Disclaimer
LWS Financial Research is NOT a financial advisory service, nor is its author qualified to provide such services.
All content on this website and publications, as well as all communications from the author, are intended for educational and entertainment purposes only and should under no circumstances, whether explicit or implicit, be considered financial, legal, or other types of advice. Each individual should conduct their own analysis and make their own investment decisions.
Much to be thankful for and excitement for what lies ahead
2024 in retrospective
What a year! Unlike 2023, aside from a brief scare in August and September due to market drops caused by the currency panic in Japan, everything has been smooth sailing. This is particularly remarkable and validates our portfolio approach and investment philosophy. Despite commodities, as an asset class, performing very poorly—and given their significant weight in our model portfolio—our strong performance is even more commendable. Year-to-date (YTD) returns stand at 26.62%, adding to last year’s 33.29%.
The initial objectives, which I maintain year after year, were to achieve positive, double-digit returns (check) and to outperform any benchmark index. On this last point, we fell short, with the Nasdaq delivering a spectacular performance that was 3.15% higher than ours. The closed operations in the model portfolio during the year (current price being the closing price of the transaction) are as follows:
Of course, not everything has been a success—not by a long shot. I’ve made many mistakes, like Seplat, where the final terms of the acquisition were far from what I expected, and surely many more will come in the future, as this is part of the process, especially with cyclical companies. What’s important in these cases is to always learn, improve, and manage risk so that these significant drops don’t overshadow the overall results or disrupt the portfolio’s compounding process.
While the companies on this list might suggest we only deal with cyclical or commodity-related industries, nothing could be further from the truth. Our approach is value investing, and we simply aim to adapt at any given moment to the themes we expect to yield the greatest returns. In addition to the positions in the model portfolio, we share many other ideas through our publication on Discord (as you’ll see below, EVERYTHING is shared in real-time and with full transparency), which have performed exceptionally well, such as:
HFG: Shared on 05/27 at €5.86/share and strongly increased in June at €4.5/share. On 09/01, we published the investment analysis on this same blog, and today it trades at €12.28/share, yielding a 110% return since we shared the purchase on Discord.
K2A.PREF: A very low-risk idea on preferred shares of a REIT, whose asset sales eliminated any solvency risk. We initiated a position on 07/24 at 147 SEK and sold on 10/02 at 196.5 SEK, yielding a 33% return in 3 months with very low risk.
GMS: An auxiliary company in the offshore drilling industry that we have been buying and trading since 2023. We bought it at 4.7p/share, sold half when it doubled four months later, and today it trades at 16p/share—a 4x in 1.5 years.
BTCC.B: As we’ll see below, one of our ideas for 2024 was to capitalize on the influx of capital into the crypto ecosystem this year, viewing it as a classic exercise in supply and demand. In the model portfolio, we decided to play it conservatively with Coinbase (a 2x return since purchase), but Mr. Timbits, one of the most prominent members of our community, shared the idea of buying calls on one of the existing BTC ETFs. We bought them a year ago, and they’ve yielded a 6x return since then.
CORZ: Another crypto-related idea we decided to play was a mining company with significant potential in the AI space. Initially, we approached it as an implicit volatility play with options (yielding >10% monthly with a very compelling underlying), but many community members invested traditionally. We first bought it at $3.94/share in February, and today it trades at $14.04/share.
The returns on investment ideas shared in LWS Financial Research have far exceeded those of the model portfolio, which is not designed to maximize returns or serve as any form of recommendation. Instead, it aims to illustrate how, with a more moderate risk profile and a philosophy rooted in value investing and macro analysis, a retail investor can outperform the indices consistently. Last year, we published an article (which I’ll link here for free) outlining our main ideas for 2024, which were as follows:
Metallurgical Coal: This was our biggest bet heading into 2024, but the global economic weakness (particularly in China) surprised negatively, reducing the underlying commodity’s price by over 40%. In light of this shift, we decided to reduce exposure, selling HCC -3.47%↓ with a +1% return for the year (+68% since last year) and BTU -5.31%↓ with a -2% return. We still hold exposure to one company in the sector, but this idea has not performed well in 2024.
Rate Cuts and QE: The idea materialized perfectly, but we ultimately decided not to include any company to play it.
