Horizon Kinetics Fourth Quarter Market Commentary
The asset manager goes into detail on why they are investing in natural gas, water rights and Bitcoin to profit from the AI boom.
The old refrain here at HK Central is that the best way to earn money from new, world-transforming technology is rarely in the technology itself. Technology like the lightbulb, the radio, television, car manufacturing, and airlines. That’s usually a complex selection choice, with uncertain winner and profit outcomes—and, to boot, a crowded, expensive trade. Rather, seek out a business that in some way is necessary to—or enables—the technology developers to do whatever they will do, which is winner-indifferent, and which is a long-term fee collector.
The Curious Case of Chinese Copper Consumption
Add Chinese consumption data onto tariffs, and you get a compelling bear case for copper prices from Goehring & Rozencwajg.
As we look toward 2025, it is clear that China has transitioned from underconsuming copper to overconsuming it—a shift with significant implications. This represents another bearish data point in the copper demand story. For 15 years, hedge funds and market analysts speculated endlessly about China’s supposed overconsumption of copper. Ironically, now that the overconsumption is real, the copper analytics community remains conspicuously silent.
Morgan Stanley on Probabilities and Payoffs
Author Michael Mauboussin’s key takeaway: great investors should tolerate frequent small losses to capture rare, outsized gains.
“One of the most challenging aspects of understanding expected value is that excess returns can be the product of high probability events with relatively low payoffs, or low probability events with relatively high payoffs. In other words, how often you are right is not all that matters. What is vital is how much money you make when you are right versus how much you lose when you are wrong.”
Real Estate
There are more than one million Canadian mortgages due for renewal this year and the cost of borrowing has shifted significantly since most were originated.
Credit card debt among insolvent debtors surged 26 per cent in 2024. And the GTHA market saw the fewest new home sales since 1990, when Toronto’s last real estate bubble popped.
Geopolitics
The upcoming launch of freight train service between Russia and Pakistan is squarely aimed at boosting trade amid Western sanctions on Moscow. Russia has also signed a memorandum with Myanmar to develop a port and oil refinery.
Trump’s advisors are pressing Mexico to impose tariffs on Chinese imports. Meanwhile, the U.S. is capitalizing on its shale boom and LNG exports to dominate global energy markets, while Europe and Asia seek alternatives to traditional suppliers.
Seeking Wisdom: From Darwin to Munger
Drawing inspiration from Charles Darwin and the mental models of Charlie Munger, Peter Bevelin’s book teaches you how to avoid cognitive biases, think in probabilities, and embrace rationality. You can find a used version on Ebay in good condition for about $30.
Baseball is back
Bring on the deranged logos!
