CHRIS ON INVESTING IN 2024
Chris joined Brian Leni from the Mining Stock Education podcast recently to discuss what’s happening in the markets right now as well as what he sees coming in 2024 — topics such as:
- Cyclical industries and asset classes and the 3 signals you see at the top of a cycle
- What to expect from the Fed in 2024 and how Chris sees interest rates (and bonds) to move in the coming year
- Coal is the new tobacco: why Chris thinks coal stocks will be like tobacco stocks over the past 20 years (some coal stocks in the Insider portfolio are currently trading at 2-4x cash flow… while paying out double-digit dividends)
- Gold, mining stocks, and what most investors get wrong when pursuing big gains in gold investments
- The death of the USD
- Why energy investments can soar (or have been soaring, in fact) despite flatlining (or even declining) energy prices
- Chris’ take on investing in Argentina under Javier Milei
- And mucho mas…
You can listen to the entire conversation here.
THE CURIOUS CASE OF MEATLESS SAUSAGES
If there’s something we’ve learned in our decades in the markets, it’s that success in investing is not all about what to buy. It’s also about what NOT to buy.
If you can stay away from what not to buy (where the odds are heavily weighted against you), then you greatly increase the chances of “being at the table when your turn to get lucky comes around.”
Case in point: Beyond Meat.
We first mentioned Beyond Meat back in 2020 in the Insider Newsletter. We certainly made no friends with the woke crowd at the time. Beyond Meat, you might recall, was “saving the planet” (although it is still beyond us as to exactly how).
If you remember when Beyond Meat came to the market, it listed at about $80, then quickly went to $230, but today, the stock languishes at $9 (and from a valuation perspective it is still expensive). That’s a -96% drop in share price — enough to make even the most hardened vegans cry for a piece of ribeye.
More often than not hot stocks like Beyond Meat end in tragedies with their stock prices being down significantly from their listing price some three or so years after their listing.
Now don’t get us wrong — that doesn’t automatically mean to say these stocks are a short on day one of their listing. Often these hotties go up significantly shortly after their listing. Just look at Beyond Meat’s stock price in 2019.
Take a look at another “hottie” of days gone by: GoPro. Sure, their products are great, but that doesn’t necessarily translate into a great stock.
As we said earlier… knowing what NOT to buy is just as important as knowing what to buy. More often than not, staying away from “hot issues” (stocks that are the talk of the town) will serve you well as an investor.
ALL THINGS TRANSITORY…
Feels like a lifetime ago, when — back in February 2020 — we started warning that lockdowns will bring about inflation and shortages. Fast forward to today, and this pesky stuff is now part of our daily lives. We recently set up a dedicated inflation channel in our Insider private forum, where members can share their own experiences with all things “transitory”.
Member Sean from the Bailiwick of Jersey sent through this:
And Kathryn shared the following:
Thinking about fuel costs, 5 years ago 1 tonne of wood pellets cost us $450. It has been going up a bit every year but nothing drastic. So for the year past it was $550 for the same amount. We were told yesterday that starting in the New Year the cost would be $760 per 1 tonne. Quite the jump.
Now, if it makes you feel any better, it’s all your fault (or so the popular press says).
Moving on to lighter topics…
You’ve probably heard (or seen) this quote from Rocky VI before:
You, me, or nobody is gonna hit as hard as life. But it ain’t about how hard you hit. It’s about how hard you can get hit and keep moving forward; how much you can take and keep moving forward.
Of course, that was just a movie. But the now deceased Charlie Munger has his own inspiration story (as detailed in this article).
And here’s the full story:
At 31 years old, Charlie Munger was divorced, broke, and burying his 9 year old son, who had died from cancer. By the time he was 69 years old, he had become one of the richest 400 people in the world, been married to his second wife for 35+ years, had eight wonderful children, countless grandchildren, and become one of the most respected business thinkers in history. He eventually achieved his dream of having a lot of money, a house full of books, and a huge family. But that doesn’t mean he didn’t face unbelievable challenges and tragedies.
In 1949, Charlie Munger was 25 years old. He was hired at the law firm of Wright & Garrett for $3,300 per year, or $29,851 in inflation-adjusted dollars as of 2010. He had $1,500 in savings, equal to $13,570 now.
A few years later, in 1953, Charlie was 29 years old when he and his wife divorced. He had been married since he was 21. Charlie lost everything in the divorce, his wife keeping the family home in South Pasadena. Munger moved into “dreadful” conditions at the University Club and drove a terrible yellow Pontiac, which his children said had a horrible paint job. According to the biography written by Janet Lowe, Molly Munger asked her father, “Daddy, this car is just awful, a mess. Why do you drive it?” The broke Munger replied: “To discourage gold diggers.”
Shortly after the divorce, Charlie learned that his son, Teddy, had leukemia. In those days, there was no health insurance, you just paid everything out of pocket and the death rate was near 100% since there was nothing doctors could do. Rick Guerin, Charlie’s friend, said Munger would go into the hospital, hold his young son, and then walk the streets of Pasadena crying.
One year after the diagnosis, in 1955, Teddy Munger died. Charlie was 31 years old, divorced, broke, and burying his 9 year old son. Later in life, he faced a horrific operation that left him blind in one eye with pain so terrible that he eventually had his eye removed.
It’s a fair bet that your present troubles pale in comparison. Whatever it is, get over it. Start over. He did it. You can, too. It is The Cinderella Principle.
As the saying goes, it isn’t how many times you lose, but how many times you get back up again that defines success.
Actually, our favourite “Mungerism” is probably this one.
That, my friends, is how to deal with volatility.
Wishing you a happy New Year and a great start to 2024!