Oil Tankers: Our original thesis was that OPEC+ would increase oil export volumes in H2 2024, with a limited fleet, which would particularly benefit the VLCC segment. We played this with DHT 6.86%↑ and $OET, achieving solid returns on both (+19% and +37%). However, when it became clear that oil market balances left no room for increased Saudi production, we closed our positions.
American Natural Gas: The theory of stagnating growth in American shale and normalized winter temperatures is playing out, though more slowly than expected, as the new LNG export capacity has not yet come online. We ultimately decided not to play this idea.
Crypto: In the model portfolio, we played this with $COIN, but we also tracked ideas like BTCC.B, ETHH.B, and BTC miners like $CORZ or $IREN. It performed as we expected, and we have been gradually reducing risk and exposure.
As we can see, not all ideas have worked as expected, but active management and diligent monitoring have allowed us to capitalize on them to a significant extent.
Evolution of this publication
This second year of premium subscription has been one of significant growth, both in the quality and variety of content as well as in the publication’s reach. It concludes with a 78% retention rate (notable considering two price increases), very positive feedback, and a 5% monthly growth rate, far exceeding my best expectations at the outset. The newsletter has reached the 44th position globally in the finance category. Thank you!
While I’m thrilled with these milestones, my goal is not growth for growth’s sake but the development of a greater project: we have built the go-to community in the Spanish-speaking world through the LWS Financial Research Discord. It features an extremely high level of expertise and the top specialists in the topics we cover (commodities, maritime transport, options…), creating a default hub for keeping up to date on all developments, news, and new market ideas—all within an unbeatable atmosphere.
With these solid foundations in place, the plan is to continue improving the quality and variety of our informational offering. At your request, we now host a monthly live session to delve deeper into new investment ideas, portfolio movements, and answer all questions that arise. We’ve also streamlined the number of positions and ideas in the portfolio. In 2025, we’ll update all previously published investment ideas and continue to deliver top-quality insights and value.
I aim to combine this ambitious goal of being the leading investment community with offering the most attractive pricing, ensuring the value-to-price ratio is unmatched. Remember, tomorrow is the last dayto take advantage of our holiday discount:
20% lifetime discount on our premium membership, locking the price forever at just €400/year or €40/month.
Main investment themes for 2025
This year, as we have just seen, has been, once again, spectacular, but the demands are not reduced for the future. On the contrary, the ambition is greater for the new year, where the initial objectives remain the same, as could not be otherwise:
Positive, double-digit returns.
To outperform all the benchmark indices.
The investment themes we are going to play have changed significantly with respect to those of 2023, and we have even closed almost all our positions in oil, which was my most important idea just 12 months ago. The macroeconomic environment is always changing, and internal sector dynamics are equally dynamic, so our job is to read the current situation well and adapt to the changes. We will now review the main investment ideas that I see as interesting for this year:
Precious Metals
The global silver market is heading toward a physical deficit in 2024 for the fourth consecutive year, driven by record demand and sluggish supply. According to the report presented at the annual Silver Institute dinner in New York, total demand is expected to reach 1.21 billion ounces, fueled by industrial growth (+7%) and a recovery in jewelry and silverware (+5%). Meanwhile, mine production will increase by only 1%, reaching 837 million ounces, resulting in a deficit of 182 million ounces, similar to 2023 but very high compared to historical averages.
Key aspects of the silver market in 2024:
Record-high industrial demand: Industrial demand will exceed 700 million ounces, driven by applications in the green economy, such as the photovoltaic sector, and increased electrification in the automotive industry. Additionally, the adoption of AI-related technologies has spurred infrastructure investment, further boosting silver use.
Recovery in jewelry and silverware: Both segments will grow by 5%, with India leading demand thanks to reduced import tariffs and a weak dollar. In the U.S., jewelry consumption will also rebound, benefiting exporters from Asia and Europe.
Decline in physical investments: Investment in bars and coins will drop 15% year-on-year, reaching its lowest level in four years (208 million ounces). While U.S. sales have fallen by 40%, India will partially offset this with increased purchases driven by bullish expectations and lower tariffs.
Limited mine production: Although global production will grow modestly by 1%, Mexico will stand out with a 5% increase, led by operations like Pan American Silver’s La Colorada and the recovery of Newmont’s Peñasquito. However, declines in Peru, Argentina, and China will limit global growth. If open-pit mining restrictions are implemented in Mexico, this crisis could worsen. It’s also worth noting that most silver mining is a byproduct of gold or copper mining, and as deposits of these metals become scarcer, the outlook for silver is not very encouraging.
