Something feels different this time, whether it's the plunge in energy supplies or the tech mania. One year ago WTI was at $60 and the futures market told you nothing about the coming crisis in Hormuz. Now the market is careless about a real supply crisis.

The situation in Hormuz has been wargamed but never seemed believable. Now we are in the most unbelievable path, yet the market shrugs it off.

A quarter of our US portfolio is in energy (producers, E&Ps, oil companies). In non-US it's dominated by Canadian E&Ps. We are one of the larger owners of mutual fund managers in the country. It's a weird tension: investors made good money but ask if we did something stupid. Until the market catches up to the supply issue, there is money on the table.

If the issue subsides, it will likely be after a fever-pitch crisis this summer where prices have to rise further to rebuild inventories of a billion barrels. $100 does not cause Permian producers to drill. The change has to be in the futures market — we won't end the great era of energy ownership until we are in contango like the 2010s.

The metric we look at is enterprise value per flowing barrel. For long-life assets like Canadian tar sands, that stacks up well. The operating leverage from higher prices has been the real reward. One year ago investors wanted Chevron and big players; now higher torque names are outperforming.

We analyze downstream assets and how to value them. Time and again, operating leverage from higher prices has been the winner.

This is a mania like you'll rarely see in your career. It's a fever you have to sweat out. AI will grow a lot over 20 years, but the adoption of the internet came because of low prices. The idea that AI will come at high prices with pricing power is wrong. As chip prices come off on GPUs, AI proliferates at low cost.

Moody's said there is $800 billion from hyperscalers in off-balance sheet commitments. That's not counting what will be there in a year. The math doesn't add up. It's tough to find where cash is being generated. We took the best asset-light businesses and made them the lowest return capital-intensive businesses. The market doesn't care now but will later. It's like oil companies in the 2010s — by the pandemic it was a misallocation of capital.