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Before I start this, I just want to warn everyone against margin utilization or large positions held primarily through options. Everyone hopefully know the saying, that the market can remain irrational longer than you can remain solvent. It’s literally true, and here, the market is being irrational, but it’s also the case that many of the most powerful governments on earth want cheap oil. Oil will inflation adjust itself eventually, locking in a permanent price floor above $100 WTI, but that may take years of battling against the man. Just look at the poor gold bugs, I don’t think any of them made it out with their sanity intact, despite outperforming the S&P500 over the last 20!!! years. So keep that in mind, just go long, and be happy, don’t use margin or options, which both force you to be right about when the thesis plays out, as well as force you to obviously need to be correct in addition to being right about the timing.

It’s much easier to put money into quality companies every pay check and compound over years, and eventually be proven correct, that it is to go all in with debt (or options) and have a literal date that you necessarily must be correct by. Just don’t do it.

Why are you doing it then?

Well, I am insane. Quite literally. And for some reason, I live to see how far I can go, and a large part of that is that I want to start CEOing and developing tech to help push the frontier of civilization. I’m arrogant enough to think I can compete with the hotshot CEOs you know of and think of, and do a better job than them. So for me, this is a journey from peanut net worth, to large enough net worth that I can have control over the direction of my future companies without having shareholder pressure force me to do anything stupid.

Honestly, I believe I’m about to blow up, get margin called and lose it all, and then you guys get to buy the dip in my stocks as I’m liquidated. Nonetheless, I’m going to keep pushing for the time being, and see what happens next, it just feels like the right thing to do.

Structure of my Q3 review.

Due to the fact I’ve become the most busy I’ve ever been, which is hopefully just a temporary spike, I’ve decided to divide my Q3 review into three portfolio updates. The first is oil & gas, where I will talk about the key oil & gas companies that I believe are undervalued, and the macro set up.

To follow, I’ll either release one or two more reviews, where I cover precious metals and war metals, and the miners I believe are best positioned with good risk/reward ratios. Overall, my pms portfolio hasn’t really changed, I’m still a huge Minera Alamos (now Mining Americas) fan, but I’ll leave that update to the next write-up.

A fast summary of macro. I remain confident that Trump has kicked the hornets’ nest, and his job remains as complicated as putting the hornets back into the nest by hand, without being stung. The Iran situation actually looks the worst that it has looked this entire time, the Iranians are either aggressively bluffing, or truly posturing here to try and regime change Trump (Jimmy Carter 2.0). As everyone knows, I’ve talked about this at length and it’s been my belief since this all started, so I’ll leave in depth discussion about Iran for another time. For now, assuming no near-term TACOs, which I’m not even sure are possible, I think oil is back above $100 WTI before midterms.

I recently tweeted that I think America and Israel killed the strong men in Iran, and I think this is true. I think the current ones didn’t get their positions based on merit, and I think even in negotiations, they’re out of their league outside of correctly picking up on the fact that Trump is desperate for a deal. This makes me think war is more likely, because weak men always cause and call for wars.

In Russia, things are fucked. Ukraine are totalling their oil infrastructure, from oil depots, to refineries, to oil tankers, they’re all taking hits. That leaves one thing left: Russian oil pipelines exporting to China. It’s my belief that Ukraine will hit one of these, and when they do, oil prices will mushroom cloud because China will panic slam the buy for any and all oil cargos they can get their hands on, as it’s likely Ukraine hits a pipeline while Iran vs USA is ongoing.

The biggest surprise (to me) has been that Ukraine has started hitting Russian VLCCs. We’ve all seen multiple disruption headlines, where Kazahkstan has shut down their CPC export terminal, and the reason was literally that Ukraine kept hitting the engine rooms of tankers leaving the port (carrying russian crude, or products). This is why I’m confident Ukraine is starting to dream about hitting a Russian pipeline. It’s the single easiest way they can fuck Russia’s free cash flow. Will it happen? I don’t know, but the set up is now there. Ukraine are out for blood, and you can’t defend pipelines, they’re too long.

I wrote when the Iran war started that Ukraine would be the black swan to cause the oil price surge, and I continue to believe it.

It’s worth dispelling a myth quickly here, that there isn’t enough global refining capacity. This is incorrect. We still have a few million extra barrels worth of refining capacity for crude above daily crude product demand globally, which means the current refining capacity is significantly above current crude oil supply (since OPEC exports are down >8mil barrels vs pre-war levels alone this August!). The point is: refiners could be overvalued here, they’re at the mercy of China deciding to ramp up throughput to >95% at their refineries. Nonetheless, I remain an extreme CLMT bull for reasons explained below.

To spice it up, El Nino is reducing Panama Canal water levels, and that means less tanker transits. We may soon have tankers circumnavigating both Africa (due to the Houthis shutting Bab-al-mandeb) and the Panama Canal having lowered transit capacities simultaneously. It would be a historic “oh shit” moment.

The last piece of relevant macro is a prediction I made that’s now coming to fruition: countries are mandating increased barrels of crude to be held by commerical refiners, and also mandating new SPRs. This was talked about in my last article, but I think it’s important to keep thinking about and watching. Parliaments around earth keep discussing signing new SPR capacities into law. This is HUGE future demand for oil, that’s arising out of this crisis. I think no one is paying enough attention to it, because governments are retarded, and thus are price insensitive buyers. They’re all mandating SPRs and now competing with eachother to bid over the rare barrels that are available. The set up for an oil squeeze is here. If just one last piece of serious oil infrastructure gets destroyed, WTI will set new all time high records, and it won’t be a spike, it will be sustained, substantially higher prices for much longer than ever before seen.

To begin, I’ll focus with my still favourite risk/reward oil producer in Canada.

Rok Resources ROK.V (CAD) ROKRF (USD). I’ve been pounding the table on this name since 27 cents/share, because it is simply a no-brainer lottery ticket with great odds of winning. At the time, they had about 20mil CAD cash and 11mil CAD worth of liquid assets, being EMPS shares, and now it’s about 9mil CAD cash and 11mil CAD of EMPS, with the cash down because they’re drilling all out, quite literally as fast as they can, to spend 20mil CAD on growth capex this year. They’re hoping to aggressively drill 10-12 new wells this year.

Their last 3 wells are still ramping up, peak production for these wells occurs after a cleanup phase that takes about 90 days, so the fact they reported >400boe already from just 3 wells is a huge deal. We have yet to see the peak production rates, but posting these kind of numbers while oil is above $80 basically means within 8 months these wells will have paid for their own capex, and then they will free cash flow for about 5 years for relatively low OPEX (since it’s priced in CAD and CAD is going to 0 just like the country Canada is in the global quality of life rankings).

I have a tiny bit more speculative information here. I met a retired oil CEO who used to drill the Pinto (where ROK is drilling) and after telling him they were significantly net cash, with >3000 boe production, and showing him their drilling plan (which he approved of), he proceeded to buy 1mil shares right in front of me. I don’t know his net worth, but he was stoked about their drilling plan and figured it’s likely this company will multibag.

Take it as you will, they’ve already drilled 7 wells year to date, and if all 7 are hits this is going to re-rate significantly once that data is reported. We’ve already got 3/10 wells hitting which derisks the capex plan by a bit, but for this to really launch and be the dream smallcap lotto ticket all commodity investors salivate over, we obviously want to see all 10 wells hit, and oil get back over $100.

