Episode 32: Contrarian Macro Investments with Chris MacIntosh

Ben Lakoff, CFA
February 15, 2021
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In this conversation I sit down with Chris MacIntosh, managing partner at Glenorchy Capital, and author at and have a wide-ranging conversation on how to position your investment portfolio.

Trends like Greenwashing are in full force, but have you analyzed what this really means for associated investments?

Greenwashing is just one tiny piece of the bigger picture. What are the second order effects of these shifts and how do you position your portfolio accordingly?

Chris is incredibly knowledgeable about these topics and goes into into why many materials, like Copper or Nickel, might be poised for more upside over the coming years and why investors should be bullish on Energy in general.

Enjoy this conversation with Chris MacIntosh

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Show Notes

0:00:00   Welcome and context

0:01:47   What is your background?

0:07:45   What is the greenwash bubble?

0:23:35   The transition to green energy

0:29:10   What fuels you think will become more important in the future?

0:37:21   What will happen if we suddenly shift to non-fossil fuel energy?

0:43:20   What sources are you monitoring?

0:49:10   How do you protect your investment portfolio?

0:55:33   What are your thoughts on Gold and Bitcoin?

1:02:41   How can the average investor get involved with copper?

1:04:20   What energy sources would you invest in?

1:11:00   Where can people find out more about you?

Show Links

Capital Exploits

Glenorchy Capital

Episode Transcript

Ben: [00:00:00] Welcome to the alt asset allocation podcast, exploring alternative investment opportunities available to the everyday investor. Here’s your host Ben Lakoff.

Hello and welcome to the alt asset allocation podcast. In this conversation, I sit down with Chris Macintosh. He’s a managing partner at Glennonarchy capital and an author at capitalist exploits. A T. And we sit down and have a wide ranging conversation on how to position your investment portfolio. Very similar to some of the other ones. There are trends like greenwashing that are in full force, but have you analyzed what this really means? And the associated investments involved? Greenwashing is just one tiny piece of the bigger picture.

What are the second order effects of these shifts and how to position your portfolio accordingly? Chris is incredibly knowledgeable about these topics and goes into great detail on why many materials such as copper or nickel might be poised for more upside over the coming years. And why investors should be bullish on energy in general.

Before you listen, please don’t forget to like, or subscribe to the podcast or even better leave a review. This really helps more people find the podcast and keep the thing going. It really, really helps. There you go. Enjoy this conversation with Chris Macintosh.

Chris, excited to have you on today.


Chris: [00:01:29] It’s great to be here. Thank you. Thanks for having me.

Ben: [00:01:32] Yeah, absolutely. Other side of the world. happy to make this time change work. I found you from your fantastic blog posts, investing for the greenwashing bubble. And I definitely want to go very. Deep a lot deeper into all things, climate hysteria, greenwashing, but first you’ve been featured on a number of podcasts, but for my listeners that don’t know who you are.

Can you give a little background about who you are?

Chris: [00:01:57] I run a macro asset management firm called den AKI capital. We, we manage private money for basically high net worth individuals and a few institutions. What we’re looking at doing there is really, it was originally designed as a, as a true hedge, mostly against some of the risks that exist in the market.

And increasingly I believe, and we can talk about this as we go forward. It is what we’re doing is actually more than just a hedge it’s it’s law, increasingly one of the only sort of places where we’re investing as some of the only places that actually do make sense to invest in, in in the current world, which is very unique, shall we say?

So there’s that. And then the research that we do for that, we. We decided that we would actually put that out to people that couldn’t afford our services or, or didn’t want them for whatever reason, whether you might be some asset manager who, who then you manage your own book. So we’ve got a massive plethora of different types of types of clients that actually buy research, which is really the combination of the work that we do in all key.

And so we sort of put that out as like a smorgasbord of our thoughts and our. Ideas and so on and so forth. And so that’s, that’s the crux of it. That’s, that’s what I’m doing now. I’ve got a background in investment banking way back hundred years ago, and that was sort of where I cut my teeth. And, and then lived the corporate world too.

To sort of venture out on my own. And I built a real estate business investment and trading business way back in the mid two thousands, which was short and sharp. So I sort of built that and ran it for about four years, five years, and then sold that all up in September of 2006. I was just based on a train that I sort of identified there, which was this ridiculous pushing down and, and of interest rates.

So subsequent to that, I’ve been built a venture capital firm based on what I deemed to be a large trained unfolding, which was a movement of capital into risk. Risk assets when you don’t, when you can’t find yield in the market, which is certainly increasing problem that we’ve had for the last two decades, really.

In order to have an, a, a portfolio that returns what you would want. One has to take more risks some way, you know, when your, when your yield component, your bonds are not returning, what play should realistically will theoretically return, then you have to get. Get that alpha from somewhere. And so that somewhere is, is, is in risk your assets.

And so I ask myself, what is the riskiest. Asset class, if you will. And that was venture capital. So that was one component behind it. The other component was while that was taking place, we had a significant move in terms of bureaucracy for companies which are going public. The costs to go in public were just increasing dramatically.

The the compliance, all of that. Bullshit that you have to do. It just got worse and worse. And so it, what it means for businesses was that right. The, that carrot of accessing the capital markets wasn’t as juicy as. As it might have looked at otherwise. And the stick was, was getting bigger. And so I was like, money’s just going to stay private.

Why would it go public, the dynamics changing anyway. So long story short, I built a venture capital fund to try and take advantage of that shifting capital, which worked. And then by 20, or actually about 2015, I looked at that and thought this stuff’s nuts. This is just. I it’s bizarre and I can’t be putting my money into this anymore and I’m enhance, I can’t be putting client money into it so that I sold in 2016.

As we now know the market carried on for another, at least two years. To the extent where we had all sorts of fun, like we work and all of that. So, and, and while that was taking place, I’ve been doing really what I’m doing now and looking at the markets and the sort of geopolitics of the world and so on and so forth, and really just training my own book with, along with a good, very good friend of mine.

Brad, who now runs, do you have an argue with me? And and then we eventually kind of came to the idea or the conclusion that. You know, this opportunity in front of us now is so extreme and so bizarre. And so. Huge that too, to not do it at a greater level of scale would be doing it, doing ourselves and in any justice.

