Podcast Summary
Investing in Russian assets as a contrarian trade: CEO Harris Kupperman sees potential in Russian stocks due to cheap valuations, high dividend yields, and potential profitability from sanctions. However, risks include share confiscation, liquidation, and ideological reasons. Consider investing through RSX index for mitigated risks.
That Harris Kupperman, the CEO of Praetorian Capital Management and Mongolia Growth Group, sees buying Russian assets as a potentially contrarian trade in today's markets. Despite the recent political tensions and market volatility, Kupperman believes that the cheap valuations of Russian stocks, particularly those tied to commodity pricing, could offer significant upside if commodity prices continue to rise. He also notes the high dividend yields and the potential for increased profitability due to sanctions. However, he cautions that there are risks involved, such as the possibility of share confiscation or liquidation, and that ideological reasons may prevent some portfolio managers from investing. Kupperman suggests investing through the RSX index, which is a US dollar-denominated basket of the largest Russian companies, as a way to mitigate some of the risks while still gaining exposure to the potential gains. Overall, Kupperman's approach to investing involves a diversified portfolio that includes buy and hold, leverage, options, futures, and indexes, and he encourages investors to stay informed and prepared for the unexpected.
Geopolitical tensions and potential sanctions against Russia could lead to higher oil prices and inflation: Geopolitical tensions and potential sanctions against Russia could cause oil prices to rise, leading to increased inflation, particularly for marginal consumers.
The ongoing geopolitical tensions and potential sanctions against Russia could lead to increased demand for oil and a continuation of its price rise, which could result in higher inflation. The panelists believe that oil prices could go much higher due to increasing global demand, especially from countries with large populations that are currently under-utilizing oil. The US dollar's strength may not have a significant impact on oil prices, but the inflationary effects of higher oil prices could be significant and disproportionately impact marginal consumers. The panelists also discussed their investment strategies in Russian assets and using options to profit from volatility.
Understanding currency trading and oil prices: Oil demand is expected to continue growing, and oil prices may increase due to structural supply issues, making oil futures a potential investment opportunity for retail investors.
Buying and selling currencies based on the logic that it's usually a good currency to buy when it feels cheap and sell when it feels expensive has mostly been profitable for the speaker over long periods of time. However, predicting the direction of currencies, especially those tied to oil, is difficult due to various factors such as supply and demand imbalances, long cycle projects, and geopolitical risks. Ross Gerber added that there are structural impediments to increasing oil supply, including underinvestment by OPEC and challenges in ramping up production in the US. Jerome Maldonado suggested that retail investors focus on owning oil futures rather than oil producers due to the uncertainties and risks associated with oil production. In summary, the speakers believe that oil demand will continue to grow, and oil prices will likely increase due to these structural supply issues.
Investing in oil with OTM calls despite economic and Fed uncertainties: Market analyst Trey Lockerbie predicts oil price increase through OTM calls, despite potential for recession and Fed challenges. Fed may lag behind inflation, maintaining low rates.
Investing in oil through buying out-of-the-money calls is a clean and safe way to bet on its price increase, despite economic and Federal Reserve uncertainties. Trey Lockerbie, a market analyst, expressed concerns about the Federal Reserve's current policy and its potential consequences, including high inflation and a struggling economy. He believes that the Fed will eventually have to change course and may face significant challenges in managing these issues. Despite the potential for a recession, Lockerbie predicts that the Fed will continue to lag behind inflation and maintain low interest rates. The TIP Mastermind community, launched by The Investor's Podcast, offers value investors a supportive network to enhance their learning and portfolio growth. AT&T Business, on the other hand, provides reliable network support for businesses, no matter how unconventional their ideas may be.
