A Weak Investment Thesis

Today’s show is focused on an investment thesis that sounds good on the surface. It comes from a listener question. The idea is that a logistics hub like Houston is a growing market which continues to experience population growth.

The need continues for more apartments, for more industrial warehouses, for more commercial, and for more industrial storage. Specifically, the argument was that there is need for more truck parking in Houston.

The problem with this thinking is that it is focused purely on the demand side of the equation. I am a student of the law of supply and demand. To me, supply and demand is to be respected with the same reverence as a law of physics, maybe even gravity. If you try and cheat gravity, chances are you will fall and get hurt. Violating the law of supply and demand will have similar consequences.

Today we're talking about assessing the existing supply, but more importantly, the hidden supply that could enter the market at any time. It's that hidden supply that is much more difficult to assess.

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