EP12 | Can YOU time the market? Digging Into Commodities & Mining stocks

Summary

• Market Outlook: The podcast discusses the recent performance of US stock markets, highlighting new all-time highs for indices like the S&P 500 and NASDAQ, driven by optimism following the Federal Reserve's interest rate cuts.
• Commodities Insight: Interest rate cuts in the US are beneficial for gold and precious metals, as lower rates reduce the cost of holding physical gold, contributing to its price increase.
• Company Highlights: Nvidia's strategic investments, including a $100 billion investment in OpenAI, are aimed at securing market share in AI computing, while Apple sees a 4% stock rise due to strong iPhone 17 sales.
• Investment Strategy: The podcast explores the debate between timing the market versus time in the market, suggesting that professional investors may benefit from timing, while most should focus on long-term market participation.
• Sector Focus: The mining and metals sector is analyzed, emphasizing the importance of supply and demand dynamics and China's influence on commodity markets, particularly for copper and iron ore.
• Portfolio Management: The hosts discuss trimming positions in NASDAQ and gold, taking profits after strong performances, and reallocating into cash to prepare for potential market pullbacks.
• Global Economic Themes: The podcast touches on geopolitical influences, such as Japan's upcoming prime minister election and its potential market impacts, as well as the US government's debt ceiling discussions.
• Key Takeaway: The episode underscores the importance of adapting investment strategies to current market conditions while maintaining a long-term perspective, especially in volatile sectors like commodities.

Transcript

You have 2 minutes to convince me why I shouldn't fire you on the spot. Of course, everybody then turns to look at me. He's the one that's starting # sack the German. >> Oh, it might well be. There are many people who are signing up to that. >> It's trending and then they floated. So, when you were saying they were billionaires, they started off being billionaires on paper. They ended up being billionaires in cash. Up 5% on the week in 7 weeks. Part of me thinks I'm tempted to take some profits there and try and time this market rather than stay involved. >> I've got to put my hands up here and say even I think we've probably had a lot of good news. Maybe it's time to take a waffer thin mint off the table. >> My god. F am I am I hearing things? Houston. Houston. I take back every yellow card that you've had in previous weeks. Your capital is at risk. The value of your shares, ETFs, and ETCs can fall as well as rise, which could mean getting back less than you originally put in. This content is for information purposes only and is not investment advice. Past performance is not an indication of future results. [Music] Welcome to episode 12 of the art of investing brought to you by IG, the global investment platform. So today we are going to be taking a deep dive into well the ETF or trust that has performed the best in our portfolio this week. To give you a clue, you could say that we're digging for some nuggets of extra value in there. Then we're going to go on to one of your questions that you've written in to us by email, and that is the age-old question of what is better for long-term performance. Is it timing the market or timing the market? We'll look at all of that after the Spice Market Review. Thank you, Rich. Uh this has obviously been a quieter and shorter week than you usual, but there's still plenty to talk about as there always is in markets. Following on from the Federal Reserve's uh decision to cut interest rates last week, US stock markets have pushed up to new all-time highs. The S&P 500, NASDAQ, uh the Dow Jones, and even the Russell has pushed up to a 12-month high. And that's an interesting thing in its own right because it's been a long time, many years actually, to be able to say that all of them have hit a all-time high because Russell's been lagging for 2, three years since 21 and now they're all taking their highs out. So, we've got to say there's a lot of optimism around in Trump land and uh that's no bad thing as we portfolio is heavily invested in that part of the market and into the US which is good. There's also been because uh interest rates are effectively coming down in America. That's good for things like gold and precious metals because if you own gold, you have to store it and you have to pay an interest charge on doing that. And so that's if you own physical gold. So when the interest rate comes down, your cost of holding it goes down and so the cost of the metal can go up. And gold and has pushed up to a new alltime. In fact, it pushed very strongly up there this week. Um and silver has also had a good week, still up at above its 14-year high. A very interesting week for assets and particularly for our portfolio, which we'll touch on later. The other big story going on in the background, we mentioned it before, is that there is going to be a new prime minister of Japan. And so the electioneering for that starts this week. It only it only takes about a week or so. It should happen in we should get the result in two weeks. But for the first time ever, one of the favorites is actually a lady. I apologize if I mispronounce her name. Uh but her name is San Takichi and she is considered a Thatcherist. A Thatcherite. >> Oh, really? >> Now that could scare a few people. Those of us who have memories going back to working in markets when that was in power, that would scare a lot of people out there. But actually for markets, that was not a bad thing at all. Uh, and her main competitor, uh, Shinszo Caillou, >> brilliant pronunciation. I've got to say he's been taking he's multilingual, isn't he? >> Well, I did I did commute to Japan for two and a half years, but I apologize if I got it wrong and I'll bow deeply if I have made mistakes there. But he's more of a centrist and he's much more bullish for stock markets. looks like he would try and stimulate the economy and get the stock market going. So again, the Nikai 225, which is the main Japanese stock market, has pushed up to new highs again this week. Away from that, uh we've had some really interesting company news, but this from the biggest companies in the world. Nvidia has been very busy, very busy indeed. They went out and they bought $5 billion worth of Intel. And if you remember a couple of weeks ago, the uh US government announced they were buying 10% of Intel on the back of Trump's recommendation. Uh, and that's helped Intel shares rise nearly 30% since then. >> He's a great stock picker, is he? He is a great stock. He He He It's not that he can tell people what to do or anything, is it? He just says, "Oh, I like that. Oh, do you want to buy some?" Oh, maybe they'll buy some as well. And all his friends run around and all buy it. >> I wish I knew him better. >> Yeah. Have you not have a lot of money? >> Have you not had the call? I mean, the reason they're buying a stake in Intel is they want Nvidia and Intel to collaborate on making new chips for the data centers that we know is is proliferating across America and across the world for to to accommodate AI computing. Um, and that's pretty big news. They also were over here if you remember with the delegation uh when Trump came over last week and they've announced that they would invest 2 billion pounds in UK startups a lot of AI but also things like fintech revolute which you'll hear more about because Revolute are about to float in the US ironically uh but they're also early investors and things like that and they're going to help the venture capital industry in the UK and for all my mickey taking about Trump and all that going on that's genuinely good news for the UK. Yeah, >> we talked about it with our guest um two weeks ago about how we've got to get the sort of scale up industry working in the UK. How we've got to get that investment and it's really good to see that investment. So, I I'm