Show host Gene Tunny interviews former investment banker Will Nutting, who runs the investment newsletter “Nutstuff”, to discuss emerging investment opportunities in 2024 and beyond. Will explains how he focuses on unloved areas like coal, uranium and cannabis that many investors overlook. He also emphasizes the importance of factoring geopolitical risks into investments and outlines opportunities that he sees in gold, Bitcoin, distressed debt, and investments in Russia. Will discusses how paying attention to geopolitics can provide an investment edge and outlines his process for gathering insights from his extensive network. Please note that the discussion is meant to provide general information and not specific investment advice.
Please contact us with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored.
You can listen to the episode via the embedded player below or via podcasting apps including Google Podcasts, Apple Podcasts and Spotify.
About this episode’s guest Will Nutting
Will is the Founder and CEO of Nutstuff, a no-nonsense, investment newsletter with 2K+ subscribers, including CEOs and CFOs of some of the world’s biggest financial institutions, founders of the most exciting startups, investors at the highest performing funds across private and public markets, and HNWIs.
Will has been writing about and investing in markets since the 1990s, focusing on U.S. and global equities, and has had the good fortune to interact with and exchange ideas with many smart investors.
What’s covered in EP219
- Investment banking, media analysis, and providing a better perspective. (1:59)
- Geopolitics, equity research, and market trends. (7:32)
- Potential peace treaty between Russia and Ukraine. (13:24)
- Geopolitical tensions, global debt, and the future of Western nations. (16:53)
- Investment strategies and geopolitical risks. (22:51)
- Energy policy, ESG investing, and the future of fossil fuels. (28:31)
- Investing in various market caps, including small and mid-cap stocks. (34:01)
- Crypto investing and market trends. (36:29)
- Geopolitics, investing, and global markets. (42:30)
- Investing in distressed debt and real estate. (47:29)
Takeaways
- Will Nutting believes opportunities exist in unloved areas like coal, uranium, offshore drilling, and cannabis/marijuana stocks.
- Geopolitical risks like those in Ukraine, the Middle East, and China/Taiwan need to be factored into investments.
- Distressed debt could provide opportunities if the economic situation deteriorates.
- Will is positioning for 2024 by focusing on gold, Bitcoin, commodities producers, and select technology companies.
Links relevant to the conversation
Will Nutting’s newsletter Nutstuff:
Transcript: Exploring Investment Opportunities in 2024 and Beyond, w/ Will Nutting, Nutstuff – EP219
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Will Nutting 00:04
But the people who actually can open their eyes and go and look at what’s going on in the world, there’s, there’s never been a more exciting time to my mind to make money in equity markets.
Gene Tunny 00:16
Welcome to the economics explored podcast, a frank and fearless exploration of important economic issues. I’m your host gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, in this episode, I sit down with former investment banker will Nutting who runs the nuts stock newsletter, who shares his views and where he sees opportunities emerging in 2024. And beyond. Among other things, we talk about gold, uranium, Bitcoin, distressed debt, and even about investments in Russia. You’ll hear Will’s Frank and fearless perspectives on markets and about how paying attention to geopolitics can give investors an edge. What I really like about Will is that he’s contrarian in an intelligent way. As always, when we’re talking about investments, this is all meant to be general information only rather than specific investment or financial advice. If you have any thoughts on what will Orion have to say in this episode, or if you have any ideas about how I can improve the show, then please get in touch. You’ll find my contact details in the show notes. Right. Oh, let’s get into it. I hope you enjoy my conversation with will nothing will not end. Thanks for joining me on the programme. Absolutely. Pleasure. Great to be here. Excellent. Well, well, you’re the author of the nuts, staff newsletter and what are you doing in your newsletter? You’re surveying the global economy, are you?
Will Nutting 01:58
Well, listen, I mean, that stuff started when I worked in their world of investment banking, or well, the broking on the investment banking side. And I got sick to death of ultimately having to retranslate unintelligible conclusion plus politically correct research. And I got to a stage whereby I just thought that the what the investment banks were producing was stuff that was doing anything but giving you an investable conclusion. And it was also perfectly hedged, that no one really came out of it, as I say, with, you know, with with a clear opinion. But I think by nature, I was always reasonably opinionated. I guess from my perspective, you know, I, when I left investment banking, I left broking at the suggestion of a few clients, I set up on my own COVID kind of hit about 12 months later. So suddenly, everybody, suddenly everybody was at home, and no one was in meetings. And that stuff really took off. And I did this as a say, when I worked inside a bunch of us investment banks. And of course, he used to put me head to head with the research departments and the heads of compliance, because very often, I was saying things that I probably shouldn’t have been saying, or I was saying them in a way that maybe I shouldn’t have been saying them. But I think we’ve, I think we’ve got to a world now where if you wake up in the morning, and you watch the BBC, or CNN or Fox, or you watch any network in Australia, and you read a national newspaper, either either, sir, that if that’s your media and your news input, you’re probably never more ignorant than you’ve been in the last 20 or 30 years as to what’s really going on in the world. And so not stuff came about as as really to try and have me doing my curated sources that I built up over 30 years where I really felt that I had a line into whether it be stuff going on in China, whether it be stuff going on in Ukraine, whether it be stuff going on in the Middle East, whether it be stuff going on in markets, I felt that if I had a curated bunch of contacts, who I knew themselves was much of truth seekers as I was, we will be able to put together a network or a platform whereby when we discuss subjects, and we try to do a curated narrative of the market, what’s going on in the market, where the world is going, why things are actually even happening in the world today, which we can talk about. When you got out the other end, you’ve got something that was readable. And that kind of connected the real world and the financial world. And so if you were sitting at home, trying to run your portfolio, or you’re time poor, and you’re trying to run your business, and you’re having a quick look at your investments, when you end up sitting down with a guy that manages your money or you end up sitting down with yourself managing your own money, you actually have a tool that hits your inbox a couple of times a week that actually really points out some of the anomalies but it also does the so what on markets because you know, we can talk about all this stuff and you know, if we woke up tomorrow Morning, I found that we had a, we had a peace treaty in Ukraine. We had a ceasefire in Ukraine. I guess the key question to ask is, how does that make you think differently about portfolios positioning? What would you own? What would you sell? Probably more importantly, and how would that change your bias as to how you would look into 2024? So I get a lot of this kind of stuff, you know, and as I say, it’s not just me, I have some extraordinarily talented and interesting inputs, which is to say, I’ve built up over nearly 30 years of doing this.
