Stocks Mentioned Skeena Resources (SKE), Nvidia (NVDA), Blackstone (BX), Disney (DIS), Israel Chemicals (now ICL), Transocean Ltd (RIG), Cisco (CSCO), Cognizant Technology Solutions (CTSH)
Highlights
September 01, 2024
Bitcoin vs Ethereum
In the last decade, bitcoin has lost 99% of its value vs ethereum.
During the Ethereum ICO, you could exchange 1 bitcoin for 2000 ether. Today, 1 bitcoin is worth a mere 23.5 ether.
The bitcoiners who tout the merits of owning bitcoin for the long-term are either unaware of bitcoin's terrible long-term track record within the crypto space, or have a hidden agenda in promoting bitcoin while bashing other cryptos.
Bitcoin does have some merits but the airtime being given to clowns like Michael Saylor is undeserved.
Bitcoin is not even second best in the crypto space.
September 03, 2024
I'm less active in recent weeks for personal reasons, but my portfolio continues to hum along.
My biggest position, Skeena Resources (SKE), is up a further 33% from the time I wrote it up for paid subscribers in July (and up >60% from the time I mentioned buying it last December). This comes on the heels of another big win with Osisko Mining.
When it comes to gold miners, picking individual stocks beats buying the GDX.
September 04, 2024
Nvidia (NVDA) business practices have come under increased DoJ scrutiny. Now that people have started looking, just wait until they figure out the demand isn't real.
SoftBank and the other AI whales desperately need a Fed rate cut and loose lending conditions.
The FDIC bailed out Silicon Valley in March 2023. Maybe they get bailed out again when this bubble bursts. The NY Fed bailed out LTCM so the precedent of socialized losses and privatised gains was set long ago by Wall Street.
Gasoline rides the inflation-deflation line
Will the anticipated 50 bps of rate cuts and money printer go brrr bring about stagflation? Or will it merely slow down the oncoming recession train? Watch gasoline for clues.
September 05, 2024
Money printer warming up
The CBO estimates that 2024 direct federal spending will be $6.9 trillion (24.2% of GDP), which is $400 billion higher than its February estimate.
Will the Fed really allow a recession to clear out the excesses caused by its previous round of money printing, or print ever more to finance the out of control government spending?
This is the ten trillion dollar question.
September 06, 2024
When I open Twitter, I see:
Stubborn oil bulls refusing to acknowledge the trend change.
Stubborn bitcoin bulls refusing to acknowledge the trend change.
Stubborn Nvidia dip buyers believing the tech bubble will keep going.
All the while, bonds and gold scream recession. I think the macro is going to throw everyone offside. We'll know how this ends only in hindsight.
September 10, 2024
Trading principles work well even for non-traders
A crypto friend/consulting client messaged me saying, "Easiest bear market, ever". He is a buy and hold long-term investor, not a trader. But my insights worked very well for him.
Many retail investors drive themselves crazy trying to beat a benchmark. If they made their money on bitcoin, they want their crypto portfolio to be benchmarked to BTC. If they made money on ETH, they want to beat ETH with a portfolio of ETH infra plays. And so on.
My recommendation is to forget benchmarks and focus on yourself.
What kind of drawdown can you handle while sticking with the plan?
Can you admit you got it wrong when you're down 50% on a coin and take your chips off the table?
Can you take some profits out and not count the $$$ you just lost by not HODLing?
Can you sit through a prolonged period of no returns?
Is too much of your net worth in crypto and would you lose your mind if we just chop sideways to down for 6 months?
My friend ignored benchmarks and focused on his comfort with his chosen strategy. And so, this is his easiest bear market, ever.
Trading principles apply just as well to investors and those following different strategies. It starts with knowing yourself.
September 13, 2024
Bullish to neutral on the bond trade
I closed the bond trade today after an incredible run beginning in April.
The market has priced in rate cuts to kingdom come. The market isn't wrong. The Fed's dual mandate as arsonist-firefighter is to inflate or die. Whether it is QE infinity, Operation Twist, yield curve control, or directly buying stock ETFs like the Bank of Japan, you can rely on the central bankers to do insane things with the currency they freely print.
But as it ties to trading, I rode this trade from extremely non-consensus to totally consensus. The incremental gains just don't move the dial anymore.
I'd rather buy mining stocks with high D/E ratios than directly buy bonds to express my view on rates.
It's the alternatives era
"It's the alternatives era" giant Blackstone (BX) isn't suffering from high interest rates. The stock is back at 2021 highs when interest rates were at 0% and commercial real estate was in a bull market. Part of this is investor delusion; part of this is investors pricing in Treasury bailouts for RE funds when SHTF.
Powell won't utter the words "the CRE crisis is contained". You can bet he will print $3 trillion.... $5 trillion... whatever it takes to save the PE giants.
The Jackson Hole pivot was a PE victory.
Disney
Celebrity fund manager Peter Lynch was fond of saying "invest in what you know". Like Supercuts haircuts? Buy the stock. Enjoy a Starbucks coffee? Buy the stock.
I've spent 100+ hours watching sitcoms on Disney's (DIS) Hotstar in India and I get why the stock is in the dumps. They run exactly two ads - YSL's MYSLF cologne for men and the Bosch washing machine - over and over and over. The only change was a single ad for Nivea in between, which didn't repeat.
Are they pricing too high, or do Indian advertisers not want to associate with the Disney brand, which is synonymous with wokeness?
In America, Disney can get away with saying kindergarten teachers should be talking about sex in the classroom, but their "values" find no home in India.
