Some history sheds light on how today's supercycle in commodities differs from the last one. I elaborate on my framework for understanding commodity price action today and how I think about positioning in and trading them.
mate I may need to take a tech lesson from you - I didn't even know until last night that SStack has a comments section. Seriously, Tech IQ of 60 here. What is wrong with me. LOL
It seems to me that you are paid well in dividends to sit in good US nat gas producers at low PE's at current prices and wait for a breakout to higher prices.
I recall Fortescue and Twiggy in 2004 very well. I was an Aussie, living in Malaysia with work and a forum I subscribed to at the time "InvestorWeb" had someone ramping FMG at 4c to my gentle (I hope) ridiculing. After a couple of weeks, he got out at 8c. I missed it completely, as it soared to > 80x and stock splits to a US$54B company. sigh...
Man I remember that dinner nearly 20 years later like it was last night and there has been a lot of drinking and forgetting since then, so that tells you something -- Soros's words "when I see a bubble forming I rush in to buy" rang Looooooud that night.
So I read like crazy (I have a reading problem), but in the spirit of keeping things simple (and probably not original in terms of the list, but heck the best hits are the best hits for a reason right):
Reminiscences of a Stock Operator -- I read this once every 3-5 years, just finished it again now, probably my 5th or 6th time reading it. It's the bible mate.
Market Wizards (timeless lessons, the chapter on Kovner as well as PTJ but all of it is terrific)
Extraordinary Popular Delusions and the Madness of Crowds (chapters 1 & 2 are all you really need here, prob skip the rest).
When Genius Failed (LTCM - has it all - crowded positioning, hubristic quants, sinews of power in the bailout... opened my eyes to how the financial world ticks, but we learn from crisis and there are plenty of other good books in this "crisis segment"
Kroll I discovered about a year ago - I love trying to find random little books that people haven't heard of. Like a conductor discovering a never-played symphony in an old library from one of the greats (happened to a buddy of mine). I am reading a neat little one that I doubt anyone has ever heard of and it's actually available on Amazon right now.. I will discuss next post! Actually, I may include a random tidbit at the end of each note on a book or movie etc - great idea! Thanks for the inspiration Tian!!
My pleasure - was a nice walk down memory lane but the realization of this two years ago made me a nice one-off score financially... there are great opportunities to be had in surfing these waves if I'm even halfway right that this is the way the world works today...
Couldn’t agree more Paulo, great stuff
mate I may need to take a tech lesson from you - I didn't even know until last night that SStack has a comments section. Seriously, Tech IQ of 60 here. What is wrong with me. LOL
Really appreciate the kind words!!
It seems to me that you are paid well in dividends to sit in good US nat gas producers at low PE's at current prices and wait for a breakout to higher prices.
I actually like that a lot here. Like natgas calls but without the theta and warm weather taking you to zero :/
Great post buddy! A glorious debut! 💥💥💥💥
Thank you my friend - now I know there is a comments section! Seriously Cloudbear can be DUMB sometimes jeez.
Great first post. You’re one of the few writers that track nat gas to fertilizer and corn and coal. Keep it up
There is something very interesting shaping up in natgas and fert/corn in 2024...
Uranium, cocoa *and met coal* !!
Man I will never forgive myself for not plowing into AMR. Especially the buyback price-insensitive bid angle. Such a miss for me.
I loved your Twitter threads, but this is even better!
Thanks hex, I'm actually really liking this format here. I feel like I can actually think again!
Strong debut Paulo!!! Thank you!
I recall Fortescue and Twiggy in 2004 very well. I was an Aussie, living in Malaysia with work and a forum I subscribed to at the time "InvestorWeb" had someone ramping FMG at 4c to my gentle (I hope) ridiculing. After a couple of weeks, he got out at 8c. I missed it completely, as it soared to > 80x and stock splits to a US$54B company. sigh...
Man I remember that dinner nearly 20 years later like it was last night and there has been a lot of drinking and forgetting since then, so that tells you something -- Soros's words "when I see a bubble forming I rush in to buy" rang Looooooud that night.
Agree w the squirrel @blindsquirrelmacro ... great post... ❤️❗️
Thank you buddy!!
Really excited about this! Shrub and Paulo on substack
I hope to live up to my buddy Shrub. The guy is awesome and the same gentleman in real life you think he is.
great insights, almost like a time capsule. if there are any books you recommend, would love to know
So I read like crazy (I have a reading problem), but in the spirit of keeping things simple (and probably not original in terms of the list, but heck the best hits are the best hits for a reason right):
Reminiscences of a Stock Operator -- I read this once every 3-5 years, just finished it again now, probably my 5th or 6th time reading it. It's the bible mate.
Market Wizards (timeless lessons, the chapter on Kovner as well as PTJ but all of it is terrific)
Extraordinary Popular Delusions and the Madness of Crowds (chapters 1 & 2 are all you really need here, prob skip the rest).
When Genius Failed (LTCM - has it all - crowded positioning, hubristic quants, sinews of power in the bailout... opened my eyes to how the financial world ticks, but we learn from crisis and there are plenty of other good books in this "crisis segment"
hope that helps!
See this twitter thread in which he recommends The Professional Commodity Trader by Stanley Kroll: https://twitter.com/PauloMacro/status/1609750232035725312.
Kroll I discovered about a year ago - I love trying to find random little books that people haven't heard of. Like a conductor discovering a never-played symphony in an old library from one of the greats (happened to a buddy of mine). I am reading a neat little one that I doubt anyone has ever heard of and it's actually available on Amazon right now.. I will discuss next post! Actually, I may include a random tidbit at the end of each note on a book or movie etc - great idea! Thanks for the inspiration Tian!!
Here's one that's fun: the first stock trader's memoir, from the 1600s:
https://www.goodreads.com/book/show/2883429-confusion-of-confusions
Very perceptive. Easy to say, but hard to do.
The Yogi Berra saying ... "In theory there is no difference between theory and practice. In practice there is."
suuuper hard
Can’t tell you how much I enjoyed reading this here. Thanks, Paulo. What a debut!
wow that means a lot Peter thank you!!
Love the insight Paulo!
Thanks mate!
Great first post. Thank you for your insight.
My pleasure - was a nice walk down memory lane but the realization of this two years ago made me a nice one-off score financially... there are great opportunities to be had in surfing these waves if I'm even halfway right that this is the way the world works today...
Out of the blocks strong, Paulo.
Thank you Susan! This one felt good to run with.
Great framework. Thx Paulo!
Thanks mate!