the illogic of expecting even a reasonable investment return on the billions, and what will soon be trillions, of dollars of capital being poured into the endeavor. We are witness to a growing reliance on debt, both on balance sheet and off, circular finance and accounting gimmickry.

The S&P 500 now trades for 26x current earnings against the second highest profit margin in the history of the stock market. That's against all stock markets. Anywhere in the world. Ever. High prices mixed with high margins are typically a recipe for mediocre future returns – or worse.

we likewise added another new company, Deckers Outdoor, to the portfolio in 2025, gradually at first and then suddenly. The company's shares were the fourth worst performing S&P 500 component of the year, down 49%. Buying initially near the low, and then meaningfully nearly at the low, our sizable investment earned us a positive 5.6% for the year.

Our combined investment in three retailers, Dollar General, Dollar Tree and Five Below, totaled 17.1% of our invested capital heading into 2025 and closed the year totaling 25.9% of our holdings. We added to the Five Below position near the yearly lows.

Despite materially trimming Kinross during the year as the price rose 204% to finance the purchase of other positions, the surge in the gold price is driving mining profitability through the roof.

AI-related capital expenditure outlays are enormous, amounting to multiples of the revenues produced from newly installed infrastructure (let alone enough, or any, profit required to satisfy a return on the capital spent). Data centers and chips are to AI as telecom equipment and fiber optic cable were to the internet. That is not a bullish pronouncement.

Oracle’s recent AI initiatives place it in the hyperscaler camp and firmly in the capital expenditure arms race, though unlike its peers the Oracle balance sheet is already laden with net debt of $105 billion at November 30, 2025 (and rising fast), mostly taken on over recent years to repurchase shares in large part to offset dilution from stock-based compensation. Already at four turns of debt to EBITDA, in the words of Parliament, they plan to tear the roof off the sucker.

Because Meta as 20% owner doesn’t control the entity, the $27.3 billion debt provided by Blue Owl (Step 2) used to finance it doesn’t appear as a liability on Meta’s consolidated balance sheet.