Bringing back Bob Iger is a mistake. The 'ride of a lifetime' is going to end up in the dumpster.
September 15, 2024
I used to be a value investor, then a value + GARP investor. But it wasn't until I learnt to respect the TA that I became successful as a trader.
Checking my biases at the door and heeding the price action changed everything for me. So many people I see on FinTwit are miserable because they have good ideas but don't heed the price action. Case in point: the emotionally charged asset that is bitcoin.
September 17, 2024
Will you buy Israeli fertilizer knowing that the ingredients in fertilizer are the same as those in an IED?
Israel Chemicals (now ICL) should lose market share in the EU and elsewhere now that the gloves are off.
September 18, 2024
Gasoline - the most important macro indicator
Sometimes, the best indicator is something no one cares about. Summer driving season is over, Fed rate cuts loom, and gasoline is just hanging on to support waiting for direction.
If gasoline bounces here, the next environment will be stagflationary. All the hidden inflation from the Fed's $3 trillion money printing in April 2020 will come right back just as layoffs accelerate.
If gasoline breaks down, we see at least a mild recession, the Fed panics and turns the money printer back on, and it's off to stagflation again.
As an economist, you can confidently predict stagflation (Project Zimbabwe, as Kuppy calls it) is the future. As a trader, the path absolutely matters.
In April, I was asked why I'm long bonds and copper. The answer - it is all about the price action, not just the macro thesis.
FOMC Decision
"Voting against this action was Michelle W. Bowman, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting."
Fed rate decisions are no longer unanimous. That's significant. Money printer go brrr is seeing some pushback by a lone hawk.
September 20, 2024
Long Chinese tech
Chinese tech is going to make a huge comeback at the expense of US tech. Taiwan still has time to choose. Make explosive devices for Israel and lose market share, or stop being a pawn of the West and stick to being the world's foundry.
If you missed buying wheat at the start of the NATO-Russia war, missed buying shipping stocks at the start of the Houthi attacks in the Red Sea, here's the next investable trend.
September 28, 2024
Turning bullish on crude oil
"Cushing’s current stockpiles of 22.7 million barrels as of September 13 represent less than a third of the storage hub’s operational capacity of 78 million barrels."
Algos and HFs are now net short an unprecedented volume of crude oil even as inventories dwindle at the delivery hub for the WTI futures contract.
I'm long Dec WTI, gasoline and refiners, in addition to core oil E&Ps and oil services holdings. Unless the US enters a recession immediately, this is a high conviction trade for me.
Commodities are about to make a comeback
The growing war risk is not being priced in by the futures market. Wheat market hasn't cared about the end of the Black Sea grain initiative. Oil hasn't cared about the Israeli escalation.
Sugar going limit up hasn't even made the news. The apathy towards commodities is truly appalling. Will Iran retaliate and change that? No way to tell, but as a trader I'm very, very interested in the long commodity trade.
September 29, 2024
Conversations with oil investors are fascinating. They talk about Namibia, Suriname, the Middle East situation, Dangote, TMX, and can rattle off the names of every shale basin in the US. Just don't get them started on why Transocean Ltd (RIG) is underperforming.
Conversations with bitcoin investors are also fascinating. They talk about bitcoin going to $100k, tell you every other crypto is worthless, and call you stupid if you don't share the collective delusions of their tribe. Get them started on the topic of Michael Saylor or Larry Fink and their devotional verses will fill pages.
Why are the smart people who understand so much about the world getting less airtime on X than the guys telling you to sell your house to acquire bitcoin?
The next Henry Blodget
Back during the dotcom bubble, Cisco (CSCO) was hyping something they called the "Internet of Things". Powered by Cisco technology, your refrigerator was supposed to communicate with your washing machine.
Here we are 24 years later and IoT has been quietly forgotten.
In 6 years, all this AI hype will be quietly forgotten - but people will remember the AI-related accounting frauds that shook investors' trust in the Big 4 and SEC. Just as we remember Arthur Andersen and the role they played in the dotcom bubble.
Is Raoul Pal going to be the next Henry Blodget?
A personal story
I quit my IT sales job in May 2015. I was employed by Cognizant Technology Solutions (CTSH) in their Insurance vertical.
When I gave my notice, my boss asked me what I was planning to do next. A normal question. But before I could answer, he followed up by saying:
"I assume you'll continue in insurance, so you don't let your experience go to waste."
I think about that a lot. This might come as a shocker, but my first degree was in engineering, specifically - biotechnology. I chose to pursue an MBA after that instead of working in a lab.
Was getting an engineering degree a waste of time? Perhaps. But I found my passion after that. After my IT career, I found my passion yet again, as an equity analyst.
And three years ago, I found my passion yet again - as a full time trader.
A couple of months ago, I found a new passion - my very own trading newsletter.
I'm 35 years old and I figure I have a 30 year career ahead of me. Sacrificing what I wanted to do on the altar of not "wasting" my previous experience is something I've never understood.
Sure, I could have worked my way up the sales ladder. I could have continued my role as an equity analyst and become an expert on gold stocks and crypto.
But I went where my passion took me, and through all the emotional ups and downs of learning to trade for a living and launching my own newsletter, I couldn't be happier.
Still long shipping
If shipping stocks sell off because investors interpret this to mean the Houthi attacks will cease, that's a buying opportunity.
We are entering peak shipping season ahead of the holidays, US dockworkers are going on strike, China is roaring back in a big way - and for the last year everyone has written off the Houthis multiple times yet they still succeeded in their blockade.
Can I be wrong on this? Of course. Strong opinions, weakly held.
Good Trading!
Kashyap