Gene Tunny 05:30
Gotcha. Okay. Just a couple of questions based on that will, which investment banks have you worked for or worked with?
Will Nutting 05:42
So I was so I know, I started my life at Fleming’s, which was a UK or Scottish actually investment bank that got ended up being bought by JP Morgan, doing Japan, which was pretty, pretty soon after I left the military as a soldier. I then to be honest, didn’t find a natural gravitation towards Japan. And I did to the US. So then I ended up going to work for Cowen, which was a Boston based investment, and they got bought by sock Jen. And then I went from Cowan, to, to Bank of America, while to Montgomery, actually, which ended up being bought by Bank of America. That was a West Coast technology house. And we did a lot of West Coast, West Coast growth, sort of growth, investing. And then I went from Bank of America, Lehman. And then I was at Lehman for five and a half years, I thankfully left before they disappeared in a puff of smoke. And I ended up in two or three other investment banks. So the last one I ended up doing was, was a steeple. Which, which is a regional regional investment bank in the States. So I always had a big bias to the US. But in a lot of the global investment banks that I work for, I always realised it was a relative game. And so I would always look at, you know, whether that was the rest of the world, European, Asian, UK equivalent stock sometimes to play a similar theme. Yeah,
Gene Tunny 07:05
gotcha. You mentioned that you thought that some of the analysis coming out of investment banks or analysis in the media is not telling you the full story. And you thought you could add, you could provide a better perspective, what do you think they’re missing? Do you have any examples of where you think that analysis has been deficient? And how have you improved on it? Do you have any examples of that? Well?
Will Nutting 07:34
Well, I think there’s, I think there’s a whole bunch of different areas. The first one, I would say, is that, I think a lot of the alpha that you can make, and maybe this isn’t necessarily Alpha inside the big index positions in markets, but a lot of the pure equity alpha you can make, you can make from frankly, just being contrarian and being brave. And so an example I would have of that as we were looking at the the, the sort of the craziness in ESG and the illogicality of a lot of the s ESG. Well, three years ago, and we picked up on a big theme and coal. There were no investment banks had coal analysts anymore, in the same way that hardly any investment banks, heavy heavy cannabis or marijuana analysts anymore. And we looked at an opportunity in coal, we saw how small the market capitalizations were, and we thought these companies and these stocks are not going anywhere. All they’re doing below the radar screen is paying down debt. And they’re ludicrously cheap. They’re ludicrously unloved. And when everyone hates something, it must go up. And when everyone loves something, it must go down. So it was a simple investment metric of becoming quite well known for doing a lot of work on, on on coal stocks. So I guess, inside investment banks, there was a lack of bravery. There was a there was a cow tearing to oh, gosh, evil coal, coals bad. But the perverseness of thinking that coal is bad, but somehow lithium mining and copper mining is all done with people wrapped in cotton wool in nice fluffy places is madness. So it was the double standards of a lot of corporate policy towards which companies and which industries you can cover. So while I guess it’s the lack of bravery, and a lot of the people use the expression woke I think woke is a bit of an over simplistic way. But I think it was, as I say, it was a lot of selectivity in wanting to be seen to be doing the right thing. And I’ve always thought that, you know, the road to hell is paved with good intentions. So, that was the, that was the metric on which we started to look at some of the, you know, uncovered areas. I think just in general with equity research, you know, having a view and having an opinion, that goes against the establishment, you know, was is a very difficult thing for most people to stomach. And I obviously talked about the geopolitics and the politics quite a lot because I think it It matters as to markets today. So I got a very resolute view on Ukraine, which was behind the tragedy, there was no possible way Ukraine was was going to be was going to be Russia and a fair fight. I wrote very early, it was David and Goliath. And you know, and David had a chance against Goliath. But, you know, once he ran out of stones, you know, he was never going to be Goliath. And I think what we’ve seen, even in the last 24 hours, with with Putin has been a lightning flash visit to to, to Abu Dhabi, and now in Saudi is the ramifications of that are that, you know, the world is completely and utterly misread what has gone on in Ukraine and where that’s going to go. So I think that’s obviously something that, you know, as we’ve been very resolute on the Middle East, to be honest, I’ve, I’ve stood back from. But the somatic that I’ve had for the last two and a half years, was a world of a rise of the oppressed and the revenge of the colonised. And I guess that was my sense that we were in a three to five year secular move, where the West has got all the entitlements, and all the debt, and all the arrogance, and the emerging markets. And the global South, because of the ubiquity of a lot of us technology, have had their eyes open to the fact that they’ve been oppressed and exploited by the West for many, many years. And that is gradually coming to an end. Now that has ramifications for a dollarized world that has massive ramifications for countries in Central Africa, which, you know, most people couldn’t put up, put on a map, but look at what’s going on in Niger, who suddenly woke up, you know, Mr. Macron, in France suddenly woke up one day when Niger had a coup, and realised one, the CFA franc was going to come to an end and Niger. Secondly, he was suddenly not going to end up with any uranium for his nuclear power stations. So again, that’s how the geopolitics plays into the market. And, you know, the, the ESG new energy world. So I guess, you know, they’re just a few examples of things that I kick around and look at. But as I say, the the overall sense to me is that you’ve got a bucket of market capitalization. In seven, seven US stocks, a lot of luxury stocks in Europe, a few selective stocks in the UK. And the opposite end of the market, you’ve got lots of short classes of potentially really, really exciting areas of alpha, if you’re willing to really go and kick the tires and the equity while in the equity world. And so I want to have a keeper first in the big stocks, because I think you need to do that from the perspective of staying relevant to index fund managers. But so people who actually, you know, can open their eyes and go and look at what’s going on in the world. There’s, there’s never been a more exciting time to my mind to make money in equity markets.
