Goehring & Rozencwajg: Investing in the Uninvestable

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Today’s indisputable un-investable asset class is energy broadly and crude oil specifically. Oil has been (and remains) the most important input to economic growth in the post-World War II world. However, in the span of only a few short years, oil’s importance has gone from being widely accepted to thoroughly rejected. The financial press argues that oil should beavoided at all costs.

Investors are convinced that global oil demand has already peaked and will decline steadily going forward. In such a world, the oil industry’s billions of dollars of upstream capital investments would become economically unviable or “stranded.” Environmentalists meanwhile are beginning to clamor for the oil industry to pay “damages” for the carbon released over the last 50 years, leaving investors to ponder whether energy assets are actually liabilities.

Frank Holmes: Bullish on Dr.Copper and Gold for 2021

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Here at US Global Investors, we're very bullish on commodities, particularly industrial and precious metals. The manufacturing PMI in a number of countries shows that factories are expanding capacity on a greater number of new orders. In August, the US manufacturing PMI registered 56.0, the highest reading since November 2018. The PMI in China – the world's biggest importer of metals and other raw materials – was 51.5 last month, well above the five-year average of 50.6.

 As I've noted before, commodities continue to look remarkably cheap relative to stocks. Below is a chart showing the ratio between the S&P GSCI and S&P 500. At no other time going back to 1972 have commodities been as undervalued as they are today. If Goldman's projections turn out to be accurate, now could be a phenomenal buying opportunity.

Harris Kupperman: My Favorite Ponzi Scheme (Part II)

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Let’s go back to what I wrote about Grayscale Bitcoin Trust (GBTC – USA) hoovering coins. At the end of July when I wrote about it, there were 406.6 million shares of GBTC outstanding. As of Friday November 13, that number had grown to 531.6 million, or an increase of 125 million shares. That’s equivalent to about 119,000 additional Bitcoins purchased during a brief period of time. To put this into perspective, the total “free float” is somewhere between 6 and 8 million coins. Hence GBTC purchased somewhere between 1.5% and 2% of the “free float” during this brief period of time.

Now add in the 38,250 coins that Microstrategy (MSTR – USA) purchased and the 17,732 that CEO Michael Saylor personally owns and you have almost another 1% locked up. There are dozens of entities also hoovering up coins, many of which are not likely sellers in the near term. Almost every week, we learn of a new vehicle with big marketing resources behind it. Do you think Fidelity is launching their Bitcoin vehicle without a substantial marketing campaign? In their mind, unless they raise a few billion dollars, their fund has been a failure. Just think about what that sort of inflow would do to such an illiquid market.

Jesse Felder: Extreme Valuations

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John Hussman: Pushing Extremes

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In calling the current market the third “Real McCoy” bubble of recent decades, Jeremy Grantham described, in his own words, what I call the Iron Law of Valuation: a security is nothing more than a claim on some set of future cash flows that investors expect to be delivered into their hands over time. The higher the price an investor pays today for some amount of cash in the future, the lower the long-term return the investor can expect on that investment.

However, there’s a difference between those long-term return prospects, which are driven by valuations and discounted cash flows, and short-term return prospects, which are driven by the psychology of investors – particularly their inclination toward speculation or risk-aversion. I talk about this in terms of market internals. Grantham describes it as a “psychological node.” We may navigate that aspect of the financial markets in different ways, but both of us recognize that the long-term prospects implied by valuations don’t condense into short-term implications for market direction.

Meb Faber: Episode #266: Best Idea Show – Kiyan Zandiyeh, Sturgeon Capital, “We Have A Blank Canvas To Potentially Create What The Technology Ecosystem Of That Country Will Look Like Over The Next 5-10 Years”

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In episode 266, we welcome our guest, Kiyan Zandiyeh, Chief Investment Officer for Sturgeon Capital, a leading frontier markets investment boutique focused on technology-enabled businesses that offer a product or service which solves an unserved, acute pain point for a large addressable market.

We’re covering Kiyan’s best idea: frontier markets. With the U.S. markets near all-time highs, investors may want to look around the globe for other opportunities and frontier markets offer a unique risk/reward. Kiyan walks us through the current landscape and what countries he’s most interested in. He covers the most common risks investors need to be aware of, and why he’s focused on private companies utilizing technology in the ecommerce and enterprise SaaS spaces. As we wind down, he walks us through a couple real examples of investments he’s made in countries like Iran and Uzbekistan.

Capitalist Exploits: Why You Won’t be Allowed to Participate in the Greatest Bull Market

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The good news is that Communism is coming and the shortages are going to be following close behind.

But really Chris… Communism?

Yes.

Remember, when capital is allocated based on its highest marginal return, individuals… you and I… will invest where there is legitimate value, where we believe our highest risk-adjusted returns will be.

On the other hand, when capital is allocated based on some other set of metrics, such as which company is the most “socially responsible”, this is simply a thinly and poorly masked form of communism.

“The key to understanding the appeal of communism, despite the grim reality on the ground, lay in the fact that it allowed so many followers to believe that they were participants in an historic process of transformation, contributing to something much bigger than themselves, or anything that had come before.”

― Frank Dikötter, The Tragedy of Liberation: A History of the Chinese Revolution 1945-1957