Value After Hours S06 E33 Big Short's Vincent Daniel and Porter Collins on Gold, Oil, and Housing
Sep 16, 2024
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Vincent Daniel, a financial markets expert, and Porter Collins, an experienced investor, dive deep into market trends. They compare today's economy to the pre-2007 crash, emphasizing cautious optimism. The duo explores investment strategies, focusing on undervalued assets and the significance of gold amid rising U.S. debt. They discuss the shift towards simplified trading mindsets among new investors and reflect on historical figures like Wilberforce and Volcker, highlighting their legacies in economic stability and justice.
Current market conditions show less distress compared to 2007, with operational wholesale markets and minimal recession anxiety among investors.
Investors are prioritizing idiosyncratic investment opportunities, like those in the cannabis sector, over broader macro-economic themes as they navigate political uncertainties.
Gold remains a favored asset for hedging against inflation and government overspending, reflecting concerns about excessive debt and monetary policy confidence.
Deep dives
Market Conditions Compared to 2007
Current market conditions are notably less concerning than those experienced in 2007, despite a general sentiment of boredom among investors. At that time, significant signs of distress were visible in banking and securitization markets, including high delinquency rates on loans. Presently, the wholesale funded markets remain operational, with tight spreads and ongoing consumer loan activity. Although there is a noted economic slowdown, the level of anxiety associated with a potential recession is not as pronounced, marking a stark contrast to the past.
Investment Strategies in a Stagnant Market
Investors are currently focusing on idiosyncratic ideas rather than broader macro-economic themes, especially with upcoming uncertainty surrounding political events like the elections. The market has seen consumers pare back on discretionary spending, indicating shifted priorities and increasing caution. An example of a promising investment opportunity discussed is in the cannabis sector, particularly with companies like Glasshouse, which is viewed as a growth story amidst changing perceptions about cannabis legislation. This highlights a strategy of seeking unique value propositions that stand out in a relatively stagnant market.
The Role of Gold in Current Investments
Gold and gold derivatives constitute a significant portion of investment portfolios, primarily as a hedge against government overspending and inflation. The ongoing fiscal deficits and the apparent disregard for balanced budgets reinforce the appeal of gold as a safe haven. While the price of gold appears modest given the economic conditions, it serves as a barometer for authoritative confidence in monetary policy. Investors recognize the underlying instability created by excessive debt, which bolsters the rationale for holding gold as a protective asset.
Emerging Market Opportunities and Energy Trends
Emerging markets, particularly in sectors like energy and commodities, present intriguing investment opportunities despite the risks involved. Investors are keenly observing conditions in China and Brazil, recognizing their potential upward valuation amidst fluctuating global economic forces. In the energy sector, uranium stands out as an attractive investment due to the projected supply shortage amid increasing demand from new reactor developments in China and Japan. This focus on undervalued sectors reflects a strategic approach to harnessing potential growth in an otherwise challenging investment landscape.
The Challenges of Market Dynamics and Economic Indicators
Current market dynamics indicate a divergence between stock performance and underlying economic indicators, illustrated by the disparity in consumer spending growth rates across sectors. Although some segments show resilience, such as certain major technology stocks, broader trends reflect caution regarding economic health. The conversation emphasizes the importance of considering structural changes in market dynamics, where traditional indicators may no longer provide an accurate reflection of market realities. As the economy continues to display a mix of slowing growth and selective resilience, investors must navigate carefully through this complex landscape.
Value: After Hours is a podcast about value investing, Fintwit, and all things finance and investment by investors Tobias Carlisle, and Jake Taylor. See our latest episodes at https://acquirersmultiple.com/podcast
We are live every Tuesday at 1.30pm E / 10.30am P.
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Hi, I'm Tobias Carlisle. I launched The Acquirers Podcast to discuss the process of finding undervalued stocks, deep value investing, hedge funds, activism, buyouts, and special situations.
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Tobias Carlisle is the founder of The Acquirer’s Multiple®, and Acquirers Funds®.
He is best known as the author of the #1 new release in Amazon’s Business and Finance The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, the Amazon best-sellers Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014) (https://amzn.to/2VwvAGF), Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012) (https://amzn.to/2SDDxrN), and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016) (https://amzn.to/2SEEjVn). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.
Prior to founding the forerunner to Acquirers Funds in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions he has advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam.
He is a graduate of the University of Queensland in Australia with degrees in Law (2001) and Business (Management) (1999).
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