I think this company gets over $1 CAD by the end of the year, but there’s obviously geological gambling risks here. If we see something like $150+ oil, this company will mint its entire market cap in profits in mere months. This is because they sell for WTI -$3, but they are a Canadian stock, with a CAD market cap. Again, I expect CAD to weaken because everyone who can is fleeing the country (why live somewhere you now lose 65% of your income to taxes). On top of this, their legacy wells have low, 16%/yr decline rates. If some of these new wells decline this slowly, it’s hard not to imagine this stock getting over $2.5CAD as they begin share buybacks. That’s almost a 10x.

The reason I love the risk reward is primarily the high cash on hand and lack of debt gives them optionality. They can take on debt and keep growing, at a rate that’s 30% of their market cap per year spent on hiking barrels/day of light oil output that sells basically for WTI prices (not Western Canadian Select, which often has more than a $10 discount to WTI). Anyway, I own tons of ROK, and I’ll look to buy tons more if they pull this drilling program off with every well hitting.

If I had to summarize why I like it in a sentence, I think the management will execute & I love the fact it is debt free and net cash, with additional liquid assets on top. This latter point isn’t priced in whatsoever.

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Okay, so great news is in (for me). I was first to write about this at length, but I said that an emergent phenomenon (which no one “established” would predict) was coming, and it’s here! Primarily, it’s going to help the oil curve invert into contango, which will bring the institutional investors en masse. Thus why I said it was so important to watch headlines for.

This article is going to be slightly more boring to read, but this is the exact stuff I believe I have to track in order to know if future oil demand will spike. This is my sieve of consciousness here, yet I still think this article is one of the highest impact about the current global oil crisis and how it’s going to impact the future. There is a summary paragraph and table at the end, which you could just jump to, but I suggest following this story since it’s the real reason oil is about to enter a truly sustained bull market (according to myself, a schizophrenic).

I hope you enjoy.

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With that said, let’s begin.

I addressed this briefly with a tweet on X, but despite the emotions getting intense, I continued holding on for dear life due to a single point: supply vs demand.

I’ve talked at length in twitter spaces and written and tweeted about it many times, but when it comes to commodity macro, I generally only care about (real) supply vs (real) demand. What I mean by real, is that it’s actually pumped out of the ground from oil wells, & it’s actually consumed for energy.

What happened was remarkable, and no one saw it coming: China cut imports so significantly, that with SPR releases from countries across the globe, most of the supply disruption was cancelled out.

But that’s not “demand destruction”, because I repeatedly sampled friends across China asking them how traffic was, and they all always replied with “normal” or in some cases “busier than normal”. So China was and is still consuming the oil products, they just weren’t making them as fast as they were domestically consuming them.

Artificially however, the (temporary) supply coming out of SPRs, combined with the (temporary) demand reduction from the Asian refinery buyers-strike for crude oil was able to balance supply vs demand well enough.

The thing is, as I’ve written before, my capitulation condition (the thing that would make me realize losses in oil and leave) has always been about two countries unshutting their shut-in production: Iraq and Kuwait. If these guys could unshut their wells, it would mean Hormuz flows were normal, and the gulf oil (real) production is effectively normal. The thing is, Hormuz flows only returned to normal for about three days due to a mass exodus of very large crude carriers (VLCCs) and other tankers. Other than those days, Hormuz hasn’t been normal when measured from an oil & oil products perspective.

That was honestly it; everything I needed to hold on and not capitulate. I didn’t care that SPRs were being drawn down, because unlike all the “professional oil analysts”, I believe SPRs will be refilled and new countries around the globe will have politicians mandate new SPRs that didn’t exist before (already has happened and I expect it will continue). Additionally, I know China’s buying strike is temporary, and not a real reduction in consumption.

So while people dance on the graves of oil bulls shouting repeatedly about how “supply > demand; super glut!” the truth was that real supply is down significantly, Hormuz is still almost totally shut, and real demand, being consumption, has no signs of demand destruction anywhere on the globe.

The only thing that matters is the normalization of Hormuz.

Now that said, here’s my thoughts on why I’m about to buy momentum, and how I’m personally going to do it.

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Basically, the summary of events is as follows.

1. I see on TwiXXer today that the news about total USD M2 is making the rounds again.

   1. Yes: M2 grew by an insane amount for a single month: about +1.1%. Meanwhile, commodities tanked, and the USD strengthened! Amazing! About as intuitive as the next point.

2. Oil draws around the globe continue (yes around the globe, because China didn’t retrofit their entire economy to stop using oil overnight, and they also would have no incentive to do this with sub $150 oil anyway).

   1. The reason crude prices are down is that the refinery buyers strike continues. I think we’ve entered stage 2 of “The Good, The Bad, and The Ugly” standoff, out of 3 stages.

3. Crack spreads (the profit a refiner makes for turning oil into oil products like fuel, distillates (diesel/heating oil), lubricants, etc, are at record highs vs oil prices.

   1. Why? This is simple, China has a ton of idled refining capacity, primarily because China isn’t letting refiners sell gasoline and diesel at market rates — they fixed the price at the start of the war. Thus, refiners are discouraged to run oil through at maximum throughputs, because they’ll be selling at breakeven if they’re lucky, and actually, for most of this war, they’d be selling at a loss. Currently, their refining margins are slightly positive with $70 oil.

   2. I expect them to return to the market soon enough and bid for oil, which should happen right as SPR releases significantly decline in volume (unless they’re extended, which they might be, but as much as people say “SPR releases are bearish” this is an incredibly short sighted perspective. The higher crack spreads go, the higher gasoline goes, and the more political pressure there is to fund new refineries as well as mandate refineries hold larger quantities of supplies on hand (Australia doubled their mandate, but one of two large domestic refineries blew up since the war started).

Some other updates: SPR releases have already started to slow in volume released per day. A lot of Canadian oil in storage (waiting to be shipped to America) is also at record lows, primarily train based oil exports (which are nothing compared to pipelines, but empty storages are empty storages.

The point is, there’s a hell of a lot of pent up demand for oil. So updates about how I’m playing this are below, but first some updates to the blog.

To start, everyone knows I’m an AI Ph.D., and I’m annoyed with myself for not investing in size in the memory bottleneck, which I’ve known about for 9 months, and knew was coming. Sure, trailing 9 months I’m up an astronomical amount, but I could be up even more had I included some targeted tech exposure. With AAPL and MSFT via Xbox and others announcing price increases for sold computers, due to soaring RAM costs, I see the bubble going farther here. Note: I’m still using the word bubble, and the reason for that is that RAM costs have hit truly astronomical levels. This inspires two things.

1. Competition: other people will race to bring new capacity online. I predict and expect classic “supply crisis followed by glut” commodity dynamics.

2. Innovation: META has already announced they’re now repurposing past DDR4 RAM to function in place of DDR5 RAM.

The point, and why I’m talking about tech, is that I’m announcing that I’m now going to play with tech investing, by treating it as commodity investing.

I’ve been (to my knowledge) the best commodity investor of this decade, and I see no reason why, if I’m thinking about digital compute and the physical tech for AI inference & training as commodities, that my current framework won’t print gains there as well. Naturally however, since AI is likely to be in a bubble where most companies will experience >50% selloffs over the next few years, I won’t be chasing this with more than 10% of my net worth, and primarily will be investing via options when the IV is in the right place.