Gene Tunny 13:09
Right. Okay. Okay. Very good. Now, can I ask you about, you mentioned about Ukraine. And so Putin has been in the Middle East? And I think you were saying that? I can’t remember the the words exactly. But it is there going to be a peace treaty there? Or is there going to be some sort of deal cut in between Russia and Ukraine? Is that Is that what you’re suggesting? Is that going to happen? And basically, Ukraine is going to surrender some territory?
Will Nutting 13:40
I don’t know when I don’t know what my timing. My suspicion is that the timing is much sooner than anyone thinks. I think I write that the head of the US the head of the Russian military, and head of the Ukraine military both share the same Christian name, which is Valerie. I’m not I think it’s spelt in a rational way, not in a not in a Western way. But I think what I’m what I’m being told, and what I understand is that there are ongoing conversations at the moment, and they are effectively deliberating over really three things, which is, you know, the location location of talks, the way in which elections would be would be conducted. And three, who would actually well, I guess, for really, who would be the the arbitrator of that, which I think probably it would be Modi in India, Modi’s probably trod a more neutral path on Russia, Ukraine than any of the major countries. And and then I guess it’s the the nature and relationship of Ukraine with with joining NATO, but I just say I don’t, I think what we’ve ended up doing, if you think simplistically, Nixon and Kissinger spent many, many years, ensuring that China and Russia stayed well apart so that we didn’t get sandwiched in the middle. And what Mr. Biden and his friends and Mr. Johnson and everyone else have done in their wisdom is they’ve ultimately pushed the Russian bride into the arms of the Chinese bridegroom. And when you look at the reciprocity between Russia and China, and you look, I think I heard levens and gave say this, he made a very good point, which is that Russia have everything that China don’t have in China, really, the Russians don’t have. So really, the two fits together, conceptually on paper incredibly well, apart from the fact that I don’t think the natural bias for middle class Russians, is to want to go to China any more than the natural bias from it’ll cause Chinese to stay in China, I think they want to go to the west, they want to do Western things. Exactly the same thing applies in Saudi Arabia, you know, to to to people in Saudi Arabia. So I think that, what we need to do is we need to have a weenie if anyone needs to have regime change, we need a regime change in the West. And the regime change in the West needs to realise that Russia is a is a is a collection of states and countries that have 11 of the world’s 24 time zones. This is a massive, massive landmass of hugely diverse cultures, and to wish for the destruction of Russia to wish for a maimed and angry Russian buffalo is to see massive instability in the world. And so to my mind, a Western rapprochement with with Russia, is desired. And I think the to go back to The David and Goliath analogy, I think it’s very real, to my mind, that you will see more signs of of a peace treaty between Russia and new between Russia and Ukraine, I think sooner rather than later. And I always I’ve always said, and I’m not original in saying this, as you know, as soon as the money runs out, the world will move on, or, you know, middle class England and middle class America all have flagpoles. And, you know, they just it’s like a semaphore competition. You know, it’s the Ukraine flag one day, it’s the Palestinian flag the next day, the Israeli flag, the next you know, it’s who can put flags up and down. And it’s very fickle, and it’s very fast moving. And the world will move on very quickly, tragically, to to the next complex, which by the way, might be in a might be Guyana, next quarter, Venezuela, for example.
Gene Tunny 17:30
Yeah, yeah, I’ve been, I’ve been following that. Now, do you think that the West will, or the United States and Britain will try to, you know, it’ll try to repair its relationship with Russia so that it splits? It doesn’t have Russia and China in a block against it? Is that the suggestion? Is that what your is that your best?