And so we kind of took the leap to, to set up what we’re doing now. So that’s that’s here we are. And we’re sort of, I think in the first or second inning of, of what I think is probably the third major trend of my professional career. Yeah, unfolding.

Ben: [00:07:13] Interesting back in those earlier, not so much the unprecedented times that we live in now, but I mean that shift into the risk assets, all, all very much aligned.

This third wave, when you talk about this, this. Big third, a third move of your investing career. You’re talking specifically about this green wash bubble. Is that, is that right? Correct.

Chris: [00:07:37] That’s part of it. That’s just simply part of it. The, the, the, the main component behind it. I believe is basically inflation.

We’ve had this deflationary impact, which really was post-World war two. Supposed to world war II. We had globalization and expansion of the pie. The pie was like, everybody wanted a piece of the pie and we kept expanding. And you had, you know, you had NAFTA and you had. You know, international trade agreements that were, that were put in place, it was really just bringing more and more participants into that global economy.

And, and so that is always a deflationary impact. Especially given that we added what 4 billion people or something of that nature to the global workforce that weren’t previously in it. And those 4 billion people were, will prepare to work for $10 a day. And so that’s always going to have a deflationary impact on goods and services and everything else that comes out of that particular melting pot.

So, so we’ve had, that was, you know an extraordinary drained that we’ve had really, yeah, since Bretton woods and it sort of grew and grew and grew and. We, we could see that that was changing geopolitically that was changing in as early as 2014, 15 sort of rising nationalist interests. It’s, it’s, it’s almost like entropy.

So you have something that, that has a momentum and as it wanes your. Your desire to get more and your ability to get more out of the squeezing, that particular orange diminishes. And so the whole psychology of. Individuals and the psychology of nations and the psychology of, of cultures and everything else goes with that.

And so that, that then translates as well into politics. And so you could sort of see this as an angst coming through. And and so we feel, we felt that that was going to certainly go back causing a shift in. From deflation to inflation where, where that globalization was an inflation impact, we were going to go through a de-globalization or, or lessening of globalization, even if, if you want to think of that way which even if it just changed at the margins would have added a significant change on asset classes.

Largely as a consequence of this. Status quo situation that you are gone. I have experienced for our entire. Adult lifetimes, which has been that experience was pretty easy. You just invested based in certain asset classes, you could sit back and go and drink a beer and not worry too much about it.


Ben: [00:10:24] It’s all your cheaply manufactured goods and all of these things, right?

Chris: [00:10:27] Yeah. Yeah. And so. And what that does is you have that feedback loop where you can more and more certain with outcomes because the longer something lasts, the more certainly are that it will continue to last, but in actual fact that that may be the case, but not always.

And certainly where the dynamics underlying it are changing. And it continues. It’s, it’s like, it’s like building a tower that goes higher and higher and you don’t build your base any wider. It’s at some point it’s going to fall over because it doesn’t have the ability to stand up the infrastructure or the foundation of it is insufficient for its continued height.

And so that’s broadly what happens in any market, in any bull markets. And that’s what we felt was going to take place with respect to them. Deflation versus inflation component. And again, we only needed little changes for that to be fairly dramatic. When you look at the various sectors that we’re interested in, many of them are down 80, 90% from their highs.

Many of them have massively curtail supply. I could talk about all sorts of industries of throw out something like uranium uranium industry is roughly 90% of the companies that existed in the previous bull don’t exist at all anymore. They’ve gone and vaporized, they just don’t exist. And so what happens is you have a concentration because that industry sort of exists, but the participants in it are much smaller, but they now know a hundred percent of the industry.

So that’s a concentration of. That industry and you know, that that’s been, been happening in many different sectors. So that’s sort of where we’re very interested and that provides one with a significant hedge, but also coincidentally, a normal summit sort of pace, a metric opportunity on a go-forward basis.

So that broadly is, is looking at it. And then there’s things like the greenwashing you mentioned, which come into that. So energy as a, as an example there’s this hysteria around climate change and the, the desire to rid ourselves of carbon emissions. And so the target full of ads is being oil and gas industry largely amongst them.

And and so we’ve seen incredible divestment of capital out of. Those sectors out of those companies and even within companies themselves many of them in the Western world have have basically committed suicide or in the process of committing suicide whereby they’re saying, yes, we’re an oil company.

BP is a very good example. So BP have come out and say, we’re no longer going to be investing in fossil fuels. So if you do want to be long energy and, and buying all long fossil fuels and you go out and you buy BP. You’re not, you’re not getting that because they’ve saved that they’re not going to be doing that.

And so all of that contributes to supply destruction, enormous supply destruction, and then the companies that do want to play in that space. Can’t get funding. You try and get funding as a pension fund, as a sovereign wealth fund. That they’ve all done been to vesting of those sectors. And I say, or it’s not in the Western world, that’d be the wasting of that.

So, so that presents us with a very unique set of opportunities because unless some miracle comes along we are not this transition that is keeps being. Talked about is, is it’s not a transition it’s it’s it’s mathematically not happening any way near to the extent that the mainstream media is putting out.

And even where it is gaining some sort of ground the old world, if you will, isn’t going away in any shape or form. And that’s been true of mankind’s history from when we transitioned from wood to call when that took place, we didn’t, we continued to utilize the same amount of wood as an energy source.

What we did was we added capacity and then we use coal and coal became the dominant force. And then when we transition from coal to natural gas and nuclear coal remained, we didn’t, it just, what happened was the overall share. Of energy consumption got taken up by natural gas and oil and nuclear, but what happened was we just added energy consumption, right?

It’s not an, it’s not a net net, zero world in that we, every time we’ve had the ability to come up with some new technology we’ve expanded. We haven’t said all that’s a flat world. We don’t, it’s a bit like your cell phone. I remember, we used to just be able to make a phone call and where the old bricks now, then they added capacity.

Now you’ve got like army gigabytes and bloody terabytes or whatever of storage capacity and everything else on your phone. And you know, even 10 years ago, we would’ve looked at it and said, do we need all of that? And we would’ve, we would have scratched our heads and not, not really necessarily be able to come up with what we would do with all of that storage capacity.

