Showing posts with label Alf (@MacroAlf). Show all posts
Showing posts with label Alf (@MacroAlf). Show all posts

Sunday, October 9, 2022

boomers retire and never look back And a smaller labor force compounds the inflationary backdrop we are in

Wednesday, October 5, 2022

Home buyers in the US have literally gone on strike.

Tuesday, September 6, 2022

How to Invest in Crazy Times with Larry Lepard

 
If we have inflation for the next 10 to 15 years, bonds are doomed.  Growth stocks are doomed.  If you go back and study the 1970s, what you see is that the good performing investments of the 70s were commodities--gold, oil, . . .  Bonds got destroyed because of inflation and regular . . . .  

Start with a big theme.  Make sure you are on the right side of a macro trend.  We're no longer in a deflationary world; we've entered an inflationary period.  It may not last more than 10 years, but certainly we're only a year or two into it.  
In general, Commodities of stuff versus bonds and growth.  This is Uranium, this is oil, this is lithium, gold, silver, wheat . . .  In this period of deflation, the market got the wrong signals, and we under invested in the things we need to live our lives. When we finally broke out of the down trend, inflation was so virulent.  We've had really bad inflation and sadly we're not going to be able to solve it instantly because we've had the inflation, in large part, because the supply . . . we haven't had the supply. 
We haven't invested in supply.  Investing in supply in this situation takes time.  You don't just turn on the tap and suddenly you got more oil; suddenly got more wheat, turn on the tap, and suddenly got more gold.  I mean it takes capital and it takes time to provide more supply to bring prices back in line.   I've been focusing on silver and gold, silver and gold mining stocks, but take a look at lithium.  I mean everyone says we need to go to more efficient cars; we need to have a more efficient car fleet.  That may not look that smart if electricity costs continue to go up.  But if were trending toward an electric car fleet, we need lithium to make those batteries.  The world in 10 years will need ten times the amount of lithium that we're mining now.  So, companies that are mining lithium are about to do extraordinarily well.  Get in front of a major trend that has years to run.  Apple and Google, for example, it's growing at 5% a year and trading at 25x earnings.  It's the best technology company in the world.  No doubt, but it's trading at 25x cash flow.  I've got gold mining companies that are growing at 50% a year and are trading at 3x cash flow.  That's a big divergence, right?