Welcome to the WC, wherein you’re trapped in my mind for eight to ten minutes weekly.
We’re deep into Alts.co holiday programming:
- Two weeks ago: The best investments of 2024
- Last week: Spend time with your family (whether you want to or not)
- Today: The worst investments of 2024
- Next week: What to look for in 2025
It’s a new year flush with possibilities. Let’s look at the most catastrophic investments of 2024 to see if we can’t do better in 2025:
- Latin America
- Cleantech
- Hedonova
- Japanese Whisky
- Round Robin
Before you begin, check out the worst investments of 2023 and the worst investments of 2022.
Let’s go.
Table of Contents
Latin America
Latin American equities, bonds, and currencies have had a terrible 2024 for a variety of different reasons.
Brazilian equity indices were off around 25% this year mostly due to its currency imploding. The Real lost 28% in 2024 against the USD. Not to be outdone, the Argentinian peso was off 27%, the Mexican peso dropped 18%, and the Venezuelan Bolivar did this.
Argentina continued its painful reform under its chainsaw-wielding head of state. Inflation plummeted and bonds rallied, but unemployment soared and poverty has surged.
And while monthly inflation is down to 2.7%, annual inflation is still nearly 200%.
However, fiscal shock is still working, if only from a top-down point of view.
On the ground? A country in deep trouble.
Milei slashed university, pension, public works, and all cultural programs. This led to “consumer spending falling 20% percent in the past year and poverty rates soaring to a two-decade high of 52.9% in the second half of last year.”
The single-minded obsession with putting inflation to the buzzsaw sword is working, but economies are multifaceted things, and butterfly wings in the capital can cause tsunamis in the provinces.
Cleantech
This is a funny one because increased solar efficiency leading to lower energy costs has been one of 2024’s biggest wins.
But lower costs for consumers and builders almost necessarily mean reduced profits for producers and manufacturers.
The commoditisation of solar panels, in particular, has hit share prices hard as capacity and production go through the (solar paneled) roof.
Cleantech funds are dominated by equity shares in manufacturers, which is a big part of the problem.
Because manufacturing a commodity — and even developing the tech behind it — puts you at the ass-end of the smile curve.
This curve applies to anything that can be commoditized–from solar panels to coffee machines to roof tiles. As long as most fund manager cleantech allocation goes to production, it’ll continue to be a dark day for investors.
Oh yeah, incoming American president DJT is doing his part to drive down cleantech prices too.
Hedonova
Longterm (alleged) scam Hedonova has finally been charged by the SEC.
I broke down exactly how they pulled it off earlier in 2024, and we’ve set up a support group for investors who Hedonova has burned.
Drop me a line if you’ve been scammed and would like to join.
Japanese Whisky
From 2014 to 2021, Japanese whisky soared 600%. Since then? Not so much. The East Asian spirit — along with most other whiskies — has been in a freefall, reaching back to mid-2023.
Premium bottles — those fetching $1k or more — were down 32% in 2024.
The trend reversal is due to several converging factors.
Market Saturation and Softening Demand
After years of explosive growth, the Japanese whisky market has begun to show signs of saturation. Demand has started to soften as more brands enter the market and consumers become accustomed to the product’s availability. The initial scarcity that drove much of the category’s popularity has diminished, leading to a normalization of sales.
Global Whisky Market Downturn
The decline in Japanese whisky sales is part of a broader trend affecting the global whisky market. In 2023, whisky exports from various countries experienced significant declines:
- Scotch exports: volume down by 20% in the first half of the year
- Irish exports: value down by 14% for the year
- US off-trade spirits sales dropped by 4.7% for the year until November
Export Decline
Official figures from Japan Customs show that whisky exports from the country declined in 2023, ending a 15-year growth streak. The total volume exported decreased by 9% to 12.9 million liters, while the total value fell by 10.7% to just over 50 billion yen compared to 2022
Price Increases and Economic Factors
Major players like Suntory hiked prices across their entire range. Some bottles saw prices double.
Shift in Consumer Behavior
The whisky collector’s market also slowed, with auction houses reporting that the prices for rare bottles dropped by up to 30%. This suggests a shift in consumer behavior, moving away from speculative buying and towards purchasing for consumption.
Competition from Other Spirits
The rise of other spirit categories, such as mezcal and Tequila, has taken share from whisky in the premium spirits space.
Round Robin
Manchester United had a torrid 2024 both on and off the pitch. Mired solidly in the bottom half of the Premier League at Christmas, the team’s stock is also in the gutter. The team’s noisy neighbours, Manchester City, have also been delightfully awful.
Sticking with sports, the never-ending COVID hangover just won’t go away for niche sports card collectors.
Nearly every one of CardLadder’s indices was down double digits in 2024, though basketball, football and tennis cards posted single-digit gains. Pokemon cards were up a tidy 10%.
Speaking of hangovers, everything coming out of a wine bottle was cheaper in 2024. All twelve Liv Ex indices posted a loss this year.
Sticking with expensive stuff that’s maybe not worth it, Banksy continued to be a terrible investment. Up 200% from 2020 to 2021, his limited prints were off 25% in 2024. According to the Banksy Index on MyArtBroker, his pieces are off some 62% since their 2021 peak. Mainstream doesn’t suit him.
Remember the longform piece I did on how climate change will impact American residential real estate prices 16 months ago?
No? Maybe you should have pretended to pay attention, because all the places I said to avoid have done terribly since then.
The botton seven markets in America in 2024 were in Texas, Florida, and Louisaina. Fourteen of the bottom fifteen were in states I suggested you avoid (adding in Arizona and Colorado).
Texas and Florida, the worst offenders, were at the bottom for different reasons. Texas is adding housing at a remarkable rate, which is adding quite a lot of supply and driving down prices. Florida, on the other hand, offers uninsurable homes, which drives down demand. And suppy too, I guess, if you only include “insurable homes” as supply.
That’s all for this week; I hope you enjoyed it.
Cheers,
Wyatt
Disclosures
- Our amigos at Alto IRA brought this issue to you