Tom Stanley rising from the grave
Tom Stanley, but from now on, I’ll refer to him as Tom Lazarus Stanley. In case you don’t know, Lazarus is a person from the Bible who Jesus brought back to life. Even though Jesus is famous for coming back to life, I’m not going to write that Jesus should move over because that could be taken the wrong way.
In 2005, the Globe wrote a story about Tom Stanley, a religious man, with the title Tom Almighty. This was a clear violation of two commandments, which say not to make idols and not to use God’s name in vain. I’m making it official: I want to get rid of the Globe. The title was also wrong, since Tom Stanley turned out to be just like everyone else.
I checked the numbers, and the fund’s drawdown from its highest point to its lowest point in 2008 and 2009 was about 79%. The fund then stayed pretty much the same for almost 7 years. What is the reason for Resolute’s amazing comeback, with returns of at least 60% in each of the last four years? Do I have to spell everything out?
It’s probably junior gold stocks. Or some other stocks of resources. I’m guessing here because Tom rarely talks about what he thinks. He does things in strange ways. He hasn’t liked tech stocks in general, but he did own some biotech stocks many years ago.
On his website, he says, “We no longer want or need to be in the news.” Who could be mad at him? At least he updates his website every once in a while. Recently, I’ve noticed that he’s added a few Ray Dalio quotes about gold and debt.
Tom is a big believer in inflation, the fact that the US won’t be able to pay its debt, and the decline of Western civilization over the next few decades. At least since 2005, he has thought this way about the world. He also thinks that the Fed is affecting market prices in a way that is typical of permabears.
I see that in 2016, Resolute became an activist for Wesdome Gold Mines. They used harsh words like “dysfunctional” and “no confidence” to ask that the company’s annual meeting be moved and got their way. I think Jesus would have done things differently in that situation.
Wesdome has gone up four times since 2016, but I still don’t know what’s behind the returns of almost eight times. About 26% of Wesdome was owned by Resolute. This is typical of Resolute’s high-octane, highly concentrated strategy, which is often used in small-cap stocks.
Many investors think that since there is a lot of “printing money,” inflation will have to happen. These people have been wrong for a long time, and they are still wrong now. This shows one of the strangest things about investing.
If you ask a 5-year-old what would happen if there was a huge increase in money, they will say, “I have no idea.” If you ask someone who knows a little bit about economics, they’ll say inflation. Still, none of the clues was the right answer.
When it comes to a fake science like economics, sophistication works against you. This comes up over and over again in investing. Active investors lose to those who don’t do anything. The investor who doesn’t know that short selling is possible is better off. Bearish arguments always sound smart, but the optimist who doesn’t try too hard makes more money.
Even though Tom’s macro views have been wrong so far, he has still done well with compounding (at 15% since 2005). He was also wrong about his main point in 2005, which was the uranium thesis. I know about the coin-flipper, broken-clock, and blind-squirrel effects, but Tom’s strong overall returns since 1993 are at least interesting from a statistical point of view.
Tom’s age is about 64. What’s the plan for a fund like Resolute that breaks with tradition? About two years ago, he put out an ad for an analyst/fund manager who could be trained to take his place. The ad is no longer there, but he still has other jobs available.
Even though I don’t agree with his plan, I think Resolute would be a good place to learn. Tom is very willing to learn and has an open mind. He doesn’t like CFA. He doesn’t trade often. Resolute has made more than $500 million since the beginning of this year. Tom runs his business with very little waste, so it makes a lot of money. And it’s clear that business can do well no matter what.
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