giving that a positive. That's not many in my direction in Donald Trump, but I'm giving a positive there. Finally, uh it makes the UK's investment a bit small beer because they've invested as well, this is Nvidia, have announced they're going to invest $100 billion dollars into Open AI. Now, OpenAI own Chat GBT which is uh obviously as you know is one of the big AI search engines um and is probably the biggest unqued company in the world now. It was set up by oh that old bloke Elon Musk with no money. Um although he has got out early but lots of uh lots of the friends have made a lot of money in it and that was a huge investment and it's basically they they want to make it um you know much bigger and more accessible for the open market and of course by doing that they'll ensure that chat GBT use Nvidia chips. Well that's the really interesting thing isn't it? that there's a hundred billion investment going from Nvidia into OpenAI for non-controlling shares. But then that hundred billion of investment is to buy Nvidia chips and it's over a number of years. Now what is the reward for investing $und00 billion over a number of years? Well, the stock adds $200 billion to its market cap. Do we have a problem here in that that kind of promise, you know, and we're seeing Trump promises from Trump every single day. We're seeing um Zuckerberg come out and throw out that 600 billion dollar figure and then get caught on microphones saying, "I just made it up. I I didn't know what you wanted me to say." Are we getting into a position where all the fake news coming out of the White House is feeding through into stock prices? Do you think? >> No, I I don't think so. I mean, look, you know, this is a way for Nvidia to secure huge market shares for the long term. And this is not a fad. It's going to be around for five or 10 years or if not longer. They are securing a position with the biggest potential AI sort of search engine chat GBT arguably. Um, and why wouldn't you? They've got, you know, hundred billion dollars is a huge amount of money clearly, but for them right now, it's small change and they're doing it over a long period of time. And that's not a bad price to pay, I would argue, to secure that market share going forward. >> I suppose the the bigger long-term question is we've moved from globalization into full-blown protectionism. All this is protectionism. >> Now, a lot of people would say that the great performance of stock markets over the last 10, 15, 20 years has been the benefits of globalization. And now we're saying the great performance is due to nationalization. So, I go back to a comment I made last week, which is everything's a bull market story to those who are bullish. To me, you want to see the how the market reacts to these things. And the market is still reacting positively. So, I think you have to say it's still in the receptive move to take this stuff. I I wonder when we look back at this in many years time, I'm not talking about, you know, next week or or the week after, whether we're going to say, do you know what, was this the start of the of the change in how the economies are going to be run, which actually means to higher and growing costs, higher inflation, and more difficult times. Now Mark of course would argue and I would go with him that actually if you have higher inflation it means earnings to go up nicely and as long as the the companies can keep putting their their prices up a bit that's great for profits not great for bonds but bonds are not barking at the moment they're not saying there's a problem here so while they're not saying it the market's going to carry on so as much as I would like to to think this is heralding something more important at the moment People just ignore it. So far, so far. Wow. >> So, we've gone from the biggest company in the world. Let's go to the third biggest company, which is Apple. Apple shares are up 4% uh yesterday because if you remember a couple of weeks ago, they launched their iPhone 17. Bit of a damp squib, let's put it like that. People are unenthused by it. But actually, the early signs are that the sales are up some 10 or 15% more than the iPhone 16, which was launched last year. They always launch around September time. Those of you who like to upgrade your phones in September, you'll know that. Um, and the important thing is that for Apple, iPhone sales still account for about half of their revenues. So, it's still very, very important. And you would think, oh, it's, you know, they make phones. It's not that important anymore. It's still huge. I question that number a little bit because it came from the CEO of T-Mobile who was doing a live interview on CNBC. happens to be the outgoing CEO of T-Mobile that was there to announce his resignation and passing on to a colleague and he was asked how how have sales been this weekend and he says ah it's fantastic T-Mobile it's doing incredible things our iPhone sales are up 10 to 15% in store in the first weekend compared with last time and so the market of course took it as well that's Apple sales up 10 to 15% put the stock up 4% >> but that's the same point as I'm market wants to hear it. That's great. And I'll say one thing in favor. I haven't had a new phone since 2012. Now, you're going to make I don't be too, you know, sympathetic towards me. I can see how upset you are about that. I've just about to order one of these new phones and I've read some reviews on them and they say they've kept it really simple. They haven't done much, but they've changed some colors and I love the orange one by the way. That's why I'm going to get the McLaren orange one. Never mind. Um, and there's lots of people ordering these things. So, I I think that's one I can believe that this is going down as a better update than people had thought it was going to be. >> No wonder his phone's on to charge cuz we've uh we've been out for 2 hours before he charged at last. >> Well, you touched on McLaren Orange there. Um, a bit closer to home, Porsche have had some pretty appalling numbers and I know Porsche is a a company close to your own heart there. Thank you very much. Yeah, Porsche and you know VW obviously own Porsche as well. uh their shares were down 8% uh yesterday and that's because they're basically giving up almost on electronic vehicles, EVs, um electric vehicles and they're going back to the good old fashioned ICE or internal combustion engine cars and it's going to cost them€2 billion euros to sort of change the the the sort of the production lines if you like. So yeah, shares are down 8%. Now interestingly that's their fourth profit warning. Now, what in your guys' experience once we get the third or fourth profit warning, is it is it in the price? Is it time to start looking at them or do you just, you know, a change of tact like that, you're you're scared? >> Well, the old rule is they never sell profit warnings in packs of one. They're always coming at least threes and obviously we've had four out of Porsche. As you say, the time you know it's in the price is when they have a big profit warning and the shares don't go down, they actually go up. >> Okay. and we haven't quite seen that with with uh with Porsche yet. Finally, and you'll hear more of this in the next few days, I'm sure if you listen to the news channels, particularly the business news channels, we're about a week away from the US government running out of money again. So, as we come to this time of year, they either have to raise the debt ceiling that the government can borrow money for, >> I guess, their overdraft limit. >> Exactly. get their overdraft limit raised or there has to be legislation sort of passed through Congress to allow them to to do that and to maybe find other ways of raising money. But in the meantime, between now and this time next week, you will hear about the threats of potentially the US government shutdown, which means they'll have to lay off workers. People won't have to won't be able to go to work and get paid if you're a fireman, policeman, all those other sort of jobs that