Stay informed about financial news and market trends: Invest in gold for long-term, diversify portfolio with commodities like oil, monitor market trends, and consider Bitcoin as a unique asset
Staying informed about financial news and market trends is crucial for investors, and tools like Yahoo Finance can help keep up-to-date with the latest information. Gold is considered a long-term investment and should be a core piece of a portfolio, but for active investing, commodities like oil can be more attractive due to their supply and demand dynamics. Bitcoin, which has been compared to gold as a digital alternative, can be traded effectively based on market signals and individual gut feelings, but it's important to note that it behaves differently than traditional assets due to its unique characteristics. Ultimately, a well-diversified portfolio that includes a mix of assets and regular monitoring of market trends is key to successful investing.
Bitcoin's price diverges from crypto miners due to Fed's signaled slowdown in stimulus: Speaker exited Bitcoin due to potential inflation, preferred Bitcoin for its tradeability, and was intrigued by uranium's upside potential
Bitcoin, as a commodity, thrives on rapid change and rate of incremental stimulus. However, when the Fed signaled a slowdown in stimulus and the potential for inflation, Bitcoin's price started to diverge from that of crypto miners. This divergence, along with Bitcoin's ephemeral nature and the speaker's personal experience with commodity investing, led him to exit his Bitcoin position. Regarding gold versus Bitcoin, the speaker sees value in both but prefers Bitcoin for its tradeability and ease of transfer. Uranium, on the other hand, has piqued his interest due to its unique attributes and the fact that the world consumes more uranium than it produces, making it a potential commodity with significant upside potential.
Uranium Price Surge: Supply Deficits, Buying Programs, and Green Energy: Uranium prices could surge due to supply deficits, decreasing stocks, Sprott's buying program, and uranium's role in green energy. Anticipated parabolic move, but diversification and timing are crucial.
The price of uranium is expected to significantly increase due to a combination of factors including supply deficits, decreasing uranium stocks below marginal cost to produce, and the active uranium buying program of Sprott Physical Uranium Trust. This entity's mission to acquire more uranium by issuing shares creates a feedback loop that could lead to an overshooting of the price, potentially even surpassing previous highs. The improving fundamentals of uranium as a green energy source also contribute to the bullish outlook. The investors in the discussion anticipate a parabolic move in uranium, similar to what was seen in 2008. The potential for significant gains makes it an attractive investment opportunity, despite the risk of loss if the thesis is wrong. The investors emphasize the importance of investing at the right inflection point and having a well-diversified portfolio.
Geopolitical risks in the nuclear energy industry: Half of the world's uranium production comes from Kazakhstan and Russia, making their supply stability a concern for nuclear power plants. Utilities only spend a small percentage of their budget on uranium, leading to a desire to restock inventories due to geopolitical risks.
The nuclear energy industry faces geopolitical risks, particularly regarding the supply of uranium from Kazakhstan and Russia. Trey Lockerbie, CEO of 3six forty six, highlighted that half of the world's uranium production comes from Kazakhstan, and the stability of its supply is a concern for nuclear power plants. Additionally, Russia, the largest producer of refined uranium, could potentially disrupt the supply by withholding sales if tensions escalate. This risk, combined with the fact that utilities only spend a small percentage of their budget on uranium, has led to a desire to restock inventories. Lockerbie also shared his personal experience with investing in Mongolia, which turned out to be a terrible thesis due to the government's ban on foreign investment and the resulting economic crisis. Despite these challenges, Mongolia Growth Group has diversified its business and launched a profitable event-driven monitoring service called Kedem.
Shifting business strategy towards merchant banking and real estate growth: The company is focusing on acquiring stakes in businesses for relationship and financial impact, while the US real estate market experiences significant growth due to a housing deficit and demographic shifts, leading to high demand for housing despite potential interest rate increases, and public.com offers a high yield cash account
The business strategy has shifted towards becoming a merchant bank, focusing on acquiring minority or majority interests in businesses where the company can make an impact through relationships and financial discipline. On a separate note, the real estate market in the US is experiencing significant growth due to a large housing deficit and demographic shifts, such as remote work and lower cost of living in certain states. These factors have led to high demand for housing, and despite potential interest rate increases, the trend is expected to continue as consumers are in a strong financial position to purchase homes. The speakers also mentioned that a high yield cash account with public.com offers a higher interest rate compared to several other financial institutions.
