Luke Smith: This commodity will grow 10x in 10 years
It’s been a crazy year for virtually every asset class. Commodities have been particularly interesting, though, because earlier this year, when most everything was selling off, commodities went on a bull run!
It’s a highly volatile sector, exposed to just about every macroeconomic variable there is, so investing in it takes a unique skill set. But as you'll learn, it's a first-order beneficiary of the big trends that will define markets over the coming decades. And that means massive returns.
In today's episode of The Rules of Investing, Livewire's David Thornton is joined by Luke Smith from Ausbil Investment Management. Luke runs Ausbil’s Global Resources Fund. The fund invests in natural resources companies using a top-down and bottom-up approach. It also goes short to help manage risk.
Luke explains why he's so bullish on battery metals, how the decarbonisation supercycle will pull commodities along for the ride, the mismatch between the bearish micro-narrative surrounding China and what he's seeing at the micro level, and how he finds companies with relative value.
Note: this episode was recorded on Thursday November 11, 2022.
- 1:20 - Ausbil Global Resources Fund
- 4:10 - High demand, low supply in battery metals
- 9:30 - Falling demand in the West, accelerating demand in the East
- 10:15 - Macro fears distracting from micro strength
- 11:50 - Positioning through the commodities bull market
- 12:40 - Lacking investment in new supply
- 13:30 - Lithium spodumene price goes 25x
- 16:00 - Lithium, Cobalt and Copper are key for electrification
- 18:30 - Energy was on a tear before Russia-Ukraine
- 19:00 - Don't write off fossil fuels
- 20:50 - Separating signals from noise
- 24:00 - Don't be negative in a negative market
- 30:00 - Don't equate Aussie EV penetration with demand for electrification
- 32:00 - As relative value shifts, so should your exposures
- 37:00 - Commodities fundamentals are stronger than the macro narrative
- 41:08 - Betting against the market in 2020
- 43:10 - A Decarb stock for the bottom drawer
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The Rules of Investing is one of Australia's top investing podcasts. We interview the leading investment minds from Australia and overseas to better understand their processes and philosophy. After launching in October 2017, there have been over...