Is your portfolio built to withstand terrible times? If not, the future could be bleak. At least, that is the takeaway after listening to Palantir boss, Alex Karp.
Karp spoke with early Palantir investor, Stanley Druckenmiller and shared perhaps the bleakest outlook on the future of any prognosticator in recent times. Indeed, if Karp is right, we should all be nervous about what the next decade holds.
But first, a little about Palantir.
The Secret Sauce Behind Palantir
Palantir was shrouded in secrecy for years. The company was inspired post 9/11 when top engineers began to wonder whether analyzing massive data sets could help prevent another terrorism attack.
The mission was bold and big, and it attracted top talent from Stanford among other elite institutions. The sensitive nature of the projects run by Palantir led to whispers of “what are they up to”?
As time went by, it became clear that Palantir wasn’t just a company built to serve government threat assessments of terrorism attacks but could be used to concatenate large datasets and evaluate risks in other sectors, such as health, where Palantir was instrumental in providing the government insights on the fallout from COVID.
Although PLTR share price has taken a tumble in recent quarters, the fundamentals remain strong. The company has expanded its customer mix, an early concern for investors, and has grown top line revenues while bolstering profitability. It’s got no debt and billions in the bank. In short, it’s a company built to last right now. And that’s something Karp claims many other companies cannot boast, and a reason why they will be increasingly reliant on his firm especially over the next decade.
Bleak Future: Terrifying Predictions
When Karp and Druckenmiller began speaking, they joked that Karp had been invited by Druckenmiller to speak at a conference of investors who were unaccustomed and unprepared to hear about the harsh realities to come. Druckenmiller suggested Karp give them the full “shot in the arm” so to speak and Karp decided to administer what he called a 50% dosage. It was enough to sew fear and horror.
So what did he say?
First off, the period of globalization has ended, if not reversed. The peak of China-US relations took place at the end of the Trump presidency, and the next 25 years will be downhill as far as international relations is concerned.
Increasingly, supply chains will be disrupted. Companies that used to source goods from China, for example, and must now re-tool their supply chain to source from other nations, will struggle in the future environment.
Druckenmiller chimed in that he believes the next 10 years will not see much progress for stock markets, much like the inflationary period of the 1960s and 70s. As stagflation takes hold, expect to sled uphill. However, there will be pockets of opportunity just as companies like Apple were formed way back when.
Horrifyingly, Karp also stated that he believes the most recent pandemic will not be the last one. There’s more to come. Perhaps if we put our investor hat on that means companies like Moderna could be held long-term. Is that why Druckenmiller holds Moderna in his portfolio? We can only wonder.
Worst of all, war is most likely coming. We don’t have to read between the lines too much to understand that’s the major takeaway from Karp’s insights from the massive datasets and analytics he can distill. If he’s correct, and you have a portfolio of stocks with poor balance sheets, it’s time to take a close look and examine whether defense contractors, debt-free companies, and firms that benefit when the world goes topsy turvy are a part of your holdings.