Feb. 14, 2023
We’re still very much in a bear market and recession.
Hey, Nick Hodge here excited to tell you about the February issue of Foundational Profits.
We jump right into the questions that everyone's asking:
Is there going to be a soft landing in the economy, and in the stock market?
And are we in a new bull market for stocks?
I give both sides of the debate a fair shot and fair analysis — looking at corporate earnings growth, or a lack of growth, the GDP in the US and what I expect for the next couple of quarters.
And we take a look at volatility and how short-term dated options have been used to manipulate the market higher over the past couple of months, now accounting for over 50% of the volume in the S&P.
The conclusion: there's still more downside ahead.
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I reveal how I'm positioning for that in my personal long-term safe retirement accounts, which is the entire point of Foundational Profits, to show you what I'm doing with my own long-term capital.
One of those things is owning gold and gold stocks. We've been in gold for a bit. We've been in some gold equities, including a royalty company that we ticked right at the turnaround of the gold market in November of last year, and have done well with that.
This month, I make a new gold recommendation, because gold is now in a bull market and it has some significant tailwinds behind it.
There have been some narratives pointed to as moving gold higher recently, like central bank buying, and Chinese and Russian geopolitical situations.
But fundamentally there are other things currently driving gold higher — particularly falling longer-term bond yields, which gold correlates with inversely, as well as a weakening of the dollar over the past couple of months.
This issue gets into why gold is likely in a new gold bull market and why some of those equities could go much higher.
One of the reasons is increasing mergers and acquisitions (M&A), which we saw this month with Newmont, the world's largest gold miner, coming in and making a bid for Newcrest, which is the world's fifth largest miner.
There's significant upside in gold if just a little bit of capital moves into that sector.
There's also a very robust update in this issue of Foundational Profits on the electrification of everything, and how it relates to uranium and lithium.
Specifically, how global governments and corporations went out and made all these targets and promises — decarbonization targets, carbon reduction targets, electric vehicle targets, built all these lithium battery gigafactories, spent billions of dollars doing so — and now are realizing that they don't have the inputs to make all these targets a reality.
They don't have enough nuclear energy, there's not enough uranium, there's a structural deficit.
They don't have the lithium they need to build all these batteries.
So now those governments and global corporations are scrambling to rectify that, and that means a lot of policies and money are being thrown around that are good for equities in those sectors.
As it relates to uranium, the US is throwing money at the problem as they do with most problems. There was $700 million in the Inflation Reduction Act to keep nuclear reactors online and incentivize them. And the Department of Energy (DoE) is now buying uranium directly from US producers.
And we of course own a couple of uranium stocks to benefit from it.
Then on the lithium side of things, it's a similar story. You had Canada last year come out and say that Chinese companies had to divest from their Canadian lithium holdings, getting very protectionist about their critical metals resources and where they're going to come from in the future and not wanting other countries that may or may not be friendly to have a toehold in them.
In the US, they're throwing more money at the problem as well. The DoE has made a $700 million loan to Ioneer to build the Rhyolite Ridge project in Nevada.
And it's not just the government that's writing big checks for these lithium projects. GM has come out and made the largest investment that any automaker has ever made in a supplier. They've put $650 million into Lithium Americas to help build their project in Nevada.
We have a company that I cover that relates to this lithium that's more than doubled since I recommended it last year, and is now on the cusp of making a construction decision and bringing in a partner, which could be a major international miner or automaker. And I think that stock has significant upside ahead.
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There's also a long section about water in this February issue of Foundational Profits. I've been writing about and investing in water for over 10 years. It's a theme that bubbles up, pardon the pun, every couple of years and now it's doing so again with a major fight going on in the Western US between seven states over the Colorado River and who gets what.
There are towns in Arizona that are running out of water. Scottsdale has cut off one of its suburbs from getting water trucked in. And so a scramble is on, it's back in the news and there's a water stock that we started buying last month that I mention again in this issue and chronicle why we're buying it and why I own it, and at what levels I've done so.
And then the issue wraps up with a portfolio and allocation update. I go through the portfolio, as I do every month, and tell the percentages of each sector that I own, how I'm allocating my own personal retirement funds, and reiterate the recent recommendations which, in this issue, include a gold recommendation and new emerging markets recommendation.
So a lot to act on in the February issue of Foundational Profits. You should remember that this is a publication that's beaten the markets seven out of the past eight years. It's what I do with my own capital and I've had great success doing that over the past decade or so.
If you're not yet a member, I encourage you to check out this issue by filling out this form.
It's a small investment of $199 to become a member for a full year. That gets you 12 monthly issues, access to all the premium reports and, of course, a peek at the exact allocations that I'm making in my market-beating portfolio.
So I hope you'll join us by filling out this form.