But yeah, we are today and now we’re streaming videos and you and I are talking on some, you know, so we just add capacity. The same thing is true in the energy world and that’s always been true. So what we’re looking at now is this idea that we’re going to not only add this new component of renewables, which in themselves don’t mathematically compute, but let’s pretend that they did.

Let’s pretend that we were going into this world where solar and wind and unicorn farts were going to be the biggest thing we would historically, we would still utilize natural gas, coal oil, all those old things to the same extent. And so when we look at that space, it’s not actually possible at this point in time.

Given the investments that are, are, are in those spaces. And so the only way that corrects itself is with an increase in the price of those particular commodities. So, so that’s a unique set of circumstances. The other flip side of that is if we do look at this renewables and I’m not discounting renewables entirely.

There was a space for them. And certainly there will be technological advancements and we will have a, there will be more usage of them be that as it may, if we’re going to transition to this world, if you look at the underlying factors, which few are prepared to do, and we say, okay, what would it take to actually achieve this?

In other words, if we just take W we, we did a study, which we published for a publication probably about a year ago. Now what we did was we looked at the United Kingdom just as, as an example. And we said, okay, the government there has come out. And they’ve said that this is what their projected plans are for this carbon neutral world.

And by 2030, they wanted to have 50% of the cars or electric and Canada anyway. So like I find. Sounds good. Sounds wonderful. What is it going to take to actually get there? We’re going to need an incredible investment in battery technology. We’re going to have to deem powerless batteries, which means a massive build out of the grid because the grid cannot, the grid can compete and can’t is struggling now.

So if we’re going to move to this, we’re going to have to have an incredible investment into the power grids and you basically selling the power. But as a science, just looking at the battery components in that, what we found is that by. To, to achieve these goals that they had said, we were going to consume all of 2000 and eighteens copper supply global copper supply.

And so that would have meant that every other country in the world would no longer use laws, any copper. And we found the same things with cobalt and lithium. And, and then that, again, that’s not even looking at the energy. The grid build app, which is required, which requires an enormous amount of steel and requires an, and you can’t make steel without coal metallurgical coal.

That’s how we make steel. And so these green ideas of saying, Oh, it’s just electricity. It’s like, well, where does electricity come from? It comes from. Palpable nonrenewable sources typically are not renewable sources. And so even if we look at wind turbines, they take a fucking fuck load of steel. You can’t make steel without the coal.

So we need to have coal mines.

Ben: [00:19:34] And the big required to actually put these things up. Right. I mean, they’re flattening the earth. They’re bringing in diesel powered trucks. They’re put on diesel powered ships,

Chris: [00:19:44] amounts of diesel. Right. And so. So it’s all fine and good. You know, this facade of, Oh, it’s going to be green and you put, put a pretty pictures of flowers and birds tweeting, and you go, this is what the world’s going to look like, and you go, cool, let’s break it down and you break it down and you realize that it’s a complete facade.

It’s just absolute garbage. Now to a certain extent, we don’t actually we don’t need to rant and rave about this. We can simply look at those markets and say, fine. One or two things is going to happen. Magic happens, which is renewables, but it’s going to require enormous amounts of copper, cobalt, steel, et cetera.

And you look at those markets, copper’s all time, low, many, many investments, MIS investment funds. And we’re not one of them, fortunately, because we don’t answer to any, anybody other than ourselves. Or not allowed to invest in them. And so, and so if that world is the one that takes over, we’re going to have a massive bull market in those underlying resources that are required to make that happen.

And history would indicate that it’s not going to happen and we still will utilize these other resources. And those have been divested of massively. And so. You kind of can play it. So that’s a heads. I win tails. I win situation to a certain extent, which is extraordinary because I’ve not typically seen that sort of set up in my investing career.

So that’s one of the components that we’re very interested in. And then further to the topic of deflation versus inflation. When you increase the cost of energy, you increase the costume, everything. How do you manufacture. When, when your cost of energy time, what do you do that you have to pass on their costs in some shape or form.

And so you might not make any more widgets. In fact, you might make less widgets, but they’re going to cost more. It’s just the way it is. And then once you’ve made them, you’ve got to transport them.

Ben: [00:21:55] And I saw on that increased cost, right. To the income consumer. Right. So

Chris: [00:22:00] it’s

Ben: [00:22:00] yeah. To summarize,  this transition will likely happen, but it’s just not as quickly and not as clean of a turnoff, this old intern on the new, as a lot of people are pricing in.

Is that kind of the core thesis here?

Chris: [00:22:19] I don’t think transition is the right word because, and I know we’ve utilized it in the past. We’ve utilized the word transition when we moved from coal to nanny gas and oil. But if we’d gone with break down those numbers and we take a look at what’s happened in those markets, the reality is that we still consume.

Actually more coal today than when coal was the sole dominant source.

Ben: [00:22:44] And so consumption is up, right?

Chris: [00:22:46] So even, even if we just use the same amount. Yes, we might have this quote unquote transition, which is, which is really just meaning we’re going to utilize other sources of energy more than we used to analyze those.

We will still need those sorts of sorts of sources of energy. And that’s at this point in time going to be very difficult because they’re not, there’s been no investments made in them. And so, so we’re setting ourselves up for for a problem. And, and then as if that wasn’t bad enough and I hate to be a bringer of bad news, but while that’s taking place, there’s also geographical component or geopolitical component.

So there’s this extraordinarily strong push in Western nations to divest of fossil fuels. And to punish anybody that does. Now, if we took Germany, Germany is a very good example. So Germany has been at the forefront of, of going green we’ll call it. And so they got rid of their coal, coal fired power stations, coal mines.

They go to the nuclear because they said that was dodgy. And they now have the highest cost of electricity in all of Europe. They also import their energy from France, which is nuclear and Poland, which is called and Russia, which is natural gas. And so all that they’ve done is that they’ve.

That is created a third party for their energy sources while costing them more so they can stand up and say, Oh, we’re green and green because Germany is dotted with these horrendously ugly wind turbines. Which they’ve used and don’t don’t work basically to the extent that they really need to clearly.

