Had a DM asking which of my recently uploaded @CruxInvestor videos on Youtube I'd recommend.

While I love digging into themes, I'd have to go with this one on "positioning yourself to get lucky", which was something my mentor rammed into me over the years. Next would be how to exit investments well.

It's rarely discussed and really tough to do well with it being more of an art than a science.

Fascinated by this. We have only been installing solar at less than 1/3 the target rate with ideal prices/conditions

It's ironic that the thing we are trying to ban(coal) is the limiting factor for something we plan to massively scale (solar)

Below are some great articles on it "The reversal, fueled by a quadrupling in the cost of the key raw material polysilicon, threatens to delay projects and slow uptake of solar power just as major governments are finally throwing their weight behind it in an effort to slow climate change."

bloomberg.com/news/articles/…

Few charts to explain why I'm a huge oil bull over the next few years.

The trajectory of oil supply declines(ESG continues to make it steeper)

Even the @IEA sustainable development demand forecast is still a lot higher than supply

Let alone if assume ~1% historic demand growth Renewables/EVs barely make a dent in primary energy (the often cited 20% renewables figure comes from adding in traditional biomass).

Like it or not we are addicted to fossil fuels for which there are no economic substitutes (apart from nuclear for electricity).

I love looking out for contrary signs.

I can't help but think Bezos flying that giant dildo into space may have marked a peak in capital over labour. The median American worker has had a rough time when you consider their earnings have gone nowhere for 50 years when adjusted for CPI.

There hasn't been enough questioning of assumptions & projections regarding the "Green transition".

This paper was one of the few that actually digs into many of these assumptions

Here are a few of my favourites pieces from the paper. "The Princeton paper proposes Net Zero primary energy by 2050 (not just decarbonization of electricity,
but of everything). This transformative proposal includes a 14x buildout of wind and solar capacity and a 3x-5x buildout of transmission capacity"

Buildout speed in reality

Thread

"Wednesday’s shareholder revolts mark an investor “paradigm shift” and a “victory in the fight against climate change”."

This simply creates more supply destruction which exacerbates the coming energy crisis

It will inflict a great deal of pain on the poorest countries. "In the Netherlands where green campaigners won a court battle in the Hague to force Shell to cut its carbon emissions by 45% in the next 10 years."

Crazy seeing correlations move towards one.

One only has to look at the market moves on the 12th and 13th of May.

Bonds are no longer providing protection S&P500 and Nasdaq

Chain of logic

Stimulus won't stop

Yield curve control= massive balance sheet expansion

USD tanks & bondholders realise they're holding the bag

Rebalance out of US assets

International equities & commodities beneficiaries

Commodities are where real supply constraints exist Commodities can be divided between

ESG compliant & non-ESG

The former have optimistic demand projections and assess to capital

The latter is viewed as being in terminal decline and largely cut off from capital

The crazy part is non-ESG is more essential to humanities progress

Great podcast with Adam Rozencwajg @Go_Rozen and @jessefelder

No surprises in the conclusions

that renewables are dramatically less efficient than

fossil fuels but Adam lays it all out beautifully.

Here are my key takeaways Onshore wind deals are being done with a 4% IRR

This needs to be levered up with 75% debt to equity to make it acceptable

Wind turbines have to be productive for full 25years in order to get 4% IRR. If only last 23-24 years that project eats through its equity cushion quickly

Every now and then you come across a podcast that gives you a better framework for viewing markets.

@ttmygh latest podcast with Russel Clark was one of those for me.

It's got me thinking about the drivers of inflation in a whole new light. I've always thought of energy as being highly correlated with inflation, but as Russel points out food is far more correlated.

Oil reacts to food inflation, not the other way around.

Food prices and wages are highly correlated and by default inflation.

Thread

There is one attribute I think is hugely underrated.

My Dad is the best example of it that I know of

which has had a huge effect on the direction of my life. I grew up on a sheep & beef farm in New Zealand

This was Dad's life work and he worked hard to buy more neighboring land and expand over the years.

I wanted to be a farmer, spent the summers working on the farm, and studied Agricultural commerce at university.

