AIA Free Weekly Email 11.19.24
How To Get Rich Without Getting Lucky
When I was young and inexperienced, I desired to get rich quickly. This led to wasting time trading options, playing around with penny stocks, trading on tips, etc.
The returns I got were inconsistent, but I occasionally got lucky and made a significant return on one of these junk investments. These occasional “lightning strikes” would reinforce in my mind that this was the way to do things. However, I was just getting lucky occasionally.
As I matured and read more about how successful investors achieve long-term investing success, I realized what I was doing wrong. I then investigated the techniques of successful investors and concluded that I needed to change my investing methodology to be more consistent.
I realized I needed to partner with good business people by buying equity in real businesses run by excellent management teams that compounded capital long-term. Once I understood that and began implementing this idea, my returns became more consistent, and volatility and emotional and psychological brain damage decreased.
The way to get wealthy is slow and steady, buying undervalued businesses when they become available.
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Mike Alkin, Uranium Market Insights With Q&A
Interview with Mike Alkin, one of the most known names in the uranium space, where he talked about the current situation concerning the uranium market, various challenges, and much more.
Russia “Temporarily” Bans Enriched Uranium Exports To The US
Russia has imposed restrictions on the export of enriched uranium to the United States, the government said on Friday, creating supply risks for U.S. nuclear power plants which last year imported a quarter of their enriched uranium from the country.
Russia said the temporary restrictions were a response to Washington's ban on imports of Russian uranium, which was signed into law earlier this year, but contained waivers allowing for shipments to continue in case of supply concerns through 2027.
Russia accounted for 27% of the enriched uranium supplied to U.S. commercial nuclear reactors last year. Imports to the U.S. from Russia through July this year stood at 313,050 kilograms (690,160 lb), down 30% from last year.
It is not clear whether the U.S. has imported any uranium from Russia after the U.S. ban took effect in August. The Russian government's decree says companies authorized by the export control watchdog can still export uranium to the United States.
This looks like a reaction to the continuing bifurcation of the world between the Atlantic Hegemon and the up-and-coming Global South and West. The initial reaction was for spot uranium to jump around $4/lb.
I have said for a while now that as the world moves to a new multi-polar world, we likely see more incidents like this. I think another important piece of news is that Kazatomprom, the Kazakh state uranium company, conducted a shareholder vote that will result in more of its uranium production going to China.
Kazatomprom, the world’s largest uranium producer, has secured shareholder approval for major contracts with Chinese entities CNNC Overseas and China National Uranium Corporation. These agreements aim to bolster Kazakhstan’s role in the global nuclear market by ensuring a stable uranium supply to China, supporting the zero-carbon transition. The move signifies strengthened bilateral cooperation between Kazakhstan and China.
This is another example of how geopolitics is affecting commodity flows. I suspect this will be bullish for the uranium price over the longer term.
Chris Wright Is My Kid Of Guy
Chris Wright, the CEO of Liberty Energy, is being nominated for the role of Energy Secretary. This is a guy who actually knows something about energy instead of the political hacks that are usually installed. Here is is bio from the Liberty Energy page.
Chris Wright is the founder, Chief Executive Officer, and Chairman of the Board of Liberty Energy. He is a self-described tech nerd turned entrepreneur and a dedicated humanitarian on a mission to better human lives by expanding access to abundant, affordable, and reliable energy.
Chris completed an undergraduate degree in Mechanical Engineering at MIT and graduate work in Electrical Engineering at UC Berkeley and MIT. In 1992, he founded Pinnacle Technologies, whose innovations helped launch commercial shale gas production and created an industry in hydraulic fracture mapping. Chris served as CEO of Pinnacle until 2006. Chris was Chairman of Stroud Energy, an early shale gas producer, before selling to shale pioneer Range Resources in 2006.
In 2010, Chris founded and served as Executive Chairman of Liberty Resources, a Bakken-focused exploration and production company, and Liberty Midstream Solutions until its sale in 2024. Chris sits on the Board of Directors of Oklo Inc. (NYSE: OKLO), a next-generation small modular nuclear reactor company, and EMX Royalty Corp. (NYSE-A: EMX), a global mining royalties company.
He also serves on the board of numerous nonprofit organizations, including ACE Scholarships, and as a founding board member of the Bettering Human Lives Foundation.
In early 2024, Liberty Energy produced a 180-page slide deck called “Bettering Human Lives.” After reviewing this document I can say this is my kind of guy.
I have not reviewed the entire slide deck but it is mostly what we have discussed in AIA for years. Energy is everything. One quote from the presentation stuck with me; “There are no low energy input wealthy countries, and there are no high energy input poor countries.” Energy is everything and is in everything. I wish Mr. Wright success and Godspeed.
A once-in-a-generation opportunity hiding in plain sight
RBA explains why they see a '“once-in-a-generation opportunity” in international, small caps, value stocks, and inflation beneficiaries.
Market leadership tends to change in response to structural shifts in the macroeconomic fundamentals. The global economy is currently undergoing major inflections across inflation, interest rates, globalization, corporate profitability, demographics and government balance sheets. When coupled with the prevailing bifurcation of sentiment and record market concentration, the current juncture may offer investors a once-in-a-generation opportunity to rebalance portfolios. Just as in the wake of the Internet bubble, what part of the market you own could mean the difference between another lost decade of returns for crowded and expensive assets or very attractive returns or assets where capital is truly scarce. With all eyes on US large cap growth stocks and disinflation beneficiaries, we see bigger opportunities in international, small caps, value stocks and inflation beneficiaries.
I agree with the sentiments in this piece. I like to keep it simple. Sell overvaluation and buy undervaluation. The US, relative to the rest of the world, is at one of the most overvalued levels ever. Does that mean we will see an immediate correction? No, but it does mean that returns going forward in the US may be lower than many expect.
That is it for this week.
John Polomny
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You’re the best John !!!!!