And the other component behind that is they have subjugated themselves to foreign players because you cannot, and I keep saying this, you cannot have political security when you don’t have energy security. And so now. And, and while they’ve been doing this, they’ve been pushing this through the EU, through the United nations, through the world, economic forum, through these international monetary funds, these various organizations, they’ve been forcing other countries to tow the line and do the same thing.

And so much of Western Europe is under the thumb. And what ultimately has happening is that much in Western Europe is now under the thumb of Russia. Because that’s where the energy comes from. And so this is happening on a global scale. And when, when, when oil traded at minus 40 back in February of this year, one of the reasons that took place was obviously the lockdowns and the subsequent demand destruction.

But while that was taking place, the Saudis and the Russians. Looked at this and said, this is our opportunity to completely vaporize our market or our competitors. And so they just flooded the world with oil. Knowing that they were doing it at below cost, knowing that nobody needed it. Which incidentally, one of our tribes Dean was to buy 10 cars because they all are above ground stories ran out.

And where are you going to put it? You put it on tankers. So that that’s just an aside. The point is they put out a business, largely shale Nigeria’s shuttered, many of the Wells, Mexico, the same thing. Venezuela already shot themselves in the head by instituting Marxism then. So they’re not a player any longer.

And what we’ve had is this extraordinary concentration of wealth in the middle East and Russia. And that’s where we stand today. So it’s not just a sector play, but it’s a geographical geopolitical play at the same time. So one needs to be a little bit careful with respect to how you execute on that trade.

Absolutely. Like I said, don’t, don’t go buying BP thinking that you’re going to want to be long energy.

Ben: [00:27:15] Right. And I, I definitely would get into that, like how an investor can actually play this, but I mean that no country has political security without energy security. I think that it’s, and you’ve said it multiple times in your blog posts, but it is a very, very valid point.

But I think at the same time, there’s no. There’s no way that the world runs without energy, whether it be produced from fossil fuels or clean energy, or what have you. I mean, the world runs on energy and I know you’ve done quite a bit of work, at least in that, with that blog post about breaking down the different types of energy sources.

I mean, From an investor perspective. I mean, are, are you bullish on uranium? You’re bullish on oil and gas, like walk me through kind of how you choose choose to play this. I guess

Chris: [00:28:08] the answer is an easy one and the answers that we’re bullish on pretty much all of them. So they all have different dynamics behind them.

The. The critical thing that’s, that’s really extraordinary at this point in time is, well, there’s two things. One is we have extraordinary supply destruction, okay. Across the energy space in the Western world, we’ve taken this view that anybody that’s in the fossil fuel space is you and I would, would be better off beating.

Babies to death with baseball bats, then getting into that energy industry.

Ben: [00:28:49] True. I mean, if any of these things, if BP came out with a cure for COVID, people would still hate it right there. They’ve they’ve divested their opening coffee, coffee stores at this point. And it was like the market rewarded. It’s very, it’s very unloved to say the least.

Chris: [00:29:07] Yeah. Yeah, you could look at them and say, wow, you know, in a normal world, and we don’t live in one of those in a normal world, you would have this transition where capital was actually making that decision. Capital is saying, we’re not investing in this, but we’re investing in that and that being an alternative.

Right? And so when you look at the wind and solar and these, these are there’s alternatives. Some of the solar companies are flying. That’s, you know, that’s done well for us, but when you look at the underlying components, you say, okay, well, how do you make Tesla? Tesla’s flying because people are going, Oh, well, we’re going into this world where everything’s going to be an electric car, if you want to be long tastes.

And I think that’s a ridiculously stupid thing to do, but let’s just say you wanted to, you buy a nickel. That’s what you buying nickel is dirt cheap is insufficient supply of, but if we’re going to have thousands of thousands of these electric vehicles on the roads, we’re going to need so much more nickel and is currently being mined and nobody’s investing in it.

And so we’re interested across the energy space and we’re playing it from multiple different angles. So it’s. There’s that component. The other component, which we alluded to touched on, which is the geographical geopolitical one is, is, is I think more important than people realize. So for example, if you and I went and we invested into a

An oil and gas company in Texas now at the moment, there’s obviously the elections going on. We’re going to find out what that all transpires to, but if the Democrats got in, they’ve already told us that they’re going to ban fracking. Okay. So you, we might, there might be a boom in natural gas, but if we’ve got an invested in a company that’s in that geographical location, it goes to zero or close to.

So you, you, we’ve gotta be very careful increasing across the sort of geopolitical space as to what are you investing in, what country and where. And so watching those trends is, is very important. You know, we, we are, or maybe five months ago now went through our entire client’s portfolios. And we broke down companies by domicile where they’re listed and then where the assets off.

And so when, when you break down, each of these companies you look at and you say, okay, if you’ve got assets in a particular jurisdiction, which is not looking favorable towards that industry, That’s a real problem. If the company itself is domiciled in that region, that’s less of a problem. And I’ll give you a description, an example of how this is likely to play out.

So I grew up in Africa, in South Africa in particular when the the head something called black empowerment. Coming in and basically what they said was, okay, you’ve got a company here. We need to change the ownership structure of this. We need to give 10, 15%, whatever it is towards this new group of people.

And basically you don’t know that’s, what’s going to happen. And so what the companies did, especially if you were a large corporate that had assets all over the world what they did was they said, okay, okay. We’ve got, let’s say a mine in Namibia, and then we’ve got stuff in Australia and we might have something else in Indonesia.

And then we’ve got some of these assets in South Africa. They did was they just strip them out. I said, okay, we’ll form a new entity here. This, this new entity owns Lee’s. These are the African assets that gets diluted down because we don’t have a choice. They’re going to take it. And that’s what it is.

But all these other entities. That are now created. They just go and create a new entity and in say, London that listed on the London exchange, and that would just buy the Namibian acids or the Indonesian assets or whatever it was both. And you’re off, it’s gone and that’s what happened. And so they didn’t.

