Market Note 10.3.2023
September 3 rd , 2023
To: Clients, Friends, & Family
From: Julien B. Booth
Re: Market Note 10.3.2023
Subtractive Knowledge – Now when it comes to knowledge, the same applies. The greatest and
most robust contribution to knowledge consists in removing what we think is wrong. In life, anti-
fragility is achieved by NOT being the sucker.
Nassim Taleb, ANTIFRAGILE
Key Points:
1. Long-duration success in business, life, and investing generally comes down to surviving;
2. Antifragile companies win when we have a real cost of money (real interest rates).
This note is intended to be short and sweet. N. Taleb is one of my favorite modern authors.
Reading N. Taleb's work is not passive; it requires confronting your own biases, behaviors, and
belief systems. I find such a challenge imperative for making our process better. The markets
challenge me daily, I best be prepared. *
I have observed many magnificent market stories in my 25+ year career. We humans sure do
love a good story.
The demise of most of these companies is as varied as the stories told to justify their market
prices. I have certainly made many investment mistakes, and will continue; however, our
process is designed to be not only robust, but anti-fragile. I prefer real companies, real
earnings, and real people.
We want to own businesses that:
1. Have little to no outstanding debt.
2. Executives with deep skin in the game.
3. Have liquidity resources regardless of the interest rate environment.
4. Are large incumbents in a critical industry (i.e. energy distribution);
5. Understand asymmetrical risks.
6. Have a control, or regulatory position due to their sheer size; and
7. Behave as long-term, prudent allocators of capital.
The present series of rate increases is revealing fragility. Antifragility entails being able to
capitalize on the present market conditions. As asset managers, it is our job to prepare
portfolios, understand and exploit the present environment.
Thank you for your interest in our process.
Julien
*Thank you, Mom, for mandating completion of my Eagle Scout.
Julien B. Booth
704.608.3100
jbooth@forestcapital.net