Growth in recycling: Secondary supply will grow by 5%, reaching a 12-year high, driven by price-sensitive sectors such as silverware in the West and structural factors in industrial recycling.
The projected deficit of 182 million ounces for 2024, similar to 2023, confirms the increasing structural pressure in the silver market. With strong tailwinds for demand, led by the energy transition, and stagnant supply, this deficit dynamic is expected to persist. The market seems oblivious to this fact, but in my opinion, with the right catalyst, we could see a sudden price spike overnight.
The outlook for gold is equally positive, with several catalysts aligning to ensure that 2025 continues the momentum started in 2024:
In an increasingly multipolar world, and following the financial weaponization of the Eurodollar system by the U.S. and Europe, central banks are choosing to increase the percentage of reserves held in gold.
Inflation is likely to rise sharply this year, just as many central banks continue to ease monetary policy, trapped between a rock and a hard place. Even the United States, no matter how hawkish Powell’s rhetoric may be, must refinance enormous amounts of debt in 2025, which is unfeasible under current conditions. Negative real interest rates provide the ideal scenario for gold and would bring traditional Western investors back into the market with force—the last missing piece of the puzzle. Nothing stops this train.
We will play this section in the model portfolio with $DNG.TO, $DPM.TO, and $ADT.AX.
Argentina
Argentina, as we saw in yesterday’s article and the subscriber-only video recorded alongside Mr. Timbits, is a country undergoing significant transformation, with strong fundamentals (natural resources, educational level, infrastructure) positioning it to shine. Milei is doing an excellent job of restoring the nation to its former glory.
The financial orthodoxy implemented by the administration is beginning to show results. After a painful adjustment period following the elimination of the fiscal deficit, we are already starting to see growth again. The 2025 calendar is packed with catalysts and significant milestones to monitor, which will have a massive impact on various sectors and companies:
Debt negotiation with the IMF
Removal of the agricultural tax
Lifting of exchange controls
Credit demand is surging – the ratio of consumer loans to deposits rose to 64% in October, compared to 42% last December – as interest rates have plummeted, a trend likely to accelerate in the coming months. Currently, most loans have maturities of six months or less, and mortgages are almost nonexistent; once credit starts flowing normally, in line with comparable countries, the economic boom will be unstoppable.
This situation presents a rare opportunity in the markets: a country with very positive fundamentals (resources, demographics, education) transitioning towards a market economy, with a functional stock market, quality companies, and attractive valuations. While not devoid of risks, the magnitude of the opportunity is enormous and offers a risk/reward profile that is hard to match. The most benefited sectors in this trend will be real estate, banking, energy, and agriculture, and these are precisely the ones we will focus on. Specifically, I anticipate the removal of the agricultural tax by mid-2025, which will serve as an immediate catalyst for $CRESY, as well as the continued rise in credit and banking expansion that will transform the country’s financial institutions.
We will play this idea in the model portfolio with CRESY 0.00%↑ and GLNG 0.00%↑ .
Crude oil
The sentiment surrounding energy stocks in general, and oil in particular, is the most negative it has been in years. One might think that after spectacular performances in 2021 and 2022, at least some interest would have remained in the sector. Nothing could be further from the truth. Investor sentiment and positioning are at rock bottom, amplified by a market consensus with propagandistic undertones (led by the IEA and EIA) predicting an imminent collapse in demand coupled with a surge in supply. In such situations, it is worth analyzing the data ourselves to see if any opportunities exist.
Despite all the commentary about weak crude demand in both China and the United States (other regions, like India, saw strong growth in 2024), the reality is that demand figures have continued to surpass last year’s levels (except for diesel). The issue has been that this growth has fallen short of initial expectations, but not in absolute terms. Visible global inventories have declined by 0.7 Mb/d, which is quite significant, especially in a sluggish economic environment.
As mentioned, the current consensus is that supply will rise sharply next year (+1.5 Mb/d), which, combined with downward-skewed demand (due to substitution from electric mobility), will lead to surpluses of +1 Mb/d starting in Q1 2025. However, if we were truly on the brink of such a negative market balance, it is surprising that the futures curve remains in backwardation and is even steepening. This makes me suspect, once again, that the consensus is wrong.
