest dividends into new stock ideas...

But what do I know? I know nothing I am from Barcelona.

The great news is that the stock market is super forgiving for mistakes of long-term investors. If one buys the same dollar amount, diversifies properly and just let the investments run, the winners will grow so big the mistakes become rounding errors.

Obviously, this only works if you have enough positions (100 plus) …

Concentrated investors better be right and not make too many mistakes.

Fourteen stocks in the crayon and monkey portfolios is still work in progress in earning the free diversification lunch.

The green marker for the monkey portfolio landed on the stock Glencore PLC (GLEN).

I have bought Legal & General already and on this investment journey will purchase Glencore when enough dividends have come in to make the buy.

As always, the monkey portfolio picks a new stock randomly and the crayon portfolio follows. Just to be clear these are paper portfolios, but Holland Park Capital London Ltd will have or start equity positions in both stock picks.

The fourteenth position will have a new position value of about $5000 according to the “no capital gain taxes growth investment plan” in the book ‘Beat the Stock Market Casino’. Have you bought the book “Beat the Stock Market Casino” yet on Amazon?

Green Marker landed closest to Glencore

Glencore has a forward P/E of about 16. L&G has a forward P/E of around 10. It is hard to make a case that either of them is in an AI bubble. Whilst Glencore is up 106% excluding dividends over the past five years, LGEN is only up 22%.

I will buy the UK listings for my company.

For portfolio tracking I need the most liquid US listing for both. It is still tough to track performance outside of your brokerage account on the web. For Legal & General the LGGNY listing seems best. Glencore can be tracked with the GLNCY listing.

GLNCY had a high of $9.1 yesterday. A paper trade buy of 549 shares of Glencore at the price of $9.1 was recorded today for the monkey portfolio.

LGGNY had a high of $15.72 yesterday. The crayon portfolio adds 317 shares of this one at 15.72.

Stock prices are sometimes set by crazy buyers and crazy sellers so who know what will happen in the future.

Share prices long-term do like to follow earnings though but predicting at what valuation a stock will trade in the future is a fool’s game and predicting earnings is an equally tough game.

May the force be with you and the crayon and the monkey portfolios.

Thanks for reading and making it so far. Paid publications have been turned on recently as my Substack can almost celebrate its second birthday now and some writers think that the Substack algorithm prioritizes paid blogs over free publications. The free content will stay similar as to how it was. For free subscribers I usually aim to publish one blog a month on things that keep me occupied in the stock market. I will just have to write more posts for the paid subscribers going forward.

Below is the boring disclaimer.

This is not financial advice. Do your own research please. This article is for information purposes and entertainment purposes only. Both paper portfolios have 14 holdings now. Slowly but surely the portfolios start looking a little like diversified portfolios. May the force be with both paper portfolios.  Thanks for reading this blog. Holland Park Capital London hopes you enjoyed the information in the blog. This is not a financial promotion. Holland Park Capital London Ltd is not receiving any compensation from anyone to write this blog. Holland Park Capital London is long the stocks in the crayon portfolio and the monkey portfolio. Holland Park Capital London Ltd just doesn’t have the same number of shares per holding as the paper crayon and monkey portfolios. The purchase prices are also completely different. Holland Park Capital London Ltd is also long the S&P 500 index.

Holland Park Capital London has no business relationship with any company whose stock is mentioned in this blog. Holland Park Capital London expressed its own opinions.

This is not financial advice. This blog is for information purposes only.

Make your own decisions please. Do your own research. Please go and see an authorized financial advisor before making any investment decisions. What works for Holland Park Capital London may well not work for you and your personal situation is unknown to Holland Park Capital London. Stocks go up as well as down and you may get back less than you invest. Your capital is at risk when you invest in stocks. In other words, you can lose all your money by investing in stocks. Any information in this blog should be considered general information and not relied on as a formal investment recommendation. This blog is for information purposes only and helps Holland Park Capital London expand on the books “Beat the Stock Market Casino” and “Stock Market Blah Bla”. Both can be bought on Amazon.

This brings extra discipline in the investment process. Holland Park Capital London Ltd is not liable for any mistakes in this blog. This blog cannot be a substitute for comprehensive investment analysis. Any analysis presented in this blog is illustrative in nature, limited in scope, based on an incomplete set of information and has limitations to its accuracy. The information upon which this blog is based was obtained from sources believed to be reliable but has not been independently verified. Therefore, the accuracy cannot be guaranteed. Any opinions are as of the date of publication and are subject to change without notice.