government employ. >> And sometimes there is a little bit of brinksmanship there, isn't it? Everybody's very relaxed until 48 hours beforehand. Then you get alerts down to 5% in the market and then suddenly something's done. >> It's as if it's a game, isn't it? Funny old game, isn't it? You know, this happens every sort of nine months a year. They agree a number and it's an enormous number that they agree and then they get to within sort of two weeks of it and the in this case the Democrats will say, "Oh, we're not going to we're not going to sign off to this." The Republicans say, "Oh, you've got to sign off to it." You get closer to it. the market does a 3% fall at some stage and we go, "Oh my god, let's all sign up because we can't stand this. >> This time it's different." >> And the bull market continues. We must have seen this 25 times over the last 40 years or whatever. Um, it's never caused a problem that's lasted more than 24 hours, if that. But it might be something that brings the markets back a little bit. Um, which is good because we're we're hoping they will come back a little bit because we got some money to go to work. But if I was to just add a couple of comments. One, bond markets started to get a little bit more interesting last week after the the the Fed cut um the next day long bond yield started to move upwards again in the US and in the rest of Europe. Um only by about 10 basis points. Not a threat yet. So prices were going down. >> So prices were going down, bond yields were going up. So if you had a bond portfolio, your bond portfolio would have lost money compared to the week before. But nothing major at the moment. This is still the dog that hasn't barked as I said earlier, but we we're expecting it to at some stage, but it's not at the moment. >> But sorry, aren't the White House going to reduce interest rates so much over the next two years? Why are why are bond yields going higher? >> Well, remember when we were doing our briefing on bonds, the shortdated bonds, naugh to fiveyear date maturity bonds, maybe seven-year maturity bonds are very highly dependent on where interest rates are going to be. So, if the Fed's going to cut rates, interest rates that is, then those bonds will do quite well. But the longerdated bonds, the 30-year bonds, remember influenced more by um the government supply, inflation views, the economy going, political risk, all these other factors and they had started to move up and so that that you know you could if you wanted to and I think it's far too early to say this. You could argue there was some question in there as to whether they really should have shut rates and that's starting to emerge. Much too early to say that yet. We'll keep an eye and watch that. But something to keep an eye on. The second thing I thought was interesting is just it's been noticeable how over the last six weeks European equities particularly have done poorly and the US market has done very well and that reverses a trend from the start of the year when the US was doing very badly and Europe was doing very well and it's been a sort of rotational trade. I think people at the start of the year, people certainly like myself had bought a lot of European equities and and got out of the US because we don't like some of the policies that are coming through when we're not sure we like some of Trump's views on on on this um you know debate around tariffs that we you know had moved that that way and then with the interest rates changing in the US and people getting more optimistic about rate moves the US equity market has done pretty well and the European market's done badly. So it's given back a lot of that relative performance. So now the S&P's done about 14 15% this year and Europe's done about 14 15% give or take. You know it's it's there or thereabouts having been quite a long way difference. Now important thing is over the last couple of days you're starting to see a bit of rotation in the US equity market and some of the European markets have started to pick up a little bit. The real question is is that just a flash in the pan? Is it just giving back a bit of that performance or is that going to uh be a a factor of the next few weeks? Once again, something to watch but not something that you necessarily what we there's nothing we're going to do in our portfolio about that at the moment. It's just something to think in our minds. >> It could be a bit of what we call window dressing as we're coming up to the end of the quarter. Good point where fund managers basically like to make make sure their portfolio is in the right shape to be a go and talk to their investors. Uh, and that can mean that quite often if they've got too much cash, they want to put a bit of cash into the market to put it to work so they don't look like they've been running with too much cash, particularly when markets go up because that hurts your performance. Or if they've got an overdraft and a lot of funds are allowed to have a small overdraft. If you're overdrawn, they may need to sell some some of their stocks to get some cash in to come back in to have some cash in the balance sheet rather than being overdrawn. And we're coming up to the end of the quarter and you can sometimes get some very funny moves in individual companies, individual stocks and shares and sometimes it affects the whole market. But we're coming up to the end of the quarter in a week's time and we might see a bit of jiggory pokery on that front in the next week or so. Now just hold that thought a minute, Mark, because we are going to be coming to quarterly reviews a little bit later on today. But in the meantime, we're going to pass across to CJ who's putting a new hat on. Yeah, I'm I'm trying a Rich's hat on today. Um it obviously doesn't fit quite so well because he's got hair and I haven't. But today we're doing a deep dive um into the natural resources sector, in particular the metals and uh the mining sector and how they're reflected in our portfolio. We're lucky today to have Mark and uh Rich and they have both got extensive experience in these areas. And before we get on to talk about it in detail, I just wanted Mark to give us a minute on why you got involved in this sector, Mark, why you love it so much. And then I'm going to ask question to you, Rich. >> Well, I was very fortunate to grow up in central Africa and my father worked for a company called Lonroe, which many of you will remember as owning Harrods um at one time and getting involved with Tiny Roland against Muhammad Alied and that battle, that corporate battle that went on. Anyway, Lonroe had many assets. Uh, and one of them was a sugar plantation in a place Malawi where where I grew up, but they also had some of the biggest platinum and palladium mines in down in South Africa. Uh, and so from a very early age, I was very interested in the mining side of Lonroe. Uh, and because I'd grown up in Africa, mining is prolific across, you know, many of the countries there and particularly in South Africa, which is obviously very resourcerich. So, I I I learned a lot. I wanted to to follow these companies. They're great to follow because when they're exploring for things like gold or diamonds or or copper or iron ore, they're in the exploration phase and that can be very exciting. If you make a big discovery, then the share price could go up two or three or four times very quickly if you find a very rich vein of ore of metal. Um, and that happens in oil as well. If you find a big new oil field, that exploration phase can be really exciting as an investor. And that sort of, you know, sort of drew me towards it. Then you get through a really boring phase for these companies where they basically have to, if they found this or they have to build a mine and they get they have to spend three to five years building this mine where they make no money at all. In fact, they're just spending spending spending and there's a share price. That's not great for share prices. So, as an investor, you sort of like the exploration side, don't like the buildout