Investment Ideas From the Edge of the Bell Curve
Last Wednesday, one tweet made me sit up straight in bed.
You see, an amazing scientific story was playing out in real time.
If it’s proven true — and we’ll very much know this week if it is — then the implications are profound.
Let me explain…
The tweet in question was this one from Princeton physics graduate Alex Kaplan:
So what did Alex see that made him so excited?
Well, last week, a new paper was published by several well-known Korean scientists claiming they’d discovered one of the holy grail of physics.
Namely, the discovery of the first ever room-temperature, ambient-pressure superconductor (SC).
A superconductor is a material that transmits electricity without resistance.
In the past, we’ve only been able to create such materials at very, very low temperatures and at high pressure.
This has made them unfeasible for most real-life situations.
But a room-temperature superconductor opens up amazing possibilities.
Energy is probably the biggest one.
Imagine transmission lines that don’t ‘leak’ electricity.
100kWh (kilowatt hours) is lost each year in the US alone thanks to this energy loss. That’s the equivalent of three large nuclear reactors running 24/7 365 days a year.
At the generation point huge savings could be made too.
Check out the table:
Source: Twitter (still sticking with the original name. Sorry, Musk)
These are big figures. And when you extrapolate them out into the world, it changes the economics for the entire energy market.
What else?
Well, how about a phone that doesn’t turn into a mini oven when you’re looking at TikTok videos all day!
Remember, no resistance means no heat so your phone won’t get hot. It also means no noisy, cooling fans whirling away in your computer either.
What’s more, because superconductors are the perfect batteries, you probably won’t have to recharge your phone very often either.
Or anything really!
You simply inject a current into an SC coil until you need it.
There’s more…
How about quantum computers in everyone’s home? Or even levitating trains that could do New York to Los Angeles in less than an hour?
These both become possible with the advent of a viable room-temperature superconductor.
This was the future we were promised!
I’ve barely touched the surface of what this technology makes possible. As Alex Kaplan tweeted, it’s a big deal and probably even bigger than AI in terms of its impact.
Happy days then?
Not so fast…
As I’ll show you now, there’s a lot of scepticism about this paper and if the claims will hold up to closer scrutiny…
https://www.moneymorning.com.au/20230731/a-bigger-deal-than-ai.html
Last Friday, the ABS released the latest retail sales numbers.
Australian retail turnover fell 0.8% in June, following a 0.8% rise in May.
The Bureau’s Ben Dorber said June’s retail turnover ‘fell sharply … due to weaker than usual spending on end of financial year sales.’
Even juicy discounts were not enough to entice disciplined shoppers watching their budgets.
Dorber said there was more discounting than usual in recent months, to meager returns:
‘There was extra discounting and promotional activity in May, leading up to mid-year sales events. This delivered a boost in turnover for retailers, but that proved to be temporary as consumers pulled back on spending in June.’
One of my counterintuitive beliefs is *almost* every active investor deeply underestimates how challenging active investing is. Almost nobody is immune from this.
Why?
— Mostly Borrowed Ideas (@borrowed_ideas) July 30, 2023
How can you value stocks?
One way is to use Return on Equity to appraise a stock’s worth.
To find out the ROE stock valuation formula, listen back to our latest What’s Not Priced In episode.
How can investors value a stock?
Listen to the latest #WNPI episode as @gcanavan2 explains his Return on Equity (ROE) valuation approach.
The ROE formula is applied to three stocks — $CBA, $TLS and $AAPL. https://t.co/HnWVWuT8e7
— Fat Tail Daily (@FatTailDaily) July 29, 2023
Miner Silver Lake Resources [ASX:SLR] is down over 20% after releasing its June quarterly, hitting a new 52-week low.
That’s despite Silver Lake reporting record June quarter production of 81,616 ounces gold and 642 tonnes copper. SLR sold 83,540 ounces of gold at an average sales price of $2,874/oz, at a AISC of $1,598/oz.
For the full year, SLR produced 261,604 ounces of gold, achieving sales guidance with 260,372 ounces sold at an average price of $2,697/oz.
So why the steep fall?
The market is ruthlessly forward looking. So what’s in store for Silver Lake that the market doesn’t like?
FY24 guidance is well below FY23 numbers — both for sale volumes and the average sales price.
Silver Lake expects sales to be between 210,000 and 230,000 ounces at an AISC of $1,850 to $2,050 per ounce.
So less sales at lower margins.
Not a good combo.
Silver Lake also announced the company’s chief financial officer Diniz Cardoso will retire next month.
The miner then said it will ‘pivot its focus in FY24 to prioritise the acquisition of drill data to deliver the step change in ore body knowledge necessary in ensuring a more predictable and valuable long term operation.’
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Investment ideas from the edge of the bell curve.
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