So, so for, for the, for the comp the countries coming in and the bureaucrats coming in, trying to steal essentially those acids They could do that, where they were dominant with those assets were under their own purveyor. So that’s where it’s important. So we looked at our home portfolio and we’d looked at the various countries and which sort of path they’re going down and said, okay, we want to have them in favorable jurisdictions.

If, if this does happen and you’ve got a company that’s say listed in Canada, which is really these resource capital of the world, but then they assets or in Ukraine doesn’t matter because if that hits them, they’ll just go fine. We’ll set up a new company in Ukraine. We’ll sell the assets to them. And it was just walk away.

You can’t like, what are you going to do? But where the, where the assets are domiciled in that jurisdiction where they can steal it, that’s a, that’s a significant rate. So the other side of that is just actually looking for, you know, companies that are. Sort of outside of, of regions in the world that we having this, this this hysteria take place, we just don’t have an interest in, in taking that risk.

So it’s a, it’s a very interesting time to be investing because it’s, it’s got so many different elements and components that are taking place.

Ben: [00:34:43] There are, there’s so many moving parts and something that I I’m always thinking about is if it’s, if there becomes some, some what of a self fulfilling prophecy because of capital flows, right?

You may make the right call, but because of. The political environment or the, the way that capital is flowing you know, that, that correct thesis doesn’t play out, you know, and you’re just, you’re fighting against these forces that are so much bigger than even though this makes sense, in theory you know, you’re, you’re fighting against bigger forces so that that’s, that’s always in my head with a lot of these plays because.

In my mind. something like nickel, So if Teslas takes off and everybody’s driving a Tesla and a UK bands, all fossil fuel cars, even though logically, it doesn’t make any sense, like from your article. I mean, passenger cars are 6% of the CO2 emissions. Like it’s nothing don’t focus.

you’re, you’re looking at your, you’re measuring yourself to the wrong, the wrong thing, but. You know, if if every country in the world bans fossil fuel gasoline powered engines, then everybody’s going to drive a Tesla and that’s, that’s just, that’s the place I’m, Nicole goes wild. I think this is where I always, and this is there’s a buyer and seller on every, every market.


Chris: [00:36:05] And, and there’s other components, you know, I love looking at second order effects. So because sometimes the first or effects get pressed. In this instance, they’re not, not yet, but the second order effects of what you just described are higher prices on everything. If we’re all to drive tasters around, what will literally will happen is blackouts.

We will have insufficient energy to power. Those vehicles. It’s that simple. It’s mathematically going to happen. And so. What only need to do is go and travel to some third world countries that experienced blackouts. And none I’ll tell you that none of them experienced deflation. Why? Because, because the cost of cost of producing everything goes up in a, in a given day, let’s say you’re going to work nine hours, but three of those hours, there’s a blackout where you’re just not as productive as you were before.

It doesn’t, you know, all you’re going to bring in generators, diesel generators as far as happening. Right. In fact, one of my clients, very wealthy gentlemen who lives in California bought himself a diesel generator. Cause he’s sick of, of that sort as home. So

Ben: [00:37:29] his roof is covered in solar panels and he drives a Tesla too.


Chris: [00:37:34] I don’t think he does, but, but but, but the reality is that you, you, you do what you have to do. That’s just for his own comfort, but if you’re running a business in, I’m just using California as a, as a. I think so humble, but wow.

Ben: [00:37:49] This is Brand candidate

Chris: [00:37:51] from, this is what happened. Yeah. And so then you get inflation across the board actually stagflation.

And then basically many of our, our other positions go up as well because you can’t manufacture at the same productivity levels when your cost of energy is higher or when, not just the cost of energy, but your actually your availability of energy. Isn’t there we’ve you don’t for an hour every day, you don’t have power.

Well, that’s, I don’t know. 10% of your productivity that’s gone away and your optics is still the same. You’re still going to pay the same salaries. You still got the same range. If you’d like, it’s you can’t, you can’t plug that hole any other way than charging more for the, for the goods that you can go to produce.

And then also what happens is that the marginal players in that space. Can’t make it work. So they go away what happens, that’s least supply. And so, you know, I’ve seen this across Africa, especially because you know, they don’t have, they don’t have functioning markets and, and energy is such a big component behind it.

People don’t realize that. And we’re going, we’re barreling full speed ahead down this path of Clomid hysteria which is backed by as far as I can tell junk science. And it is what it is. I mean not yet. It’s sort of, I’m actually not here to, to make an argument about climate change. You can have whatever view you wish on that.

I’m here to make money. And and so. That’s it is what it is. And coupled with that is this de-globalization. And with de-globalization what you get is national nationalism. So I mean, I’ve written articles about this as far back as three years ago, saying that we’re going to get trade Wars. We’re going to get sanctions.

We’re going to get impediments into. Functioning markets and that’s supply destruction. The other thing that is likely to take place is we’re going to get nationalization of resources when, when these things become critical. Governments will step in and go. This is too important. We have to maybe support it will be, we’re not going to export it anymore.

Or, you know, it becomes a national security interest and and that’s where we’re headed to.

Ben: [00:40:26] So, and we, we got a taste of that with COVID in the U S right, like massive supply chain disruptions, because we’d been outsourcing this for. Decades, you know, and at such a lower cost and so much that we’ve basically forgotten how to do these things on our own.

And then you, you pick it apart a little bit and you realize, actually we don’t even have the capacity to build this on our own anymore. It’s been outsourced. And then as a, as a by-product of globalization, which is great for the consumer lower costs, but when it becomes national security and disasters, it’s, it gets pretty.

Pretty nasty pretty quickly. I’m curious. I mean you’ve vote on, on your Twitter. You, you have quite a few tweets about COVID situation. I, it seems like we’re. Pretty well aligned with that. And we’re recording this on November 3rd. the presidential elections are going on in the U S right now.

 here in the next couple of hours, I’ll, I mean, honestly, we’re not gonna know for weeks. Right. But you know, these we, we should start to have some numbers and I. You never know. I’m curious, what sort of, what, what are you monitoring right now to w what would change your mind about these, these investment thesis that you have?