phase. But when they start actually then producing out of that mine once it's built, then you've got maybe 20, 30, 40, 50 years of cash flows that are pretty visible, you can see out a long way. And that's another great time to be investing because they're generating lots of cash. They can then do more in more way exploration or give it back to shareholders in terms of, you know, dividends or share buybacks or take over other companies. But that, you know, there those are big exciting phases and that's one of the things that's always attracted me. There's great characters involved in the industry like Tiny Ran. I've got a great story for you. Right. And I was in the market when this happened and I was covering the the sector and it regarded it's regarding a company called Brie X. This was a Canadian quoted company and had gone from basically a penny share to being a top 300 stock in Canada on the Toronto Stock Exchange, the TSX as it's called. And basically what they' done is they had this mine in Indonesia for gold. They were mining gold and they basically took a load of analysts out there and basically showed these analysts down the mine shaft these all these gold little gold ingots and gold nuggets all the way along the this sort of side of this wall. So all the analysts came out hugely enthusiastic about it upgraded all their forecasts. This company went to $6 billion of market value from being a penny share being worth virtually nothing. Now, as it turned out, there's this thing in mining called salting. So, basically what had happened, a person had taken a shotgun case, filled it with little gold ingots and little gold sort of uh nuggets, fired it into the wall of the mine, and so there in the mine there were all these little gold ingots, and there were basically lots of little bits of gold fired out of a shotgun cartridge. Now, if you've ever been in a gold mine, you don't find gold like that. You just don't find like that. It comes in a quartz like you know it's a quartz like you get those magic stones and in there you you have to you have to crush it and then you have to you have to put cyanide on to get rid of all the quartz and gets the gold out and then you have to process and process but you cannot see gold just sitting in a mine and all these analysts were brought into it. Sure enough it's a basic blew up. Everyone suddenly realized it didn't happen mainly because the chief geologist threw him outself out of a helicopter and committed suicide and the share price went to zero. and that was Brix. So, you got to be pretty careful about some of these mining companies. You've got to know what you're investing in. Do your homework. Be reassured. Which is why we're happy to invest in the very biggest ones rather than maybe some of the smaller ones. >> Thank you, Mark. Rich, you've got an extensive background in that area as well. Tell us a little bit about what got you involved and what your interests are. >> So, I was very lucky. The first two years of my career was spent trading the retail sector. So, Marks and Spencers and Tesco's right now. interesting companies but not the real sex drugs rock and roll of volatility. First week in January 2006 I was moved across to the mining desk and they said right these stocks operate a little bit differently. Now on the 11th of January, so a week into it, Metal bid for Arcelor, which were two of the stocks in our sector. And that started this cascade of M&A in the sector. And the move ended up making my career because I was the only sellside trader to have a live copper price. It was one of the things that Credit Swiss did greatly was give us that live. So I would get Morgan Johnson from Marshall Waist phoning up and and asking what the live copper price was or uh Davis from Clareville was on the phone, you know, what can you do in Extraata? He wants to know the copper price. So I had a 15minute sort of ahead of most of the street and was feeding this to all the sales traders and made a name for myself. So I fell in love with the sector very quickly. As Mark says, there's some great characters. Mick Davis of Extra, >> love, mate. Great guy. He built Extraata from almost nothing through doing deals along the way. And within you know a year and a half of starting in the sector we had seen BHP try to buy Rios numerous biders for uh the likes of Lawnman for Valley down in Brazil. And it it's it's not just as you're growing up with a kid you know you've got the Tonka trucks and you've you know it it's pulling these resources out of the ground. It's just really interesting to to read about. >> You said one thing there for the benefit of everybody. You said sell side. When we say sell side, what do we mean? >> So, yeah. So, we've got what Mark was involved in um for the majority of of his career on the buy side, >> which is managing the money. >> So, essentially, you're buying research and ideas from the sell side and the sell side are the investment banks and and the brokers. Now, another thing is is IPOs. I had the good fortune to be the the man who was in involved in opening Glenor. So it was the biggest ever IPO on London Stock Exchange in 2011 um at its time. Yeah, we IPOed Glenor real old school style. You you know you couldn't have it all on the computer. You needed to know your buyers and your sellers. And I had you know just scribbling down orders and we were making it in hund00 million on the touch even in the mids. that that touches the difference between the buy and the sell price or the buy and the sell price. >> You can tell how excited I am. I'm going back into to Trader Lingo without explaining it. >> Yeah. I mean, Glenor is amazing. I I one of my best days ever as as an investor was I I had the pleasure to go over to Zuk in in Switzerland and sit in front of uh these heads of businesses within Glenor. I've never to this day had more billionaires roll down in front of me in the space of an afternoon than I did that afternoon. I probably saw five billionaires one after the other who was in charge of copper or in charge of iron or in charge of coal and these guys just one after the other and the flotation gave them that money and what did they do with it? They put it all in Switzerland paid no tax on it. Well, lovely. >> Were you involved in the did you did you buy some in the allocation? >> Only small. But we did we did buy some, but it was it was a bad price. You just knew it was a bad price because, you know, these guys were just cashing in literally billions of dollars. >> And funnily enough, commodity prices had gone higher into the IPO. So, in fairness, you know, and and I'm not an expert in this area, but I I seem to remember bits of this. What what you're actually saying is a very well executed exit plan because Glen Core for those who don't know Glen Core and I'm now on dodgy ground because I'm going to talk to you guys and just mention it. They were a trading house in lots of different commodities. So they had a guy head of oil. They had a guy head of mining and they all had stock in the company. They waited for the stock to get right up at the very top and then they floated. So when you were saying they were billionaires, they were they started off being billionaires in on paper. They ended up being billionaires actually in cash while the rest of the street nursed their losses as the stock IPOed. It it came at £530. It opened at 8 a.m. at £549 and didn't see that level for 12 years. There we go. You see, >> timing is everything. I think we might be thinking about that a bit later as well. Um, okay. So, let's go to the portfolio. That was a lovely intro. Thanks, guys. Now, we've got a number of holdings within our portfolio. Uh, we've got our position in gold. We got a position in copper, but we've also got the Black Rockck World Mining Trust. And I'm aware that we've not really given a lot of background in that over the past few weeks. So, Rich, why don't you take us through what's in that and you and Mark, you can discuss, you know, some of the factors that that made us think about that. >> That's right. So, there's numerous ways that we could have gotten exposure to mining metals resources. We've chosen to buy a little bit of copper. We've chosen to buy a little bit of gold, but this gave us the exposure to the names in a way that we trust in the the Black Rock um mining trust. And it's built up of holdings in each of the the large cap miners. And so if I just go through the list of where the exposure is, it's 8% each of Rios and BHP. So two of the biggest mining companies in the world. And then Glenor that we've mentioned, 7% is uh Glenor. 