Investment Lessons Learned in 2023

I’m limping into 2024… literally. 

Of the questionable decisions I made this year, deciding to spend my Friday mornings playing pickup basketball with people a decade younger than me ranks near the top. 

Thankfully, I have two months to let my inflamed, arthritic shoulders and knees heal before I start that lunacy again. 

As we close out 2023, this is a good time to take stock of the year that was. Of course, everyone’s doing that this week, so we’re adding our unique Freeport Society take: We’re going to learn a thing or two so we can thrive next year. And being an election year in an age of chaos, every quiver we add to our investment arsenal is invaluable. 

What Makes the Rich Man’s Currency

We lost some good people in 2023. Charlie Munger, Warren Buffett’s longtime partner in crime, passed away at the age of 99. 

He wasn’t a member of the Freeport Society, but I named him one posthumously. His independence of thought and willingness to speak his mind for nearly a century made him one of a kind. 

Anyone who ever listened to the man came away at least a little smarter. 

Speaking of Buffett, the “other” Buffett – Jimmy – unfortunately sailed into the sunset in 2023 as well. 

Jimmy was most famous for his iconic song “Margaritaville,” which will be proudly played in tiki bars and frat houses across the globe until the end of time. 

Of more significance to us here at The Freeport Society, was that he effectively turned what might have been a one-hit-wonder career into a billion-dollar business empire complete with restaurants, hotels, and even retirement communities. 

Jimmy Buffett’s business acumen was so well respected that it got the attention of Warren Buffett, and the two became friends. Warren even once publicly (in jest) asked Jimmy to write him into his will. 

It takes chutzpah to turn a song about wasting away on a beach into a billion-dollar fortune. ‘Atta boy, Jimmy. That’s the Freeport spirit!

Speaking of musical icons, Taylor Swift didn’t die in 2023, but you could argue that good taste in music did.

I’m (sort of) joking. I’m not a fan of Taylor Swift’s music, but in her defense, I’m not her target demographic. But what I lack in enthusiasm for her song catalog, I absolutely compensate with my respect for her as a businesswoman. 

Swift personally earned an estimated $4.1 billion from her Eras tour this year, making it the single biggest haul earned by any musician in history. She is bigger than Elvis or the Beatles… and she did it her way. ‘Atta girl!  

Swift isn’t a person at this point. She’s a brand and one that is virtually impossible to reproduce. She rightly deserves CNN’s Businessperson of the Year award. For crying out loud, her take-home pay was larger than the GDP of 42 countries. 

Swift has what Buffett (Warren, not Jimmy) and Munger would call a competitive “moat.” And that’s exactly the kind of thing we look for in great businesses… or what I call the Rich Man’s Currency.  

We can’t invest in Taylor Swift, unfortunately. She’s a pop star, not a publicly traded stock. But we already have seven Rich Man’s Currency companies in our Freeport Investor model portfolio… all of which are led by businesspeople as good as, if not better than, Taylor Swift. That’s why they’re in our portfolio. 

You can find out how to see this model portfolio when you watch this video from Louis Navellier here.

A Shrinking World

Not everyone who passed in 2023 quite fit the Freeport mold. 

Silvio Berlusconi, who was the on-again, off-again prime minister of Italy for the better part of 20 years, died this year. While I never met the man, I suspect he would have made me like him by sheer force of personality. And, hey, his parties looked like a rip-roaring good time. 

Unfortunately, he was also the poster boy of crony capitalism and essentially everything wrong with modern politics… and modern state-guided capitalism. 

He was a billionaire media mogul who wasn’t particularly shy about using his TV networks and newspapers to promote his political career… and even less shy about using his influence in politics to further his business interests. 

When we say the mainstream press is “owned” in America, there might be just a little exaggeration. In Italy, the leader of the country literally owned the press.  

On a grander scale, war between Israel and Hamas broke out this year… Iran accelerated its uranium enrichment efforts… and there’s been a lot of saber rattling over Taiwan. Globalization is breaking down, and it’s not pretty. 

All of this is driving business back onto American shores… and it’s creating opportunities in sectors that Wall Street would prefer to ignore.

In particular, American oil and natural gas companies had a banner year in 2023. As deglobalization continues, these and other businesses reshoring will be great investments. That’s why we’ve already added several to our Freeport Investor model portfolio. Again, our Freeport Society friend, Louis Navellier, explains why this is important and how to access the portfolio here.

Good News for Capitalism

Of course, deaths weren’t limited to famous people. Several well-known companies gave up the ghost in 2023. I wrote about the demise of WeWork back in November. 

The office sublessor known more for its fraudulent accounting, free craft beer, and wild Burning-Man-style parties than for actually being a place of business finally had to accept something resembling reality and file for bankruptcy protection.  

Home retailer Bed, Bath & Beyond also filed for bankruptcy in 2023, closing all of its remaining stores, and pharmacy chain Rite Aid filed for Chapter 11 reorganization.

Each failure was unique… but there was certainly one common thread. All had been previously kept alive by cheap liquidity courtesy of the Federal Reserve. And once the Fed started raising rates – and money actually had value again – none were able to realistically continue servicing their debts. 

Of course, I can’t lay all of the blame at the Fed’s feet. 

While Powell’s actions distorted the cost of capital, encouraged bad decision-making making, and essentially rewarded failure for several years, Bed, Bath & Beyond and Rite Aid failed because they weren’t able to compete with more innovative rivals like Amazon.com, which had been encroaching on their turf for years. 

In a real free-market economy, business failures aren’t a bug. They’re a feature… and part of the creative destruction that pushes us forward. Weaker competitors die off, allowing stronger ones to gain market share. That’s how it’s supposed to work… and we all benefit as a result of lower prices and better service. That’s capitalism. It’s not always pretty, but it works.

Perhaps that’s the theme of 2023. This was the year the free market awoke from its Fed-induced slumber and started to assert itself again. 

Good. An age of chaos will have winners and losers. It’s our job to identify the winners, and we welcome that challenge in 2024.

2024 is an election year and one that promises to be even more chaotic than usual. , We need to be in our A game. To prepare, I’ve already added 20 companies to our Freeport Investor model portfolio. 

Beyond that, we have prepared an “Election Blueprint” for you to prepare your investment portfolio for the best and the worst the year has to bring.

You’ll find out how to get your copy, here.

To life, liberty, and the pursuit of wealth.