The Heretic Speculator August Month-End Newsletter
Jerome has spoken; his verbal message is clear. Do the Fed's actions corroborate the tightening tough talk? So far no. But that doesn't mean we shouldn't be defensive anyway for now.
August has come to a close and it was an interesting month to say the least. On the economic side of things, we saw equities, metal, and crypto all sell off fairly dramatically near the end of the month. Talking energy prices has been all the rage and people in the EU are really feeling it. It’s become so bad, we’re now seeing headlines like this:
“Eat or heat.” Wowzers. While everyone on Twitter has suddenly become an expert on European energy supply, I would like to point out that Doomberg sort of predicted all of this nearly a year ago in Have Fun Staying Cold.
The consequences of what is happening in Europe are awful. Small businesses are literally facing closure because the cost of energy is making it unaffordable to continue operating. Sad stuff. But I want to reiterate that Doomberg has been talking about an energy crisis in Europe for far longer than 3 weeks. And whoever is behind that account sees nuclear as the only viable option for a future with robust energy production. That means uranium. For our considerations, the Uranium ETF (URA) has now found a bid.
Not only is URA positive on the month, it’s now also positive year to date. This is one of the ETFs in my Top 5 ETFs for 2022. The rest have been dogs, but it’s nice to see this one seemingly turning the corner. Speaking of dogs, should we take crypto out back and shoot it yet?
The BTC chart looks awful at the moment. After spending a couple weeks above the 8 Week MA, it looked like BTC was turning the corner. But a big selloff from $25k seems to have marked the top of our relief rally. Like everything else, crypto is a macro trade at the moment. We’re all just waiting on Credit Master Wizard Powell’s next move. In the meantime, we puke…
It seems counterintuitive, but the bad times are exactly when it might make sense for some companies to brand their businesses. From a marketing expenditure perspective, ad rates are generally lower when the economy is slow and messaging strategy can change from more of a sale-based immediate ROI campaign to a longer-term branding approach. This doesn’t work for every company or business, but for the ones that have strong balance sheets, it can make a lot of sense. The same is true for investing.
For those of you who are new to Heretic Speculator or for those who have simply been unwilling to take the plunge into crypto, my Seeking Alpha subscription service BlockChain Reaction has now been live for 3 months. I really try not to beat you guys over the head with this because I know many of you don’t see yourself as “crypto investors.” Some of you may even believe it’s a scam. But for those of you who are generally interested, the time to look at alternative coins and tokens is now not next year. You want to own before the rip, not chase the rip.
The biggest potential for serious crypto returns is in the mid to smaller cap tokens. While there is considerably more risk in the mid and smaller caps, so far the Top Token Ideas in the service are doing much better than a dollar cost averaged Bitcoin position. An equal weighted portfolio of my picks is down 5% since posting. If those same dollars were hypothetically dollar cost averaged into just Bitcoin at the same date of postings, the Bitcoin-only portfolio would be down 20%. The point is, diversify your crypto portfolio and buy my research so you don’t have to do the work yourself.
The early reviews of the service have been strong - it’s currently a 5-star service! If you’re intrigued, try a free two week trial! No strings attached. Don’t forget, Amazon stock collapsed 95% from all time highs after the dot com bubble. Find that decline on the chart now…
Does crypto have an Amazon? Only one way to find out.
Of course, crypto isn’t the only thing I cover. You can simply upgrade to a premium membership right here at Heretic Speculator and get access to completely different investment insights. For instance, I was a net seller of assets in the month of August and was transparent about that with paid subscribers.
Alternative Assets
Earlier this month, I detailed why I sold out of my Masterworks fractional art investments for paid subscribers of Heretic Speculator. The overwhelming majority of my capital was invested in the platform’s Monet and investors got an exit at a satisfying premium. At that time, I noticed that I still had a cash balance from the George Condo investment that also received an exit several months earlier. Essentially, my largest two positions were bought out. I ultimately decided to take the money and run. This is what I wrote about the decision to divest my Warhol and Banksy exposures:
The reason I have now divested art through Masterworks is because I found myself having a hard time justifying the redeployment of the capital. One thing that has helped art as an investment through the years is that it is incredibly illiquid. It’s difficult to panic sell a painting valued at 7 or 8 figures. However, when that asset is fractionalized among hundreds or even thousands of investors with a secondary market apparatus; I think we’re going to find that the valuations of some of these assets can now be moved around a bit with greater democratization of capital investment in the assets.
What I didn’t predict but have now learned is the art market is about to get a $1 billion supply flood from the late Paul Allen’s collection liquidation. That’s a lot of art for the market to absorb and we’re already seeing softness in the entire alternative asset market. The alternative art market is now down 12% YTD according to Altan Insights. One other note that I think is pertinent to this section; Masterworks’ minimum investment in asset IPOs has always been $1,000 - the company recently brought that minimum down to $500. Tell me without telling me you need more capital inflow.
STONKS
Art wasn’t the only thing I sold in August. One of my longest STONK market positions through the years has been Chicken Soup For the Soul Entertainment common stock equity (CSSE). That position was closed in mid-August along with 3 other positions. Details of each decision can be found here. For CSSE, the exit at just under $14.00 was an impeccably timed exit as the stock has closed under $9 each of the last three sessions.
If you read that article, you might remember the price level I said I’d become interested again. We’re there. I still have not bought the shares back. But it’s one for a watch list.
Keep reading with a 7-day free trial
Subscribe to Heretic Speculator to keep reading this post and get 7 days of free access to the full post archives.