Research

When Assumptions Break

Fulcrius Research

Every investment thesis rests on assumptions. The ones that matter most are never written down.

A blocked canal, and a coffee shortage nobody predicted

In March 2021, a container ship called the Ever Given turned sideways in the Suez Canal. For six days, nothing moved. Over four hundred vessels sat waiting while one of the busiest trade corridors on Earth stayed shut.[1]

The canal carries roughly 12% of global trade.[2] Freight rates climbed 40%.[3] The effects spread far beyond shipping. Physical robusta coffee premiums in Europe tripled, because nearly all robusta bound for European roasters travels through Suez.[4] Toilet-paper pulp from Brazil was delayed because the container-vessel crunch spilled into break-bulk shipping, a completely separate logistics market that shares a pool of vessels with container routes.[5] The coffee market and the tissue market have nothing to do with each other. They turned out to share a dependency that neither had reason to think about.

The blockage was resolved in six days, and it still exposed connections running through dozens of industries. Companies depend on suppliers three tiers deep, logistics corridors they have never evaluated, energy systems and political stability in places their executives may never visit. Under normal conditions, none of this is visible.

When the disruption lasts months rather than days, the financial damage compounds.

A war that split two chemical companies and two airlines

On 24 February 2022, Russia invaded Ukraine.[6] Sanctions and export restrictions followed within days.[7] Energy, agricultural commodities, and industrial supply chains were disrupted simultaneously.

European natural gas hit €185/MWh within days and peaked near €350/MWh by August, roughly ten times higher than a year earlier.[8] Ukrainian grain exports were blocked, trapping 22 to 25 million tonnes and pushing global wheat prices up more than 50% year-on-year.[9]

Look at what happened to specific stocks.

BASF and Dow: same industry, a different gas supplier

BASF (BAS), the world’s largest chemical company, reported €3.2 billion in additional energy costs for 2022. Its Ludwigshafen complex runs on natural gas as both fuel and feedstock, and its stock fell roughly 40% from its pre-invasion February peak.[10] Dow Chemical (DOW), headquartered in Michigan, makes similar products for similar customers. Its stock fell about 7% over the full calendar year.[11] Dow’s plants run on cheap American shale gas. BASF’s ran on Russian pipeline gas. Over thirty percentage points of divergence in the same industry, largely explained by which gas supply each company happened to sit on.

Ryanair hedged its fuel. Wizz Air didn’t.

Wizz Air (WIZZ) fell 62% over the year. It was the only EU budget carrier with a base in Ukraine and it hadn’t hedged its fuel. Ryanair (RYAAY), flying many of the same routes, fell 27% and took market share in Budapest, Wizz’s home airport. Ryanair had locked in 80% of its fuel at $63 per barrel before the war.[12] The question that separated a 27% drawdown from a 62% drawdown was whether the airline had signed a fuel hedge. That question does not appear in a standard equity report.

What the Federal Reserve broke when it raised rates

Those were physical supply chains fracturing. But the largest hidden dependency in markets during 2022 was not physical at all.

On 16 March 2022, the Federal Reserve raised interest rates for the first time since 2018.[13] Low rates had been the norm for so long that the assumption had become structural: woven into how growth companies were valued, how startups planned their runway, how real estate was financed, how much leverage businesses carried.[14]

Nobody wrote “rates will stay low forever” on a whiteboard. But a stunning number of financial decisions implicitly depended on it.

Carvana and AutoNation sold the same cars to the same customers

Carvana (CVNA), a used-car retailer, fell 98% from its 2021 peak. Its model required consumers accessing cheap auto loans, and it carried $6.8 billion in high-coupon debt that needed constant refinancing.[15] AutoNation (AN), a traditional car dealer selling the same cars to the same customers, fell 8% and posted record earnings.[16] Ninety points of divergence, same industry, same year. Carvana’s balance sheet bled cash at higher rates. AutoNation’s financing arm was self-funding securitisation that generated income as rates rose.

Four hops from a rate hike to a collapsing cloud stock

The consequences cascaded. Higher rates made risk-free returns compete with startup bets, so venture capital funding fell 31% in a year.[17] Startups with less incoming capital reduced spending, starting with cloud infrastructure. AWS growth halved from 40% to 20%, its slowest ever.[18] Cloud stocks collapsed: Snowflake (SNOW) fell 58%, Datadog (DDOG) 59%, MongoDB (MDB) 63%.[19]

Nobody buying Snowflake in January 2022 was thinking about the Federal Reserve. AWS had been growing 40% annually and consensus models projected similar rates forward.[18] That growth depended on startup funding, which depended on cheap money, which depended on low rates. Four hops. Invisible until it snapped.

The pattern underneath three unrelated shocks

An accident in a canal. A war in Eastern Europe. A central bank raising rates. Three events with nothing in common except what happened afterward: a belief that countless decisions quietly depended on stopped being true, and the consequences radiated outward through connections nobody was monitoring.

