May 14, 2025

 

(THE QUIET CORNER)

 

May 14, 2025

 

Hello everyone

 

If history is our guide, what boomed in the last decade may not shine quite so brightly going forward.

Two questions for you.

What are you focused on in the market right now?

And

Where are you not looking in the market right now?

Yes, Bitcoin has done well this past decade, but will it hold a steady path in the future?  After reaching the near-term target of ~$125-$150, Bitcoin may pause, turn lower/consolidate, and catch its breath for a while.

Let’s look at history – it’s a great guide.

Each Decade shows a different story behind sector dominance and why the landscape changed.

 

1960s: U.S. Stock Dominated

Blue-chip U.S. stocks, led by a group called the “Nifty Fifty” companies like IBM, Coca-Cola, and McDonald’s, were considered unbeatable.  Investors believed these growth giants could do no wrong.

But something changed.

The 1970s brought high inflation and a brutal recession.  Many of these stocks lost half their value and underperformed that decade.

 

1970s: Gold Sparkled

Amid economic uncertainty and soaring inflation, gold prices surged by over 1,400%.  It was the safe haven everyone wanted.

And then came…

…the 1980s.  Inflation cooled and economies stabilized.  Gold prices fell nearly 50 per cent, and gold underperformed.

 

1980s: Japan shines

Japanese stocks soared, making Japan the second-largest economy in the world.  Real estate and stock prices seemed unstoppable.

But by the early 1990s, the bubble burst, leading to decades of economic stagnation now known as Japan’s “Lost Decades.”

 

1990s: The Tech Boom

Technology stocks, especially on the Nasdaq, exploded higher thanks to the Internet revolution.

Fast forward to 2000 – the dot-com bubble popped and wiped out a trillion in market value.

 

2000s: Emerging markets and commodities

China’s rise and a commodities Supercycle made emerging markets and raw materials the big winners.

However, they put in a lacklustre performance for much of the 2010s as Big Tech took over.

 

2010s: Bitcoin and Big Tech

Bitcoin grew by over 9 million per cent from its early days.  Stocks like Amazon, Apple, and Microsoft also delivered spectacular returns.

But today, these giants face regulatory pressures, slower growth, and increasing competition.

The winners of yesterday may not be the future play.

Don’t chase.

Let history be our guide.  The best place to invest over the next 10 years probably isn’t where the last boom happened.

And why is that?

Because by the time something becomes “obvious,” it’s often already fully priced into the market.  Growth slows, risks rise, and the easy gains vanish.

Think about it.

Let’s revisit 2000. 

If you bought tech stocks then, it took 15 years just to break even.

Winners take their turn according to the macro environment.

The macro environment is not fixed.

It’s always changing.

Each decade brings a new mix of:

Inflation (rising or falling prices)

Interest rates (low or high)

Business cycles (booms and recessions)

And different assets perform better or worse depending on these conditions.

For example:

When interest rates are low and growth is strong, like in the 2010s, the Nasdaq and growth stocks thrive.  Cheap money fuels innovation and expansion.

But in a world of higher inflation and rising interest rates, the game changes.  Growth stocks struggle because borrowing costs rise, and future profits are worth less today.

 

So, where should we be looking?

Energy stocks tend to shine in tougher environments.

Rising inflation boosts the price of oil, gas, and other resources.

Higher rates and slower growth make hard assets like energy and commodities more valuable.

So, here’s the story in a nutshell.

When Nasdaq does well, energy often lags.

When energy outperforms, growth stocks usually struggle.

 

Energy sector vs. the Nasdaq

 

The hidden opportunities: where are they now?

Real opportunities often lie in the quiet corners, the sectors or regions no one is talking about yet.

While the media spotlight shines on tech and crypto, energy has been pretty much ignored, and that’s a strong argument, I believe, why it could be one of the biggest outperformers over the next decade.

Since the 2008 Global Financial Crisis, the energy sector has been one of the worst places to invest.

The S&P 500 Energy Index has lost over 40 per cent from its 2008 highs.

For the past 17 years, energy stocks have either fallen or gone nowhere, even as tech boomed.

But this underperformance has set the stage for a powerful comeback.

Today, the energy sector offers:

Lower valuations than tech stocks.

High dividend yields rewarding patient investors.

Tight supply, after years of underinvestment in new oil and gas projects.

Rising global demand, not just from emerging economies but from something new: AI.

AI needs energy and lots of it.

Right now, Artificial Intelligence (AI) is the story that’s devouring all the oxygen/space in the media and investment world.

AI is changing industries, creating new opportunities and driving massive infrastructure builds.

But many people/investors have a blind spot when it comes to AI.

And that blind spot is critical to AI.

We are talking about the enormous amount of energy required to run AI.

Data centres that power AI models are energy-hungry giants.

Training a single large AI model can consume as much energy as 100 homes use in a year

Demand for electricity to fuel AI and cloud computing could triple by the early 2030s.

 

The energy supply – it’s a problem on the horizon, which is moving closer as the months/years go by.

AI is the future.  But energy is the foundation.

Without affordable, ample energy, the AI revolution could stall and that’s why energy investments could be the biggest surprise winners of the next decade.

We need to be thinking in cycles.

Consider Woodside Energy for a moment.

In 2008, Woodside Energy was booming, and the energy sector had enjoyed a 20-year bull run.

Woodside was one of the stars of the Australian Stock Exchange (ASX).

Now pause and imagine this: someone says to you that Woodside is about to enter a 17-year bear market.

Would you listen, or would you think the person had a screw loose somewhere?

Check out the chart here, and you’ll see what I’m saying. Woodside stock spent the next decade and a half mostly going sideways or down, even while companies like After Pay, Atlassian, and other tech favourites soared.

 

 

The reason.

The cycle had changed.

The macro backdrop moved from a commodity-driven boom to a low-interest rate, tech-fuelled environment.

Focus on the cycles first, not the company.

The lesson: think forward, not backward.

Go to the unloved, ignored corner of the market – these are the sectors that present the greatest opportunities.  Arrive there right before the world realizes it needs them again.

Enjoy the cycle journey.

 

QI CORNER

And speaking of cycles, this seems like a good time to share Ryan’s view of Small Caps here.

Ryan Lemand, Founder & CEO/PhD in Finance

In the US, small caps have never been this cheap relative to tech — ever.

This chart shows the ratio of the Russell 2000 (IWM) to the Nasdaq 100 (QQQ). And the message is loud and clear: the gap between small-cap America and mega-cap tech is now at historic extremes.

From the early 2000s peak to today, it’s been a relentless decline — a 25-year erosion of relative value, innovation capital, and investor attention. We’re now flirting with levels not seen in decades, as small caps trade like an afterthought in an AI-dominated world.

But here’s the question:
Is this a permanent reset, or a setup for a massive reversal?

Because history has a habit of rewarding what’s been left behind — especially when monetary cycles turn, inflation bites, or growth broadens beyond the top five tickers.

This isn’t just a chart — it’s a flashing signal.
Reversion is not dead. It’s just waiting for a catalyst.

Activate to view a larger image.

 

 

 

Cheers

Jacquie