Investing in companies with strong fundamentals can lead to significant rewards: Experts suggest investing in companies like Cornerstone Building Brands and St. Joe, which have strong fundamentals and offer attractive returns on capital and equity, as opposed to the cyclical and uncertain nature of home building.
Smart financial decisions can lead to significant rewards, whether it's finding a better travel credit card or investing in companies that produce components for the housing industry. Joe Carlasare expressed his positive outlook on Cornerstone Building Brands, a company that manufactures various home components and has seen strong fundamentals, leading to a significant stock price increase. He believes that companies like Cornerstone, which avoid the cyclical and uncertain nature of home building, offer attractive returns on capital and equity. Trey Lockerbie also mentioned St. Joe, a company that owns a large amount of land in Florida and sells lots, as another potential investment opportunity in the housing supply chain. Percoco considered St. Joe a better business due to its cheaper price and the potential for recurring revenue through commercial real estate development. Both experts emphasized the importance of making informed financial decisions and highlighted the potential rewards of investing in companies with strong fundamentals.
Multi-faceted investment strategy: Long-term buy and hold of strong trends and event-driven opportunities: Joe Percoco employs a dynamic investment strategy that combines long-term buy and hold of strong macro trends and event-driven opportunities for short-term gains, allowing him to maintain a diversified portfolio and mitigate losses during market volatility.
Joe Percoco of 3Five Zero Six Capital employs a multi-faceted investment strategy, focusing on long-term buy and hold of strong macro trends and event-driven opportunities. Percoco's approach involves buying and holding assets with strong trends for an undetermined period, while also capitalizing on event-driven opportunities for short-term gains. This strategy allows him to maintain a dynamic portfolio that evolves with market conditions, mitigating losses during market volatility. The discussion also highlighted the significant undervaluation of the company they were discussing, with its stock trading at a quarter of net asset value, despite impressive growth metrics and strong earnings reports. Percoco expressed confusion over the discounted stock price, but sees it as an opportunity to make profitable investments. While he occasionally dabbles in volatility trading, he mostly loses at it and prefers to sell volatility through writing puts.
Disciplined approach to selling options: Setting a desired price, maintaining balance, being prepared for volatility, and selling options or buying undervalued assets can enhance investment returns
Having a disciplined approach to selling options, particularly covered calls and puts, can significantly improve investment returns. Joe Percoco emphasizes the importance of setting a desired price for selling options and having sufficient cash on hand for potential reallocations. He also suggests maintaining a dynamic portfolio with a balance of leverage and liquidity, allowing for quick responses to market events. While he doesn't rely on momentum indicators for decision-making, he emphasizes the importance of buying cheap assets and remaining patient during macro trends. Overall, his strategy involves being prepared for market volatility and taking advantage of opportunities to sell options or buy undervalued assets.
Focusing on high volatility stocks or high implied volatility numbers isn't always the best strategy for options trading.: Consider being assigned the underlying stock at current price before trading options, prioritize undervalued stocks, and use call options as a hedge for long-term investments.
When it comes to options trading, focusing solely on high volatility stocks or high implied volatility numbers may not always lead to the best outcomes. Instead, investors should consider whether they would be happy or upset if they were assigned the underlying stock at the current price. Prioritizing undervalued stocks and being willing to write options on them can be a more effective strategy. Additionally, when considering long-term investments, such as in the case of oil, buying call options can serve as an effective hedge against potential market crashes. For more information on Joe Vaughn and his resources, listeners can visit his website, kedm.com.
Entertainment with a financial twist: The Investors Podcast offers valuable insights, but remember it's for entertainment only and consult a financial professional before making investment decisions.
While "The Investors Podcast" provides valuable insights and information for investors, it's essential to remember that the show is for entertainment purposes only. Each episode features discussions on various investment topics, but the information shared should not be considered financial advice. Before making any investment decisions, it's crucial to consult a financial professional. Additionally, it's important to note that the show is copyrighted by The Investors Podcast Network. Any syndication or rebroadcasting of the content requires written permission from the network.
