Our 2024 stock picks

0:09One thing that happens a lot if you write about financial markets for a living is that people ask what stock should I buy? Have you got any tips? And when people ask me that, I always say no, which my husband says is very boring of me. Now, there's a couple of reasons I say no. One is that if a tip comes from non-public information, then it's unethical and, you know, probably like illegal. So sounds bad. I don't intend to test that theory. I'll visit you in jail, Katie. You don't have to worry about that. The other reason, well, listen on. As a teaser, I will tell you, you seriously do not want to listen to my stock picking ideas.

0:48This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. And while everyone else is talking Trump, Trump, Trump, we have a little palate cleanser for you. We're going to pass all this Trump stuff at a later date very shortly. I'm Katie Martin, a markets columnist and huge idiot here at the FT in London. And I'm joined by my usual co-pilot, His Excellency Mr. Robert Armstrong from the Unhedged newsletter in New York. Rob, say hello. Katie, I would have described you as like a medium-sized idiot. I think you're selling yourself short. But also, Rob and I are joined by an unhedged podcast newbie, our very own UK news editor, Kadim Shubha, who usually concerns himself with the ins and outs of UK politics and policy.

1:35But today, he joins us as a super genius markets guru. Kadim, welcome to the show. We are truly not worthy. I am very excited to be here to have my victory lap. Right then, if you're listening, you're probably wondering what on earth we're all talking about. So, every year the FT's money section, which is all about how to manage your money, unsurprisingly, runs a stock picking competition. It's just a bit of fun. It's fun. It's not serious. You should definitely not take it seriously if someone does really, really, really, really, really badly in it. So you pick five stocks and you bet on them or against them.

2:13Your bets stay the same all year. And at the end, you see who's done the best. And it started off as a bit of a kind of little jokey thing between people at the FT. And then it became like a big thing that readers can play. And this weekend, the results for 2024 will be out. And so, listeners, you're getting a sneaky early steer on the results. Kadim over here. Winner. Winner. Two years running. Did he win of all entries or just the FT? He's the FT winner two years in a row. I'm the best FT journalist. All right, get him, reel it in. So first of all, the best FT journalist two years in a row, although there was someone from commercial FT apparently who beat you this year, so ninky, ninky, no, no.

2:59Oh, really? But twice in a row out of FT editorial is not to be sniffed at. I cannot wait to hear what Kadeem's theory is, how it works, what his process is. He was 12th in the competition overall out of something like 1 ,364 people. Pretty good. Adam, the floor is yours. Please tell us how you managed to be so clever. So have you heard of a little thing called crypto? Turns out, you know, it's a great, great buy. And last year I went long crypto. And when I came first among FD journalists, they asked me, what are you going to do next year? And I said, I'm going long crypto again. But you can't just buy Bitcoin.

3:42What particular vehicles did you use? So last year I went mining stocks. And when I was asked, are you going to do this again? I said, yes. And it was written up very snarkily as he claims he will do the same strategy for the second year in a row. But I did. So this year I went to Bitcoin mining stocks, Marathon and Riot. admittedly they did not do that well but then i went coinbase boom that did great yeah i went micro strategy which went all the way to the moon and then i had a little ai a moose boosh with nvidia so looking at the spreadsheet i've got a little clip of the spreadsheet in front of me so there's a little thing where you can kind of say why you've bought or sold what you've sold what So MicroStrategy, his rationale for going long was Moon.

4:31NVIDIA, his rationale for going long was AI Moon. Coinbase, his rationale for going long was Moon. Marathon Mining, you'll be surprised to hear his rationale was Moon. Riot Platforms, Moon. I love this. I forgot that I had put those down as my reason. But, you know, I've covered crypto in the past. and the fact is that you meet people with this energy and there's, you know, not a number of mainstream journalists that's not zero that sniffs at this kind of thing. It's two on this podcast right now. Two on this podcast. And yet the people with that kind of energy, at least some years they make some money.