Whether it be prolonged COVID shutdown or change of power in the U S or, or, you know, God forbid some something worse. Like, what do you, what are you monitoring? Keeping on the pulse? It’s very little,

Chris: [00:41:56] I mean, there’s, there’s some players that we’ve got around the Around the elections. Largely that’s been ammunition stocks, which we bought three or four months ago, which had done very well and we’re holding on.

But in terms of the rest of the portfolio, they were representing deep value before 2020 came along. And what has done now is it’s just, it’s just made them. You know, I couldn’t have written a novel around what’s taken place and it had been believed. And it’s, it’s just created the most extraordinary set up for, for these sectors.

I, I just, I couldn’t have imagined it. So, you know, it’s a bittersweet situation and that It’s, it’s very exciting to see that taking place and to see the inevitability of what is going to transpire and being able to hopefully position accordingly to, to profit from it. And I say bittersweet, because what’s happening is not good.

It’s not good for the world. It’s not good for humanity. It’s not good for societies. And I, I. I give up all the profits that we have made and all that we will make to have it look something different, but I can’t, the world doesn’t work like that. And so the, you know, the first thing you gotta do is just try and predict yourself and, and work with what you have.

So you know, these shutdowns are, are are creating. Huge supply destruction. Those supply chains that you mentioned have been decimated, there are being in the process of being changed. Many companies have to rearrange how they go about sourcing products and that’s without things like sanctions And at the same time, many of them gone away.

So again, we have extraordinary supply destruction. I mean, agriculture is one of those spaces that we’ve literally been looking at it for about five years and we’d never done anything about it. And now we’re, we’re long and very long, but, you know, and I’ve spoken to CEOs across the world in that space.

It is phenomenal. And I hate to say it, but we’re, we are likely to have food shortages and famine within the next easily next 48 months. Just absolutely myopic legislature that’s been put forward. The, you know, the, these lockdowns are just absolutely insane to give you some numbers. And this is from the UN in terms of the number of people that are now globally on the brain could starvation.

For every one person that’s died of COVID and that’s with COVID and from COVID. So those numbers are a little bit skeptical in any way, but even if we just take that number for every one person that’s died, we now have 35,000 that are on the brink of starvation, likely to die. So. To the idea that this is about health is just complete politics.

And we haven’t considered the suicides and the alcohol abuse and drug abuse, all of the attendant issues that are, that are yet to come and there are hitting already. So it is what it is. Largely what we’re looking at is. Is an extraordinary shift of political, social and economic power from the West to the East.

And it’s not necessarily because the East is screaming ahead. They’re literally just sitting there watching the West destroy itself and championing alone. No, I just saw China coming out and saying, yeah, we’re, I’m all for going carbon neutral by 2060. Yay. And the building over a hundred coal-fired power stations.

So they pay lip service to it. They champion their competitors to carry on down this path that champion them to carry on with lockdowns.

Ben: [00:46:07] China China taking the long game with all of this right there. They’re fighting a war and the rest of the West can just preoccupy ourselves with these little battles and our four year elections and our little initiatives that over the next five years, but China’s always thinking a hundred years out and how they’re just going to.

Going to crush us. Right. And it’s securing food security and land and all of these places that are agricultural rich and yeah. Playing, playing the very long game. That’s the, that’s the unfortunate reality with a lot of this. And I think, I think for me, I, I, whenever I have these conversations and start thinking about these you know, and I, I don’t want to go down the whole Capitalism is broken short-termism discussion of those things.

But I mean, it’s quite easy to get very pessimistic and every scenario ins and pitchforks and torches and something very dire But from an investor perspective, one, how do you stay optimistic and to w what do you, what do you do to protect your portfolios or the portfolios of your, your clients in these, when thinking about like these long longterm moves like this,

Chris: [00:47:24] that’s a great question.

I guess the first thing to realize is that. The world’s been through massive transitions in the past and our ancestors at some point in time had to make decisions that mean that we’ll still have today and they were difficult decisions. The right thing to do a hundred years ago. If you were in Europe was to go to the United States.

That was the law. That was the best thing that you could do was the best thing for you. Does the best thing for your offspring? It’s just the way it was now. That would have been difficult if, if we were German speaking or Italian or Polish or anything, Russian That, that it was difficult. Didn’t, didn’t make it the wrong decision.

I was told the right decision. I feel like we’re in a similar situation today. And so when you, when you look at the long arc of history, what we’re experiencing now, isn’t all that unique. It has unique attributes to it. It has technology and it has a whole lot of different attributes, but in, in terms of the.

The actual experience itself, it’s not that unique. So I think to a certain extent that lends you some sort of comfort, you go, Hey, humanity has been through this sort of stuff before we will come through it. What do you then got to realize is that it is, it does represent danger and it does represent opportunity.

So I think we can’t be myopic to it. And in order to move forward, the best for me, the best way to keep your own sanity is to have a plan and to, and to work towards their plan and comp constantly watch and assist to see whether you’re on track so that you have some level of control. The worst feeling that you can have is where you don’t have control of your life.

And I think that’s the. So for me, the answer to your question is how do you gain some control? So in our investment portfolios, that’s what we’re, that’s what we’re doing, or that’s what we believe we’re doing. We might be wrong. But we feel like we have a very strong grasp of what’s going on, how best to build a diversified portfolio, to, to adequately manage that.

Then there are other issues obviously around where might one locate oneself and, and, you know, there’s a, there’s a separate topics of discussion that we can talk about them some other time. But you know, there there’s

get the sort of massive transitional shift that we happen now of wealth.

That’s a massive opportunity. At some point, you’re going to look back and people will be then, wow. If you could have like, just got that half, right. You know, that was phenomenal. You know, I spent some time just recently with it all framed in, in Vienna and he’s a Russian origin and we were talking about.

You know, the, the, the history of Russia and his background and his family, grandparents, and so on and so forth. And one of the things that was really phenomenal is, you know, when the USSR broke up, those who understood what was going on, just made out like gangsters. I mean, literally that’s, you know, now, so and I’m not suggesting going and stealing things, but just an extinct.