Will Nutting 18:02
I think it goes back to the to the point, which is that if you’re sitting in the UK, you’re you’re sitting in the US, and you have a pragmatic view about where you are at in your, you know, take the Ottoman Empire kind of equivalent analysis, right. All the Holy Roman Empire, where are you? As I say, you’ve got I mean, I looked at the I was watching the the presidential debates that the leadership debates in the US last night, I mean, and the level of rudeness and offensiveness and unpleasantness it, it just plums new debt. So, you know, we live in a society now that is so disrespectful of institutions. And there’s a reason for that. The institutions have a lot to bear for that. Secondly, again, we have massive indebtedness, huge amounts of entitlement. And also, we have all the old people. And it’s an unpopular thing to say, but, you know, can we afford to continue to support, you know, the elderly populations that we do? And the answer is probably not, but no one’s willing to have that conversation, you know, politically, because it’s certainly in the UK, UK, politics is probably the same in Australia, you know, you know, the grey vote is been the vote that politicians have been trying to bribe and try and get hold on. So, for me, it’s a it’s a case of evolve or die in western case. And I’m not saying it’s in the next 12 months. But if you look at the history of the last 20 years, and look at all the conflicts that you know, we’ve been involved in, as we’ve obviously follow the US into a lot of these conflicts and in good faith. You know, that was all great when money was free. When money when we were waging a few wars in Afghanistan and places that most Americans and most Brits couldn’t put on a map. It was all great. But you suddenly take the cost of money from costing nothing to positive real rates. And you’ve got a completely and utterly different world to play with, you know? And not only are you seeing that emerging in the world of private equity, those people that, you know, that walked on water and could do no wrong, you know, look at the look at the look at the performance numbers in that industry, if you actually really break out the numbers for those funds since inception. So, when I look at it, as I say, I just think I think the world is changing. And if I was sitting there, and talking to, as I do on occasions, talk to politicians, it’s understanding that it is a case of evolve or die in many respects.
Gene Tunny 20:37
Yeah, yeah, absolutely. Can I ask you about the Middle East? What? What are your thoughts on? What will happen there? Is there still a risk of a wider regional conflict involving Iran, involving other states in the Middle East?
Will Nutting 20:56
I don’t know that I have a greater perspective on this than anyone else. I mean, I was horrified by, you know, we’ve all seen the equivalency of the equivalency of what went on the seventh of October would have been, you know, the IRA in the UK, killing 9000 people, we can do all these analogies, and I’m not going to get taken down down a rabbit hole there. You know, I go back to the end of the Ottoman Empire in the in the 20s. I go back to Sykes Pico, when, you know, Frenchman, and an Englishman sat down with a crayon, probably with a glass of port and drew up the lines of the Middle East. But I guess when I stand back, and I take away, you know, go back to a time when these countries didn’t exist. And try and look at the true history of this. And then fast forward to where we are today. I think it’s incredibly difficult to see how a two state solution exists in the Middle East, and how we get to that stage. But again, I think what we’ve got to have is we’ve got to have leaders in the West, who have an interest in not accelerating and not exacerbating these conflicts. And I think we need to try and find a way of of dealing with this, you know, because the optics of the world looks at what’s going on in the Middle East. And as shocked as they are by what happened on the seventh of October. I think they’re also looking and saying maybe there is a an unacceptable civilian civilian casualty rate to the operations that are going on at the moment. So as I say, I mean, your guess is as good as mine, when it comes to Iran. I think I think the Iranian leader is I think he’s visited increasing in Moscow today. I mean, Iran seem to be, you know, seem to be very quietly, obviously playing a, you know, a very, very strong game here, you know. But as I say, I don’t want to even think about escalation at the moment. And I’m hoping that, you know, I hope that cooler heads can prevail.
Gene Tunny 22:57
Okay, we’ll take a short break here for a word from our sponsor.
Female speaker 23:03
If you need to crunch the numbers, then get in touch with adept economics. We offer you Frank and fearless economic analysis and advice, we can help you with funding submissions, cost benefit analysis, studies, and economic modelling of all sorts. Our head office is in Brisbane, Australia, but we work all over the world, you can get in touch via our website, www dot adapt economics.com.au. We’d love to hear from you.
Gene Tunny 23:32
Now back to the show. So I guess what I’m interested in well, is to what extent are you factoring in these geopolitical risks going forward, such as you know, what’s happening in Ukraine, although it sounds like that sort of, that may not be a big factor in the future, given that there could be some sort of a deal? What could happen in the Middle East? And also in China, Taiwan? Is that is that a risk? To what extent are you factoring these potential? What would you call them zones of conflict or flash points into your investment recommendations?