Obviously, if I’m going to chase this bubble, the right way to think about it will be as a boom and bust cycle, and since I’m well-connected and actively researching AI, I’ve got a shot of identifying future shortages before others identify them.

This leads me to my second point about the future of the blog.

I want to try and write some code to automatically scrape my buys and sells, and post them at least on a weekly basis.

This may take me awhile, but I’m hoping to get this going, since I think it will be awhile before I officially start a fund. The reason for this is that I haven’t had much to say lately, because I’ve just been sitting on my hands and waiting. I have rebalanced some things in my portfolio, but they’ve been very minor, and I’ll talk about that below, as well as discuss my view on commodity macro.

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Life Update.

To start, I’m super busy with AI at the moment. Hoping to submit one, if not two papers to a deadline later this month. Part of the reason I’m so focused on it is that I’d like to finish my PhD, and the rest of the reason is because I’m trying to ignore the manipulation in the oil market and bet on what I believe to be reality (Iran being unwilling to reopen the strait to its pre-war “freedom of navigation” status). As I’ve explained before, that has many implications, like Iran being OPEC now, as they are in a position of power where they can choose the export quotas of countries north of the Strait of Hormuz. It’s important to note this power position is temporary: it can only last if these neighboring countries don’t bury pipelines in the ground that circumvent the Strait.

Geopolitics.

The current rumoured deals are such that, should Iran sign, Iran effectively melts down all the leverage that they currently have permanently. The reason I say this is simple. Neighboring countries should learn a lesson here, and make contingency oil export plans via pipelines. That means if Iran closes the Strait in the future, it won’t make as big of a deal (unless Western countries don’t refill SPRs, but come on, of course they will).

So the point is, Iran has lost the ability to use the Strait of Hormuz as a weapon. This is it for them. They have to go big, or they quite literally lose their sovereignty. In fact, I believe they have to go so big that there’s only one winning outcome for them: they need to regime change the USA by keeping the Strait shut until 1 day after midterms. This would be a repeat of the Jimmy Carter Hostage Situation, where he was embarassed so badly by Iran (and made to look so helpless), that he lost his presidential re-election to Ronald Raegan.

Once the democrats sieze control of both the house & senate, in a crushing defeat for republicans, that’s pretty much it. Iran will have won. The Democrats aren’t going to let more of Trump’s war happen. Trump will also have to start battling never-ending impeachments, which he’s likely to get taken out of power by.

Geopolitical alternatives for Iran.

Theoretically: there is a deal they’d be willing to sign, but it would likely be one that makes Trump look so bad, that it would ensure he loses midterms. That means Iran keeps their enriched uranium, doesn’t dilute it, and Iran also gets paid a lot of USD (this USD is currently locked, but once unlocked, it will serve to boost “effective” M2). Iran also probably gets to charge tolls for the strait, permanently.

Again: why would Iran give up their current leverage. Normal people aren’t even aware of the situation because of refineries refusing to bid for oil (mentioned below under macro). Honestly, I think even Trump et al. aren’t fully aware how screwed the oil market is, because they’re successfully controlling sentiment so well (even my sentiment is “FUCK OIL” and I’m one of the most disciplined, unemotional investors alive. I have sat through brutal 70%+ drawdowns without even feeling it, and recovered everything + more!

My geopolitical conclusion.

I think Iran draw this out until midterms. The best way to say “never fuck with us again” is to have a history of regime changing the opposition, both times they fucked around and found out. The great irony is that this began with Trump wanting to regime change Iran! It’s funny how you tend to meet your greatest fear on the path you take to avoid it (Trump was likely manic after success in Venezuala, and wanted to cement himself as the big boy military regime changer of the world in order to home-run midterms; at least that’s my guess).

My expectations.

If my base case expectation, which is the Strait is opened the day after midterms, becomes reality, I expect oil to be over $150 for quite some time, more than long enough to benefit my oil producers.
If the Strait is opened tomorrow, I hold the following belief. Oil will have a floor price of $78-$80, due to countries

1. refilling SPRs

2. mandating increases to governmental SPR reserve sizes

3. and also mandating increases to the number of days of oil that refineries must store on hand demand

Australia has already done the above and I expect more countries will follow their lead soon.

The floor price above assumes Iran doesn’t close the Strait again post opening, but naturally, there’s a chance the Strait gets closed again if Iran feel the deal isn’t good for them (or Israel feels it’s not good for them, or the USA, or perhaps even countries like UAE / Saudi Arabia could start shit). The point is, there should be extra geopolitical risk baked into oil prices going forward, and that’s why I’m confident $78 is the floor.

Begin: oil macro and surprisingly… micro

To begin, ignoring the geopolitics here, we have a new emergent phenoma! See my post here to understand the previous two.

In addition to 1. Barnacles, 2. New SPR mandates & oil on hand increases mandated, we have 3. Refineries are choosing to draw down supplies they have on hand, instead of bidding to keep supplies in storage flat. This is happening globally, but it’s really happening strongly within Asian countries and some European.

This means we have an absolutely bonkers standoff because no one wants to pound the bid for physical oil. The reason they don’t want to buy is clear: what if a Trump deal drops and oil prices plummet? If we buy oil before that, we’d take a huge loss on crack spreads since our input costs would be locked in at high oil prices vs the current oil prices. Remember, cracks are how much refineries make when they buy, refine, and sell the oil products from a barrel of oil.

Thus, I present to you the macroeconomic situtation of physical oil in a meme below. I suggest listening with volume on, and if you’ve seen the movie, you should know why.

It’s cut before we get to the next part of the standoff. And that’s because that’s where we are, we’re about to enter the first stressful phase, where the refiners start looking at each other with sweat on their faces, but we’ve still got another few weeks before they start getting ready to draw their pistols and pound the bid at ask (causing price discovery).

Here’s the best part, as my subs that are crazy enough to have read my introduction to my computer science theory about self-avoiding random walks, this is the precise setup required for an emergent phenomena to trigger a black swan. This black swan would be black only for those who don’t hold oil, and that’s a pretty important distinction, and we will get into that in the next chapter.

Learn about self-avoiding random walks and extinction events below:

The thing is, this standoff of waiting to see who pounds the bid for physical oil fiirst, that’s the exact kind of thing that causes a “buy the news” event. You’ve probably heard of sell the news, which happened recently with my largest gold miner holding, Minera Alamos (now Mining Americas Corp). Basically, myself and others informed the market a bit too well (via weaponized autism) that the PFS for copperstone was going to be a huge beat. So a bunch of people bought the stock who aren’t genuine longs like myself, and they tried to sell the news, hoping for a quick trade. Now, Minera is down so much it’s ludicrous, and an obvious buy, but I digress.

The point is if they all try to buy the news, there will be a massive spike in demand for physical oil, and that will spike the oil price long before Kuwait and Iraq can un-shut-in their wells.

To summarize: the Asian refineries are cutting run-rates and drawing down storage (supplies they had on hand). The European refineries are doing the same. And this is because both sets of companies believe a Trump peace deal is close, which means “why should we buy oil now, when we can buy it next week after it crashes on news that Hormuz is open?”. This means that even if the strait opens tomorrow, they may all hit the bid simultaneously, causing, “counter-intuitively” an oil price rally on the “bearish” news.