You kind of have the opportunity today to steal things, to get them for prices that are just absurd. So, you know, that’s, that’s a huge opportunity I think, to, to to have that kind of up the experiences that we’re having today, which are traveling and are stressful and, and create anxiety. Is a way to dispense with that anxiety is to have a plan to tackle it head on.

That’s, that’s the best way to do it. I think.

Ben: [00:51:45] Yeah, that makes sense. I mean, so a lot of the things that we’ve talked about, I mean basic materials Oil energy, uranium. Like these are, these are kind of the core thesis that we’ve discussed, but I’d be curious your opinions on. A store of value assets. what role does gold play in one of these well-diversified protected portfolios? And then the other thing that I’m always constantly thinking about is something like Bitcoin. For me You know, a billionaire, somebody very wealthy. There’s only a few ways that you can ever run out of money in your lifetime and it’s hyperinflation or confiscation communication from the government.

you’re constantly doing all of these things to protect against those two main disastrous consequences of having so much money. Right? the allure of something like Bitcoin, The call it the risk return opportunity or getting too, too great to actually completely write off at this point, the fact that you can memorize 12 words, stripped down, bare, naked, and walk across the border.

And as long as you can log in to the internet, you know, and find somebody that’s willing to buy that on the other side, you have access to this wealth, which you certainly can’t do with. Your stock portfolio or gold bar. I’d be curious, your thoughts on gold and then Bitcoin, as, as they play into a piece into a well-diversified portfolio,

Chris: [00:53:18] well is easy one.

I mean, you don’t buy gold to get rich. You just buy it as a as an insurance policies policy in the store wealth. And so it makes complete logical sense to go in gold. And I would. Countenance to say that owning gold and holding, owning gold equities are different. And even within the gold equity space, because you know, a lot of clients will come to me and I’m good.

I’m all in gold. I’m like, okay, what are you on? And they’re like, they’ll list a bunch of junior miners. And, and, you know, which can easily go to zero. And so physical. So there’s, you know, those are different. Just want to make their point because a lot of people sort of go gold and buy a bunch of junior miners or something like that, which is not the same thing at all.

Ben: [00:54:01] Myself included. Right. I buy GLD, which is, you’re trusting that somebody has golden a vault and they’ve issued you paper and it’s like, Well, it’s kind of gold exposure. It’s better than no gold exposure, but it’s certainly not the same as a bar of gold in my safe that I can shave off pieces for, you know, bread or whatever

Chris: [00:54:21] that said.

If you’re looking at inflationary environments, which I believe we’re coming into the best returns in that space, or historically have always been energy. Copper, why outperforms gold. So. So I do think that’s likely to happen again. So we’re bullish called we have an allocation towards gold as well as gold miners.

So that’s, you know, I don’t, I don’t have anything intelligent to say other than anybody else that you would have spoken to who, who is in that space with respect to Bitcoin you know, it’s something that everything that you said is true. It has a nice symmetry to it even more so now I think as as governments clamped down on freedoms of every Stripe and certainly the coming digital currencies that the Europeans, I think they’re going to be the first out of the gate with with the European digital currency.

There’s certainly looked like there’ll be the first out of the gate with this great reset that they’re talking about, which is likely just to be acid confiscation, basically stealing people’s money and paying off debts and creating a situation where you are tied into this really and dystopian technologically driven world.

I don’t think it’s going to work. And I think what’s going to happen is you’re going to seek capital shift. It’s already shifting, I just spent weeks traveling around Europe, speaking to some very smart, very wealthy people and they all understand, they all have at least some knowledge of what’s going on at all and not doing their best to take measures against it.

And so. Bitcoin comes into that in that, as you mentioned, it allows that transferability very, very easily. What concerns me with Bitcoin and we have an allocation to it. What concerns me with that is that the very reason that is it is probably the, the most.

That’s the word I’m looking for. It’s, it’s probably the best asset I can think of to own in a sort of a world where they were, where these things are being implemented. Okay. And the very reason that it is the best asset, I think is also probably the very reason that they’re going to ban it. So, so there’s an asymmetry there now, what.

What we’re going to have to watch for is when they, and I’m convinced the whole ban it when they ban it, whether it gets banned across the board with it, every country comes on board with that particular thing or not is, is what’s going to be important because all you need is some escape valve where some countries, maybe Japan, Japan has always been very pro, but going they’ve always, they’ve already said it’s a currency.

Dada. You know, does that, does it just not flood towards those exit valves? Because you’ve got to have an exit game

Ben: [00:57:35] same, right. I mean, it just takes one country to go, actually it’s not banned here and we hold part of our reserves in it.

Chris: [00:57:43] Exactly. Yeah. So, so, so again, what I’m saying is that. The risks behind Bitcoin are becoming elevated every single day at the same time that the rewards for it are becoming elevated every single day.

So now the question is, what do you do about that? I believe that you just manage that position in terms of your position sizing. Don’t make it something where if you wrong, it wants you out. And if you’re, so you want to, if you’re right, you’re going to do fine. Right. And you will probably look back and go, Oh, I wish I’d put more in fine.

Of course. Rather be that guy than the guy who’s like, I got screwed. I’m like, so that’s my thoughts on Bitcoin. I wouldn’t be holding. Personally, I, I wouldn’t want to own more than like 10% allocation, but I’m not putting like w yeah.

Ben: [00:58:44] Varies by person. I mean, all of the, all of the disclaimers that we need to put there.

it sounds like copper and energy. I mean, for the average investor, what’s, what’s the easiest hands hands-off way of of adding these seizures.

Chris: [00:59:01] I mean, Freeport is probably the most easy way to go about getting access to copper. That’s the biggest, most liquid well-run company that is diversified across the globe.

It tracks copper pretty well. It’s mainly, I mean, I guess you could, you could go along the Chilean peso There’s problems there. And then Chili’s doing some really stupid things at the moment. So as it has our most countries, well, many countries as well, many countries, it’s fascinating to watch to some extent that actually that elimination of potential candidates makes it easier because you basically just scraping out, go not, not, not.

And then you kind of look at what you’re left with, which makes your investment. Price is somewhat easier.

Ben: [00:59:54] Yeah. And then I th that makes a lot of sense. The unfortunate reality with Freeport it’s when I, when I was in college and I decided that selling naked putz was was a great way to make up money you know, Picking up pennies in front of steamrollers.