Will Nutting 24:19
So I run the cyber sort of this little farm, this little portfolio that I publish every Monday and it’s, it’s, it’s got a few million dollars in it, and it’s, it’s a small amount of people’s money, it’s not open to external investors, and I don’t want to be a fund manager. But what I do want to do is to see that people see that I eat my own cooking, and I reflect, you know, I reflect my my thoughts and my ideas in six or seven key Cymatics we have a macro overlay thematics we use a bunch of ETFs to ultimately just reflect where we think the interesting parts of the world are. And then obviously, we have six kind of key Cymatics like global digital infrastructure and energy But infrastructure and stuff like that. So so it’s a fairly simple logical portfolio. As I said, factoring these thematics in Yes, I do. But But conversely, we sold out of most of our US defence stocks seven or eight months ago. By way of example, you know, we still have a some exposure to, to fertiliser, so, you know, feed the world. But on the whole, you know, I don’t, you know, I’m very, I’m very selective on, you know, trying to play the kind of war in conflict trade inside equities, because I think the market gets, you know, the market gets pretty savvy with it. We still own big systems in the UK, we’ve owned, we own some dividends, Ryan Mattel in Europe. But I think, you know, if you looked at the defence stocks as an example of what you are what you asked me, I think what we’re discovering now, as even the nature of warfare is changing. And, you know, though, these defence platforms are vital and hugely important. And whether it be aircraft carriers, F 20, twos, F 30, fives, multibillion dollar incredible aircraft, you know, also low level, you know, almost analogue warfare, when it comes down to drones, etc, you know, is something that the world is waking up to, you know, I’ve got an, you know, I’ve got an aircraft carrier, and you’ve got 50,000, you know, I’ll raise you your aircraft carrier to 50,000 drones. Now, you know, I’m sure that a state of the art aircraft carrier has the technology to repel drones. But I suspect if there’s a really concerted drone strike on a on a carrier group, you could probably inflict some, some fairly cataclysmic losses. So to me things like the thick of things like the the defence sector is much more important than, Oh, gosh, we live in and we live in a world, you know, let’s just blindly go and own defence stocks, oh, gosh, we live in a high conflict world, let’s blatantly just go no, no oil stocks, you know, I prefer the capital spending infrastructure, infrastructure cycle type names, you know. So when it comes to energy, I like infrastructure, I like uranium has been a still a huge and has been a big focus of mine for the last three years. I like offshore drilling. I like the lateral businesses to offshore drilling. Where you’ve also got, you know, huge cash generation and debt being paid down and such. So we’re pretty selective actually, about how we, how we play those thematics inside portfolio. The portfolio? Yeah.
Gene Tunny 27:39
Fair enough. Can I ask you about uranium? So are you do you think we will, there’ll be a resurgence in demand or a resurgence of investment in nuclear power? Is that what you’re projecting?
Will Nutting 27:55
Uranium is? I hate you know, I hate to say things are that simple, but to my mind, uranium is the is the is that it’s, it’s a simpler supply demand story, as I’ve seen, in my 30 years of doing this, you know, you’ve got, you know, 150 100 60 million pounds of production, you know, you’ve got children terminan of demand, if you if you use an analogy of oil with those numbers, it will be the entire focus of the world on the deficit in on the deficit in oil. You know, I mean, I think it’s 25% of US electricity production comes from from from from nuclear. And also, it’s not just a case of digging uranium out of the ground, putting on a truck, driving it to a power station, and loading it into a furnace, you know, you’ve got to actually process the uranium, you’ve got to produce the fuel rods, there’s a huge bottleneck. So there’s been a complete lack of capital spending in the uranium space, because there’s been a complete lack of capital spending in the energy bridge. And I guess I want to divert to this and just say that, when you look at energy policy and energy spending, you know, I think if we were sitting down with 20 year olds or our children and explaining the world we want to get to, in terms of energy, the other side of the chasm. I think we all kind of know what that looks like with wind, wave, solar, etc. But we have to supply and we have to, we have to provide baseload power, and baseload power. When you think about the energy bridge from the Old World to the New World, is, unfortunately, a lot of fossil fuels. And it’s going to be a lot of fossil fuels for the foreseeable future, which is why met coal is still a hugely exciting space. But when it comes back to Uranium, again, uranium is an area where it is the lowest cost the lowest cost electricity apart from hydro and utilities, have completely and utterly under understood went on shoring up their supplies, and then load on that the unknown quantity of small modular reactors coming into the market. I just think you’ve got a tremendous call option. The only thing that surprised me about uranium is one, how tiny the market capitalization is. So for most index players, it’s kind of irrelevant. Don’t talk to me about uranium. I mean, I can’t even I can’t even think about it. It’s not It’s nowhere in my index benchmark, apart from Cameco, that’s about the only stock that I think has any kind of relevance to people. But I think for anyone who’s smart, and actually tries to look at where the world’s going, I’m surprised that uranium isn’t $150 upon.
Gene Tunny 30:45
Right, gotcha. Okay. Okay. And you mentioned offshore drilling. So this is consistent with your, your expectation that we’re still going to be relying on fossil fuels for several decades into the future. So I suppose that yeah, that makes sense. It is, it is. And I,
Will Nutting 31:08
when I try it, when I try to think about energy transition, and energy position and energy policy, it kind of takes me back to school prize giving. And it makes me think, you looked at me strangely, and I know
Gene Tunny 31:23
that I was just thinking, I mean, it’s a very, it’s a very British thing, isn’t it? The school, the school prizes I was thinking of? There’s a great Jeeves and Wooster story with the prizes, but we won’t divert on to that. But go ahead, go ahead.
Will Nutting 31:38
So that the words think about it is that it’s about the ESG Industry and Energy Policy, which is that, yes, the industry and the whole environmental policy, what it’s done is it’s continued to reward. The, you know, the nerdy kid at school with the pedal back pedal that crosses, he was super bright, who always won the science prize, okay, from day one, continually given the science prize. To me, that’s the green energy company, they were they started good, they stayed good. And they got even better at being good. The problem is that the most exciting and most interesting price to reward at school price giving was a really badly behaved hit the big kid who had a real presence at school, who was the badly behaved, disruptive guy who was running around making a mess everywhere, causing damage, doing bad things to other kids who suddenly became a better behaved kid. And you can then give them the price of being better behaved. So when I look at energy, and that’s the brown energy companies, that’s the occidental is that the Exxon Mobil? That’s the BPS? That’s the Australian equivalents. It’s, you know, whoever it is. And so I think, if only governments and if only investors and investment mandates could take a look at these companies and say, right, you know, what, we need to start rewarding the businesses here, that kind of do a better job of evolving, not only is it going to be a good thing to attract capital back into these companies, who can continue to invest in the energy bridge, as I, as I, as I call it, you know, but also, I think it’s, it’s just going to send the right message to the industry. So again, I I’m not, I’m not a climate denier, I’m not an ESG dislike or hater, I’m just a pragmatist. And so I think that the second wave of ESG, whatever, however it looks, that will probably evolve in the next, you know, one to five years, I think it’s going to be much more joined up thinking much more honest, and much more realistic. And so, as I say, I think you know, the cop boondoggles of the last few years, you know, the latest one we had last week, I think just I think we’ve seen Peak Peak nonsense, and I think, peaking ESG and as peak climate nonsense, dissipates, I think some really interesting investment opportunities will come out the other side of it.