Importantly: the “demand destruction” narrative will be proven false when this happens because consumption hasn’t gone down, everyone is just running supplies on hand stored in locally owned tanks. When they come to buy oil to replenish stocks on hand, there will likely be a surprise (in my schizophrenic world at least).

In summary: I am claiming, and I may be wrong, that the absence of price discovery can be explained by the above, combined with the USAs method of releasing SPR reserves (with a partial chunk of SPR barrels being funneled to Cushing to allow the treasury to manipulate the futures market as per my write up about Bessie Boy’s Algorithm).

See Bessie’s boys algorithm here:

When this standoff ends and the triggers are pulled, the price action will be a mushroom cloud to be remembered.

Lots of people are asking me: how close is Cushing to tank bottoms?

Here’s the recent API data:

API storage update (all numbers in barrels)

Crude -9.119 million barrels (analysts expected -3.4mil, again being wrong; they’re refusing to increase draw expectations!)
Gasoline -1.191mil
Distillates +1.3mil
Cushing -1.125mil
SPR actual -7.9mil
Total crude draw: -17.019mil

This puts Cushing close to 20mil barrels currently stored, but depending on where tanks are in their maintenance cycle tank bottoms can probably be drawn down to 18million, to, in the best case, 15million, and the worst case just slightly under 20million.

I have no idea when it will happen, so I’m going to estimate 15mil barrels is when Cushing starts to have issues.

Since Trump is currently bombing Iran as I type this, I think it’s unlikely that this situation is resolved, and I expect Cushing will draw down at a conservative rate of around 500k barrels/week.

So the worst case is 10 weeks until huge problems.

The reason it’s hard to know what tank bottoms are is because the bottom contains sediment, and water, so… Who knows how much is in there!

The risk no one is emphasizing strongly enough.

I will keep this short. There’s a lot of rich people, and there’s a lot of rich funds, and a ton of people with political power, and all of them want the SpaceX, Anthropic, and OpenAI IPOs to go well.

Part of making these IPOs go well is keeping oil prices down. Oil is the blood of the modern economy. It keeps everything running, and with higher oil prices, it’s like the economy is dehydrated and the blood is thick. Suddenly, everything starts to go a little slower.

My belief is that we’ve had a lot of inflation, and oil can probably go over $140 without causing any real magnitude of demand destruction, but that’s not what the rich people believe.

Additionally, we have organizations like OPEC that have been brainwashed (somehow) to believe that if oil spends a few mere months above $120, everyone on the planet will switch to electric vehicles. Obviously, there’s not enough lithium for that, and we’re years away from hybrid lithium x sodium batteries being manufactured under an economy of scale boon for the technology.

My point is that you’re likely a fool if you’re long oil, because you’re not just fighting the fed, you’re fighting everyone, including OPEC!

For those that have read my article on self-avoiding random walks (which I can’t remember what I wrote within), I’ll just summarize my brain a bit here.

An extinction event within an evolutionary system is caused when everyone starts doing the same thing. Think about the refineries. They’re all cutting imports and choosing to run down storages, with the hope (and prayers) that oil prices crash in the near-future. That leads them toward their own death, because if they all decide to buy oil for delivery in the same week, there’s not enough tankers, and boom! You have the steepest backwardation in oil prices in history (you ain’t seen nothin’ yet).

Can you guess my point?

I warned everyone I’m a madman, multiple times in fact, so yes, I am perfectly comfortable telling almost everyone that they’re wrong — and if I’m wrong, I will be wiped out because I’m still in this and still using margin.

My belief here is simple. If everyone is hoping for the same thing, maybe they self-organize together and achieve it / pull it off. But Iran just downed an apache helicopter and Trump responded with more bombing of Iran. Come on!

The middle east (including Israel) is an awful place to live because the philosophy “an eye for an eye and a tooth for a tooth” is embedded within way too many people who are in power there. Iran will have to retaliate again now.

Don’t worry though, Trump will declare the ceasefire is still on, and oil stocks will stay down.

My official prediction on macro, you can write it down.

I think oil stays higher for longer, with a price floor of $78/barrel. I also think, that OPEC is a little bit correct, and that yes, these higher gasoline prices will boost EV demand, meaning that this oil bull market will likely cause a significant lithium bull market (which is already ongoing, but I think it will guarantee lithium prices stay higher for longer too).

Because of this, I started looking at lithium companies, and I found one called EMP Metals Corp EMPS.V (CAD), and I really like their set-up, under the guise of planning for a 2+ year long speculative investment, for reasons I’ll talk more about below. I was actually going to take place in their recent private placement, but I chose not to because of a surprise.

While looking into EMPS: I actually found a crazy, absolutely ludicrous way to play the oil and lithium bull markets simultaneously.

And we all know I’m insane, so yes, I jumped on it, and I’m now, I think, holding the highest risk portfolio I’ve ever held in my life. Please don’t copy me. You’ll see me living in a tent on the streets in a few years.

Below is a toy portfolio with margin that I think is robust to current chaos with ample upside potential over a long-term view.

Another disclaimer: I make predictions about the future based on my life experiences and vibes below. If they’re wrong, well I was wrong and it’s your fault for trusting me: I am no oracle, just the local neighborhood schizophrenic.

Also: please don’t use margin, there’s too much damn volatility and fake news headlines. You have to leave a TON of buying power unused to survive, and the volatility is gut wrenching. Honestly, just never use debt to invest and live a happy life where you don’t live in fear of accidentally putting yourself into slavery if the market flash crashes.

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The summary of this post is that I haven’t been looking at the markets. Most days I’ve had no idea what the price action is in the stocks I own, and that’s how I like it. I try to buy quality and then sit on my hands doing nothing, and right now, it’s just impossible to keep up with the news anyway. Thus, I’ve just been focusing on AI research, and it looks like I’ll be submitting two papers to an AI conference this month. I’ll likely write about how I expect the next stage of the AI buildout to affect commodities later this Summer. I’ll also write an article soon explaining (in hopefully easy to understand terms and pictures) what deep neural networks are learning and how they’re computing the answers to queries.

Why I’ve given up on trying to track the news? Each hour, at least one American official makes multiple statements about how a deal is imminent. About every three hours, at least one post from Iranian state media, or a politically affiliated Iranian posts somewhere (or is interviewed by some outlet) and says something close to “we aren’t even talking to America, they keep making demands they aren’t in the position to ask us for”.

The craziest thing is that the “free market” still trusts statements made by Trump, Marco Rubio, Scott Bessent, Pete Hegseth, Barak Ravid, etc. Their statements all continue to move oil prices lower, despite all of them having been wrong for >95 days now (recall: Barak wrote Axios articles saying this war wouldn’t happen and published them… checks notes… 96 days ago. Meaning that doing the opposite and believing the opposite of what Barak says is quite literally the easiest way to make money in 2026.

If you remember my posts on Substack and on X about the Strait of Hormuz closure from the first day this war started (which started for me the moment Iran retaliated by hitting neighboring country oil infrastructure), it’s basically as simple as betting on the behaviour of the Iranians.

In my opinion, it doesn’t matter if America wants to make a deal. Iran has to want it as well, and I think the American x Israeli assassinations of senior Iranian leadership left behind extremists.

Alas, what do I know, oil is still below $95 despite both sides actively firing missiles at each other today, a 14.75mil barrels of crude drawdown in America, and Iran officially posting that the ceasefire has ended (and not with a peace deal, but with more violence).