6 and a half% is Anglo-American and then Freeport McMorren. So each of these has slightly different portfolios of commodities. And if I really wanted copper, I might go to Freeport or an Antifagasta, which are copper specific mining stocks. But then the diversifies, as we call it, that's more like Rios and BHP. When you say diversified, you mean because they're not just single metals. They're digging out the ground. It's a well diversified portfolio. So maybe one or two of the things might be doing well, maybe one or two aren't, but they're diversified. A bit like a good portfolio. >> Exactly like a good portfolio. So you've got, you know, iron ore, copper, coal, um, some have got oil and they trade it like a portfolio, right? Sometimes they make big mistakes. Rios make a terrible acquisition that got into aluminium and it left them, you know, writing down the value of these assets for years. Mining's great in that way is that you're building a portfolio of exposure to a commodity that you want exposure to at that time. Then we go further down the list and we find chemical. Now chemicals now in uranium, right? So then we're adding a bit of exposure. We've not just got gold and copper and iron ore, but we've also got uranium in there. And by the way, uranium is a big player at the moment. has done very well because a lot of uh companies in the data center world we go back to data centers and AI there's a huge amount of power required to run all these computers and the supercomputers and interestingly uh I think it's Microsoft have actually um reopened three mile island which is an old nuclear power plant in America so that they could use the power from that to power their data centers going forward >> and they've signed it for 20 20-y year deal. So, uranium, there's lots of these small reactors now that are being used to power these plants. So, uranium demand is going up and up and up. >> Isn't it funny how things come round full circle? If you go back to Fukushima, >> then uranium was such a dirty word, but now the AI needs so much energy and questions over its sustainability. Then suddenly we're happy with these mini reactors. >> And it's a clean energy, right? It is a clean clean power source. Whereas coal, which is when Fukushima happened in in remember in Japan, there was the earthquake that led to the tsunami that hit the nuclear power plant there in Fukushima. They had to close that down. China were building 450 new nuclear power stations at that time. They stopped pretty much overnight. Germany closed all of their their nuclear power stations down. Japan did. And all this demand for uranium just suddenly disappeared. And then there was a glut of uranium. The price collapsed as did many share prices that were associated with it. Chris and I know one called Geiger counter that did very well all the way up. It's now doing very well again. >> Very well again. >> Exactly. So you got to be conscious of the end markets for these things and uranium is unique in that sense. It's one of the reasons we probably don't wouldn't have it in this portfolio because there are those associated risks which you wouldn't get in copper for example. >> If my understanding is correct, it's very cyclical the metals industry. We've got a nice broad exposure to a a you know a big range of these metals. Why are we so confident at the moment that that's a good exposure to have? Because of course we might get exposure and it not be a good time to do it. Why are we thinking I mean clearly it has been a good time because the way these prices move but give our listeners some some sort of clue as to what's the driver behind some of these things. >> Let me run you through the exposure to commodities. We've done it to actual stocks. Yeah. So we got 32% exposure to gold and precious metals, right? So that's includes silver and and platinum and palladium as well. Then we got 25% of copper and we know from following the single stock stories that copper is in such high demand because it's actually quite hard to find production growth going forward. >> So So hold on. Uranium is for nuclear reactors. Copper, why is copper? So let's go with that for that one. >> Well, it's used in computers. It's used in sort of power transmission. The best conductor for electricity is copper. And when copper became so expensive a few years ago, I remember the Chinese started making an alloy. They mixed aluminium and copper because copper was so expensive. And there was a massive glut of aluminium, which we talked about. Riotinto had bought all this aluminium. There was too much aluminium in the world. The price had gone down. And then the Chinese said, "Oh, we're going to mix copper and aluminium. That's not as good a transmitter as of electricity as copper, pure copper is, but it's a hell of a lot cheaper if you mix it in with aluminium. And so they did as they were building out railways and and rebuilding and sort of building out their infrastructure from the big cities in China. But right now, copper, it goes into these data centers, right? Huge demand. >> I think we got an ETF link to that as well. That's last week's forecast. >> Yeah. And then uh electric vehicles also take a great deal of copper. So, it's positioned very well in all the thematic ideas that have that have come through. >> Okay. So, I've got copper, uranium. What? I've got some gold. We all know that gold's been doing fantastically. What What else? >> Then we've got 11% iron ore. Now, iron ore is of course what goes in to making steel. So, you take a heap of iron ore, you take a heap of coal, and then you get it very hot and you get steel coming out the other end. So 11% exposure to iron ore. China are huge buyers of iron ore and which has done very great things for the Australian economy over the years, hasn't it? >> I think you have to remember right that China are very influential when it comes to commodities. Full stop. They still buy approximately 50% half of the world's commodities and in iron ore particularly they're still massive. They still buy about I think it's about 75% of all the iron ore that's produced in the world. They buy about 50% of all the copper that's produced in the world. So they are we've got if the Chinese economy is going badly, it's not great for the end markets for some of these. Now there is AI and things like that offsetting to things like copper, but China right now are trying to turn their economy which has been in decline for a few years back into a growth mode. And that means they've got to spend money on building infrastructure, railways, you know, plants, electric sort of, you know, vehicles and big manufacturing areas which chew up huge amounts of iron ore and copper, etc. So, China's beginning to stimulate that should be good for the end demand of of these metals. But, interestingly, there's no new supply coming on. We can see you know it's very easy to see as we said earlier on if you wanted to build a new copper mine today if you find the discovery that might take you three or four years to get it approved then you have to start building the plant it take you another 5 years before you can even start selling the copper now that gives you a huge amount of visibility as an investor that there's no more copper coming on in new areas for that period of time that's an investable time horizon most equities look six to nine months forward let alone 5 years so we know The demand is there because China are trying to stimulate again. The world's picking up and growth is picking up