Gene Tunny 33:59
Okay, okay. Very good. I liked how you described the you’re talking about the shot glasses before you wanted to have some shot glasses? What’s in your shot glasses at the moment? Well, can you give us some idea of what those those are they? Are they speculative investments, how would you describe them? Well, I
Will Nutting 34:25
think so. I guess just to paint a scenario for this. The I don’t know what the data is, but probably over 90% of equity. Investing is passive. So let them take it that it’s passive funds, it’s machines. It’s it’s quants, it’s everything else. So what’s left over at the end of the day, is either you as a retail investor or as a you know, as an active investor scrabbling around saying, Have I got an edge on Microsoft have I got an edge on? Can I come over? Do I have an edge on Palantir eran AMD versus owning and video to get my exposure to artificial intelligence. Am I the smart? Am I smart enough to have worked out that IBM as a forgotten as a forgotten cap, a technology mega cap might actually have technology, I might actually be really, really relevant to AI, I could the AI Halo suddenly shine above AB IBM, which is what you’re seeing happening at the moment, for example. Now, I talked about some of this stuff, and I write about it. And I’m hugely focused on it because it’s hugely relevant for alpha and for performance. So I view those as the kind of buckets or those the buckets of market capitalization. What’s really interesting is in small cap and mid cap world up until about three weeks ago, it was literally like all the pint mugs in the world and disappeared, you know, and it was either as I say, a bucket or as a shot class. And the shot glass is all the all the tiny stuff. So a lot of it as I say it’s uranium stocks, its offshore oil stocks. It’s, you know, the old gold stock, its coal, its special situation, things that we have an healthcare like, really interesting company called cardio that deals with the some of the aftermath of COVID vaccines with pericarditis and myocarditis. It’s a it’s a gold company that has a hidden uranium company inside it that we look at and focus on a lot. I’ve said coal already. It’s tankers, some tanker stocks, you know, if you look at what’s going on in Panama, and look at what’s going on was in potentially in the Suez Canal, you’re beginning to see new tankers are not being built. You’re now actually seeing some tankers having to go round the whole south coast of America without going through the Panama Canal. Think about what that does to day rates on tankers, etc. It’s Kryptos. I have a positive, a cynical, I 55 years old, right? So I’m kind of a middle aged, middle aged white guy, with a with a natural cynicism towards tattoos, ponytails and people talking to me about crypto. But I’ve absolutely right that we absolutely own it and invest in it. And and I think that some really interesting, fascinating trends. And the final thing I can say to you, is we also cannabis and marijuana stocks, which remind me of kind of coal in 2020. We have we have some positions there as well. Yeah,
Gene Tunny 37:25
yeah. Very good. With the crypto. You mentioned that there are some trends that you’re you’re excited about, what are those with crypto?
Will Nutting 37:37
Well, I think to be to be positive about to be really positive about crypto, and to ripoff, the, the the cynicism that you see out there of it doesn’t really solve any problem. It’s, you know, it’s it’s the currency of criminals and perverts and, and, you know, weirdos, I think you have to get your head out of the developed West and go into emerging markets and go to the spec is done Korea, Stan, you know, and actually see how people use crypto see how people are entirely comfortable with having crypto wallets, see how people use crypto as as accurate as a security for loans in the same way that, you know, crowd funding has worked in the West. And so as I say, I think when I look at the risk reward on crypto when I look at Kryptos, entire market cap still being about 1/10 out of gold. And I look at the usability of crypto and how I see crypto developing that usability. And I think I’m right saying there’s 22 about 22,600 Different Kryptos but 53 or 54% of Kryptos market cap is basically and effectively Bitcoin and Aetherium you know, so to me, I think, you know, if you don’t own Bitcoin, or you don’t own Aetherium, or synthetics or any kind of defy plays, and you’re sitting in front of grown up investors, I think you better have a really, really good reason why you don’t you better own lots of gold as an alternative. And I’d suggest that if you actually get on a plane and go and travel to the global South, the parts of the world that are growing really fast, with dynamic young populations, without old people without entitlement, and with no debt. You’ll come back feeling a whole bunch more about crypto than you would if you’re sitting in your office in Mayfair or Washington.
Gene Tunny 39:42
Yeah, yeah. Okay. Okay. Now, what’s your process for, for getting these insights? So you mentioned you’ve got a you’ve got an extensive network, have you got a team working for you?
