As a strongly introverted person, from time to time I like to think things through. Part of this habit is to take a look back at the previous (in this case still running) year which I am doing with this Weekly. In addition, I am going to add my outlook for the coming year from an investment perspective.

Summary and key takeaways from today’s Weekly
– The year 2024 is coming to and end – time to look back, but also to the future.
– I am digesting my previous outlook by commenting on where I was right, but also where I haven’t.
– Basically, my strategy will remain the same. I am sharing a few of my stock ideas to keep an eye on.

Last time, I wrote two separate such articles, a review in December 2023 (see here) as well as an outlook (see here) to kick-off the year 2024.

This time, I thought I’d merge them into one episode.

In preparation for this Weekly, I have re-read my previous articles and written down the key aspects for me.

As always, human judgement can be right, but it also can be wrong.

I absolutely am no exception by perfectly fitting into this scheme. There were things where I pretty much nailed it – but of course, I was wrong on one or the other subject. My longer time readers know me as a reflective person, not being shy to comment on things that didn’t run as well as expected.

But of course, trying to be a realistic-optimist as much as I can – with the goal to find attractive stock ideas – I will also comment on one or the other great pick for my members. Primarily, because I want to throw off the ballast of underperformers, in order to focus on what counts – those picks that make a real difference.

In this regard, I do not see any reason to change that.

“Butter by the fish” as we say in German – let’s get straight to the point.

Join me and my members on our journey to beat the markets!

^{both as per 11 December 2024 market close – since August 2022}

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Looking back – and ahead

Starting with my last year’s review, I have written down three subjects that I had extensively expressed my thoughts about, not just in this specific piece, but likewise on separate Weeklies as well as on Twitter:

• dividend cuts
• sector rotations and index weightings
• commodities

I highlighted the topic of dividend cuts as one of the big themes not just for a short period of time, but even for this entire decade (see here).

While my assessment has not changed in its core, I must conclude that I have unintentionally neglected this topic a bit in the recent past. To put it on a more positive note, I focussed on different topics.

On many occasions I’ve been cautious, at times even ultra-negative, about what I see as a dividend bubble. While it can of course work out pretty fine for many investors, I am afraid that the next recession – which could even occur in the not too distant future – will clean up especially the pseudo-religious, fanatical part of this club that is primarily focussing on past performance.

Case in point, dividend titles.

In last year’s piece, I wrote that I continue to have 3M (ISIN: US88579Y1010, Ticker: MMM) and Walgreens Boots Alliance (ISIN: US9314271084, Ticker: WBA) high on my list for the next coming dividend cuts. They had not done me the favor in 2023.

Exactly that happened not too long after, though (see here and here).

The more so spectacular, as 3M has been a dividend king and Walgreens was very close to this status. Walgreens didn’t even wait a full month do slash its payout. Later in the year, it even got kicked out of the Dow Jones after the stock fell massively.

Unfortunately, both series have ended. I was right. While I didn’t benefit financially in these cases, I felt confirmation that investing without serious financial analysis is garbage. The probabilities for both to act like they did was very high, despite many companies preferring to ignore reality and kicking the can down the road.

Other than these, this topic has stepped into the background for me.

Number two, sector rotations and index weightings.

Timing wise, I have been wrong. My preferred scenario, seeing a sector rotation out of tech into other sectors like especially commodities, has not only not turned out.

Tech surged massively higher, first and foremost being driven by Nvidia‘s (ISIN: US67066G1040, Ticker: NVDA) seemingly endless growth story. The stock of everybody’s darling roughly tripled year-to-date and later in the year it also joined the Dow Jones index, replacing Intel (ISIN: US4581401001, Ticker: INTC).

The good thing is, my goal is not to have a good short-term timing, but to be right in the long run by avoiding dangerous setups and going where the risk and reward is strongly favorable.

I even dedicated an entire article regarding this topic (Dow Jones inclusion) with the question whether this isn’t rather a sign for a top than the start of a new era (see here).

However, a few things are very strange.

I know that I am risking to be ridiculed by those who don’t accept different opinions (as is the case when you’re saying something against dividends, bitcoin or Nvidia), but I think that Nvidia’s story is slowly coming to an end. Not only due to Chinese authorizes starting to question some of the company’s competitive practices.

Consider also the entirely fishy story surrounding Super Micro Computer (ISIN: US86800U3023, Ticker: SMCI) which hasn’t been able to file its annual report still to this day. The end of their fiscal year was 30 June 2024. Last Friday, they received another extension to file their report by the end of February 2025, however, this is everything but certainly not normal.

Having been seen as one of the biggest AI success stories, the stock of SMCI has come down to earth rather hard, temporarily, having lost 80% from peak to trough.

Why does this matter?

SMCI is one of Nvidia’s biggest customers with ~8% of the latter’s sales, as you can see in the right column below.

That should be known and kept in mind.

This was accompanied by EY, its auditor, resigning and being reluctant to sign off what the company laid in front of them.

