How to choose the ‘right’ investmen t strategy…

Thursday, 29 June 2023 — South Melbourne

[7 min read]

Dear Reader,

It’s hard to believe that we’re almost halfway through 2023 already!

So many things have occurred in the last six months that previously would’ve taken decades to unfold.

Several events have revealed there’re opposing sides seeking to convince us that their version correctly reflects the truth.

These include, but are not limited to:

Many are only starting to realise that there are often two sides to every story. What you read and who you believe will influence your stance, but different sources can give you completely opposite perspectives.

Trying to discuss these controversial topics with others to help you reconcile in your mind the truth is a delicate and risky task. After all, you don’t know which side they stand on each topic and how emotionally invested they are in their viewpoints.

A poorly handled discussion could lead to strained or even broken relationships.

While it’s good to be on the right side of the discussion, possibly even history, what really is the benefit?

It’s funny that I’m discussing this. After all, I’ve made up my mind on which side I stand on many of these above topics. I’ve dared to engage people in discussions over it and even with those whose views are opposite to mine on some occasions.

Sometimes it was respectful and civil. Other times it didn’t end well.

When I reflect on these topics and consider what benefit my stances have brought me, I realise something. Having the ‘right’ viewpoint doesn’t equate to a payoff.

What matters is being able to identify actionable steps you can take which can add dollars to your account.

Society doesn’t follow what’s right. It follows the money.

That’s just the way it is!

Knowing this can help you get ahead of others.

And you don’t need to ditch your principles and morals either. I know some do. And neither does it require you to exploit someone for your own gain.

It boils down to your ability to identify the investment opportunities as these events play out.

The Green Agenda’s nuclear twist

Take, for example, the Green Agenda.

We’re all aware of how the world is moving to ditch fossil fuels and embrace solar panels, wind farms, electric vehicles and smart meters that control the household’s usage of electricity.

To achieve this, governments are rushing to shut down coal and gas power plants.

Never mind the fact that households in many countries are now needing to pay much more with their utility bills! Don’t worry about them enduring potential blackouts or brownouts (such as those in South Africa and the US mid-west).

You might think it’s now a foregone conclusion that the world is going down this path of eradicating fossil fuels and going to net zero carbon emissions.

But what if countries are starting to ditch the Green Agenda because the whole idea sounds great on paper, yet impractical at best and socially suicidal at worst?

You’ve heard about the famous study by Simon Michaux regarding the number of critical metals needed to achieve the Green Agenda. It shows that the number far exceeds what mining companies can produce over the same period.

Well, it’s happening.

Earlier this week, the nationalist Government in Sweden that came into power last October voted to abandon the 100% renewables target in favour of bringing in nuclear energy. While the Government is still seeking to commit to removing its reliance on fossil fuels, it recognises the country needed to focus on providing a stable energy system for its people.

After all, Sweden had been a nuclear-free country for almost 40 years, and this abrupt about-face suggests nothing is off the table. This includes the possibility of dismantling the commitment to removing fossil fuels in the future, should the country run into further trouble with providing affordable energy.

As the countries that pushed the hardest for the Green Agenda start to backtrack on pragmatic grounds, we’ll soon see how the clean energy revolution will evolve.

And the political pressures are mounting against governments that are dogmatically adhering to this agenda. Germany is seeing support for the Alternative for Deutschland (AfD) party soar to become the second most popular party and winning a district election for the first time. The AfD has long been shunned by mainstream parties on both sides of the political aisle due to its stance on protecting the national interests of Germans, including their stance against encroaching globalism and going green.

It's only a matter of time before many Western nations will experience the same societal shift, especially as households are doing it tough financially.

So, what to do?

The Fat Tail Investment Take

Here at Fat Tail Investment Research, our editors come from diverse backgrounds — culturally, politically and philosophically.

Each editor has a unique view of the markets, investment thesis and strategy.

Sometimes our views are opposites of each other (think Vern Gowdie and Ryan Dinse on cryptos!).

But what I’m getting at is that you get the benefit of seeing different perspectives to help you develop a well-rounded view of investment-impacting topics.

Nick Hubble at Strategic Intelligence Australia is very interested in unpacking this disaster that seems to be the ‘great energy transition’. And both Greg Canavan in the Fat Tail Investment Advisory and James Cooper in Diggers and Diggers are keen to ‘follow the money’ as governments struggle to meet these Green demands.

As for me, I’m interested in investing in precious metals and mining stocks, choosing to place value in something tangible rather than an unrealistic pipedream. You can follow my approach in The Australian Gold Report.

It’s up to you what path you ultimately decide to take. Just ensure it is a well-informed one…

God bless,

Brian Chu,
Editor, The Daily Reckoning Australia

Dear Reader,

An old friend writes from Baltimore:

‘I was taking a post-prandial stroll the other day, up St Paul, a left on Read, then down again on Charles.’