again. Data centers are using all this sort of stuff, but there's no new supply. Remember what we said, supply and demand are the biggest driver of share prices and commodity prices. Even more so in commodities because supply and demand is where it is most basic. In shares, you have dividends, you have other issues, you know, are they going to be taken over? You have all these issues. In commodity, it's simply supply and demand. So if you know supply is tight, demand is going up, the price should go up. >> This is why we both love it so much because it's so basic. >> It is just demand and supply. And that has changed because it's a bit of a hangover from CO because of course you said and rightly stated that this sector is very cyclical, right? So if the economy goes into a downturn, these companies have to pull all their capex and they have to save their balance sheets. So during 2020 2021, you were getting you weren't getting any investment into the long-term um mines and production. So now in 2025, you're suddenly left over. Well, where do I get my production growth for 2728? I've got to go and buy it. And the only way to buy it is look for companies like Anglo-American that have got real high quality copper mines and you go and buy them. And that's what BHP tried to do to Anglo last year. They managed to fend them off. B B B B B B B B B B B B B B B B B B B B BHP walked away and now Anglo and Tech Kaminko which was bid for by Glenor and is 3 and a half% of our fund. They've now married and are merging in the next year to give give themselves great cost savings of um corporate production in Chile. So, as I say, it's a hot bed of M&A and it's because they're all chasing the same commodity and that gives us great belief in this copper exposure that we've got outside of the mining trust as well. Grow your portfolio with IG. Invest £50 with IG and get a free share bundle worth between4 and £200. Make your first investment into an ISA, GIA, or SIT account by the 30th of September and benefit from commission-free investing as well as 4% variable interest on cash. Other fees may apply, terms and conditions found in the show notes or on ig.com/uk. Start your investing journey with IG today. Guys, that's really exciting and I'm now an avid believer in this stuff. But before I changed my whole portfolio around for it, um you mentioned earlier Mark about uh Porsche having some terrible results because they were pulling out of electric cars. Does that move by them? I mean clearly not on their own, but clearly if that marked some sort of move away from electric cars being the next big thing, would that put some pressure on the valuations you're talking about for things like cockpit and other things? Right now we're at this real instance of sort of two big sort of uh demand pools. One has been electric vehicles but it's actually compared to the overall size of the market. I think off the top of my head it's about 5% of copper was basically being drawn into electric vehicles. Now electric vehicle sales are down heavily but they've not completely disappeared but they're down you know and in Europe they're down about 40% which is why Porsche trying to pull back. They're not they're not going to stop doing electric cars. they're just pulling back from the developing the new ones and concentrating the older ones. >> But at the same time, we've talked about it time and time again, data centers and the whole proliferation of supercomputing really is offsetting that. And I, you know, I I had to say that I think without actually that that sort of pull back in electric vehicles usage, >> then the copper price would be substantially higher than it is today. >> I would also say for example, if if you were going to ask me right, what would change your mind on this? It is China. As Mark alluded to, it's always been China since 2005. This sector depends on the Chinese economy and its industrial production and the the real estate as well. Now, it hasn't had that tailwind for the last few years, right? China never really came out of of CO with a with a great growth program. So it is going to be dependent on this stimulus. We think we're at the the start of a stimulus periods, right? So that should be a tailwind that the sector hasn't had in previous years. But if something went wrong in China, it would change my mind and it, you know, we'd have to be pretty quick about amending the exposure. >> China had a big problem um with a property bubble and for the last 5 years they've been deflating it. In other words, they've been trying to get property house prices down because people were borrowing over borrowing against that and then that people were going bankrupt and it was causing all sorts of issues in the system. They've been trying to sort that now for 5 years. We are coming to the end of that and there are signs that the property market is beginning to turn and beginning to look a bit more stable. that would again would be good for starting to build new property because there there's been a there's been virtually no new builds out in China because this they've been deliberately trying to push the property market down. If that's turning, demand should pick up. >> Okay. So, I'm taking it from that that we we're happy with what we've got. We think there's a very bullish story around some of those metals, some of the mining companies. If something happened in China, we'd be watching things very carefully, but until that happens, >> we're happy with the exposure we've got. Is that is that what we're saying? I've really enjoyed putting on Rich's hat. It's been great. Too much. I'm going to hand it back to Rich. Right. So, we're going to have a look at the portfolio. However, I fancy this could be a little bit more brief than usual because next week we've got something to look forward to. And that's because not only is it the change of the month, it is the change of the quarter. As Mark alluded to, quarter end leads us into time to do a bit more of a deep review as uh you gents will have been accustomed to during your portfolio management days. What happens CG at the end of every quarter? Rich, um I was enjoying this podcast until you reminded me about some of those meetings that I used to have to attend uh at the quarter end because uh they were a fairly emotional experience. When I was at Mercury, uh we had um over 20 billions of money that we were looking after for more than 150 clients. We'd probably have 300 meetings each year. Each of those meetings would be reporting on performance and you'd be going through a pack to say this is what we did this quarter. This is what worked. this what didn't work and this is what and this is how the overall result is. Now the problem with being the boss is that you're never invited to go along to these meetings when they're good because anybody can do them. The only time you you have to go is when the meetings are bad and you know clearly I'm a very successful fund manager as you all know but there are times it's been terrible and I've had to go along and see clients and um you know there are there are ways this works well and there are ways it doesn't work well. So, I'm going to give you an example of each one. There was one client I went to see after a very poor quarter. We just started managing the money. So, this is the sort of first review meeting. I've got to really go anyway and the performance is poor and it's a lot worse than it should be. We've read it completely wrong. We'd underperformed. I went in there think I'm getting a real roller from these people. They're going to really be going for it. Gave them the reasons for it. No anger, no nothing. It was tense, but there was no issues at all. nice, good questions, sensible, whatever. Next quarter, I go along and we've had a really good time and I think I better go back and and and talk to these guys. So, I I I go back in to talk to them, tell them how well we've done. Walk out, the chairman follows me out. He says, "If you ever perform as badly as you did in that first quarter, I'm going to fire you, but I