"I Expect A Crash"
Submitted by QTR's Fringe Finance
One of my favorite investors that I love reading and following, Harris Kupperman, has offered up his thoughts on where he stands on the market in his Q4 2025 investor letter, out this week.
Harris is the founder of Praetorian Capital and one of my favorite follows and I find his opinions - especially on macro and commodities - to be extremely resourceful. Harris offers a perspective you won’t get on CNBC - and his thoughts are below.
Please be sure to read both my and Harris’ disclaimers, located at the bottom of this post.
To date, we’ve had five standard years (2019, 2022, 2023, 2024, 2025), and two years of dramatic outperformance (2020 and 2021). To be honest, I would have expected that the ratio would be more balanced by now. That said, as an investor, I can only take what the market gives. I will not force the issue, nor chase themes that are outside of my wheelhouse.
Unfortunately, I am primarily an investor in ‘real economy’ businesses, and almost completely eschew tech investments. As you can imagine, this has made my job difficult, as the ‘real economy’ has mostly been in recession since 2023—while equity markets have mostly levitated on the back of tech outperformance.
This spring, after getting whipsawed by Trump’s Liberation Day nonsense, I chose to dramatically de-gross the portfolio and go on a self-imposed vacation to think through the world in front of me. How do you invest in a world where the vast majority of the US population is struggling financially, where the vast majority of ‘real economy’ businesses are struggling, and where the political mandate is no longer to try and grow the economy?
For most of the past century, politicians were elected if they could bring prosperity to voters. Now, in a Uniparty political system, all that matters is propping up the numerous asset bubbles. Politicians theoretically could grow the economy, but that is a political decision that they’re loathe to make.
Think back to 2022 when our economy actually started to accelerate as it came out of the COVID funk. Things were booming, restaurants were full, retailers reported great numbers, and wages for most workers accelerated in real terms for the first time in decades. However, it wasn’t so great if you owned assets. Tech stocks crashed, real estate got into trouble as interest rates increased, Private Equity panicked as wage growth hurt margins, and a few banks failed as they took on too much duration.
As a nation, we chose to bail out those with risk assets at the cost of everyone else. The Fed rapidly raised interest rates, the government doubled down on ESG nonsense to slow economic growth, and within a few quarters, the rate of change turned negative.
At the time, I should have recognized this for what it was. Instead, I kept believing that politicians would undertake policies to grow the economy, after tamping down on inflation a bit, as general prosperity was historically necessary for re-election. I now realize the folly of my misunderstanding. We’re going to run the economy to maximize asset values. Everything else is collateral damage.
As I stewed through this collage of information, I kept asking myself how to invest in a world where my universe of investible companies (those with cash flow at low valuations) would likely continue to suffer. Eventually, I returned to...(READ THIS FULL ARTICLE HERE)