I noticed there was a single car parked inside the 1217 kraal. Two on the lot behind 808.

‘I noticed the fading For Sale banner on the cast-iron fence in front of the Chas Street property. The dead and deserted lunchtime eateries heading down toward Pratt. Tumbleweeds where Kerrigan Kitikul used to make the best Chicken Pad Thai anywhere, complaining to me about the latter-day yuppies who ordered chicken without the chicken.

‘No chickens, no yuppies in sight. Just grad students with crap hanging from their pierced nostrils and the bored scribblings of tenth graders permanently etched on their flabby hides.

‘Looking up to good old George W, I pondered if the time was right to replace him with Horatio Nelson, gazing over the swells at Trafalgar...shot-to-sh*t French men o'war...the shivered-me timbers of Spanish galleons...a single oar still moving in frantic cones: a lone survivor unaware that the painted Fortuna at the bow was already winking at passing mackerel.

‘o quae mutatio rerum.’

Political machines

Our friend was describing the carcass of our own business! Until 2020, we attracted hundreds of young workers into the city…ready to spend their money and enjoy misspending their youth. Now, they see no reason to come into the city at all. Our buildings — 10 of them in the heart of the city — are mostly empty. They had been grand houses for rich people. Then, after the rich left, they became nice places to work, with desks and computer screens amid the classical trim work.

What has happened to US cities? Democratic mayors, machine politics and wars against poverty and drugs pummelled the cities over decades. Today, we explore the circles of Hell.

Fox Business:

‘The business districts in a number of America’s major cities like New York and San Francisco are facing an "urban doom loop" as the workforce shifts away from office work in the wake of the COVID-19 pandemic — a trend that has economists raising alarm about the fiscal impacts.

‘This was not solely the fault of Democratic city governments. While they continued to jab and punch at their own voters, the Trump Administration came at them like Mike Tyson for Evander Holyfield’s left ear. In March of 2020, Trump proclaimed ‘two weeks to stop the spread’ — a shutdown of much of the US economy. Workers suddenly didn’t have to come to the office. They could work, or not, remotely.’

Or not…

Even then, it was obvious that the COVID virus was a threat to the old and the unfit…not to most people with 9–5 jobs. Most working people are under 65 years of age. But the overwhelming bulk of COVID victims had already retired. The Mayo Clinic reports:

In the US, about 81% of deaths from the disease have been in people aged 65 and older. Risks are even higher for older people when they have other health conditions.

In other words, people died from COVID much like they did everything else — when they got old. And by now, despite vaccines that promised to protect them from it, almost everyone we know has gotten COVID-19, some people more than once. And (almost!) every one of them is still alive.

The horrors of the lockdowns are largely forgiven. But they are not forgotten. Dr Fauci, the perpetrator of the scam, is joining the faculty of our old alma mater, Georgetown, where he will be able to infect young minds. But office space is still largely vacant.

During the lockdown, people in cities could scarcely leave their houses or apartments. They were trapped — often in dreadful circumstances. After all, in big cities, space tends to be expensive. Many people — especially young people — use their tiny pads just as places to sleep. The rest of the time, they are out and about — at work, at health clubs, at bars, parks and restaurants.

But during the lockdown they were, well, locked down. There was nowhere to go. And nothing to do. God forbid you were trapped in a small space with someone you didn’t like.

Fake emergency

Many people — the trendsetters — took the lockdowns as an invitation to get out of Dodge. They headed to states that were less eager to tell their citizens what they could and could not do. Small towns and suburbs were more pleasant, freer, and even cheaper. And the emigres found that they could work just as well in their new gardens — remotely — as they once worked in their cubicles.

And then, when the fake emergency was over, they didn’t want to go back to work.

Fox continues:

‘The growing popularity of remote work has decreased the number of workers heading to the office on a daily basis and made it easier than ever for workers to live in suburban and rural areas without needing to commute. That workforce migration poses challenges for businesses reliant on sales and traffic from bustling downtowns, and risks triggering a fiscal doom loop in which cities see tax revenue dwindle and respond by raising taxes or reducing services, further exacerbating conditions for the remaining residents and businesses.’

Office occupancy rates in major cities fell to just 10% by the end of 2020. Still today, only about half the workforce has returned to the desks and diners that once knew them. In response, landlords have had to reduce office values by an estimated 39% to retain renters. But the vacancy rate is running at twice the historic average. And in total, economists believe the value of New York’s commercial office space might be cut by about half a trillion dollars as a result.

Yes…city governments and the national government have both done their parts to make city life miserable. But those are just the outer rings of Urban Hell. There are more.

Regards,

Bill Bonner,
For The Daily Reckoning Australia