July's investment musings
In an attempt to get more of my thoughts on paper, I’m going to be putting a few thought here per month. Whether anyone reads it I cannot guess, yet I hope that at a minimum it becomes informative as a tool for retrospective self-analysis.
-Reading about the performance potential for sodium-ion based batteries, I have some serious long term concerns about the long term bullish case for lithium. As someone who won’t pretend to be an expert in the differences, I won’t go into the details of the science, yet the simplified fact is that sodium based batteries are cheaper. While there are some downsides, primarily the range of sodium batteries, for many people in the developing world price is of course the, not a, deciding factor; and this technological advance likely kills many of marginal lithium investment projects (although in the slimy world of junior mining, it’s extremely unlikely that these enterprises will have the honesty to pack it up and return any cash they have to their shareholders.)
As an American, my first instinct is to implant my economic truths onto others, but here the difference seems obvious. In most parts of the world, top level car range is not a deciding factor. People in most other parts of the world where these EVs will be sold (Europe, East Asia) simply aren’t Midwesterners who will drive 2 hours each way on their Sunday to get breakfast and catch an NFL game with their neighbors; or 12 hours on their annual vacation from Ohio to Myrtle Beach.
-I, and likely thousands of others, had the (seemingly) obvious idea to buy longer dated puts on Nvidia post stock split. The challenge that I see is timing, as the most likely triggers to pop the balloon (change in sentiment, or re-evaluation of their earnings with rumblings of some shaky revenue sources) are difficult on the face of it for a novice like me to time. I’m still keeping an eye on this, and will likely buy puts if the valuation gets even sillier, yet this is an extremely crowded trade that I’m currently inclined to leave to the pros.
-A few college buddies and I have a stocks focused text chain, and one of the most commons ideas (or targets) is America’s whipping boy, Boeing ($BA). In what is a true duopoly (although I need to do my research on China’s COMAC), and with Airbus having their own supply chain/production challenges, on the face of it Boeing appears to be a pick with a few classic positive indicators (negative sentiment (with the added 21st century spin of being among the foremost meme targets), challenges at their primary competition, a long order book, & a strong moat). On paper their acquisition of Spirit Aerosystems should (“should”) help some of their quality control issues, and it’s somewhat easy to envision their stock price being north of $200 by the end of the year. Their balance sheet is concerning, yet their position in the defense industry makes them a classic too big to fail monster. Inclined to take a 1% position for shits and gigs to see where it goes
-Some of the brightest people who I read have mentioned platinum and palladium as the current unloved commodity, ripe for a turnaround; which of course will lift the boats of the associated miners. A glance at Sibanye-Stillwater ($SBSW) confirms the negative sentiment. I haven’t done enough research in the sector to seriously comment, but there are enough trends (EV fad fading, SBSW bottoming, these commodities unloved) that I’m likely going to take a ~2% position size in SBSW and sit on it for a few years.