Five Bold Predictions for 2024
Oil Prices will Be Flat
Oil production in the U.S. is hitting records over 13 million barrels a day. At the same time Brazil, Guyana, Canada and Norway are also increasing production.
Unless there is an escalation of war in the Middle East or China invades Taiwan, oil prices should bounce between $63 and $80 for the first half of 2024. Biden has mentioned that he will refill the SPR if oil gets to the low $60s a barrel, but it is unlikely in an election year.
OPEC is holding the line on production cuts as Saudi Arabia wants to fund its new straight line city in the desert, but Angola, a smaller oil producer, has stated it is leaving the group. And Brazil, a new member joining next year, says it won’t abide by the production cuts. Other OPEC members follow or simply cheat on production numbers like they have done in the past.
Oil and natural gas tend to top out in January or February when the weather gets cold. It will be a good time to sell.
Oil Tankers will do well
I’ve been long oil tanker stocks like Frontline (FRO) and Scorpio Tankers (STNG) for about three years now. There is a shortage of ships that move oil around the world and they aren’t launching new ones until Q4 2024.
The Russian war and the attacks off Yemen mean that tankers must travel farther to supply the world with energy. On top of that, these stocks are cheap. FRO has a 14% dividend and has a p/e under 6. There are a number of them out there. Look to buy the Norwegian based shipping companies and stay away from the Greeks who are less shareholder friendly.
Russell 2000 jumps 30%
The small cap stocks have been underperforming the big guys for over 10 years. Historically when interest rates are cut, the smaller stocks do the best. If you look at the chart and follow the trendline you get right around 2,600 on the Russell up from 2,001 today. If you have a 401k or the like, move some money out of the DJIA or S&P500 and into a small cap index fund. I prefer growth over value.
Bitcoin to $130,000
Bitcoin halving is coming on April 7, 2024. This is when the payment of bitcoin to miners gets cut in half. This reduces supply and gives speculators a reason to buy. Bitcoin halving has occurred four times in total. Each time it happens the crypto coin has gone up anywhere from 600% to 3000%.
Furthermore, each time there is a halving event Bitcoin goes up about half as much as it did the prior time. After some basic math this gives us a forecast of $130,000 per bitcoin. There are other stocks that should do well or better, such as the BTC miners. These stocks have already started to move. Marathon Digital (MARA) which I own personally, is up from $3 to $24 this year.
El Salvador: The Turnaround Story of the Decade
El Salvador has long been the epitome of drug gangs, corruption, civil war and poverty. But this is changing fast. A few years ago President Nayib Bukele started buying bitcoin as part of El Salvadors currency reserves. He took some hits politically when BTC crashed but now that it is above $43,000 he is back in the black and it is starting to look like a prescient idea.
President Bukele also got tough on crime and tossed 10s of thousands of gang members in jail. This has led to some criticism from human rights activists in New York, but lots of praise from the people of El Salvador who were fed up with the criminals. Bukele is up for reelection in February and is leading in all the polls.
El Salvador recently saw its GDP growth rate increase to 3% in the third quarter and its credit rating was raised to b- by Standard and Poors.
On top of that I’m starting to see travel blogs talk up the country as a great place to visit before the tourists start showing up. You can buy a nice beach house starting in the 100,000s. There is also some great surfing if you are into that sort of thing.
All the best,