Thus, I’ll spin in my chair for a few more weeks while I continue to watch the barrels in storage plunge at record levels. Surely, the USA can’t lose >2mil barrels/day forever. The ink required to print Axios articles requires oil! Alas, we don’t print things anymore, and that’s why semiconductors keep going higher.

Eventually, the market will care, right? If not, my current plan is to go down with the ship. Even though I’m officially a computer scientist by trade, and a current AI Ph.D., I continue to believe that physical reality matters, and that every day oil is above $80 is a great day for Canadian oil producers (which everyone knows make up my entire oil exposure).

For paying subs, I continue below.

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Let’s jump in.

This is something I didn’t see coming, but America has no choice but to sign the worst deal ever, or commit to a serious campaign in Iran. Either way, I doubt the Strait is going to be open soon with enough flows to ensure supply = demand; in fact, I’m almost certain supply will remain less than demand.

Iran is OPEC now.

Let’s take a step back and actually consider what’s happening. In a single sentence: the USA has no idea how to open the Strait of Hormuz, and in at most 95 days, tanks around the majority of the globe will be empty or near-empty.

We’re at a point that’s it’s virtually impossible that Iran doesn’t have full control over ship transits through the Strait of Hormuz in the future. The crazy thing, is that Iran didn’t even realize it had this much leverage, they didn’t ask to be put in this situation, it got forced on them, and somehow, they won the first few battles decisively.

Take a moment to consider that the majority of Iran’s profits come from the sale of oil. They’ve now discovered they can ensure oil supply is below oil demand, for at least a few years, by ensuring they’re given total control over the Strait. Alternatively, they can charge an “environmental fee”, although more realistically, it’s probably going to be in tandem with their sole ability to control the number of tankers that can transit the strait.

Honestly, the entire situation is insane, and while I immediately predicted the Strait was going to stay closed when Iran started bombing neighboring country infrastructure, I certainly didn’t have the thought that they could end up with this much leverage over not just the USA, but the world.

I don’t actually have much to say here, so I’ll just walk through the compression of my thoughts. Honestly, I’m shocked that this is the situation, but it is.

1. Iran now gets to choose which tankers can and can’t transit the Strait. This means they can solely determine the export capacity of OPEC members north of the Strait.

2. America looks primed to give Iran a pile of money in order to open the Strait, it looks like it will be at least 24 billion, but possibly as much as 0.25 trillion, with most of this coming from unfreezing of their funds. TL;DR: buy cheap gold miners to hedge, cuz that’s going to boost effective circulating M2 and cause some inflation (or weakening in the USD as Iran dumps it for other currencies / gold / etc).

3. There is virtually no way America can open the strait, other than with an extensive boots on the ground campaign, and at that, it would probably need to require a bunch of other countries helping. It would be all out war, but Trump campaigned on “no more wars”.

Maybe you’re wondering why I think this? Well for one, the deal details that were leaked this last weekend seemed incredibly unfavourable to the USA. Since then, we seem to have confirmation that Qatar is set to “loan” 12billion to Iran, which happens to be the amount they’re asking the USA to pay up front, in order to open the Strait.

But the full reason is much easier to see: the USA signalled they’re unwilling to commit seriously to any kind of real campaign in Iran. That means Iran just has to hold the line: if the Strait stays closed for ~70 more days, due to tanker transit times, oil is going over $200.

Meanwhile, the World Cup is about to begin, and the USA has its 250th anniversary coming up, and seriously, what can they even do?

We’re at this point in the article and we haven’t even talked about Iranian uranium yet, but let’s talk about it. Iran want the current deal to release them a pile of money in the first 30 days, and then, there will be no discussion about uranium until 60 days. Over this time period they will “slowly, but steadily” increase traffic through the strait, which they’ll be charging a toll (read: environmental fee) to transit.

All they have to do is slowly increase traffic through the strait, and by day 60, world oil supplies will be so messed up and low, that oil prices will have already skyrocketed. It’s a fact that tankers won’t be returning to be inbound traffic to Hormuz until this situation is fully and clearly resolved. That means production won’t be un-shut-in, in Iraq, Kuwait, etc.

Like it’s actually insane. Summer driving season is just beginning, and Summer vacationing. and yes, Iran somehow has this much leverage. There’s just no way to get them to open the Strait other than a high commitment military campaign, and the Trump admin just won’t have the support for that. I also have no idea how they could manufacture consent for it. Maybe if oil prices get high enough and they blame Iran? Can people be that stupid? I don’t know!

The point in a single sentence is just to ask yourself a question: what can the USA actually do to get these “crazy bastards” to “open the fuckin strait”? - Donald J Trump, Truth Social, Strait of Hormuz crisis, 2026.

1. There is no political support for a ground invasion.

2. Bombing isn’t going to do it.

3. Nukes would be genocide, and an absolutely abhorrent and egregious crime against humanity: you can’t vaporize cities because you suck and made a mistake.

Unless anyone has any other ideas, it seems like option 4 is the only way forward:

4. Total and absolute capitulation, where Iran gets everything that it wants.

That’s today’s dose of schizophrenia. I honestly didn’t think this was possible, but the events since this last weekend have made it seem all but guaranteed.

I continue to believe that holding undervalued oil producers combined with undervalued gold (and a minor amount of silver) producers is the best way forward, and of course, my personal portfolio already reflects that. Of course, do your own diligence.

I think if a non-binding “memorandum of understanding” is signed, oil futures will crash a bit, and honestly, when that happens I will be struggling to not full port oil… I will try to remain responsible, but unless Iran don’t realize just how much leverage they have, oil supply isn’t going to increase much in the next 3 to 6 months (surely it’s impossible that Iran don’t know, Russia, who also want high oil prices, must certainly be whispering in their ear that the USA can’t get Hormuz open; Russia supplies intelligence that helps Iran). I just can not see a way that America can open the Strait. Maybe enough bombs would do it, I’m certainly no military general, but surely it would take a lot of bombs if there is a possibility via this route.

Anyway, I remain to have no idea what’s going on, but fortunately for me, my call that the “Strait of Hormuz Aint Openin’ soon” is now deeply correct, and buying virtually any oil producers (that I’m aware of and track) are deeply green since I posted that. I think oil re-rates higher soon, but I think SPRs need to drain a bit more first.

I’d love to hear from paying subs in the comments below. Please tell me if you see a route that America can open the Strait that I’m not seeing, because I don’t want to full port into what I’ve chosen to be my undervalued oil producing race horses (primarily OBE + JOY) but I am starting to see oil as being the easiest trade of my life. How is this not obvious to everyone? Iran has accidentally found out it’s got the world by the balls.

Anyway to explain the title of the article for those who may not get it, Iran are very likely to be given so much power (via control of the Strait) that they can determine OPEC country export quotas by simply throttling the number of ships allowed to leave from north of the Strait.

Best wishes,

G

The last time I wrote in a post about the Strait of Hormuz situation, I said I thought cheap Canadian oil producers were still a buy, because my gut was telling me that we’d simmer sideways without a peace deal — just more ceasefire. So far, this call has been perfect. OBE is up like +40%, Journey at least +10% (this one I’m surprised isn’t up way more), Suncor is killing it (the calls I bought are already past the moon), Strathcona (SCR) is doing well, and yep, so far, everything is working out.