felt the right thing to do was to not put you under pressure to allow you to think more about how you were going to do in the next quarter." So, that's that's how you should handle it when you've done badly. He's the one that's starting # sacktheerman. >> Oh, it might well be. But uh you know and there are many people who are signing up to that. >> It's trending. >> The second example is one that went went completely the other way. Um I went to see another client once again after a period of bad performance. This is coming a bit of a trend unfortunately. I went with the guy who actually managed the fund and a sales guy. So I thought well I'm just really in tow to say a good few the odd word now and again because these guys have got the relationship. We walked in. The chairman stood up and he said, "Your performance is terrible. You have two minutes to convince me why I shouldn't fire you on the spot." And of course, everybody then turns to look at me. So, I suddenly got to now appear center stage telling them why we've been so stupid and got things wrong, but why we're we're right for the long term and all this sort of stuff. And in the end, it it had a happy ending. So, that was fine. The point of what I'm trying to to bring out here is people blame the city for short- termism, but the fact is you're going every quarter to talk to clients and it's a lot of pressure. I'm not expecting sympathy. I was paid very well to do it. But at the end of the day, it's a lot of pressure on people. They that m that makes them take those profits early and not run things for too long because they want to make sure that they've got those things in the right spot. Next week, we're going to have our quarterly performance meeting where we'll run through each of our positions, how they've done, we'll assign an owner to each one. Somebody's got to be responsible. I mean, what normally happens is it's something doesn't work, it's the GM's fault. If something does work, it's somebody else's. And and we're not going to have that next week. >> I fancy that might not be the case. >> Next week, of course, everything Well, it's going to be my idea. But we we're going to put names to each position, get people to talk about why we've still got them. Do we believe in them still or not? And go through a proper review. But that's for next week. >> Well, this week I think you jets are going to be surprised somewhat pleasantly about the benchmark that we have crossed. We are now up 5.04% in the 7 weeks that we've been running this portfolio. So well done both. Thank you. >> Can we stop now? Well, if we look at it, the World Mining Trust is our best performer of the week that we just done a deep dive on. VANC crypto blockchain innovators ETF has performed yet again is now up 30% on the year. Then we've got NASDAQ good performer this week. Gold up 2.5%. The safe trade is moving at 2 and a half% a week. We look down at the bottom, even the worst performer is down only 28 basis points. So a really strong week and leads us into the question perfectly. The question of the week is what is better in the long term for portfolio management? Is it timing the market or is it time in the market? Because up 5% on the week in 7 weeks, part of me thinks I I'm tempted to take some profits there and try and time this market rather than stay involved. Mark, what do you think? >> Well, I think you know we are professional investors and therefore sorry I could give a straight voice a straight straight face. I'm a professional investor and as a result we are expected to be able to see the nuances in the market moves and uh to appreciate sometimes when things get a bit overstretched on the upside or oversold on the downside when people get too pessimistic and we should always be pragmatic about these things and be prepared perhaps to take advantage of that. Now, as professional investors, that is our day job. We're doing that day in day out, hour by hour and watching markets all the time. Most people don't have that luxury and therefore they have to maybe look at their portfolio once a day or once a week or once a month or whenever they get time to do it or at the weekend. Those people don't want to be trying to peak to pick the peaks and the troughs week by week or day by day in the markets. And therefore, they are probably better off just staying in the market, shutting their eyes when it goes a little bit wrong, enjoying it when it goes well, but being there for being time in the market, if you like. If you're choosing to listen to a podcast about investing, we're probably hoping to get some education out there to move you from that position more towards one where you might spot things that you wouldn't have necessarily spot before. Is that right, Chris? I think the way we're trying to run the portfolio is with a mind to time in the market, but also timing the market. So, we're not trying to actively trade all the time here because we know most of the people listening to this podcast, uh, you know, have a day job. They're doing other things. They can't automatically do what we're thinking. So, we don't want to be pushing people into being too active. We would regard ourselves as professional investors. Much as I laughed at I didn't laugh this time. No, >> you didn't laugh. And that was really kind of you, Mark. But but at the end of the day, we would regard ourselves as professional investors. And a professional investor is about timing. I mean, if it isn't about timing, I don't know what it is. So, um, you know, if you go see any wealth manager, they will tell you it's time in the market, not time in the market. They're not trying to do that active management. We are trying to do it, but we're trying to do it with sort of one hand tied behind our back because we recognize the people who are listening to this won't be able to trade as actively as we would normally trade. So, I would follow Mark's advice completely. If you're interested in these financial assets is part of what you're doing, but it's it's not a main part of what you're doing, then you want to be sitting in the market for as long as possible. What we're trying to do is just help those people with when things get a bit silly, maybe take a little bit out and move somewhere else. One of the key things though you've got to remember is we have set ourselves a performance of absolute return target of 10%. So therefore, we're going to be thinking about things not in terms of how's my equities done versus some other market, how are the those sorts of conversations which a professional investor will be thinking about all the time. We've got to look at it against how we doing relative to that target. So I think you can be a little bit more active on that. If you've got achieved your 10, if you're up at 12, you're up at 15, you may say, I want to have a rest for the moment. I want to take it easy. So we're trying to address that. We're trying to give people a little bit of confidence. They could try a bit of timing the market, but we're not trying to get in any way, shape, or form the impression that it's an actively traded um portfolio. This is more about you can sort of fire and forget to a degree. There will be some activity. The way I like to explain it to my students that I try and teach investing to, I try to get them to think about it as often as they'll go to the dentist for a checkup, right? Whether that's every 3 months or six months. That's how often they should be looking at their portfolio at their savings their SIP Isa their pension in the minimum because if you're taking a a portfolio and earning 20% a year and you just think that you can sit back and never look at it, I think that's a bit lazy because if you're going to work every day, you build up this portfolio to a decent size and you're making 20% of it, that's a hell a lot of money. That's a big return by the time you get to CJ's age, you know, to not think that you need to do any work for these returns and they just come to you. No, I think you should be doing a little bit of work. And not necessarily, I'm