Today’s theme is the eternal difficulty of confronting reality when it changes, and we will find this theme in the news without even touching the issue of people who still aren’t confronting the reality of a President Trump. For example:

-The world’s largest industry, energy, is changing profoundly, and not all of its leaders are facing what that means. As OPEC members meet in Vienna, some seem to think it’s still 1978, when a few of them could set production limits and send the price rocketing. But now some of the world’s largest oil producers – Russia, the U.S. – aren’t OPEC members, and even the members can’t agree; they haven’t managed to set production limits since 2008, despite repeated attempts. More important, the world isn’t as oil-dependent as it used to be, and that’s a long-term trend. Some companies, including Royal Dutch Shell and Hungary’s MOL, and some big oil producing countries, notably Saudi Arabia, are embracing the new reality. But others, including Algeria and Venezuela, still hope to work magic. An agreement is possible on Wednesday, but it would be a stop-gap response to a long-term change.

-U.S. car dealers can’t believe their hundred-year-old business model is changing. Their latest panic is in Virginia, where they’re suing Tesla for daring to try selling cars directly to consumers. In a video, the president of the state dealers’ association exhorts his members to fight back – not by innovating their business model to give consumers a better alternative to Tesla, but by lobbying legislators to change the law in their favor. This is classic denial of a changing reality, and it can work for a time; car dealers wield major clout in state legislatures, and Arizona, Michigan, and Texas have outlawed direct sales of cars. It’s also classic King Canute behavior. Longer term, no one can doubt where this is going.

-Most of us are unrealistic about our future investment returns. Back in 1999, a survey of investors found that even the pessimists expected stocks to return 12.9% annually over the coming decade. Warren Buffett told them to expect maybe 6% annually over the next 17 years and was just proven almost exactly right, as the great Carol J. Loomis explains. Today’s debate is whether you can expect even 5% a year after inflation over the next decade. No one can know for sure, of course, but the uncomfortable reality, difficult for most investors to confront, is that we’d be foolish to count on it.

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Still addled by excessive turkey and stuffing, I inexplicably made Nicolas Maduro Ecuador’s president in yesterday’s note. A thousand apologies. He is, of course, overseeing the implosion of Venezuela.

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