So: what do I think happens next? Well, I’m getting fairly confident I know what’s about to happen, and that there’s only a single path forward. Of course, I can be wrong, but here’s how I’m positioning for Summer driving and travel season.

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So, there’s quite literally memes about this: how on Earth is Scott Bessent keeping oil prices rangebound between $80-$120?

The memes tell us he’s the most powerful gay man to ever live; after all, he did give Elon Musk a black eye last year! Nonetheless, this is actually a bit of a stretch, and the USA and allies should be able to keep the lid on oil prices for much longer than everyone is anticipating. I spent a little time thinking about this while on a brisk walk tonight, and I realized that there’s a very easy-to-execute algorithm for Bessie Boy to run in order to keep oil prices suppressed.

Fortunately, there are many ways to profit off this. Even more fortunately, the portfolio I built has a reasonable probability of being both robust and profitable (of course it’s not guaranteed, thus the word probability is used).

Let’s dig into it.

So the most important thing when you’re trying to infer what someone is doing, is to keep it simple. You need to make the fewest possible assumptions to boost the probability of your inference being correct. This is where most schizophrenics go wrong, they hedge their entire conspiracy theory on a chain of 50+ assumptions. If each assumption has a coin flip probability, the odds of the theory being correct are (1/2^50), or so small that it might as well be 0.

Here’s my theory about what they’re doing, and you’ll hopefully agree that it’s unbelievably simple and makes sense.

The following is a fact:

Fact 1. Oil prices were exploding until the IEA announced that a coalition of allied countries were going to release 400million barrels of oil.

Keep this fact in your mind.

Oil bulls like HFI Research responded to the IEA’s intention to release these barrels by meming that it’s like pissing into the ocean, after all, at least 8mil barrels/day are certainly offline, and it’s likely that the true number is closer to 11.5mil barrels/day. So this 400million barrel release is, let’s just say around ~40 days worth of supply, yet we’re already at ~70 days since the Strait of Hormuz was closed, and oil prices have recently been trending downwards.

Fact 2. Deploying these SPR barrels will take around five months.

So, how is it then, that the only quantitative bandaid applied to the situation was pissing into the ocean, yet it’s working?

Conjecture 1. The USA and its coalition of allied nations are running Bessie Boy’s algorithm, described below, to keep oil prices down.

Here’s how I would do it.

Fact 3. The futures market is paper, and is very financial; >95% of contracts aren’t executed for delivery, meaning that if you have physical barrels, you can gamble on them having the effect of ~20x more physical barrels than you actually have, since many contracts will be rolled over to the next month (not executed for delivery).

Source: According to data from the CME Group (which trades WTI crude), typically less than 3% of contracts actually result in physical delivery.

You can probably see where this is going. The TL;DR is that a 1mil barrels/day release from the SPR is actually, financially engineerable into a 20mil barrels/day release.

The point is that a small amount of physical oil, can be used as “collateral” for a massive short position, which can move the market disproportionately.

Bessie Boy’s algorithm (most abstract view).

Within America:

i. The Treasury of the United States of America will heavily short the front month WTI paper futures contract, primarily at moments in time when WTI is most susceptible to manipulation — this is after hours.

ii. If these shorted futures contracts are executed (called for delivery), the USA treasury simply moves oil it bought from the DOE to satisfy the delivery.

Within the EU:

i. Bessie Boy directs the UK, Germany, Spain, France, etc, to release their portions of the SPR the same way.

ii. These countries short the front month Brent futures, and if they’re unlucky enough to have the contract exercised for delivery, they deliver their SPR into the contract.

iii. Simultaneously, since these countries need oil, they bid for oil later down the curve delivery dates, slowly pulling the tail end of the curve higher (which we’ve seen occurring since the IEA’s announcement of SPR releases).

Within Asia:

i. Bessie Boy directs Japan to do the same thing as the EU.

Bessie Boy’s algorithm (the details)

Now, there’s one last thing you need and that’s useful idiots, people that you can rely on to jump for the “opportunity” to post a headline and get clicks. That’s simple, choose any group of journalists.

a) First, short a gentle quantity of oil, which makes it look like insider trading, but in reality, you’re actually just taking out the entire bid — you’re leaving no liquidity to catch the fall. Now the journalists start dropping articles about the same thing with “sources”. Oil prices crash the first few times you do this without any intervention needed on your behalf.

b) Once you’ve already done this 3x or 4x, the journalists have lost credibility and the market isn’t going to move as much anymore on their articles, thus, you short the futures hard the moment after the article drops, making it look like the market still cares.

Why is this important? It frustrates the hell out of retail investors (and fund managers) that thought the Strait of Hormuz oil crisis was going to lead to them making free money. They give up. They eventually stop holding, which makes a) (destroying the bid) easier.

What does this achieve?

Well, you might think it’s simply this and partially it is: it frustrates everyone trying to hold an oil position, and margin calls anyone speculating on futures with large levels of leverage. Eventually, people start to give up, they flow their funds into other things that are playing nicer with the current dynamics of the system, being SPY, QQQ, and semiconductors and memory.

But actually, it’s to decimate Iran: the SPR reserves are large enough that they can continue manipulating the market this way for months. Exactly how long is hard to estimate, but I think they won’t have problems keeping the oil price irrational until at least the first week of August, which is when the physical shortages should begin manifesting themselves at scales beyond what the SPR releases can plug. Note: because of the beauty of paper contracts and the fact retail don’t have tankers to deliver oil into, they can likely continue the financial engineering even after the first headlines about empty tanks begin to drop.

What is the consequence, or the cost of running Bessie Boy’s algorithm?

This one is simple. The SPRs are being drained, and that means that, should a deal be made to open the Strait of Hormuz, and it opens, and the SPRs are now low and are not replenished high enough to survive if Iran then shuts the Strait again. The algorithm can’t be run again. This means that the SPRs necessarily must be refilled, and they must be refilled quickly, or this financial engineering will no longer be available in the future.

Thus: it will be a priority to refill SPR reserves ASAP upon reopening of the Strait of Hormuz.

What is America’s Gambit?

America is betting that Iran will capitulate before their own, and their allies abilities to manipulate the futures curve wear out. Indeed, SPR reserves are large enough to keep this going for quite some time.

How much predictive power does this give our world model?

As far as I can tell, it predicts everything, with less assumptions than everyone else is using. Examples.

1. China banned product exports, but then legalized them again; why?

   1. Oil analysts speculate this is because China’s economy might be affected by their neighboring countries suffering from high oil prices, sure, but China’s own economy would be hurt from this situation as well. It’s simpler to believe that China’s intelligence agency reversed engineered Bessie’s algorithm. They’d come to the same conclusion as I’ve come to, that the USA can suppress oil prices for a significantly long period of time by doing this. Especially with the demand destruction we’ve seen (cancelled flights, Brazil boosting ethanol in gasoline, etc).

2. The USA blockaded the Strait of Hormuz; why?

   1. Simple. Losing more global oil supplies won’t affect the price of oil in the near term (but it will in the long-term). This means that Iran can be forced to feel more pain, while the financial engineering makes everyone quit on oil prices going higher (including possibly the Iranians).

3. But midterms!!

   1. Trump will win a landslide victory if he gets Iran to capitulate to the point of physically surrendering their uranium, the republican voting turnout would be near 100%.

