The pro-cyclical capital intensity of most traditional real asset businesses can dilute shareholder returns during an upcycle.
The market has historically favored duration-sensitive growth assets (like software) over real assets, creating a headwind for value-oriented strategies.
A potential severe recession could be triggered if governments are forced to pull back on spending, disrupting the nominal growth narrative.
Opportunities Identified
Investing in capital-light real asset businesses like royalty companies and financial exchanges to capture nominal growth.
Exploiting the market's under-appreciation of the long-duration, right-tail optionality embedded in royalty assets.
Identifying undervalued international exchanges, such as Brazil's B3, that offer attractive entry points.
The long-term adoption of Bitcoin as a finite, digital store of value in institutional portfolios.