Two Doubles
Emerging markets emerging
April 2, 2025
ETFs can be a good way to get thematic exposure while you search for better firm-level ideas to capture that theme. For emerging markets, the Freedom 100 Emerging Markets ETF (FRDM) is less exposed to China and its potential military conquests. Its top position is 8% in Samsung followed by a more reasonable 6% in TSM then 4% in Bank Polska. The entire world will probably have a rough day if China follows through on its increasing belligerence towards its neighbor, but FRDM will fare better than my S&P Emerging ADRs.
I’ve been perplexed by how gold miners have failed to keep up with the physical gold price over the past several years. In part, it is because a lot of gold miners are mismanaged companies. In part, it is because gold has been used for purposes that gold mining stocks can’t fill (Russia, for one example, has been flying loads of gold around the world to keep its supply chain intact during wartime sanctions). But I bet this will mean revert this year; the VanEck Gold Miners ETF (GDX) is a convenient way to express such a bet while I look for better ways to express it via specific stocks.
Miners are a great asymmetric bet according to Chris MacIntosh who wrote that,
If gold’s current price surge is impressive, gold miners are behaving like they missed the memo. Take the GDX ETF. It’s trailing gold like a hungover intern on a Monday morning. Yet the underlying businesses? Throwing off free cash flow yields of 8-10%. Some with 35% margins. They’re trading cheaper than they have in 40 years. Why the disconnect? Simple: central banks don’t buy miners. They buy gold. But institutions will. And retail? They’ll FOMO in last, as they always do…buying junior miners on margin while CNBC runs breathless headlines about gold’s “parabolic” move. Right now, miners are one of the few sectors with sky-high margins, low debt problems, and valuations stuck in 2015. That won’t last.
Biotech is one of my favorite places to look for M&A targets at this moment. Pharma needs to replenish its pipeline. M&A is far faster than organic drug development. The S&P Biotech ETF (XBI) has gotten punished over political fears so far this year. It could climb out of the hole as M&A targets get scooped up for big premiums.
Energy is a cyclical sector in general. Stocks look cheapest at the top of their cycle and look most expensive at the bottom. Outsiders tend to get the most enthused right when industry insiders are most wary and vice versa. Refiners generally track the overall industry, but they diverged over the past two quarters with energy up 22% and refiners down over 5%. I expect that spread to mean revert over the next year. The VanEck Oil Refiners ETF (CRAK) is one way to express that.
July 10, 2026
Bonds are sleepy. Refiners and gold miners are solid. Biotech breaking out. Emerging markets emerging. These tools are simple ways to get broad exposure. Fine. I continue to like emerging Asian, gold miners, refiners, and biotech better than the overall equity market but what were extraordinary opportunities a year ago are now merely ordinary. And each category has specific examples within them better than the overall ETF. Here are specific securities I have long preferred within the refiners, biotech, and gold miners.
For emerging market exposure, I like Frec’s direct index.
Each of the specific firm-level securities outperformed their respective sectors while benefiting from sector tailwinds.