Listening to Adam Robinson rank traders accuracy on @TKPPodcast (ep 47)

1/Metal Traders

“Metal traders have not been wrong once in the last 18 years in regards to the direction of interest rates”


2/Bond Traders


3/Equity Traders


4/Oil Traders


5/Currency Traders 6/Economists

“Economists are literally always wrong. If you have a group of economists, and they’re in 100% consensus about the direction of interest rates, I’m going to take the other side of the trade, for sure”

7/Central Bankers “They’re not in touch with the economy at all”

Thread

I'm going to go through a few things, I've learned about rare earths and how I plan to play them as a result.

I've changed my views and positioning significantly since writing traderferg.com/rare-opportuni… in September last year.

I'll refer to rare earth elements as REEs REEs are a China story

China mines >70% of REEs

China refines >80% of worlds mixed oxides

China separates >90% of worlds elemental oxides

China produces or controls 100% of new REE base metals where 95% of the value is

Chinese base material is dirt cheap & highly subsidized

Thread

Charles Ellis had the idea of the "losers game"

Professional tennis is a "winners game" i.e. you win by hitting winning shots

Amateur tennis is a "loser's game" i.e. you win by not making mistakes.

Investing is a loser's game.

Avoiding making stupid mistakes is key The 1st rule is to avoid anything that prevents you staying at the table

Always be long time & avoid margin

Rick Guerin was Buffet and Mungers equal in intelligence yet he wanted to get rich quicker & used margin

He got margin called in 73 & sold all $BRK to Buffet at bottom

Thread

A lot of people don't seem to grasp the bigger picture of the tanker trade.

Everyone tried to play the storage story last year and got burned when it didn't materialize (see below chart).

The real story is the recycling rate and empty orderbook. First point to understand is the average life of a VLCC is <20years

Reason being the cost of special surveys at $4m in year 20 makes no economic sense unless the ship is earning high rates

Like getting a $350 warrant of fitness for a $1000 car with a high chance of failing it

Thread

Keep getting DMs on "can I buy Q stock" & how does Chapter 11 work?

To start have

Chapter 7 is a liquidation bankruptcy
(past reorganization & must sell everything to pay creditors off)

Chapter 11 is a reorganization bankruptcy
(Which is what I'm going to discuss) When a company declares bankruptcy C11 it is delisted from major exchanges & starts trading on OTC/pink sheets with a Q ticker at the end

This serves two purposes

1. Gives equity holders a market to liquidate any shares they may still be holding

2. Speculation on C11 outcome

There is a large flaw in the projections of 50% renewables by 2050.

Take note of China and India which are the two largest coal users in the world and are continuing to build out coal plants at a rapid rate (China is adding 10% by 2025). For China to reach 48% and India 55% will require an enormous build-out of wind and solar while shutting down coal plants.

A quick run-through of my favorite uranium charts and reasoning.

Big picture.

The #uranium market structure lends itself to boom and bust.

History will repeat itself again. Following on from the above chart: "what if it takes another decade?"

It can't happen with utility contract coverage rolling off at a rapid rate.

Also need to add time for utilities to get yellow cake through the fuel cycle (18-24mths)

49% of US reactors are uncovered by 2022

Thread on #coal

Thermal Coal Demand

The narrative is that thermal coal is in terminal decline & will be replaced by renewables and nat gas moving forward

Coals in decline in developed countries, but we often overlook the fact that developed countries are the minority globally Coal still accounts for almost 40% of global electricity production

It pays to remember is that developed countries comprise of 1.3B people while developing is 6.5B people which based on demographics is on the way to 8-8.5B people by 2050.

This doubles the energy system.

Thread

Molten Salt Reactors look to be a game-changer

History has always involved progressing up the energy density ladder and MSR technology fits this bill

Six considerations

1. Public perception

2. Safety

3. Cost

4. Efficiency

5. Waste

6. High heat processes 1. Public perception

Nuclear needs a rebrand & PR makeover

When people hear nuclear the likes of the Chernobyl series or nuclear weapons spring to mind.

MSRs achieve this and address both safety concerns and waste concerns (the two most common nuclear reservations).

A history of oil with The Economist covers

It's one of the better contrarian indicators

Drowning in Oil

March 6th, 1999

Oil = $17 barrel

Impressive timing. The end of the Oil Age

October 25th, 2003

Oil =$30 barrel