5:15You know, other years maybe less. Maybe they won't. This year they made a lot of money. I'm not going to let you off the hook with these kind of journalistic anecdotes. Do you believe in crypto as an asset class, Kadam? Yes or no? Good question, Rob. Well, I can't honestly say yes, but that's not quite the same as saying no, especially when my strategy this year is probably going to be going along crypto again. That was a small masterpiece of equivocation, Kadam. I congratulate you. I have a theory about this game, which has really nothing to do with crypto. So, you know, there's no money at risk here.

5:53It doesn't matter if you do badly. Did you hear that, listeners? It does not matter if you do badly. All that matters is you do well in the funniest way possible. And so you've got to pick the highest volatility, biggest hit stocks that you can find. And if it falls flat, you know, well, you haven't really lost anything. But if you win, you win going long crypto two years in a row and hopefully three years in a row. The bragging rights are all yours. In last year's contest, the 2023 contest, the unhedged entry was basically the opposite. Like we basically positioned ourselves to be short all the crazy weird stuff.

6:34And I think we lost to the index by a million percent, roughly speaking. I think we may have come in dead last of all entries. Not somebody else did worse, I think. But we were like, because we like basically took your philosophy, Katam, which is be right or wrong in an interesting way. And we turned out to be wrong. Like, I think a lot a lot of people will know, you know, so Marathon Mining and Riot Platform, these are companies involved in like Bitcoin mining stuff. Coinbase is a is a crypto trading platform exchange. it might call itself. NVIDIA is in AI, so it's slightly separate. But MicroStrategy is a very interesting, very weird company, right?

7:21Nominally, it's a software company. But really what it does is it buys shed loads of Bitcoin. So it's effectively like a listed company that way before crypto ETFs became a thing was already effectively a crypto ETF. It was a company whose share price just tracked Bitcoin. Is it a leveraged Bitcoin plight? Like, do they borrow money to buy this stuff? Yeah, they borrow plenty of money. Yeah, that's right. And actually, a big micro strategy story is, you know, people looking at if the Bitcoin price gets low enough when it's a sort of crypto winter situation, what happens to micro strategy? Does it hit the points at which its borrowing starts to go haywire?

8:05You can't argue with how the shares did last year. They were up 400 % last year. At one point last year, the shares were up 600%. Yeah. Kadim, you were one of the 29 people who went long. Is it only 29? In the competition. But this is the thing. MicroStrategy is the closest. Sorry, in this competition, you can't do ETFs and stuff. Is that right? Yeah. No mutual funds, no ETFs, no commodities, nothing like that. Stocks. Right. So if you want to be long Bitcoin in the purest way, MicroStrategy is the stock that you have to pick. It's leverage long. It's not just long. It's leverage long Bitcoin.

8:40Right. So if you're playing this game, you know, it's a pretty binary bet. Is Bitcoin going to go up and down this year? Don't know. But if you get it right, you knock it out of the park. So the idea that only 29 people have noticed that you should probably go along the extremely volatile commodity or whatever it's called that could send you to the top of the rankings. I mean, I think that's people are missing a trick here. it's obvious when you're uh when you're a stock picking genius cadim i take my hat off to you um what are you going to call your hedge fund uh moon obviously moon moon capital no no that's too many words just just moon well unfortunately we've been talking for far too long so we better wrap up this uh no i don't think so i don't think it's time to wrap up i think it's time to talk about Katie stock picking results.

9:35The moment we've all been waiting for. So, as I mentioned, there were 1 ,364 entrants to this year's competition. Would you like to guess where I came? Is it dead last? Does it have four digits? I was number 1 ,360. Ouch. I take it back. You're not a medium-sized idiot. You are a full-sized idiot.