I’ll call them silent assumptions. Cheap energy. Stable rates. Open trade routes. Reliable access to manufacturing capacity. These beliefs disappear into the background precisely because they hold. You don’t notice the assumption that the canal keeps flowing or that gas keeps arriving until the day it doesn’t.

In every case above, the companies that survived best had positioned themselves for the assumption to break, without predicting the specific event that caused it. Ryanair hedged its fuel as permanent policy. Dow built its plants near American shale gas decades ago. AutoNation ran a self-funding balance sheet. The semiconductor fabs that stockpiled neon after the 2014 Crimea crisis sailed through 2022 when Ukrainian neon production collapsed overnight.[20] None of them needed to predict the war. They understood what they depended on.

Most investment research is organised around individual companies. You open a report and learn about a business: its revenue, its margins, its management, its competitive position. What’s typically absent is the set of dependencies connecting that company to the wider world.

A company’s fortunes ride on demand environments it doesn’t control, suppliers it may not name publicly, physical infrastructure half a world away. Those dependencies often carry more weight than another quarter of margin expansion, because when one of them shifts, the entire thesis unravels at once.

Housing, 2022: four unrelated companies, one shared bet

In 2022, the Federal Reserve raised rates and existing home sales fell 18%.[21] Think about what depends on people moving houses. Every sale triggers appliance purchases, furniture, paint, flooring. The stock performance that year: Wayfair (W) fell 83%. Whirlpool (WHR) fell 37%. RH fell 50%. Sherwin-Williams (SHW) fell 29%.[22]

An online retailer, an appliance manufacturer, a luxury furniture brand, a paint company. Four different industries. They shared no supplier, no customer, no obvious connection. Standard correlation metrics would not have flagged them as related. They shared one silent assumption: people keep moving houses. When rates doubled, all four dropped together.

Their own CEOs confirmed it. Whirlpool’s Marc Bitzer: “existing home sales declined sharply in 2022, reflecting the mortgage rate shock.”[23] RH’s Gary Friedman: “The housing market is in a recession, and it’s just getting started.”[24] Sherwin-Williams warned new residential volume could fall 10-20%, citing sixteen straight months of declining existing home sales.[25]

A portfolio holding all four looks diversified. Four companies, four industries, uncorrelated businesses. In practice it was one bet: people keep moving houses.

How many independent ideas do you actually own?

The same test, applied to your portfolio today

Consider what it means to hold Nvidia (NVDA) today. The position is a bet on AI infrastructure spending continuing, TSMC maintaining capacity access, sufficient energy being available for data centres, and export controls remaining stable. If those conditions hold, the investment works regardless of quarterly execution. If one of them cracks, execution becomes irrelevant. As of April 2026, Goldman Sachs estimates that AI-linked companies account for 45% of the S&P 500’s total market cap, up from 25% when ChatGPT launched in late 2022.[26] If you own an index fund, nearly half your portfolio depends on some version of the same silent assumption: that AI infrastructure spending continues to grow. The concentration is there whether you intended it or not.

Most of these dependencies are knowable in advance. The hard part is holding all of them in view at the same time.

A system built around assumptions, not companies

Tracing one chain is something any good analyst can do. Holding hundreds of them simultaneously, updating each as conditions shift, noticing when a shared assumption weakens across positions, that requires a different kind of system.

That is what Fulcrius is. It makes the assumptions beneath a portfolio explicit, tracks when they change, and maps where they overlap. When a silent assumption begins to weaken, Fulcrius helps you see which positions may depend on it, and how those dependencies overlap across your portfolio.

We’re building Fulcrius because we think research should begin with assumptions rather than companies. If this way of thinking resonates with you, we’d love to have you follow the journey.