not saying trade it by any means. I'm I'm just saying learn the basics and that's what we're trying to do here. Learn a little bit about valuation and see when we're extended and when we might be oversold. To me, I think you should think about a proper quarterly portfolio review, which is what we are talking about doing. As we've talked before, look at the weekly by all means. Get excited about it, but really look at it quarterly. And when you get that information, you've given it quite a bit of time over the over that quarter to run and look at things at that point. Um, lots of people will will be able to get their pension valuations from their pension provider. You can go in, go in at the end of the quarter, look at what it looks like, think about some of the things that we've been talking about, maybe ask your wealth manager why he's got the positions he's got. But I honestly think that anything more regular than quarterly is getting a little bit too regular because we want to let these things work and get through. Okay, so it's coming up towards the end of the quarter. Mark stated, you know, there's a can be a little bit of jiggory pokery goes on. It has been known in the end of the quarter. I put to you that we've only really bought things. We've only added to our risk so far and it's been the right call. It's been a fantastic call, Spice, but we're up 5%. Is there any temptation to take a little bit off the table here? Cuz you told me it's new highs on the S&P, it's new highs on the NASDAQ, it's new high on the Nikai, it's new highs in gold. I'm nothing if not a pragmatist. And I learned that from working with Chris for many years. And what I will say is that in the last two weeks, we've had some exceptionally good news for some of the biggest companies in the world. And I'm talking about Oracle is a top 10 holding in the world in the US. Uh Nvidia, we talked about the length earlier today. Apple with the their new iPhone going well. In the last couple of days, that's pushed NASDAQ up quite nicely. um up to new highs, comfortably through the new highs. Uh and we've also had the start of the interest rate cuts in America. I've got to put my hands up here and say even I think we've probably had a lot of good news and now might be prudent to take >> my godfathers. Am I am I hearing things right? >> A waffer thing. >> Houston, >> I take back every yellow card that you've had in previous weeks. to quote Montipython and uh Mr. Creassote, maybe it's time to take a waffer thin mint off the table and I would actually trim our NASDAQ position. I'd cut it in half, take 5% out. Now, I personally would want to put that into cash, but not into the short guilt. Remember short guilts were used as a as a a proxy for cash but we're so close to budget in the UK that part those shortdated UK guilts may come under a bit of pressure as we approach the budget. I therefore would personally like to say take 5% out of NASDAQ, move it into cash, real cash, which through IG think we can earn 4% annually on that and then keep it there in store and ready for if there are any pullbacks or any disappointments or if this exuberance that we've seen a bit of bit of in the short term gives us an opportunity to buy into any dips. And I'm a big fan of buy the dip. There's a very rude way of saying that. I won't be drawn into that, but buy the dips then I'd be happy to do that. Can Can you just pinch me? >> I I'm wondering if I >> I'd rather punch you if that's all. >> We didn't have to do it two weeks ago. We made a bit of money by hanging on for two weeks. >> No. Okay. And let's uh let's take that cash and run before he changes his mind. So, we're selling half of our NASDAQ position. That's 5% of the portfolio. That's moving into cash. Sorry, chairman. Have we changed hats? >> Well, we did change hats earlier. In fact, if you could reach that. Yeah, I can. Um, okay. So, so I'm going to go a little bit further. I don't have any great problem there. Mark's had a great call on the US um markets. They've done very well. So, why not, you know, take half out there. I'm also quite tempted because I feel we're when we look at what we're trying to do, we're trying to do 10%. We've done 5%. So, we're halfway to our our target very quickly. And there's a lot of things hitting new highs. I'm looking at my holdings now. say what have I got 10% of that's done pretty well and I look up there and I see gold as having done very well indeed. Now I'm not suggesting we should sell gold completely. All of us look in different ways. I look at how gold is moving relative to all its moving averages. And when I look at how it's moving in association with its daily, weekly and monthly moving averages, it's looking more expensive than I have ever seen it. >> And so this is technical analysis. >> It's trying to get the chart to speak to me. It doesn't often speak to me, but when it does, it's normally quite good. I'm suggesting at the moment it is speaking to me that the wise man takes a little bit off the table. Keeps the rest running. Go back to what the art of execution, the connoisseur keeps a bit running, but takes a little bit off the table. So given we've done so well, I actually think we might suggest we sell 5% of NASDAQ, 5% of gold. Gold's done really well in a period when equities have done really well. It's meant to be a different sort of asset. So when I go and look at all these things, I think just let's just take a little bit off. >> Yeah. And you me mentioned that yields have been going >> and yields have gone up a little bit at the long end as well. So you know, I'm just got a feeling that we should just say well done. Let's move a little bit side. We're still very invested in markets. We will still be exposed to the upside or any downside, but it just gives us a little bit of ammunition if the market does drift back a little bit. I'm in agreement. I would put both of those in a cash instant that yields 4%. We've always said on this podcast, the biggest risk you can have is holding cash. So, we mustn't think of this as a long-term investment. This is an investment to just take a breather, just see how the next few weeks transpire, and then look to find an opportunity to get it back in there. The real chairman suggestion is we sell half our NASDAQ and half our gold into cash. Can I say one of the the the reasons I don't advocate selling out of all of these positions is that it's very difficult mentally if you've sold out of position to keep following it and then even if it comes down to buy back into it. >> It's quite hard mental discipline to do that. So if you retain a bit of a holding in there even though a much smaller size you're still following it you're still invested in it and therefore you are looking for opportunities if you like to take your position back up again. And for me personally, that's a very good way of staying and keeping with a position over the long term. >> Excellent. Right, that is the portfolio review. Are we at peak positive news flow? And that has led us to take half the position off the NASDAQ and half the position off gold after a stellar performance since we bought it. Up 9%. We've got some great numbers here. In our wildest dreams, I think we wouldn't have thought we'd have done as well as this. I think it's just prudent to take a little bit of money off the table. So, that's what we're going to do. Okay. Now, so that answers the question hopefully. Is it better to time the market or is it all about timing the market? Well, a little bit of both. If you can do both of the things but top slice here and there, then you're well on your way to your target for the year. So, thank you very much, Claire from Hitchen, for that question on timing the market versus timing the market. If any of our other viewers or listeners have a question for us, please email in to >> the art of investing at.com. >> It gets better by the week. Join us next week for the great portfolio interrogation and let's hear how these guys conduct themselves after the end of a quarter. Thanks for joining us. [Music]