Making Hay Monday – December 2nd, 2024
Making Hay Monday
High-level macro-market insights, actionable economic forecasts, and plenty of friendly candor to give you a fighting chance in the day’s financial fray.
Gromen
This newsletter has contended Waymo is way ahead of Tesla when it comes to placing autonomous vehicles in service on actual roads, versus test tracks. The above visual from the prolific Luke Gromen forcefully drives that point home. At this point, Tesla has been guarded on the number of real-world AV rides it has successfully completed. Its full self-driving system requires more frequent driver interventions than does Waymo’s. In a recent test drive, the TSLA required interventions twice during the first 45 minutes while the Waymo system operated without driver involvement for two hours. Even more striking, is that the TSLA full self-driving (FSD) program requires disengagement after just 10 to 20 miles compared to an average of 7900 miles for Waymo. (Disengagement occurs when the FSD system shuts itself off due to driver inattention and is a source of considerable user frustration.)
Crescat
One of this newsletter’s overarching views is that the decade from 2020 to 2029 is likely to turn out a lot like the 1970s when it comes to both inflation and stock market performance. If that is correct, which Fourth Turning theory suggests, it might be wise to look back at how the S&P performed back in the Disco Decade. (Fourth Turnings are typically roughly two-decade periods that happen every 80 years or so and include some type of mega-crisis. These eras have historically produced high inflation and weak stock prices, at least in real, or after-inflation, terms.) Certainly, the 1970s was a nasty one for the S&P — particularly, in real terms — but it was a spectacular decade for the Barron’s Gold Mining Index.
Evergreen Compatibility Survey
“Asians and central banks buy gold, not North American-based gold miners. Gold mining stocks, with record production, record margins and record cash flows are still languishing due to the total lack of interest (in many cases hatred) for the stocks.” -Fred Hickey, 11/29/24
“Because silver and gold have their value from the matter itself, they have first this privilege, that the value of them cannot be altered by the power of one, nor of a few commonwealths, as being a common measure of the commodities of all places. But base money may easily be enhanced or abased.” -Thomas Hobbes
Another Golden Opportunity?
Shutterstock
Whenever you sell, even partially, a security that is in a strong uptrend, there is always the risk it just keeps running. The saving grace for trims versus outright exits is that the retained position allows continuing profit generation. Yet, human nature being what is — wildly oscillating between fear and greed — it’s in our DNA to regret divesting even 25% of a holding that does a Nvidia.
Yet, even with almost everyone’s favorite AI play, there have been some surprisingly sharp retracements, including this year. For instance, in the spring it tumbled from $84.67 to $76.20 almost overnight. Then from mid-June to early August it plunged from $135.58 to $98.91. Since then it has come roaring back but anyone who had reduced into spikes and added on weakness would have nicely capitalized on the volatility even with a stock that has seemingly gone straight up.
Naturally, it’s beyond human capabilities to hit the exact peaks and troughs in these swings. However, methodically selling into vertical up-moves and buying back when air pockets are hit is a good discipline to which investors should aspire, in our view.
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IMPORTANT DISCLOSURES
This material has been distributed solely for informational and educational purposes only and is not a solicitation or an offer to buy any security or to participate in any trading strategy. All material presented is compiled from sources believed to be reliable, but accuracy, adequacy, or completeness cannot be guaranteed, and David Hay makes no representation as to its accuracy, adequacy, or completeness.
The information herein is based on David Hay’s beliefs, as well as certain assumptions regarding future events based on information available to David Hay on a formal and informal basis as of the date of this publication. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized or that an investment strategy will be successful. Actual experience may not reflect all of these opinions, forecasts, projections, risk assumptions, or commentary.
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Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this material, will be profitable, equal any corresponding indicated performance level(s), or be suitable for your portfolio. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.
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