Tom Bodrovics welcomes a new guest to the show Chris Macintosh. Chris is the founder of CapitalistExploits and a seasoned hedge fund manager with experience in seven countries. They engage in a discussion revolving around ongoing recalibrations and rotations in capital markets, focusing primarily on the deindustrialization of the West and financialization as significant shifts over the last few decades. Chris underlines the disconnect between Western nations’ massive market caps and their actual production capabilities. He also discusses short-term changes such as the increasing dominance of few companies in the S&P 500, accounting for a substantial percentage of market capitalization, and passive capital flows from Western economies affecting investing, particularly smaller companies.

Chris expands on the potential consequences of a mere 10% rebalance in Western markets, emphasizing instability arising from massive sovereign debts, derivative markets, and potential debt cycle inflation. He highlights the anomaly of passive capital flows toward large cap stocks and the importance of asymmetry in investing for low downside risk with significant upside potential. Chris mentions automation selling during a downturn and seeking contrarian sectors as an alternative investment strategy.

The conversation covers geopolitical risks, including the possibility of ‘great taking’ or conflict, having assets outside the financial system in counter-cyclical, counter-jurisdictional asset classes like food, shelter, agriculture, precious metals, and maintaining a long-term perspective. Chris discusses the importance of education, problem-solving skills, diversification, and taking action to deal with fear. He prefers Latin and South America for living and investing. He advocates for banking in multiple jurisdictions and investing in cash-flowing businesses.

Time Stamp References:
0:00 – Introduction
1:07 – Economic Overview & Trends
14:30 – Derivatives & Rebalancing
24:14 – A Silent Bull Market
27:59 – Liquidity Analysis
31:30 – Great Taking & Risks
36:05 – Cloudstrike & Russia
39:08 – War & Capital Shifts
42:57 – Politics Stability & Capital
49:07 – Interesting Jurisdictions
54:19 – Banking & Diversification
58:24 – Fear, Volatility & Action
1:04:13 – Wrap Up

Talking Points From This Episode

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• The West’s massive market caps vs production capabilities create instability due to debt and derivative risks.
  
• The impact of passive capital flows on investing, with unloved sectors offering potential protection.
  
• Preparing for a rotation away from overvalued equities and towards undervalued sectors.
  

Guest Links
Twitter: https://x.com/capitalistexp
Website: https://capitalistexploits.at

Raised in Southern Africa, Chris Macintosh has since lived & invested from 7 different countries. After a career at top tier investment banks such as JPM, Lehman, Robert Flemmings and Invesco, Chris became tired of corporate life, and has since built and sold multiple million dollar companies, overseen $35m into venture capital, all the while investing full time, and managing his own and private client wealth.