4. The physical price of oil is converging (by coming down) to meet futures price.

   1. Trivial: you can just buy front month futures and get them delivered in the near-term, and front month futures remain cheap while Bessie Boy’s algorithm is running. Eventually, futures get pulled up, and this is what we’ve seen.

5. Why did the UAE leave OPEC?

   1. Was it for a swap line? Likely, but why would America want them to leave? So journalists can be useful idiots and drop a new headline to hide the futures shorts behind: “Since the UAE has left they’re now free to flood the market with cheap oil”. It’s my belief that the UAE is still a member of OPEC unofficially. I just can’t see them genuinely leaving, since OPEC caved and gave them their allowed quota production increases they begged for during the pandemic. They were actually treated quite well, after causing a bit of a fuss about this during the oil bull market of late 2020 to year-end 2023.

   2. My point here is, just because you “leave OPEC” on paper doesn’t mean you leave OPEC in reality. It’s 2026. You can still pick up the phone and coordinate.

6. What about pandemic risk!! They released a bioweapon created via gain of function research to cause demand destruction! (super conspiracy theory requiring hundreds of assumptions, giving it a low probability, but let’s address it nonetheless)

   1. No; I really don’t believe this: they literally do not need to do this. They can buy months and months of time by manipulating the futures market via Bessie Boy’s algorithm. There are tons of SPR barrels left, even after these 400mil are burnt up, they can simply do another 400mil. Maybe after that second batch, only then would things get truly dire. Remember, when the first tanks hit empty, it’s actually causing demand destruction.

7. Why can they last so long?

   1. Well, yes, storage tanks are running towards empty, but they aren’t emptying as fast as people think. This results from countries having “28 days of remaining supply” not being 28 days of remaining supply, because during those 28 days, domestic refineries + fuel imports will slowly bump the number upward (while it’s draining downward).

   2. Other things can be done, e.g. Petrobras just bumped ethanol content in gasoline up to 32%!! RINs can be increased (renewable credits for biofuels), and RINs have been spiking, which results in rushing to increase biofuel manufacturing (which we know is happening because methanol prices are skyrocketing).

This all reduces to the thing I’ve been saying all along: the only important question is, will Iran feasibly strike a deal with America?

Obviously, I can’t answer this one, I don’t think anyone can, not Trump, nor any of the Whitehouse insiders, and to be honest, that’s the single best supporting piece of evidence that Bessie Boy’s algorithm is being run. Journalists keep telling us peace deals are imminent, but every time they fall through — it turns out to be the case it just wasn’t even close to happening.

The issue is that Iran has been fractured into many different factions that all have different beliefs and different desires. It will be difficult to get all of them to agree, especially with the recent demonstration that Ukraine was only invaded by Russia because Ukraine gave away its nuclear weapons — their deterrent against invasion.

Obviously, IRGC members share that opinion because they watched the same history we all watched.

My belief is that both America and Iran are convinced they can out last each other. Iran is likely aware of Bessie Boy’s algorithm (they talk to the Chinese and surely the Chinese have figured this out and shared the intel). America is aware that Iran is taking a huge financial punishment — over the last 4 days 0 ships transited the strait of hormuz, literally 0. This hasn’t happened since the war started. Over the last 24 hours, Trump blew up 3 empty large tankers (owned by Iran). Things are escalating as America tries to flex their confidence that they can outlast Iran.

The good news is we can place bets without being able to answer whether a deal is coming.

That statement I made above, that the SPRs will necessarily need to be urgently refilled, is what gives WTI a floor price around $80 for at least two years. And with that floor price, stocks like Obsidian energy and Journey energy will have ample opportunity to buy back shares, and convert 2P reserves into 1P reserves (ultimately boosting their share prices). Suncor will print money off crack spreads too, as will CLMT. The portfolio I built looks robust here (in my opinion, which is wrong).

Even if the Strait of Hormuz is reopened this week, both Journey and Obsidian should have around +40% left in the tank over the next year, and that’s beating both Buffett and Druckenmiller, so that’s more than sufficient for me.

Probabilistically, I think we’re at least 30 days away from the Strait of Hormuz being opened (since there’s literally mines floating in it) and I think that pushes the lower bounded performance on Journey and Obsidian above +60% within 12 months.

Indeed, if the Strait is closed for longer, say another 90 days, then I think a spike over $150 oil becomes likely, and that’s when Journey and Obsidian will both have just too much free cash flow, and should significantly re-rate higher on the backs of ridiculous numbers of daily shares being bought back.

Naturally, I could be wrong about everything, and you should assume I’m wrong, this is for entertainment after all. I have no real evidence supporting any of my claims about Bessie Boy’s algorithm, this is just my best model for understanding the current price action within oil. I am now confident however, that I don’t think oil has a chance of seriously inflecting until at least August, and I could be too optimistic / not conservative enough, so in that event, it’s probably in late September that oil has the best chance of inflecting. Knowing that markets can remain irrational longer than you can remain solvent, it’s probably November that oil spikes. Who knows. This is why I don’t buy options, I can’t time things that accurately, so I just go long cheap, high free cash flowing producers / services related to a sector I believe has a strong future.

Thanks for reading, I hope this is a good one (I think it is but we’ll see if y’all agree). I think this also explains how gold and silver were manipulated via paper for so long. You really can stretch a small amount of a physical commodity a ridiculously unfair distance when it comes to shorting the paper contracts, due to the rareness of execution.

Comments are open so feel free to discuss below and let me know if I’ve missed anything, but overall, I think this is a pretty good Occam’s Razor model (max entropy) that explains the current situation. We’re using tools that we know Bessent has (the SPR), and we’re using knowledge we know Bessent has (financial engineering of paper contracts).

Best wishes,

G

If you keep reading, you agree that it’s purely for entertainment purposes, because that’s what I do, I entertain people.

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Anyway, let’s run through my ideas about this company and the sleeper assets I believe the market totally missed on their balance sheet.

First, I’d like to thank you guys for your support.

Since launching the substack every idea I’ve had has worked out almost immediately after my proposal of the concept. As my Q2 report detailed, I’m still bullish on all those ideas, and I didn’t sell anything to buy this new position. I maxed both my line of credits, and cash advanced as much as I could off my two credit cards (yes I’m willing to pay 20%/yr interest for this one), and used a bit of margin.

The blog has now grown to half the size of what I consider to be “large enough”, being 1337 paying subscribers. Once I hit that number, I will stop accepting new subscribers.

Also, inspired by Calvin Froedge, I will offer lifetime subscriptions for $5000 USD. There are actually some people paying more than this just for annual subscriptions, since the stocks-speculator lets you pick the amount you want to pay, but I digress.

Are you ready for this?

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With that said, I’m not sure if I’ll always do a quaterly update since, despite what people think, I actually don’t trade much. You’ll notice for the most part, my portfolio hasn’t changed beyond adding new stocks via debt because I tend to try and identify whatever stocks I think will benefit the most from the current political scene around the earth and hold. This post will begin with an outline of how I think the Strait of Hormuz situation will evolve. It will then go into my portfolio weightings. The TL;DR is I entered 2025 without using much, if any debt. I’ve since added a lot of debt to my investments, buying dips and/or opening new positions.