Sources

  1. Reuters, "Traffic in Suez Canal resumes after stranded ship refloated," 29 March 2021. The total backlog reached 422 ships by the time the Ever Given was refloated on 29 March 2021.
  2. New Zealand Ministry of Foreign Affairs and Trade, "The Importance of the Suez Canal to Global Trade," 18 April 2021. The canal handles approximately 12% of global trade and 30% of global container shipping traffic.
  3. Mechai, N. and Wicaksono, H., "Causal Inference in Supply Chain Management: How Does Ever Given Accident at the Suez Canal Affect the Prices of Shipping Containers?", Procedia Computer Science, Vol. 232, 2024. The study found a ~40% increase in global container shipping prices (World Container Index) attributable to the incident, at a 99.89% confidence level.
  4. The Straits Times / Bloomberg, "Your instant coffee may soon be at risk from Suez Canal blockage," 26 March 2021; corroborated by News24/Fin24's syndication of the same Bloomberg report. Physical robusta premiums reached $450/metric ton above exchange price, approximately three times the normal rate of ~$150/ton.
  5. The National / Bloomberg, "Shipping shortage could spur renewed scramble for toilet paper," 25 March 2021. Suzano SA CEO Walter Schalka stated the company was rolling March pulp shipments into April because break-bulk vessels were being displaced by the container-ship crunch.
  6. UK House of Commons Library, "Conflict in Ukraine: A timeline (current conflict, 2022–present)," Research Briefing CBP-9847.
  7. Council of the EU, "Russia's war against Ukraine: EU sanctions," consilium.europa.eu.
  8. Reuters, "Prices spike on Russian invasion of Ukraine," 24 February 2022. ESMA, "The August 2022 surge in the price of natural gas futures," October 2023. TTF front-month rose ~41% on the day of the invasion to €118.50/MWh and peaked near €340–350/MWh in August 2022.
  9. BBC News, "Ukraine war: Deal signed to allow grain exports to resume by sea," 22 July 2022. Council of the EU, "How the Russian invasion of Ukraine has further aggravated the global food crisis" (infographic). Global wheat prices were 58% higher in March 2022 than March 2021.
  10. BASF Report 2022, "Share Performance." BASF press release, 24 February 2023. BASF reported €3.2 billion in additional global energy costs in 2022, of which €1.4 billion was attributable to higher gas costs at Ludwigshafen alone.
  11. MacroTrends, "Dow — 7 Year Stock Price History." Dow fell approximately 7–11% in 2022 depending on adjustment method. Dow CEO Jim Fitterling cited "65% of production capacity in the Americas" and "structurally advantaged feedstock positions" on 2022 earnings calls.
  12. Evening Standard, "Wizz Air cuts growth targets after axing flights to Russia and Ukraine," 7 March 2022. Ryanair FY22 Results, May 2022. Ryanair was 80% hedged (65% via jet swaps at $63/bbl, 15% via caps at $78/bbl). Deutsche Bank airline coverage noted Ryanair gained Budapest market share from approximately 18% to over 30%.
  13. Board of Governors of the Federal Reserve System, "Open Market Operations." The Federal Open Market Committee raised the target range for the federal funds rate to 0.25–0.50% on 16 March 2022.
  14. FRED (Federal Reserve Economic Data), Federal Funds Effective Rate. The target rate was 0–0.25% from December 2008 to December 2015, rose to 2.25–2.50% during the 2016–2019 hiking cycle, and returned to 0–0.25% in March 2020.
  15. CNBC, "Carvana shares tank as bankruptcy concerns grow for used car retailer," 7 December 2022. The stock fell from an intraday high of $376.83 in August 2021 to $3.83 by December 2022.
  16. AutoNation, "AutoNation Reports Record Fourth Quarter and Full Year Results," 17 February 2023. AutoNation reported record full-year 2022 EPS of $24.29 (GAAP) and its stock declined approximately 8%, well ahead of the S&P 500's 19.4% decline that year.
  17. Reuters, "U.S. VC funding cools from 2021 record as investors keep their powder dry," 6 January 2023. PitchBook-NVCA data: US VC deal value fell from $344.7B (2021) to $238.3B (2022), a 31% decline.
  18. Amazon, "Amazon.com Announces Fourth Quarter Results," 2 February 2023. AWS revenue growth decelerated from 40% (Q4 2021) to 20% (Q4 2022). CFO Brian Olsavsky cited customers working to "trim their spending because of the difficult economy."
  19. MacroTrends stock price history (Snowflake; equivalent pages exist for Datadog and MongoDB), calendar year 2022. Snowflake -57.6%, Datadog -58.7%, MongoDB -62.8%.
  20. Reuters, "Exclusive: Russia's attack on Ukraine halts half of world's neon output for chips," 11 March 2022. WSJ, "Chip Makers Stockpiled Key Materials Ahead of Russian Invasion of Ukraine," 13 March 2022 (paywalled; reported in full at ETCentric's summary). Major fabs (TSMC, Intel, Samsung) had built 2–6 month stockpiles after the 2014 Crimea crisis spiked neon prices 600%. None reported production stoppages in 2022.
  21. National Association of Realtors, "Existing-Home Sales Receded 1.5% in December," 20 January 2023. Full-year 2022 existing home sales totalled 5.03 million, down 17.8% from 2021. Freddie Mac PMMS: 30-year fixed mortgage rate rose from 3.22% (January 2022) to 6.42% (December 2022).
  22. MacroTrends stock price history (Wayfair; equivalent pages exist for Whirlpool, RH, and Sherwin-Williams), calendar year 2022. Wayfair -82.7%, Whirlpool -37.2%, RH -50.2%, Sherwin-Williams -29.4%.
  23. Whirlpool Q3 2022 earnings call transcript. CEO Marc Bitzer: "Obviously, existing home sales declined sharply in 2022, reflecting the mortgage rate shock."
  24. CNN Business, "Anyone who thinks we're not in a recession is 'crazy,' says RH CEO," 9 September 2022.
  25. Sherwin-Williams Q4/FY2022 earnings call transcript, 26 January 2023. CEO John Morikis warned new residential volume could fall 10–20% and cited 16 consecutive months of declining existing home sales.
  26. Barchart, "How AI Ate the S&P 500 — And What It Means for Investors," 24 April 2026, citing Goldman Sachs analysis; corroborated by The Kobeissi Letter's separately reported 45% figure the same month. AI-linked companies' share of S&P 500 market cap rose from ~25% in late 2022 to 45% by April 2026.