Unveiling the Resilience: Defying the Angel of Death in Corporate Volatility
When a company emerges victorious from a drawdown, it boldly declares to the angel of death that today is not the day.
In the tapestry of finance, companies emerge as mortal entities, with an average lifespan of a mere 18 years. The undulating rhythm of teams, either embarking on new journeys or exploring diverse ventures, paints a vivid picture of the ephemeral nature of corporate existence.
Just as every heartbeat signifies an opportunity for human growth, companies must perceive each market drawdown as a chance to innovate with different products and strategies. Learning, akin to the lifeblood of both individuals and organizations, becomes the catalyst for evolution.
Picture volatility as the enigmatic 'Angel of Death' in the corporate panorama. When a company embraces change, updates its belief system, and confronts a drawdown, it becomes a testament to resilience. It unequivocally signals to the Angel of Death that today is not the day, propelling itself to new heights in stock prices.
Conversely, companies anchored in outdated belief systems, burdened by debt, and averse to volatility, court destiny like those tempting fate. They resist the necessary evolution until the inevitable arrival of the Angel of Death. If interest rates ascend to unstable levels, their unwavering commitment to antiquated paradigms may herald bankruptcy.
The entire corporate structure is essentially built on the notion of low volatility. The prevailing belief posits that volatility is detrimental to portfolios, leading to the inclusion of companies with a low-volatility profile in any financial toolbox. However, this philosophy teeters on the edge of avoiding change, requiring a delicate balance between stability and adaptability in the face of an ever-evolving market.
Indexes, in abundance, house zombies. According to Morning Star, 11.5% of listed stocks are zombies, and JP Morgan's research reveals that 40% of companies are not profitable. Amidst the Small Caps, one finds a spectrum—from the likes of fantastic companies like Super Microcomputers Inc (SMCI) to the zombies dwelling in a pseudo-reality fueled by debt, such as CIVITAS RESOURCES (CIVI).
Drawdowns Super Microcomputers INC Vs CIVITAS RESOURCES.Â
When a company emerges victorious from a drawdown, it boldly declares to the angel of death that today is not the day. However, delaying the transformation of belief systems reaches a point of no return.
If you are a fund manager, a family office, or an ultra-wealthy individual, do not hesitate to contact us. We invite you to add different perspectives to your investment process, enriching it with insights that navigate the delicate balance between stability and adaptability in the ever-evolving market.
Thanks for reading,
Guillermo Valencia A
Cofounder Macrowise
Brazil, 26/11/2023