10:09I bombed so badly. I feel for you, Katie. I did the same thing last year. I did the same thing last year. You can't have been that bad. I mean, being the worst in the FT, as the FT's markets columnist, is bad enough. But I was like almost the worst in the entire competition. Let me tell you. So did you give the form to your dog? How did you manage this? Well, first of all, I was doing okay at a certain point in the year. I was long ASML, Dutch manufacturer. And at a certain point until July, I was up 58 % on this stock. ASML, as some listeners will know, is kind of the company that makes equipment that you need to have to manufacture high-end microchips.

10:54Like you literally, if you're going to make fancy silicon, you literally have to buy stuff from ASML. How did I lose on this stock though? Possibly has the deepest defensive mode. And, you know, it's interesting that even though, you know, you pick what looks like this incredibly solid company, but you're still exposed to the global chip cycle. Like even that company is kind of cyclical. Intel and Samsung's businesses kind of fell out of bed. Chip businesses fell out of bed. ASML sinks too. I mean, if you looked at that portfolio, if you said, what is the least risky stock in here? I would have said ASML.

11:27I was Long Persimmon, a UK house builder, and I was doing great. I was up about 25 % and then the budget came along. UK house builders did really badly. That all went very pear-shaped. This sounds like quite a sensible portfolio so far. This is surprising. Thank you, Rob. Also, look, every year in this stupid competition, I short Tesla. it never works and i thought sod it i'm gonna do it again my rationale that i put in the form was this is just my usual hunch that it has to be the year it comes unstuck wrong short tesla how did tesla do in 24 at all well originally i was doing well again it was down 40 to april and then it all went wrong so i lost like a i lost my shirt on tesla but where i really went wrong is that just as cadim had gone long micro strategy i went short micro strategy No.

12:17This is the thing they always say about shorts. Never, ever go short. When you go long a stock, the worst you can do is losing 100%. When you go short a stock, sky's the limit. Or rather, I don't know, what's the opposite of sky's the limit? Hell's the limit? Whatever is down there. Hell is the limit. Beginning of 2024, crypto prices had already been down, I think. at the end of 2023 it wasn't a good place did you think it was going to create a more so you were taking a pure bet on crypto i guess i was taking so my my rationale on the little form here for going short micro strategy was crypto in it and look that's almost as insightful as moon and i am i'm happy to accept that i called this wrong i think the worst decision in that list is not shorting Tesla or MicroStrategy because, you know, maybe it's the year that those bets come off and then you win big.

13:18Yes. The one that's the oddest is Persimmon. Yeah. I mean, how much is Persimmon going to go up in a single year? It's a British house builder. How much can that stock move in a single year? I take the other side of that. We're not giving you back on this podcast ever again. House builders are incredibly cyclical. But is it going to double in a year? They're incredibly like a little, you get like a little faint pulse from the UK economy. That stock moves. So if you even have a, even if you have a mildly bullish view on the UK economy, like it goes from being dead to being mostly dead, right? Then that, you know, a house builder would be very sensitive to that.

13:57That's a stock, those stocks you can win on. I know because I shorted one of those things a few years ago, so. I'm incredibly bad at this game. There was one year, a few years ago, when I was long a couple of UK stocks. And I think they both went bankrupt or like one of them delisted or something. Yeah. When you go long a company that actually disappears, that is rough. So I'm really questioning whether I should play it again this year. Can I talk about my dumbest? I had like four stock picks that basically did nothing. My incredibly bad stock pick was the year. I was long, one of the stocks did the worst in all the S &P 500, which was Dollar Tree, which is a dollar store in the United States.

14:37And it was a kind of a turnaround play. They just fired a chief executive. There was an activist investor in it. It's a stock that has made a lot of money in the past. A business model that has made a lot of money in the past. And I figured, you know, this is a turnaround story. A lot of bad stuff has happened. They did a bad acquisition. Maybe I could, this is, there's some upside here. What I completely failed to understand was how rough the combination of the K-shaped recovery in America, meaning everybody has done the recovery has been great in America for everyone except the bottom decile of households.

