Why I just put half my pension in this one stock

The last time I was this bullish on something, it was New Year. I was looking at Ferrari. I talked about it on the channel, and at the time the stock was still falling. Today, the stock's rallied about 30% from the entry point that I'd identified back at the New Year, 285 on the Milan listing. It had about 7% downside. So in this video, I'm going to explain why I've just put half of my pension into A new stock, similar reasons to the ones that I'd identified in Ferrari going back to the beginning of the year. So let's just take a step back for a minute and think about where we are in the world. We've got interest rates— if you're looking at the market's pricing of those bond yields, in other words, look at the 10-year or the 5-year yield in the US— around 5%. At the same time, and somehow, tech continues to defy Gravity. The company in question is one that you'll have no doubt heard of, just as you'd heard of Ferrari. It's Hermès. And it's the brand value and the moat of these companies that adds to the conviction that I have in being able to buy into temporary weakness. And I believe this will be temporary. So on the subject of brand value, guys, if you otherwise own tech It's more a B2B thing than a consumer thing, but who gives a fuck about being associated with Oracle or, you know, being a customer of Broadcom? Nobody, right? But if you say the word Ferrari, if you say the word Hermès, those are brands like Rolex if they were listed that attracts an aspirational buyer. Human beings are wired for status. We're all playing some form of status game. And the majority of the world, especially nowadays compounded by algorithms and social media, the internet for 20 years before that, is constantly conditioning us to seek materialism as the expression of status. It's the primary way, it's not the only way. And I do think that longer term— and I'm seeing transitions now in, in some parts of society— away from materialistic hedonism and more towards experiential spending, travel, disconnecting. I think that'll be a, a growing theme going forward, and especially amongst sort of the 0.1% or what have you. But by the by, bringing things back, these companies, due to their brand value, have incredible pricing power, which essentially means that they can put the prices up every year. Now, in a different sector, let's say food, food staples, toothpaste for example, Colgate, those companies will also likely increase their prices every year. But it's not, I believe, in terms of Veblen good, whereby the more expensive or almost unattainable, just almost out of reach something becomes for the typical upwardly mobile middle-class consumer. the more desirable it becomes. And there's a distinction between the likes of, let's say, the pricing model of Rolex, where it's meant to be supposedly priced on some multiple of the typical net earnings of a middle-class consumer. It's meant to be just within reach, just within reach. Whereas then if you look at the line at, I don't know, A. Lange& Söhne or whoever the fuck, Vacheron, like, that is true luxury, that's true wealth. And the same thing applies here. Hermès client base, unlike say LVMH, which is a massive conglomerate— everything from, well, Moët& Chandon champagne to Tom Ford, I think now trying to acquire Tiffany, or they did acquire Tiffany, trying to acquire Cartier— it's, it's all these sort of— there's some upper tier, but mainly like mid-tier luxury consumer brands. It's shopping mall brands. These are not necessarily things that are truly waitlisted or have a true 1%, 0.1%, whatever that horrible term is, clientele. The people that you never see on social media that are up in the Alps somewhere in some retreat all year round. And that means that they're not only able to— or they're not only increasing their prices owing to cost-push inflation, but they're able to do that consistently in excess of inflation. It's their business model. They have to do in order to maintain desirability given the business model. So without waffling on about the moat and pricing power and the brand, those are the obvious things just to get out of the way before we get a little bit deeper. Now you might otherwise think that, and the analysts seem to think, that all luxury is cyclical. But ask yourself this: Who comes out of a recession richer? Who comes out of a crisis better off? It's those with cash. It's not the typical homeowner struggling to pay the mortgage or needing to refinance or what have you. Those that are genuinely vulnerable to interest rates are typically reliant on debt and are overleveraged, overgeared. It's asset owners. So bring this back, I need another sip of coffee here. There is a slowdown in China that started playing out, well, probably about 10 years ago now in 2016. But I'm being facetious. The credit cycle rolled over. It peaked and began to roll over in July of last year. So we're seeing the complete opposite in China. I talked about this in my last video where we're looking at things more broadly and how to invest in the country. US Is it closer to the top of the cycle or the bottom of the cycle? Clearly closer to the top of the cycle. Yields at 5%. You've got the ISM at— I don't even know what it is. It's above 55. It's high. And on the other hand, you've got China towards the lows. Equity markets discounted accordingly. It's in the bloody price. So from my perspective, we'll get on to the valuation in a second. We're looking at an artisanal leather goods company, in essence, with pricing power, with minimum spends, with waitlists, of evil and good. And when you then look at the fundamentals, this is a model that I ran money with throughout my career. You can see the rating for the company in the top left, 4 out of 5. I don't think there are actually any 5 out of 5s in the universe. This is the ranking, but down at the bottom, this is a really important bit. It shows you, in this case, the discount rather than the premium to where it should be trading. Where it should be trading being the historical average free cash flow. It's a 10-year trailing median if we need to be exact. Right now you can see at the bottom that it is at a 40, 4-0, discount to where, according to history, it should be trading. From this point, a 40% discount to return to fair value, it implies 60— 6-0— percent upside. This is Hermès. It's not some beaten-up cyclical or something that's facing the threat of AI disruption. Somebody sits in a workshop in bloody France, Switzerland, wherever, on the border, stamping little pieces of leather, conditioning them and doing all this fancy shit with them, and then sell somebody a belt, sell somebody a handbag that's been on a waiting list for about 5 years and has spent about half a million euros with them to get there. If they don't buy it, there'll be a million other people behind them who would at the same bloody price, 10 grand, whatever it is. It's never been this cheap. I'm trying to see, even in 2007, the last time yields were at 5%, it was trading at a 15% premium. We're just talking about returning to fair value, guys. I'm not being greedy here. So the other thing to consider in this is also on the subject of it being oversold. Look at it daily, oversold. Look at it weekly, yeah, okay, oversold. You'd expect that. But if you look at it monthly, It's also oversold. Now, it's literally never been monthly oversold. I'll finish with this last chart. If you look at the times where— forget the 40% discount, but look at times where it was trading basically at the lowest point within the range, which would be 20. It's more like 22, but let's just say it's 20 times. I've marked those points on this chart, and you can see what happened next consistently. So this is a near-term Or short-term doubt, which I see as an overreaction and as a massive opportunity that I've just backed with half of my retirement. Morning coffee's definitely done. See you on the other side. Godspeed. Remember, it's not advice, but you gotta have some risk. No risk, no reward. If you want more help with this, then subscribe to the channel and I'll see you on the other side. Take it easy.