Will Nutting 39:55
So we have I mean, we, in terms of kind of, you know, full time employees as basically as effectively, we’re pretty much a team of two in terms of actually running the business on a day to day basis. But I have about five people who some are all clients of mine, some of the people I’ve known for many years, who, on the whole, we’re all super successful, overtired. And all living in interesting parts of the world, and all doing really interesting things. But also, they massively wanted to keep their head, their head in the game in terms of markets, and macro and geopolitics, something else. And so what happens is that, you know, a little bit like having a research department, you know, if I want to, if I want to look at global video games, or I want to look at Coal, I want to look at tankers. I have my own go to sources where I would go to, you know, we’re not writing, probably writing a five page report. To my mind, what I’m trying to do, and that stuff is to make people question make, make, make people think, on occasions, make people laugh, and try and make or save your money. And so these sources, and these, these people that kind of work with us, our partners, if you like, are just incredibly useful as one as kind of sounding boards, but also as amazing sources of perspective and information. And, you know, they are on the whole, you know, in some respects, just trying to do what I’m trying to do, which is to home, you know that that truth seekers they are. And they’re, they’re realists and pragmatists in terms of how they look at the world. So we have, you know, regular conference calls, we have regular brainstorming sessions every week. And so I have a really good, experienced team that I kind of a second check on me. And on occasions, you know, we’ll sit on a call and I’ll go on, am I completely off the wall on this on? Am I am I? Am I mad thinking, thinking about this in this way? You know, how? And then the other question, I guess I ask is, how consensus? Am I is everyone else talking about this? Because if everyone else is talking about something, or everyone else is focused on something, you know, I don’t want to be the last guy at the party drinking the mind sweeping the drinks, you know, you know, I want to be the kind of first guy at the party and I don’t really mind if, you know, I’ve got to make small talk with, you know, with the granny, you know, until the fun people turn up. Yeah.
Gene Tunny 42:18
Okay. And so who’s your newsletter pitch that will? So I mean, you mentioned like, you’ve got high net worth individuals. Like, who would who’s going to benefit from this?
Will Nutting 42:33
I think it’s, you know, it’s pitched at it? Well, when you look at the content of it, it’s got a bit of everything for everybody, because it’s got some thought provoking stuff on the geopolitics side, it’s got some real world stuff that, you know, I just pick up from people sending stuff to me, and, you know, I scrape batter, you know, meet other media stuff and such, like, you know, but on the whole, if you’re time poor, if you’re intellectually curious, if you have to look at markets, or you have to look, or you have an interest in understanding how the real world meets the financial world, and how that looks, it’s really pitched to anyone in that environment. So, you know, we have anyone from one of the most respected, macro hedge fund managers in the world, who uses it as a, as a real world check. You know, if you, if you sit inside a big New York hedge fund, for example, you know, 90% of your employees probably going to chauffeur driven car to work, they get a chauffeur driven car home, you know, they, half of them were a lot of them fly privately, you know, they have restaurant quality food delivered to their desk. And, you know, it’s such like, most of them don’t even ever look out the window, and actually go and look at what’s going on in the world, you know? And so we’re kind of a reality check. We’re a real world reality check as to look at this. Have you thought about that? And as I say, Well, anyone who receives that stuff really, as somebody who’s who’s intellectually curious, and all we’re trying to do, I think, is to make people feel and look a little bit smarter about a whole bunch of subjects. And the process. What I love about it is there’s a huge reciprocity, which is that peep, I get a normal amount of feedback from people. And so if I’m really, if I’m really taking an aggressive stance on something political or geopolitical or something about the market, you know, it’s very interesting to me to know how much pushback I get and who gives me that pushback. But as I say, it’s a hugely broad church from some of the most respected entrepreneurs and investors in the world family offices, but also I have a lot of people’s kids, you know, who’ve left university who’ve been given their first, you know, 20 or 20 or 30 grand, they’ve just started an equity portfolio. And they’re trying to work out, you know, they’re understanding the power of compounding mathematics, and they’re trying to work out what they should own and what they shouldn’t own.
Gene Tunny 45:02
Okay, so it sounds like it is not necessarily out of the out of reach for people who aren’t hedge fund managers, then I’ll put a link in the show notes to it so people can check out the details. Gene, our
Will Nutting 45:19
system is, you know, we give people a month free or whatever it is. And, you know, as I say, I mean, it’s 85 pounds a month is a meaningful, it’s a meaningful investment for a new for, for a letter. But it’s not a newsletter. It’s a facts, ideas and conclusions letter. And so it really does drill down to and give you investable conclusions. And that’s one of the reasons why I think, you know, we charge what we charge is because if you make frankly, one decent investment decision that it pays for itself, you know, hand over fist.
Gene Tunny 45:51
Gotcha. Okay, as global focus, so you’d have a focus on East Asia and Australia. global budget of global focus.
Will Nutting 45:59
Absolutely. And one of the reasons I travel as much as I do, is because I go to, I mean, I can’t tell you how many countries I’ve been to this year. But you know, Namibia and Africa, South Africa, Mozambique. I’ve been all over the stands as Becca Stein, Craig iStan, I’ve been to Panama, I’ve been to Colombia, just to name a few. And when I go there, I don’t just go there to lie on a beach. I go there, and I meet people who run, you know, I’ve wandered around the office base port, the guy who, who, who runs the port in Valencia, Spain, Namibia, understanding what’s going on with oil discovery and infrastructure in the energy and oil business in southwestern Africa. You know, I went and met the guys who run all the all the power transmission business in Namibia as well. And understanding that relationship with what’s going on with South Africa and their power problems in South Africa. So we really do go and meet and try and understand what’s going on in places. And then I’m just looking for those nuggets of interesting stuff to explain to other people why and how those things are happening, but also looking for investment opportunities.