15:14And that's the bottom decile of households is the core customer of Dollar Tree. And the stock was just taken out to the woodshed and beaten up. It was appalling. Chopped into tiny, tiny bits. The moral of this terrible story, everybody, is that picking stocks is really hard. Also, the other moral of this story is this is just a game. This is definitely not investment advice. If you follow investment advice from any of us, you're even more of an idiot than I am. I mean, there is a serious point that you just made, Katie, that is worth repeating. Like if you want to have any chance to, in a sustainable and responsible way, pick stocks, it is so much work.

16:01Right. You have to really, really know what you're buying and you're reading and you're calling people and you're doing research and you are. Because otherwise, you know, it's just too hard. You get caught it out. You can't casually be like, oh, dollar stores sound like an interesting play. No. But even if you put in the work, you might still get carded out. You might still get carded out. Oh, 100%. 100%. But the work is like, even to play the game in a reasonably respectable way, work is table stakes. That's your ante, right? Yeah. If you listeners want to play the game, then the full story on this whole sorry affair will be in the FT this weekend.

16:41You should check it out. There will be a link in there somewhere that you can put your bets in for this year. Kadim, hats off to you. You've done pretty damn well. Kadim is banned from unhedged forever. It's been nice having you on the show once. Canceled. You've got to go for the, you know, the volatility, the big hits. Fair enough. You know, hedge funds, if you're listening, Kadim's right here. He's amenable to generous office. Waiting for your call. Waiting for your call. We're going to be back in a sec with, if you can believe it, Long Short.

17:26All righty, now it's time for Long Short, that part of the show where we go long, a thing we love, or short, a thing we hate. Rob, do you have one ready? I do have a short, and this is a preview of the show we're going to do shortly about the new presidential administration. I am short strategic ambiguity. I think that the new administration is going to keep us guessing about a lot of stuff. And I think in a little while, markets are going to get pretty tired of strategic ambiguity. They're going to want to know what the actual policies are. So I am thinking strategic ambiguity has its place in politics.

18:09It can be powerful, but it has a pretty short half-life in markets. Mm hmm. I am long of ways to look incredibly stupid in a range of media formats. So there's this podcast, there's the article coming up this weekend in print and online. I'm thinking maybe we should do like a projection onto the side of the FT's London headquarters or maybe. Yes. Fly a plane over London with one of those big banners on it saying Katie is a huge idiot. But it is better in our job, Katie, to be wrong in an interesting way than right in a boring way. I think that's really true. If you have any other ideas for me, ways I can look stupid in the public format, please email unhedged at ft.com.

18:57Kadim, hero of the hour, what are you long or short of? This is going to make people think that I'm so incredibly basic. Yeah. But I am long the Gales Bakery chain. and for non-British listeners the Gales Bakery chain is a very expensive kind of fancy bakery and you find it in all the nice areas and it's actually sort of a badge of honour if you have a Gales in your area I mean not to boast but we just got one in Walthamstow oh very good didn't the last fancy British baking chain like collapse in an accounting scandal that was a whole other thing that was a whole other thing this one really does have customers and it's amusing how long the queues are.

19:40And you think, goodness, you're just buying croissants. Why is there a long queue? And yet you find yourself in that same queue. And when you finally get in, you think, ah, this is lovely. How much is a croissant? It's so expensive. It's the most expensive. I'll undoubtedly get it wrong. It's probably four pounds or something like that. You should save your money and put your money in your own sodding portfolio. Seriously, imagine if you'd done that. You'd be a bazillionaire. if you'd foregone gales and bet on yourself instead. I'm going to go and comfort eat some croissants. Let's wrap it up here.

20:11Listeners, we will be back in your ears to talk Trump, Trump, Trump, Trump, Trump on Thursday. Unhedged is produced by Jake Harper and edited by Brian Erstad. Our executive producer is Jacob Goldstein. We had additional help from Topher Forges. Cheryl Brumley is the FT's global head of audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn, and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30-day free trial is available to everyone else. Just go to ft.com slash unhedged offer. I'm Katie Martin. Thanks for listening.

21:04Thank you.