Even if SMCI’s numbers were to be correct – which no one knows – even what was published back then was hardly convincing. The company has low margins and it has been massively burning cash as of lately – in an allegedly very hot bull market. Again, assuming the reported numbers are correct.

Not to mention that exactly this company was already delisted in the past due to their creative accounting practices (see here).

Another point that’s made me scratch my head was that despite sanctions and a prohibition to export the top-tier tech to China, somehow there are reports (see here or here) that China nonetheless has access to Nvidia’s top-notch GPU’s.

Or here freshly posted on twitter, a Chinese businessman showing his newly purchased Nvidia GPUs.

While direct exports to China seem to have dropped, suddenly exports to Singapore have risen dramatically.

On the first screenshot below from Nvidia’s annual report 2023, i.e. almost two years ago, you can see that sales to China have been dropping and Singapore is not even listed separately, i.e. being meaningless.

Per last count, suddenly Singapore has become a major hotspot.

Maybe that’s put a bit too conservatively. Singapore came out of nowhere to become the second biggest area by sales with more than 20% of total revenues.

I don’t know why Singapore.

Taiwan is somehow understandable as it is a big production jurisdisction. But why is Singapore buying so many GPUs? Maybe someone has an explanation why Singapore suddenly grew by more than 200% in sales, massively outpacing the overall growth rate for Nvidia which roughly doubled its sales?

I have found this twitter post interesting, at least to think a bit about it.

^{source: Twitter, see here}

There are several posts and discussions on twitter with valid arguments to be considered. More and more things seem to be unsound.

Evangelists and worshippers of “the best company of our lifetime” will oppose this strictly. I don’t care. But don’t start crying and calling it manipulation in case something “unforeseen” breaks.

Of course this party can go on for some time. Maybe I will be entirely wrong on this one. But I would have extreme pain in the stomach to be invested here seeing such things.

An entirely different topic: if this is the hottest company and the best thing since sliced bread, why the heck do we have this here:

Insiders, i.e. mangement, are dumping Nvidia’s stock like there’s no tomorrow. Front and center, the ever highly convinced CEO himself. Some people even dumped several times nine-figure values.

Who’s buying? The retail crowd and likely pension funds who don’t want to be left behind. In other words, from a position of weakness, not strength. When I express my negative thoughts about Nvidia, often I am confronted with that this is the best company ever, I am too skeptical or this is a must-own in a portfolio.

I’ll leave it with that. What I know is that I am staying away from this stock. The risk is significant, while the upside is rather limited, given the rules of large numbers and also considering that the semi sector is extremely cyclical.

In my latest German-speaking Interview with Timo Baudzus, one of my crazy predictions for 2025 – which was our topic – is even that Nvidia will come down rather hard (see here). One of the others is that Intel (ISIN: US4581401001, Ticker: INTC) will have to be bailed out due to their failed turnaround strategy.

But let’s assume the above paragraphs are irrelevant.

Going a level higher again, I continue to be skeptical about index investing as well as especially the big tech stocks. I have been clearly on the wrong side of the trade for this year again with this view, but I lack the necessary highly positive risk and reward.

While there might be more reward, risks are high and the upside should be rather limited.

I do not engage in such trades for a potential upside of maybe 20–30%, knowing that they can fall by half easily – look no further than 2022!

Sooner or later valuations start to matter again.

This will be the time when the highly celebrated tech stocks which pulled the market up previously, will be the ones that drag it down. Most ETFs do NOT offer a proper diversification or protection.

Seeing graphics like below is another indication to at least wait before running after a train that has left the station. I have also seen a post where BlackRock was citied with having said that we eliminated the business cycle – dear…

The third subject, commodities.

Topics I mentioned last time were among others to look for low cost producers, to have an eye on silver as well as not to forget about oil.

The latter especially in light of the US shale revolution facing a possible peak. For those who are more interested in this subject and have 1–2 hours of spare time, I highly recommend to read the latest quarterly report from G&R where they again extensively comment on why US shale is likely at a tipping point (see here).

I guess, this was a good call in hindsight.

Both, gold and silver, performed well. Interestingly, both more or less in lockstep with the S&P 500. All three are up by roughly a third as of writing over the last twelve months.

Throwing in the topic of low cost producers, my former silver stock idea Silvercrest Metals (ISIN: CA8283631015, Ticker: SILV) performed strongly. I decided half a year ago to close the case after a total return of 85% due to valuation concers. Subsequently it was announced that the company will be acquired for an even loftier price (see here).

All in all, a good trade, despite having left a few percentage points on the table. I almost hit the bottom and left at a good point, either. My thesis was correct.

Indeed, commodities remain of interest for me. Not all of course, as I am highly selective.

Besides gold and silver, I have been active in uranium and oil and gas.

My uranium trade Yellow Cake (ISIN: JE00BF50RG45, Ticker: YCA) is closed (see here). Everyone’s talking about uranium and it has been declared the safest bet in the commodities sector. There’s practically no other voice.

