Money & Markets: Don’t feel the FOMO; just wait for the next big thing

In investing it is always better to be too early to the party than too late. For me this is fortunate as I am always too early for everything including trains, appointments and investments. Kicking my heels strikes me as far better than the torture of FOMO (fear of missing out). FOMO drives many people to lose their shirts because it impels them to jump into a market at or near the top, only to see their money go down in flames.

FOMO is a systemic weakness and a very costly one for many investors, both private and institutional. It has been a pestilence in the crypto bull market which has now crashed. While premature speculation merely leaves the investor lying in wait for the inevitable, FOMO tends to leave participants destitute.

The FOMO-impaired, and they know who they are, need to embrace the fact that there is always the ‘next big thing’ on its way. FOMO should be avoided and focus set on the next market fashion just over the horizon.

Markets fashions and technology developments are two sides of the same cliché. There will be a technology layer in the mix of a boom, bubble, bust in the markets. Stock market booms and bubbles are technology-driven and technologists have been responsible for the boom, bubble, bust cycles as far back as you want to look. Some may think that this is some kind of condemnation but actually there is nothing wrong with the boom, bubble, bust cycle, and its bad reputation comes from the screams of those crushed worshippers that fall under the market’s juggernaut. That ramshackle market juggernaut, while often rickety and erratically propelled, is what got us where we are today.

So while crypto leaves the throne of current market craze and bubble, what is the next big thing? What Asimovian magic will enthral the markets next?

For me, the clear and standout front-runner is the hydrogen economy.

The hydrogen economy is an intuitive solution to the thorny problem of energy storage. Alternative energy is the future, like it or not, with hydrocarbon sources of energy to be replaced for much of the world’s energy needs. The trouble is ‘sustainable’ energy, whatever you want to call it, needs to be stored because it doesn’t have the lovely switch-on-and-off functionality of fossil fuels. Wind blows in the afternoon, the sun shines with all kinds of unpredictability, tides flow predictably but for bounded periods. There is plenty of energy to be harvested on a windy, sunny day, with the tide going out, but to store that bounty you need a simple cheap mechanism of storage and delayed utilisation.

Batteries seem like a good idea, but when you consider the batteries themselves and the scale, the problems become apparent. Companies like Tesla have done great work solving problems of peak demand with large battery farms, but it is easy to think that hectares upon hectares of lithium batteries or, worse still, lead batteries is going to prove problematic for a world with eight billion electricity customers.

This is where hydrogen comes in. While not exactly a great idea for air transport, hydrogen seems like a pretty terrific solution to energy storage. Connect your windmill to a gadget that cracks water into oxygen and hydrogen, store the required gases in the most efficient manner possible and then turn them back into electricity via a fuel cell.

Fuel cells are going to be a big thing on the stock market. There are already players with billion-dollar valuations on the technology- and risk-crazed US markets.

Many fuel cells use exotic catalysts and many are from the family of platinum group metals or PGMs. These precious-metal commodities are starting to have a run but that has a long way to go and will propel their miners and the technology companies with PGM IP already locked in.

There are a whole host of reasons why the hydrogen economy will not be with us immediately, but that has never stopped a good market boom before, because the stock market lives for narrative about the future and its riches, and the hydrogen economy narrative is tremendously strong and ripe for hosannas. There are untold billions in play to solve the energy storage problem, and hydrogen is going to be an important part of the solution and explode a whole new generation of companies into existence for traders and investors to place their bets on.

For doubters, the thing to do is watch the trading of platinum group metals, because these will act as an indicator to how the hydrogen economy is unfurling. Only 180 tonnes of platinum are mined a year and to double the upside for this precious metal, platinum is an obvious asset haven from the inflation which is flowing from the fabulous Covid-19 money dump the world’s central banks have hosed into the world economy.

How the hydrogen economy will pan out is anyone’s guess, and that is exactly what the stock market and its risk-hungry denizens love. It is also a ‘right on’ theme in this neo-puritanical world.

That hydrogen boom, bubble, bust cycle will come this way too, and if you feel FOMO when you spot the trend then you’re already too late. Don’t forget, there will be another one just over the horizon heading your way.