November 5, 2026, Issue 33

Well now, dear readers, where do I begin? First of all, let me say that between moving, travel for work, and being the one-man-show business-wise, I have been absent from my constituents. I do miss writing this newsletter even as I struggle to find the time to write it.

With the USA mid-term elections now a couple of days behind us, we have had a chance to digest a bit of what has just happened. To review: Democrats have decisively regained control of both chambers of congress. Not only that, but they have won governorships in Texas and Georgia, both longtime Republican strongholds. For the first time in 16 years, Democrats govern in a majority of states.

What does this all mean? To begin, this should come as a surprise to no one. Trump fatigue is real, even among many Republicans. His all me, all the time type of governing always was going to have a shelf life, and it has spoiled like the lumpy cream you poured in your coffee last week. His tariffs have created both a wariness amongst long-time allies as well as inflation at home. What was supposed to be 4–6-week war in Iran has entered its 8th month with no decisive victory. In fact, I could argue that Iran has won this war handily up to this point. That war has driven oil and gas prices up by 25%, again pushing inflation higher and cash in your pocket lower. The ballroom, the triumphal arch, ICE’s overreach,RFK, the list goes on and on and it greatly overshadows any good achieved over the last couple of years. To that end we should outline that lower taxes, secured borders, and a friendly business environment have been good for people and stocks. On a more personal note, the support for Israel and Jews in general will now place the only democracy in the middle east in jeopardy. I would also imagine an even more accepting level of antisemitism than we have already seen in the USA. More on this aspect later.

Some are surprised at the strength of the far-left Democratic Socialists of America (DSA) candidates. Again, if you’ve been paying attention this should be no surprise at all. The political pendulum swings back and forth. Obama begets Trump and Trump begets the DSA. The only aspect of this success that leaves me bemused is how socialism is playing out in real time around the globe. The most obvious place to look right now is France. Now let’s be clear. France does not consider itself socialist. Neither does Canada. But let’s not split hairs. Tax rates between corporate payroll tax, income tax, and GST/VAT type of consumption taxes take more out of workers’ paychecks. In return people in these countries receive “free” healthcare, subsidized university tuition, universal childcare, and other goodies. The problems are many: Teachers and doctors usually are not paid as well as in purely capitalist systems, which lead to shortages of both. Note that this was the start of the French riots; the lack of investment in education. But also, the wait for medical services in Canada can be scary, as is the number of physicians leaving the country for grenner pastures. All of this could be coming to the USA in 2028.

For now, I will say that the next two years will likely produce nothing more than gridlock, investigations, lawsuits, and accusations. Sadly, this is where the state of politics is today.
I remain hopeful that with most people in America dismayed with both parties, there is a path back to the political center, where most of us live.

The Implications for Stocks

It occurs that many of you have never seen or lived through a stock market correction. Well, the market does not always go up. Yesterday we saw about a 5% decline in one day. This is a time to reflect on what we own, why we own it, and where it is all headed.

The Democrats victory this week led to what I believe is a bit of an overreaction to most things around AI, data centers, and the tech trade in general. If we own quality, we will want to look at potential buying opportunities. While the pace of the AI buildout may slow, there is no way that it will stop completely or go away. As such, we believe that it may turn into a good thing for the companies supplying the goods that go into that build. Companies like Micron will likely see the extension of demand as the build extends by years into the future. Since current demand is not met by current supply, this will likely help even out the sales cycle, keeping the momentum going well into the future. Micron’s forward PE is 3.8 as we write this. We understand that memory has historically been cyclical, but the slowing of the build seems to say that demand for memory will continue to be stable. Nvidia has been knocked down to the point it is negative for the year as far as returns. Nvidia makes the chips that AI is built on top of. I think it looks inexpensive at these levels. EROC, which is involved in providing power for data centers hit a new 52 week low this week. The election is not enough to turn around the demand created by data centers and any potential slowdown. These are just a couple of examples of what has gotten caught up in selling.

In the meantime, Microsoft hit a high this week as the market felt like they have data centers built, and they may start to conserve cash. We took advantage of that to sell our stake and raise cash. MSFT is a great company, but we had a 38% gain and took our profits to deploy elsewhere.

Peloton, one of my pet projects had what I view as very positive results. Revenue was up, profits were up, but the real story for me is $350M of free cashflow. I still view PTON as undervalued, and as such lowered my average price by buying some more in the $5.50 range. I think with commercial/industrial products coming online, and an installed base of over 2,5 million users, this company has great management, and is still an outside shot as an acquisition target.

As far as everything else goes, we are holding tight, holding some cash, and waiting to see which way the wind blows next week as the market continues to digest politics, earnings, and global sentiment.
We have taken it on the chin like everyone else over the last few weeks. But the measure of investing prowess isn’t making money when times are good, it’s how you handle it through the rough patches.
welcome to the rough patch!

Thought of the Day

I tend not to overreact, and always try and maintain a healthy balance between to high and too low. I like a good conspiracy theory as much as the next guy, but never dwell on them….until now.
Here is mine: Given where the world is, and now given where the USA is headed, I have a vision of a world where Israel no longer exists, and where it becomes increasingly difficult to even be Jewish anywhere. We know that USA support for Israel is coming to an end, both financially and ideologically. The rest of the world is already there. While the Jewish state may not need the financial support, I believe it still needs moral support. Today’s young adults don’t understand or care, and that’s if we’re lucky. Many do care and are dead set against Israel. Don’t get me wrong; I can disagree with policy whether here or overseas. But the right to exist is a different issue. This is a sad state of affairs.

As always reply to this email or comment to let me know your thoughts or questions.