AIA Weekly Free Email 6.10.24
Terrapower starts construction on new nuclear reactor in Wyoming
John Polomny interviewed by the “Early Stage Investor”
I discuss cheap resource markets but some other areas where I am finding value.
Horizon Kinetics Q1 2024 Commentary
Somewhere along the line, people got the idea that we “hate” technology stocks. Yes, that was the specific term communicated to me. It’s not true, though. Three of our most successful and impactful investments have been technology stocks. Really.
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So, we must hate technology stocks. Except we don’t. It’s just that when most people like them—especially when they love them—they’re not just priced for success, they’re priced so that even success will not yield a satisfactory result.
The article goes on to discuss Micron as an example. It outperformed 24 years ago, and the stock ended up crashing. It is outperforming again today. Why? AI, of course. The article also provides interesting discussions on valuation and market history.
Perhaps the major error in technology investing is a confusion of terms. As our Chairman Murray Stahl is apt to say, language corrupts thought. Almost no one actually invests in technology. That’s Thomas Edison and Elon Musk territory. What people invest in are public corporations that are developing or buying or selling a technology.
And as far as the business of technology goes, there’s nothing new in the realm of human behavior. That is, nothing new about the development, the funding, commercialization, private capital raises, the public IPO and follow-on offerings, product supply/demand dynamics, market sector size limitations, the successfuels-its-own-competition cycle and associated margin pressure and/or displacement risk, and the inevitable demand saturation and incipient industry cyclicality. Those are well-worn pathways. Which means that no mater how exciting the thing they’re selling, basic business valuation analysis and discipline are not invalidated or passé. And the App can always be updated with a professional tune-up.
Also a discussion on the reasoning behind their Blockchain Development ETF. Very interesting.
China is expanding into Central Asia
Afghanistan’s Taliban Reports $80 Million In Crude Oil Sales In 10 Days
On Sunday, Humayun Afghan, the spokesperson for the Taliban's Ministry of Mines and Petroleum, revealed that the group had sold 130,000 tons of crude oil for $71.6 million before it successfully put up another 20,000 tons (146,000 barrels) of crude worth $10.5 million for bidding on the same day. This marks a reversal of fortunes for one of the Middle East’s most volatile regions with the country previously importing the 50,000 barrels of oil it consumes daily from neighboring countries such as Iran and Uzbekistan.
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Beijing has been cozying up to Kabul ever since the United States withdrew from Afghanistan in 2021 after a 20-year presence. Chinese diplomats have been meeting their Afghan counterparts almost weekly since the establishment of a Taliban government in Kabul, with western analysts alluding to some sort of emerging “cooperation.” Back in January, Chinese President Xi Jinping received the diplomatic credentials of the Taliban's ambassador to Beijing. The move confounded foe and friend alike because no country has formally declared its recognition of the Taliban government. However, it's not clear if Beijing’s action constitutes diplomatic recognition.
This is part of the long game being played by China in Central Asia. What di the US say?
“We don’t see Afghanistan as a place where we need to compete with the Chinese and the Russians,” Thomas West, the U.S. special representative for Afghanistan, has declared.
Of course, they don’t.
China-Kyrgyzstan-Uzbekistan Railway Project Revived After Years of Delays
After spending some time on a sidetrack, the long-planned China-Kyrgyzstan-Uzbekistan railway may be ready to get back on the main line. The heads of state of the three participating nations have approved an intergovernmental agreement to transform the railway from “a vision into a reality,” according to the Xinhua news agency.
It was a virtual signing ceremony for what, to date, has seemed like a chimerical project. Chinese leader Xi Jinping, Uzbek President Shavkat Mirziyoyev and Kyrgyz President Sadyr Japarov each affixed his signature to the agreement via video link. Specifics of the agreement were not immediately disclosed.
This is why I am so bullish on the “New Fertile Crescent,” Central Asia, and Uzbekistan in particular. China is flexing its political and economic muscle to help develop these areas. Of course, they are doing it because they see an advantage for themselves, but that doesn’t change the fact that it is happening and will create opportunity.
TerraPower Begins Construction on Advanced Nuclear Project in Wyoming
TerraPower, a leading nuclear innovation company, today celebrated the start of construction on the Natrium reactor1 demonstration project. This marks the first advanced reactor project to move from design into construction.
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The project features a 345 MW sodium-cooled fast reactor with a molten salt-based energy storage system. The storage technology can boost the system’s output to 500 MW of power when needed, which is equivalent to the energy required to power around 400,000 homes. The energy storage capability allows the plant to integrate seamlessly with renewable resources and is the only advanced reactor design with this unique feature.
Here we go!
Quote
“Markets follow the economics. You don't go buy something because it's out of favor. You buy something because it's getting into favor, because its economics are improving (...) that's what pulls capital in.” ~Rob Robotti
That is it for this week!
Regards,
John Polomny
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