The most recent approximation of my thoughts is within an interview I did with Brandon Beylo, published this Friday on his Value Hive podcast, see here:

Important note: the next post I publish will hopefully be an artsy one about living life, as afterall, this is the demystifying life blog. When I publish it I’ll move up the annual cost to subscribe by around 20%. This next post will also include a discount code for approximately 20% off the increased price, which will expire after a few weeks.

If you are an existing subscriber, your price will not increase. If you subscribe using the discount code, your price will be locked in, and never increase.

The point is, whatever the price is you’re paying now, if you don’t cancel, will remain the price you pay going forward.

So if you’re not a paying subscriber, but want to support this insanity, using that discount code might be a good option if you don’t subscribe before the price increase.

Begin.

My thoughts on macro are below. I am currently very annoyed by war pigs, and wish I could’ve just had an easy year investing in mines. Alas, the oligarchs command death and hatred to mankind, so what can you do other than invest accordingly and make money off it. How fucked up the world is that I’m writing this. Hopefully we can change this one day…

To start, recall that I think the world will have a fuel crisis, and I was second to call this, with only Calvin Froedge beating me to it by a few hours because I was sleeping. What do I mean by fuel crisis? Well…

Poor countries are in serious trouble, and poor countries without their own refining capacity better be stacking food and water because this could become a serious mess.

Australia isn’t supposed to be a poor country, but due to some geriatric brain illnesses, the population that lives there loves to elect leftists that do things like ban nuclear power, and encourage natural gas (imported from the middle east), and best of all, love to pretend they can lower their carbon footprint by letting India / China / etc refine oil into gasoline + diesel + jet fuel. That brings the Australian CO2 output per year chart down compared to refining oil to fuel domestically, (Australia is producing less CO2 WOO!!) and pushes up India and China’s CO2 output per year by the amount Australia saves (is this called net zero???), but leaves Australia to get destroyed by a fuel crisis when the most unstable region on earth, with historically the most wars, decides to do what it does best: set itself on fire.

It’s unfair to blame the arabs too much here also (though they did push Trump to do what he did), but I think the man to blame is Netanyahu, and the insanely bloodthirsty Israelis that support him (far too many of them). I reiterate, that if Iran was truly weeks away from a nuclear weapon and causing a nuclear apocalypse, the other two powerful nations, being Russia and China, both having powerful intelligence agencies, would be on our side to stop it. Thus, I conclude this is pure Israeli propaganda to drag the West into a new war. Great.

Back on track: Australia’s economy is going to grind to a halt as they fail to source diesel and fuel, and many of their mines shut down and lay people off. The same goes for New Zealand. The same goes for most of Africa, and some parts of Asia.

It is a fact that at least 8 mil barrels/day of Middle Eastern oil production is offline. It is a fact the Saudi’s and UAE will never be okay with Iran charging a toll to use the Strait of Hormuz. It is a fact that a serious missile strike on Yanbu pipeline pumping staitions would immediately send oil over $200 if it resulted in a total failure of the pipeline. It is a fact that oil wells that get shut in can’t be brought online easily. It is a fact that Russia has lost almost 1/4th of its export capacity due to Ukraine being the black swan that squeezes the worlds’ oil production and fuel supplies.

These are all things I predicted earlier in Q1 2026, but the point is, a lot of mines are going offline: tons of them. This is going to mess up NVDA, so it’s going to mess up SPY. The market should tank. But what do I know, Warren Buffett agrees with me, calling this pullback “a tiny 5%”, and going on to say approximately that he’s not in “the game to make 5%, but more like 50%” when he buys the dip.

Fertilizer: I think 2022 / 2023 shows that fertilizer likes to cycle and crash quickly. I don’t own any direct exposure because I’d rather benefit from a surprise, like Suncor’s 800k t/yr exports of sulfur, which, should sulfur prices increase the way I think they will, should result in a 2% or so of their market cap in pure free cash flow injected into their bank balance.

Helium shortage: going to mess up tech. People are talking about this, I don’t care too much because it seems like it will be much easier to print returns within oil producers. I’d rather bet on this, since it’s easier to understand, than derivatives of the main event. I do have one idea here, but I haven’t had time to look into it yet. Perhaps a future post will dig deep into it.

What’s next?

I can see two routes forward. The likely one is some kind of use of USA ground troops in Iran in the near future. I think this because Trump tends to say “we aren’t going to do anything, we are leaving, etc, etc” then attack Iran (happened 2x after lots of these headlines, and there’s been lots of these headlines for the last 10 days). I think he thinks he’s getting them to drop their guard (and maybe he is).

The other route is a genuine TACO, but that won’t work because the Saudi’s + UAEs won’t be okay with Iran charging a toll and OPEC is run by the Saudi’s. Look at the recent Saudi vs Russia oil price war over 300k barrels/day (Russia refused to cut), the Saudi’s flooded the market. I just don’t see this happening! Again, what do I know, but the vibe here is that a peace deal is far away.

Nonetheless, independent of a peace deal, oil infrastructure has blown up. I find it hard to believe that oil prices can spend much time below $100 over the next 12 months, and the oil producers I own below are all awesome in that environment. We are one major pipeline hit away from $150 to $250 oil too, just has to be the right pipeline (e.g. russia southern pipelines or Saudi East-West Yanbu, etc).

Overall I hate this situation. War is fucking stupid and people are stupid for being so full of hatred that they’re blind. I blame all sides, and renew my call for fellow liberatarians to move to Alberta and assist with secession from the Zionist empire. We can pull this off, we just need people who know how to make money to come help us create the lowest tax jurisdiction in the world, that still has underlying civilization (e.g. isn’t an island frequently hit by hurricanes in the Caribbean).

Okay, on to my portfolio and my balancings below. I’ll explain here how I’ve set this up. I’m going to be reporting a “net worth %” and also a “portfolio %” number. This is because I’m using a lot of debt, and I typically think of investments as “what % of my net worth did I put into this” and the total percentages add up over 100% because I am borrowing money.

Additionally, this portfolio will soon be out of date, because I’m going to blow my current buying power on a new oil producer or two that I’ll write about imminently. Nonetheless, I think it’s robust to the current world situation, and I don’t expect to sell anything, I just expect to spend all my dry powder attempting to repeat the insane gains I achieved in 2025. Yes: I’ve decided to go in with even more leverage, do not follow me on this, I am insane and could easily go bankrupt if I make even a small error. I promise we have different financial goals, and whoever you are reading this, you do not want the risk of using so much debt. I have no choice but to do this because I want to be able to solve some major open problems within science and mathematics while my brain is in its peak performing years (my youth) and I need to speed things up. Remember, “Power comes in response to a need, not a desire” - Goku

I reiterate one last time, if you copy me, you’re insane and irresponsible and can’t blame me if I blow myself up and anyone who attempted to copy me. The risks of using margin are extreme, and no one has ever used a lot of margin for an extended period of time without going bankrupt. I am not even qualified to tell you about the risks, but if you ask anyone that knows anything, they’ll say “don’t use margin”.

Below is a toy portfolio that I think is robust to current chaos with ample upside potential.

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I recently took a margin loan for 78% of my net worth to buy oil companies ($SU + calls were the majority of it, then and then a sprinkling of with a dash of $SCR. Most people would call this lunacy and gambling, but what do most people know! Pundits on the internet made memes of me pushing my balls around in a wheelbarrow (thank you South Park & thank you for building the GPUs that let this all happen).

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