The Rational Cloning: Weekly Ideas #40

Brian Laks (Old West) on Tin and Alphamin, Pierre Andurand on Commodities, Ray Dalio on Stagflation, Tweets That Make You Go… Hmm 🤔

Welcome to the 40th edition of the Rational Cloning Newsletter (Weekly Ideas Series).

Helping you discover the best ideas of others.

Happy cloning.

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Weekly Investment Ideas

(1) Brian Laks of Old West on Tin and Alphamin

Andrew Walker @AndrewRangeley

Podcast #113 is up! @brianlaks discusses tin's "alpha" potential and why $AFMJF could be an interesting way to play it.

yetanothervalueblog.substack.comBrian Laks from Old West on Tin’s Alpha Potential $AFMJF (podcast #113)Brian Laks, partner at Old West Invest Management, discusses the bull case for Tin and why he thinks the world’s largest tin miner, Alphamin, could present an alpha opportunity. Please follow the podcast on Spotify, iTunes, or most other podcast players, as well as on

(2) The Current State of Commodities w/ Pierre Andurand

(3) Reducing Inflation Will Come at a Great Cost: Stagflation (Ray Dalio)

By these measures central banks policies have not been good. More specifically,

1. The Fed is moving from printing and buying debt at an annual rate of around $1.5 trillion to selling it at an annual rate of $1.1 trillion, and from sharply lowering interest rates to sharply raising them. For that reason, we experienced the big lurch forward and are now experiencing the big lurch backward.

2. Because debt assets and liabilities are now very high and because government deficits will remain high, it is virtually impossible for the Fed to push interest rates to levels that are high enough to adequately compensate holders of debt assets for inflation without them being too high to support strong debtors, strong markets, and a strong economy. If the holders of debt don’t get adequate returns they will sell them, which worsens the free market debt supply/demand picture, which either leads to a dramatic cutback in private credit (which is depressing) or the central bank creating more money and buying more debt to fill in the funding hole (which is inflationary). 

In summary my main points are that:

1. There isn’t anything that the Fed can do to fight inflation without creating economic weakness

2. With debt assets and liabilities as high as they are and projected to increase due to the government deficit, and the Fed also selling government debt, it is likely that private credit growth will have to contract, weakening the economy, and

3. Over the long run the Fed will most likely chart a middle course that will take the form of stagflation. 

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Tweets That Make You Go… Hmm 🤔

Greg Capital @phoenixvalue

No real wealth without health. You play the game differently when you finally accept it’s finite.

Chris Mayer @chriswmayer

"The best investment I think is to buy almost entirely equities and hold it." - Edward Thorp h/t @SantangelReview

HorizonKinetics @HorizonKinetics

Observation #44 Retail electricity prices are typically determined by longer-term contracts and regulations. Wholesale prices reflect more immediate supply/demand dynamics. If wholesale prices are any indication, we may see big retail price increases soon.

Chris Mayer @chriswmayer

New blog post: Harnessing the powers of compounding requires you to sit still most of the time. (Munger’s first rule of compounding: “Never interrupt it unnecessarily.”) Hard to do because everything in our culture nudges us to “do something.” $CPRT $ODFL

woodlockhousefamilycapital.comMake Haste SlowlyIn today’s blog post: Investment wisdom from an old latin phrase, a favorite of a certain Roman Emperor and motto of the Medicis. Does it encapsulate the paradoxical nature of benefitting from long-term compounding? I think so. Please read on to learn more… [Woodlock House, County Waterford, Ireland…

Thunderdome Capital @MadThunderdome

FinTwit...Energy is OvEReArnINg! Oil is about to collapse! Buffett - hold my beer. Hmm...wonder who I should listen to..

Fast Stock Market News @faststocknewss

*BERKSHIRE HATHAWAY BUYS 9.55M OCCIDENTAL SHARES, FILING SHOWS $OXY

Dave Waters @alluvialcapital

Here's a a preview of next month's Q2 letter in GIF format. (Could be worse, we're well ahead of benchmarks so far.) Still, it's been painful to watch some cheap stocks get MUCH cheaper. Time for some examples!

Le Shrub 🔥🌳🇺🇦 @agnostoxxx

There’s very few fertilizer bulls left which makes me feel warm and fuzzy that I’m long. Shortages aren’t going away. And shrubs need fertilizer to flourish so it’s all good. ☺️🌳 $UAN $MOS @TraderPamplona

Vishal Khandelwal @safalniveshak

Aquamarine's investing principles. (Source: 2021 Annual Report) Thank you for your thoughtfulness in sharing these, @GSpier. My personal favourites are #4, 12, 13, 17, 16, 19, 20, 23, and the rest.

Emérito/Numantia Patrimonio @foso_defensivo

$BAM

edelweiss.substack.com#9 Rebel capital allocators (Part III)A trilogy discovering the 10 basic principles for finding outstanding CEOs

Doomberg @DoombergT

1/ Modern society is awash in stuff. There’s stuff at the grocery store. At the hardware store. At Amazon and eBay. We eat stuff, wear stuff, buy stuff, and store stuff. Click some buttons, swipe a card, tap a phone – and presto! Stuff appears.

Harris Perlman @OtterMarket

A macro question from a non-macro guy: is it reasonable that energy companies (oil/gas/coal) seem to be pricing in a significant decline in energy prices, at the same time that the market is freaked out about continued inflation? Aren't those views significantly contradictory?

Check out previous issues of Weekly Ideas👇 

• The Rational Cloning: Weekly Ideas #39

• The Rational Cloning: Weekly Ideas #38

• The Rational Cloning: Weekly Ideas #37

• The Rational Cloning: Weekly Ideas #36

• The Rational Cloning: Weekly Ideas #35

And check out previous issues of Mosaic Musings (now The Rational Cloner’s Library)👇

• Mosaic Musings #3: Royalty Companies: Inflation, I win; Disinflation, I Don’t Lose Much. [Inflation Crisis Series]

• Mosaic Musings #2: Disinflation → Inflation Inflection Point? [Inflation Crisis Series]

• Mosaic Musings #1: Tin [Molecule Crisis Series]

The Rational Cloner’s Library

• Table of Contents

• Fertilizers

• Royalty Companies

• Tobacco

• Black Stone Minerals (BSM)

Authored Books

• Nick and Zak's Adventures in Capitalism: Words of Wisdom from the Nomad Partnership Letters

• The Little Book of Investing Ideas: A Curated Collection of Investing Wisdom