Gene Tunny 47:10
Okay, okay. Very good. Final question. Well, 2020 24, what are you expecting? What do you think? Do you have any ideas on what the what big developments there will be? What are you? How are you positioning yourself for 2024?
Will Nutting 47:28
So I think 2024 if I’m, if I’m, if I’m right, I think there’s a there’s a slim chance that we get an acceleration in in a past acceleration in inflation. But on the whole I, I’m hoping I’m hoping and thinking that the current escalation that we’ve seen in kind of geopolitics comes down. I don’t see China, escalating with Taiwan, I think quite the opposite. So I see some rapprochement of some of the geopolitics. But I also see a big drive to nationalisation. So I think, you know, countries are increasingly going to be looking after themselves, you know, there’s going to be an anti Davos psychology to most to most countries, you know, I think we’re going to be going through this huge election cycles. So I think that’s huge election cycles is going to feed that I think it’s going to feed economic nationalism. You know, when it comes to, you know, I think gold will go higher, I think Bitcoin will go higher. I think Russia will potentially be a really fascinating investment. I think coal alongside uranium will still be great investments, I think oil arguably will still be a very good investment as well. So on the whole I’m still focused on kind of the bottom end of Maslow’s Hierarchy of Needs pyramid and less focused on the top you know, not saying okay, not saying that we are going to have some incredibly good opportunities and technology and I’m absolutely not the guy tried to write off artificial intelligence. But I do worry that the seven big technology companies in the world it for entitled indebted West that needs to cut debt I do worry that they are such serial underpay as of tax that the potential opportunity for for tax rates to have to go up materially inside these big technology companies. I think to me is a big concern.
Gene Tunny 49:35
Yeah, gotcha. Okay. Okay. Right. Oh, we will not own anything else before we wrap up. This has been terrific. I love your insights into being contrarian how you can benefit from it. I mean, not I mean being contrarian in an intelligent way. I think often there’s a lot of you know, there is contrarian ism and as may not be helpful, but I think you can In contrary and in an intelligent way, and I think you’ve demonstrated that with some very good examples. Any other points before we wrap up?
Will Nutting 50:09
No, I think if I was sitting talking to young people in school, and I didn’t want to talk and kind of financial language, I’d say, I think the kind of the, the Anglo Saxon world needs to get back to its its culture, and its balance, and its realism. And its focus. And I think we need to focus on getting back to our traditional strengths. And I think what’s interesting is, that’s what Russia and China are doing. And I think that when we stand back, and we look at how we’re going to navigate this next very difficult period, you know, of multiculturalism, and everyone having a phone, everyone having an opinion, everyone’s seeing what’s going on in the world unfolding on a daily basis on a screen, you know, I think we’re gonna have to go back to basics, and I think it’s going back to basics in society. And when it comes to investing, it’s going back to basics and investing, which is, you know, free cash flow, you know, you know, low leverage, and me as a shareholder, and an equity holder, getting returns. And if I’m looking at the toxic areas of the market, it’s probably going to be a world where where, you know, distressed debt is going to be a fascinating opportunity. And as well as I think, you know, global macro, it’s not going to be private equity. And it’s probably given its and it’s probably not going to be bonds. But I mean, I’ll let the bond I’ll let that I’ll let the bond guys pontificate on that.
Gene Tunny 51:38
Gotcha. Just before we go, What do you mean, what were you driving out exactly with distressed debt? There? was so I mean, I think what do you have in mind
Will Nutting 51:47
that if I started today, if I, if I started today, I listened to a podcast, um, yesterday with the head of Blackstone’s real estate business, and a lot of the fat not understanding really any of the language that she uses. She sounded to me like, you know, she’d been schooled in the same school that the principles of, of Harvard and Penn University have been schooled in, which is seen in all the news worlds, and I was 20. For us. You know, I, I think that the, the opportunities that have been unlocked in the next two years, as retail investors are kind of locked in the church and, and set fire to, as they have opportunities to go and buy the retail charges of the these big private equity firms offer distressed offerings. I think that if you’re sitting there with a big pile of cash, the opportunity to go and buy, you know, cheap UK assets. But the same way, I think the opportunity to go and buy exposure to very cheap real estate assets is going to be huge. The question for me is, do you want to own the equity? Or do you want to own the debt, and I suspect being as high up the capital structure as possible is where you want to be. And he probably needs it, and you probably want to get paid to wait. So I’m going to imagine that I think the debt side is more interesting than the equity side. Okay,
Gene Tunny 53:12
okay. Gotcha. Right. Oh, well, not. This has been fascinating. I really appreciate your insights. I will put a link in the show notes to not stuff and yeah, I encourage. If you’re listening in the audience, and you like what we’ll have to say, then yeah, definitely check that out. I think it’s, it sounds like you got a great process. There will end. Yeah, I really enjoyed your insight. So thanks so much again, for your time. Obviously,
Will Nutting 53:42
we can sign you know, we can we can sign people up for it. We give people a month or a couple of months for free. And you know, that we can work on that basis. But listen, thanks so much. Really, really enjoyed it.
Gene Tunny 53:53
Excellent. Thanks so much. Well, alright.
Will Nutting 53:55
Thanks a lot.
Gene Tunny 53:58
rato thanks for listening to this episode of economics explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact at economics explore.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.
54:45
Thank you for listening. We hope you enjoyed the episode. For more content like this where to begin your own podcasting journey head on over to obsidian-productions.com
Credits
Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com.
Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.