I actually, I bought a lot of Freeport as a young, poor college student. When, when yeah, I was forced to buy some and then energy, I mean, oil and gas, uranium, everything in nickel for the solar play. Like what’s, what’s kind of your play there.

Chris: [01:00:24] I spend the next half hour just running through all the different positions, but what I would say is this.

Look at those sectors and then go and do your homework and, and realize that. Every company has its own set of risks. You can have a risk that the CEO runs off with the CFO’s wife. You can have the risk that a government does, something really stupid. And they’ve got a particular asset in that particular country where the government’s doing something stupid.

Like there’s just so many different risks that you have full anyone company, which you don’t have with a particular commodity. So part of the part of you would say, well, then you just bought a commodity. No unless you’re an adept future straighter, because then you basically need to step into the futures market.

That’s that’s, I don’t think that’s the best way to play it. The other side of it of course, is that if the, if an underlying commodity moves by 10, 20% owning the equities makes a lot of sense because the equities can go 10 times that. So what I would look at doing is just building a diversified portfolio across all these different sectors and breaking that the way that we go about it with an AKI, as we’ll say, 50% roughly will be the thumb.

All the particular sector. I want to own stuff. There’s not going to go away. So it’s companies with very low debt. It doesn’t have, you know, it’s free cashflow, strong data, dah, dah, dah. I don’t really care necessarily. What happens to the share price in the next six, 12 months, whatever, who cares? I’m looking at five years out and I’m saying, are these guys going to be around?

Are they gonna be you’re still profitable. Cool. Okay. And then at least half of your position in a number of companies like that. Bearing in mind, what we spoke about before with respect to geographical risk. And then you might take some more risk in terms of buying maybe small caps that have got some leverage and so on and so forth.

To the extent where you have position sizing, where you’ve maybe only got one or 2% in any one equity, because look, if you get it wrong or some government does something stupid or whatever, or there’s a fraud or like mine gets flooded for example. Yeah, no one could see it coming happens, destroys their cash flows and so on and so forth.

If that’s a 1% position it’s first, it’s not going to go to zero, but even if it did you go, okay, 1%. You’re like, you’re fine. You can sleep at night. One of the biggest things that we have for clients coming to us, wanting us to manage their money is necessarily their inability to understand. Marcus Weinstein sectors, it’s there, it’s the psychology, it’s there, their inability at times of stress to make logical decisions and to do.

And then the only that just comes with time and experience and basically cocking things up a lot. And having going through those, those experiences, which, which are you know, their tastes. And so they’re not pleasant. One of the ways that I would suggest if you’re gonna manage your own money, one of the ways I would suggest to handling that particular issue is to not be overly exposed to something because when things work out for you, well, fine use, you might look at and go, Oh, I wish I had more positioned in those data.

It’s when things don’t work out. And then the, what I’ve seen this happen so many times before, and it happened to me in the boss. You land up making your decisions based on what the market’s doing. So you get you just a bloody ball getting bounced around by forces that you don’t have any control over.

You don’t want to be that guy, you know? So you know, very back to the March. What’s a February, March self that we had gratefully we went into at roughly 70% allocated. So we still have about 30% cash. And from 15th of March, we just started buying like aggressively. It kind of bought them 24th ish there.

So. And you never going to know when the real bottom is no, one’s got a crystal ball, but you looked and you’re like, this is nuts. You just get like, you have to be buying. And so it was, and I know that there are many clients who came to us after the fact who were like, not our, I want you to manage our money because I went through that and they just sold David’s thing and they just freaked out and they just like jar.

And so. You know, again, try and position yourself so that you’re not gone try and position so that you don’t get emotionally whipsawed so that you understand what you bought, why you bought it, and you can logically look and say, has anything really changed? If the price has changed because the market is going through a liquidity event.

Has it changed is their company still going to be doing what they’re doing in a year’s time or whatever the case might be. And so, but it’s difficult to, to, to have those internal conversations with yourself. If you’re getting emotionally torn up because you’re, you’re down 30% and you don’t, you think it’s going to keep going and you just, you know, so it’s as much an emotional stability that you need as a, as it is about understanding markets and, and looking at valuations and all that other nonsense.

Ben: [01:06:09] Awesome. that’s really good advice and much harder to do than to say, right? You think you’re a logical person and I have conviction in this trade and all of this, and then the bottom falls out for some reason, that’s outside of your control and. Suddenly suddenly that conviction isn’t so strong.

That’s for sure.

Chris I want to be aware of your time. This was fascinating conversation. Wanted to give you a chance to talk a little bit more about capitalist exploits, what you do, where can my listeners find out more about you about capitalist exploits or whatever else you want to talk about?

Chris: [01:06:45] Sure. So the website that we’re on is capitalist exploits dot ATT common Lexie gets you there as well. And the service that we run there is basically research that we do for our private clients that we put out as like a smorgasbord around these sectors. And and clients can look at that and choose how to build their own portfolios.

And that’s Wiki publication. We put out as well as. Different alerts special reports, monthly Q, and A’s with people can ask me whatever questions I got and try and draw base to answer them. And then the other is, is, you know, for accredited investors that want to have a capital managed. That’s what we do at Glenorchy.

So that’s all key

Ben: [01:07:33] Well, I really appreciate it. I know my listeners are going to really, really enjoy this conversation. So thanks again.

There you go. First off. Thank you very much for listening all the way through. I hope you got a lot of value out of that conversation. As always, you can find show notes, links, and [email protected].

Please share this with anyone you think might be interested and derive any value from this conversation. And as always, you can reach out to me for any feedback or questions. Please give the video a like, or even better subscribe on YouTube or your podcast player of choice. This really helps others find the podcast or the video as well.

Thanks a lot. Hope everybody has a fantastic day and stay safe out there and invest wisely.


Ben Lakoff is an entrepreneur and finance professional. He has developed strong global finance experience through 10 years of international assignments in the US, Brazil, Afghanistan, Southeast Asia, Czech Republic and through the award of his Chartered Financial Analyst (CFA) certification.