This Is One Bad Apple…

 What are the factors that gave rise to investors’ success over the last 40 years? We saw major contributions from (a) the economic growth and preeminence of the U.S.; (b) the incredible performance of our greatest companies; (c) gains in technology, productivity and management techniques; and (d) the benefits of globalization. However, I’d be surprised if 40 years of declining interest rates didn’t play the greatest role of all. ~ Howard Marks via his latest letter, “Sea Change

In this week’s Dirty Dozen [CHART PACK], we look at investor positioning, 2022 highlights, international small-caps on sale, the BIG opportunity in precious metals, and Apple stock about to prove gravity, plus more…

**Note: Enrollment to the Macro Ops Collective will open next week on Monday, December 26th. 

The Collective is our premium service that offers institutional-level research, proprietary quant tools, actionable investment strategies, and a killer community of dedicated investors and fund managers from around the world. 

We are doing something special to celebrate this last enrollment of the year. You can read more about it at the end of this note. **

  1. The last BofA Fund Management Survey of the year. Summary highlights below.


  1. 2022 has been a busy year…


  1. We’ve written about the near record value spreads in small-cap over the last couple of months (links here and here). Putnam published a report recently (link here) highlighting the historic relative value opportunity in international small-caps, writing:

“The price-to-free cash flow multiple of non-U.S. small caps versus U.S. large caps is in the top decile of attractiveness…In 86% of periods (12 of 14) since 2000, when price-to-free cash flow relative valuations were at similar levels, non-U.S. small caps outperformed over the following three years.”



  1. Tightening monetary conditions work with a long lag… (chart via NDR).


—   5.  Here’s the updated composite analog for the SPX in both recession and non-recession outcomes (chart via NDR).


  1. Gold is cheap via BofA “Net 21% say gold undervalued in Dec, most on record.” The only other two similar readings (Jan 09’ and Sep 18’) coincided with major lows.


  1. Crescat Capital shared a good update on precious metals over the weekend (link here). Here’s a clip and a chart.

“We are at a key inflection point for the precious metals industry today. The overwhelming social pressure to adopt the green revolution, renewable energy technologies, and electrification has forced the gold mining industry to shift its capital and attention to so-called “critical” metals. Consequently, there has been a declining interest from major mining companies in deploying capital to gold-focused projects. Perversely, this repositioning is a major tailwind for a new precious metals bull market.”


  1. Gold enters its strongest two-month stretch of seasonality this week.


  1. Not sure how I missed this, but here’s the WSJ’s September 20 frontpage of their Business & Finance section (h/t to @crescatkevin).


  1. Also back in September I wrote that the market “Generals were about to be shot” (link here). The long-term charts of the megacap tech stocks have only gotten worse since. AAPL just completed an 18-month H&S top. Chart below is a monthly.


  1. Meanwhile, it’s still incredibly expensive with a price-to-sales ratio of just under 6x.


  1. And whales continue to dump their shares en masse…

**Note: As the end of the year approaches, we wanted to take a moment to thank you for reading our weekly commentary. This year has been a wild one with lots of ups and downs. Fortunately though, we’ve made it through with our P&L in the green. 

As a thank you for spending your time with us, we’re going to do something we haven’t done before. Over the next 2 weeks you’re going to receive a number of premium reports that were previously only available to our Collective members. 

This year has been tough because we’re in the middle of a huge macro shift. These reports explain exactly what’s happening and more importantly, how to profit from it.

Keep an eye on your inbox tomorrow morning. You’ll be receiving our first report: The $146 Billion Green Energy Gap. 

And as a quick reminder, enrollment to the Macro Ops Collective will be opening next week on Monday, December 26th. 

If you have any questions about our service and what it can do for you, make sure to click here to schedule a free call with us.**

Thanks for reading.

Stay frosty and keep your head on a swivel.

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.