Andy Hoese from Finding Value Finance discusses current trends in stock and commodity markets, value investing strategies, and emerging opportunities in undervalued sectors.

The Big Picture: Stock and Commodity Markets in 2025

Hoese begins by sharing his high-level perspective on the current state of the markets. He believes that the stock market, particularly the NASDAQ and S&P 500, is showing signs of a potential topping pattern due to overvaluation. Rising inflation and interest rates are expected to weigh on these markets, leading to sideways trading rather than continued upward momentum. In contrast, Hoese sees significant value in commodities, which he considers undervalued and poised to benefit from money flows shifting away from overvalued equities.

Using Elliott Wave analysis, Hoese suggests that commodities are in the early stages of a multi-year bull market. He identifies the 2020 bear market low as the start of a "wave one" rally, with the market currently at the bottom of "wave two" and preparing for a significant "wave three" upward move. This shift, he predicts, will be driven by a slowdown in stock market inflows and increased investor interest in commodities, particularly precious metals and energy-related assets.

Unconventional Ratios and Emerging Opportunities

Hoese is well-known for using ratios like gold-to-silver to identify undervaluation. In this interview, he reveals several lesser-known ratios and commodities that he believes are currently attractive:

• Metallurgical and Thermal Coal: Hoese highlights Newcastle Coal Futures as "incredibly attractive" when compared to gold. He sees coal as a key beneficiary of growing energy demands, particularly for artificial intelligence (AI) and electric vehicles, which require significant electricity production.
• Iron Ore: Currently at a bottoming phase, iron ore is another undervalued commodity with potential for upward movement.
• Lithium and Rare Earth Metals: Both are in a bottoming phase and starting to turn higher, driven by their critical role in battery production and technology.
• Fertilizers (Urea, Ammonium, Nitrate): Hoese prefers these over potash due to their historically explosive price movements. He also notes ammonium’s potential as an alternative fuel source for large-scale shipping, especially as oil and natural gas face supply constraints.

Hoese emphasizes that these commodities are inflation-sensitive and likely to benefit from a resurgence of inflationary pressures. He also remains bullish on oil, despite its popularity, as it aligns with his strategy of investing in undervalued and overlooked sectors.

Uranium’s Role in the Commodity Bull Cycle

Uranium remains a focal point for Hoese, who believes it is transitioning from the bottom of "wave two" to the start of "wave three" in its bull cycle. He expects uranium to experience significant growth, potentially alongside other commodities, as global energy demands rise. Hoese notes that uranium’s price movements are interconnected with other commodities, and a slowdown in the broader stock market could drive more capital into this sector.

Silver: A Potential Breakout Star

Silver is another commodity Hoese is excited about, particularly if interest rates continue to rise. He draws parallels to the 1940–1980 period, when silver experienced dramatic gains. Hoese predicts that silver could break out of its current consolidation pattern (a "cup and handle") and reach multi-hundred-dollar levels if inflationary pressures and rising interest rates persist.

ETFs vs. Direct Investments

When it comes to gaining commodity exposure, Hoese prefers direct investments in physical metals or individual commodity companies over exchange-traded funds (ETFs). He argues that ETFs, which often include large, stable companies like Chevron or ExxonMobil, tend to underperform the underlying commodity during bull markets. In contrast, smaller companies or physical metals offer greater leverage to price movements, providing higher potential returns. For investors seeking safety, Hoese recommends physical metals, while those willing to take on more risk should consider individual equities with strong upside potential.

Commodities to Avoid

Hoese advises avoiding "soft commodities" like wheat, corn, and soybeans due to their shorter lead times for production, which make them less likely to experience significant price mismatches during bull markets. Instead, he focuses on commodities with long lead times—such as uranium, oil, and metals—where supply constraints can drive substantial price increases.

Synergies with Other Asset Classes

Hoese links commodity cycles to broader economic trends, particularly fiscal spending and monetary bank lending. Historically, real estate booms driven by bank lending have led to commodity shortages as money floods into the system. While fiscal spending is currently the primary driver, Hoese believes that a resurgence in bank lending (if interest rates were to fall) could further amplify commodity price increases. He predicts that commodities will outperform when other asset classes, like stocks and bonds, underperform due to overvaluation and rising interest rates.

AI and Data in Cycle Analysis

While Hoese acknowledges advancements in AI and big data, he maintains a straightforward, value-driven approach to investing. He likens his strategy to Warren Buffett’s, focusing on commodities that are historically cheap relative to financial assets (e.g., using metrics like the CAPE ratio or Buffett indicator). AI, he argues, will increase demand for energy and commodities by reducing production lead times and driving innovation in manufacturing. This dynamic reinforces his bullish outlook on commodities, as they are the "ingredients" for AI-driven products.

Timing the Market: A Long-Term Approach

When asked about identifying cyclical peaks to exit positions, Hoese emphasizes that he is focused on the long-term secular trend rather than short-term cyclical fluctuations. He advocates a "buy the dips, hold the rips" strategy, arguing that attempting to time short-term pullbacks often reduces overall returns due to taxes and missed opportunities. As an example, he cites Centrus Energy, a uranium company that has risen over 100x since its 2020 bottom, highlighting the potential for outsized gains by holding through market cycles.

Hoese dismisses short-term trading based on sentiment or news flows, as these are difficult to predict accurately. Instead, he focuses on undervalued assets with strong fundamentals, believing that commodities are currently mispriced and poised for significant gains through the 2030s.

Cash Positioning in 2025

Hoese does not advocate holding large cash positions if attractive opportunities are available. Throughout 2025, he has been actively deploying capital into undervalued sectors like coal, lithium, and other commodities showing strong technical and fundamental signals. For investors without steady income, he suggests maintaining some cash reserves for flexibility, but his approach prioritizes capitalizing on current opportunities over waiting for potential market pullbacks.

Final Thoughts

Hoese’s insights underscore a disciplined, value-driven approach to commodity investing. By focusing on undervalued sectors with long-term potential, avoiding overhyped assets, and leveraging historical cycles, he offers a compelling case for commodities in 2025 and beyond. His emphasis on patience, strategic timing, and direct investments provides valuable guidance for investors navigating today’s complex markets.

For more insights from Hoese, visit finding-value.com for Q&A sessions, or follow him on YouTube at Finding Value Finance and on Twitter at @finding_finance.

You can find the interview with Andy Hoese here https://youtu.be/904NJRi-VHI?si=Gsn80v7Ea02cZ1v5

Disclaimer: This interview is not a recommendation to buy or sell any shares, products, or services. Always conduct your own due diligence and consult a financial advisor.