I don’t like to hear such things.

This is a signal that the easy money has been already made. So far, my pick hasn’t advanced further. Let’s see how it develops, but I’d prefer to see a stronger correction with many bulls leaving the playing field in disappointment.

Nothing goes up in a straight line!

Turning to oil and gas, just seven days ago I published a Weekly and a new stock idea to play this sector, this time from a completely different point of view (see here).

I remain highly convinced that this sector continues to offer great value. Not only due to strong balance sheets and proven business models, but also due to extremely bad sentiment.

What does feel better, a proclaimed “safe bet” or one of the most hated sectors no one wants to hear of anymore? Oil sentiment is now even lower than during 2020 which is hard to imagine. All my picks from this sector are financially healthy. We can’t say that for sure about uranium producers.

Despite being an idea from the year 2023, not 2024, I continue to like my pick for my Premium PLUS members to play especially the oil component of the energy sector.

Coming now to my outlook, basically my strategy does not change.

The main reason is that my overall assessment hasn’t changed. The leading darling stocks continue to be uninvestable for me from a risk and reward perspective. Besides, I do not see a strong economic recovery, that’s why being highly selective and knowing what I own will be the way forward.

Commodities will remain at the center of my attention, where supply and demand constellations are favorable. What I do not like is high demand expectations, but at the same time growing supply. That’s why I am staying away from lithium and copper for example.

Uranium is a clear “it depends”. I will continue to monitor it. But first, I’d like to see many of the newly emerged pundits to throw in the towel.

Gold via my gold mining stock idea and oil (several ideas) are a must-own for me. Regarding silver, I haven’t found a suitable replacement for now for Silvercrest Metals. On my watchlist, I have an interesting developer – but it is just a developer and financing has not been secured, yet.

Besides, what I have already started and will likely continue to pursue further is looking for special situations. The advantage is that if I my thesis is right, such ideas can easily bypass the overall market environment and do their own thing (given we don’t have a massive sell-off).

Not being correlated to the broader markets brings the risk of temporarily underperforming the market and having to answer the question why not just do what everybody else does? Well, when you do what everybody else does, you will have only at best an average return. And the full downside all inclusive.

That’s not what I am aiming for!

With these special situations, I do not mean not-so-well executed ideas of thyssenkrupp (ISIN: DE0007500001, Ticker: TKA, see here) or Burberry (ISIN: GB0031743007, Ticker: BRBY, see here) which happened to be troubled and unfortunately unsuccessful turnaround stories. I closed both of them at manageable losses to free up my mind.

So far, these decisions have been good, because both stocks are trading lower compared to the point where I ditched them. Where I need to get better at is to separate die-hard turnarounds from otherwise more healthy special situations.

Another topic I wanted not to leave untouched – this is very important to understand:

As sometimes a few clever pundits attack and remind me of my bad picks and why I do not comment on my former great ideas that didn’t play out – my answer is pretty straightforward. I close most of my losers relatively quickly to keep the losses small. On the other side, I try to let my winners run.

My hit rate might not be that high. But this is not the goal of investing.

People who claim that have no clue what they’re talking about. I instantly know that they are likely ETF investors who have never had success with stock picking if they have ever owned a few stocks directly at all.

It is like with darts. Even the best players don’t hit the triple-twenty field with every arrow. Nonetheless, they have very high averages. The key is to have a very successful pick from time to time and to keep the losses small.

If I close let’s say three positions at a loss of 20% each, but have one with +170% (see further below), my hit rate is just 25%. Oh, what a loser… But the average return is still 27.5%.

Not so bad, isn’t it?

In this context, my Weekly about how to deal with unrealized losses in the portfolio is highly recommended, if you haven’t read it already (see here).

Primarily, I am looking for ideas that have more tailwinds than headwinds.

If you need another reason why it makes sense to be on board early with those of my ideas that work out well: if I make a stock idea public after it doubled and it doubles again, those who picked it up “for free” are up by 100%. My members, though, are up then by 300% or 4x, not just 2x – that’s how compounding works.

Other than the above, I remain skeptical about the overall state of the world economy. I do not believe in a turnaround and return to dynamic growth until I see it. Especially for Europe, my enthusiasm is limited. China, the former world locomotive for growth, is hard to assess, but doesn’t look like a major success story a the moment, either.

My head is full of new ideas. Over the next weeks, I will bring my thoughts in order to hopefully publish more exciting ideas in 2025. Other than that, several of my active ideas for my members are still awaiting their catalyst to send the respective stocks higher.

To close, I wanted to thank all my readers and especially paying members for their relentless support. You (hopefully) get what you pay for and YOU make this service possible.

Conclusion

The year 2024 is coming to and end – time to look back, but also to the future.

I am digesting my previous outlook by commenting on where I was right, but also where I haven’t.

Basically, my strategy will remain the same. I am sharing a few of my stock ideas to keep an eye on.

By becoming a Premium or Premium PLUS Member, you get instant access to all my already published research reports as well as several updates.

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