A third of this supply growth is expected to come from the U.S., specifically from shale basins. For years, we have discussed the theory of depletion in these reserves, which would represent an insurmountable (geological) obstacle to these forecasts. This theory, championed by G&R, has been thoroughly analyzed in our deep dives. Although they have missed the timing, it seems the moment of truth is finally approaching. In 2024, American shale has not recorded any growth, and the monthly trend has been declining. By basin, the Permian—once the beacon of the most recent production boom—appears to be plateauing in its growth profile, seemingly validating Hubbert’s theory. If shale underperforms in 2025, as I believe it will, the only source of non-OPEC supply growth in the last decade will disappear.
The other major hope for supply growth lies in emerging markets like Brazil or Guyana. However, reality once again diverges from the EIA models. These markets face operational issues and investment delays, keeping supply flat. A dramatic turnaround would be required to meet expectations.
It appears that Trump, unlike Biden, plans to enforce sanctions on Iranian crude, potentially freeing up 1 Mb/d of supply that other OPEC members could compensate for, effectively eliminating the threat of idle capacity. My opinion is that once fears of a massive surplus in Q1 2025 and beyond are proven unfounded, we will see Brent oil settle in the $85-$95/b range. Given the current valuations of producers, this would result in an immediate rerating.
We will play this idea in the model portfolio with $PBR, $VET.TO and $VAL.
Uranium
Uranium has become a frustrating investment idea for many, and understandably so. Despite continuously improving fundamentals, the spot price of the metal seems stuck in constant apathy, and many mining companies dream of returning to their 2021 valuations. Given this scenario, it’s logical to question whether the fundamentals are truly as strong as they appear. Short answer: yes.
Demand, both from the construction of new reactors and the reactivation or life extension of existing plants, continues to grow steadily. Even some countries, like Germany or the United States, which were once staunchly opposed to the proliferation of this technology (both politically and socially), have shown a radical shift in their stance. While demand surges, supply – from both existing mines and planned new projects – consistently falls short and faces delays.
In 2024, we’ve witnessed the world’s two leading producers, Kazatomprom and Cameco, significantly cut their production guidance, citing supply chain issues (if not these, it would be geological or operational problems). Mines undergoing reopening processes, like Paladin’s, have also failed to meet expected volumes (from inventory, not even actual mining yet). Additionally, these producers have supply contracts for volumes exceeding their production, relying on the carry trade that worked for the past decade (but won’t anymore). Sooner or later, a contract will go unfulfilled, igniting the uranium market once and for all.
As mentioned in the introduction, this investment idea has tested the patience of many who, despite improving fundamentals, have seen their shares drop more than 50% from 2021 highs. This example is highly illustrative of investing in cyclical industries and commodities. Initially, when fundamentals hit a turning point and the commodity price begins to rise, all that matters is the sector’s beta, and the more leverage to the commodity price, the better (during this phase, low-quality junior mining projects thrived). Eventually, when the dust settles, junior miners keep diluting and burning cash year after year, revealing quality projects as the only viable option, making stock picking critical. This is not unique to uranium – we’ve seen the same pattern in oil over the last two years. First, the junk rises – heavily leveraged, low-quality plays – but ultimately, quality prevails.
We must not lose confidence or focus: if fundamentals keep improving and the price doesn’t yet reflect it, that’s a reason to accumulate more, not to sell. All it takes is a spark to ignite the massive pyre that’s been building, and we’ll see 2006 all over again.
We will play this idea in the model portfolio with $U.UN and $DNN.
Portfolio positioning
My impression, given the current valuations in the U.S. equity market (which are very demanding, especially in the tech sector), is that we are likely to experience a negative or, at best, neutral year for the major equity indices, in a scenario similar to 2022. Eventually, as always happens, capital will rotate toward other, more promising themes and sectors that have been overlooked (energy, industrials) and alternative geographies, such as emerging markets. We don’t know when this trend shift will occur, but our duty as investors is to try to stack the odds in our favor, and right now emerging markets offer a superior value proposition compared to the U.S.
In addition to these broad themes, I am very optimistic about the prospects of $BAK, ICL 0.00%↑ or SLP 0.00%↑ , which should begin to enter a more positive phase in their capital cycle. As milestones are achieved, it’s likely that we’ll rotate part of this capital into more classic value-style ideas, such as WBD 0.00%↑ or $CGEO, and further expand our exposure to Argentina.
This concludes the article on positioning for 2025 and the 2024 review. If you have any questions or suggestions for improvement, my private twitter messages are always open.
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