Maria’s Note: Maria Bonaventura here, Rogue Economics’ senior managing editor. I recently had the pleasure of sitting down with Nomi in our Delray Beach, Florida, offices again. (Catch up on some of our previous conversations here, here, and here.)
We talked about how her career shaped the way she looks at the markets… And she told me about a valuable lesson she learned from a mentor when she first started out on Wall Street.
Today, I’m sharing our conversation with you. Read on…
Maria Bonaventura: Nomi, since you joined us at Rogue around this time last year, you’ve covered a number of topics. From commodities to cybersecurity… cryptos… and the trading habits of members of Congress.
But running through everything you do here is the core theme of distortion. Now, usually, that word has a negative connotation. But you find ways to turn that distortion into a positive – and a profit opportunity. Can you explain your unique vision a little?
Nomi Prins: Well, there’s no one-size-fits-all model. At the end of the day, it’s up to each of us to pick the strategy that makes sense for our situation.
But with everything I write, and every investment recommendation I make, I take a step back and look at the broader picture. And a big part of that for me is being on the ground and seeing things for myself.
Maria: How does putting your “boots on the ground” help you find the biggest profit opportunities in the markets?
Nomi: This goes back to my upbringing. I was always curious, and I looked for things that other people didn’t see.
But my career on Wall Street also helped me push that intrinsic drive.
When I first started working at Chase Manhattan Bank, for example, there was an economist I used to chat with. I was 19, fresh out of college, and I didn’t know what economics was at the time, so I would talk to her to learn more.
Of course, she looked at all the numbers that economists are supposed to look at. But she didn’t leave it at that.
She had what she called the “mall approach.” Every Sunday, she would spend two hours at the local strip mall. And she would just observe. This was her idea of how to assess the real economy.
She told me, “It’s really important to get a sense of what’s happening on the ground – by being on the ground. You can’t be on the ground if you’re in an office.”
And, you know, working at all the big banks on Wall Street over the next 15 years, I had very good office conditions. But I knew she was right.
You can’t know what’s going on unless you leave your comfy chair and go out into the real world. You have to walk into the small-town bars, talk to real people, and figure out what they care about.
So for example, say I’m looking at a mining company. I’ll go out to where its biggest mines are.
When I’m there, I see that it’s 7 p.m., but they’re still working. And I can talk to the engineers that come by the site.
They’re there just because they want to see how the technology they’re either buying or developing is going to make their mining more efficient, or cleaner, or whatever it might be.
But I can’t see that for myself unless I’m there. I can’t know who they are and what they go through if I can’t look them in the eye or watch them in action. If I can, I want to join them for a beer or coffee and hear about what’s really going on – on the ground.
Actually, when I flew to Arizona to research a copper mine for our Distortion Report subscribers, I saw a sign on the wall outside. It had instructions about how to use a particular new technology. And I got to see this firsthand.
While I was doing that, one of the engineers happened to be walking by the same spot, with his family – and he was talking to them about the same thing.
On the ground at a copper mine in Arizona
You can’t get that sort of perspective sitting behind a desk. That’s why I’m always traveling. And I usually don’t go to a place just once. If there’s a pattern and there’s a reason, I go back a few times and see how things have evolved.
Maria: Speaking of the evolution of things… you pay special attention to five distortion profit themes – New Energy, Infrastructure, Transformative Technology, New Money, and Meta-Reality.
These are sectors that can grow quickly because of how disconnected the real economy is from the market.
But as we’ve seen this year, money doesn’t always flow into these sectors at the same time. So what should readers have their eye on in the New Year?
Nomi: It’s really an interesting situation we find ourselves in today.
The Fed adopted an aggressive rate-hiking strategy to fight inflation this year. And that created an environment where certain sectors – still poised to benefit from The Great Distortion – underperformed others. Because of uncertainty surrounding the Fed’s policy.
But this month, the Fed kicked off Stage 1 of what I’ve been calling a three-stage pivot. That means it raised rates by only 0.50%, compared to 0.75% at its last four meetings.
Stage 2 will be when the Fed pauses its rate hikes. When we get to the pause, it will change which of these profit themes steps onto center stage.
Along the way, if we follow the money that’s distorting the markets, we can find opportunities to profit from those distortions. And right now, some of the biggest opportunities are in the sector I call New Energy.
Now, as you know, I do look at traditional energy, including oil and gas. Because at the end of the day, we still need fossil fuels. But within New Energy, I also include what I call “transitional” energy. Anything that involves transitioning from old forms of energy into new forms of energy.
Maria: That’s right. And you’ve recommended many ways for our paid-up subscribers to take advantage of distortions in the energy markets this year – across both traditional and transitional energy.
That includes the chance to lock in gains like 25%, 27.5%, and 39.5% in just days in our Energy Distortion Monitor letter.
For readers who aren’t paid-up yet, what’s a good way to get exposure to this trend as we head into 2023?
Nomi: The iShares Global Clean Energy ETF (ICLN) is a good place for readers to start their search. It’s an exchange-traded fund that holds close to 100 stocks in various New Energy sectors – from wind to solar to geothermal power. These sectors present excellent investment opportunities for the long haul.
But what I aim to keep doing for our subscribers is to follow where the money is flowing mostly into – and mostly out of – to find the names with the biggest profit potential.
Maria: Looking forward to more of your insights on that next year, Nomi. Thanks for your time today, as always.
Nomi: Thanks, Maria. Talk soon.