Larry McDonald — The Paper Wealth Era Is Over; The Great Rotation Has Begun

Chipotle is the burrito chain. The stock has roughly halved. His argument is about the "K-shaped" economy: the wealthy are earning a lot of interest on their cash, but the bottom 60% of households have almost no savings and are pulling back hard — so any business that depends on ordinary consumers has been hammered.

That's why he likes it now. Late in the year, investors dump their losers to book a tax loss (selling at a loss lowers the tax bill), which pushes already-beaten names even lower. He sees that forced year-end selling as a chance to buy a strong brand cheap.

Target is the big-box retailer. Same story as Chipotle: a solid consumer business beaten down because the squeezed middle and lower-income shopper has cut back. He calls it "a great value toward year-end" — i.e. cheap because of tax-loss selling, not because the company is broken.

Diageo owns top global liquor brands — Johnnie Walker, Guinness, Smirnoff. The stock is the cheapest it has been in decades, trading below its long-term average price trend (he points to it being below its "200-month moving average," a multi-decade smoothed price line — meaning it's at a historic low).

He describes the selling as a "category-five hurricane" of capitulation — the point where the last discouraged holders give up and dump shares, which usually marks a bottom. His logic is Warren Buffett's: buy hall-of-fame brands when they go on sale. (The bear story — young people drink less — is real but, he argues, already in the price.)

Rio Tinto is one of the world's largest miners, including copper — the metal data centers and the power grid can't be built without. His punchline: you could fit about 34 Rio Tintos inside Nvidia's market value, yet Nvidia's buildout needs Rio's copper. In other words, the picks-and-shovels supplier is dirt cheap while the chipmaker is enormous.

One caution he flags: it's "overbought" short-term (it has run up fast and may be due for a breather), but he still sees it as very cheap and under-owned for the multi-year rotation into hard assets.

Alcoa makes aluminum. He notes the market "hated Alcoa a year ago." His thesis is that aluminum is a key material for building out the electric grid and data centers — so a metal nobody wanted becomes a beneficiary of the AI-power buildout.

LyondellBasell is a big chemicals/plastics maker. He sees the same "category-five" capitulation as in Diageo — the stock has fallen so far below its normal trading range (an extreme distance under its "lower Bollinger band," a line that maps how far prices usually stray from average) that it signals sellers are exhausted and a bounce is likely.

Tilray is a cannabis company. The whole sector is a "bombed-out village" after years of decline plus year-end tax-loss selling. The catalyst: reports the U.S. may reclassify cannabis to "Schedule III," a less-restrictive legal category that would ease taxes and banking for the industry — news that already popped these stocks ~30%.

He frames it as buying a washed-out sector on a real policy catalyst, and says you can keep buying the dips for the next 6–9 months.

Trulieve is another U.S. cannabis operator. Same trade as Tilray: a beaten-down sector turning up off a very low base on the rescheduling news.

GDX is a basket of gold-mining stocks. It's a core holding he's owned for 3–4 years. His key point: the entire gold-and-silver miner group was tiny — about $290 billion a year ago — so when a relatively small amount of money flowed in, the sector rocketed ~140%. Small, cheap sectors move violently when capital finally arrives.

SIL is a basket of silver-mining stocks. He's still long. He watches the gold-to-silver ratio (how many ounces of silver one ounce of gold buys) — it's around 68, and in a real commodity bull market it tends to fall toward the high-50s/low-60s, meaning silver outruns gold. That leaves room for silver miners to keep rising.

Weatherford is an oil-services company — the firms that drill and service wells for the oil majors. He's adding it into the most bearish energy sentiment of the year. The driver: a U.S. push to ramp up offshore drilling in the Gulf, which needs exactly these service providers.

OIH is a basket of oil-services stocks (Schlumberger, Weatherford and peers). He's buying into peak pessimism — futures-market data showed traders extremely bearish on oil, and November is seasonally one of the worst months for crude. Buying when everyone is giving up is the bet.

Occidental is a large oil producer (and a Buffett holding). It's one of the oil names he's adding alongside the services companies, into the same washed-out, everyone-hates-energy moment.

Antero is a natural-gas producer. He calls it a "free-cash-flow machine" — it generates far more cash than it needs to run, has paid down debt, and used the spare cash to buy back 5–10% of its own shares (which raises each remaining share's claim on the business). His bigger theme: AI data centers need huge amounts of power, and cheap U.S. natural gas is how that gets fed.

Range is another natural-gas producer with the same profile as Antero — lots of free cash, shrinking debt, buying back stock. He sketches a case where it could throw off roughly a 15% "free-cash-flow yield" (the cash it generates equal to about 15% of the company's value each year — a very high payout).

Energy Transfer is a pipeline operator — it owns the "toll roads" that move natural gas around the country, collecting fees on the volume. It pays an ~8% dividend and has doubled that payout over four years. He likes it as the infrastructure that physically delivers the energy AI demands.

FCG is a basket of natural-gas company stocks — a one-click way to own the whole nat-gas-equities theme. He says this was the consensus 2026 idea at his Palm Beach investor dinner: data centers are being moved to where cheap gas is (northern Texas), and U.S. gas exports are booming.

Core Natural Resources is a coal miner. "I love the coal," he says: it throws off roughly a 15% free-cash-flow yield (cash generated each year worth about 15% of the company) and bought back about a quarter of its own shares this year — both signs of a cheap stock gushing cash. Coal still powers a lot of the grid feeding AI.

Schlumberger is the largest oil-services firm. He'd "rather own Schlumberger than Exxon or Chevron" — he prefers the company that services the wells over the majors that own the oil. It's trading below its long-run average price trend (its "250-week moving average"), and it's positioned for the U.S. offshore-drilling push he expects.

IBIT is the iShares fund that simply holds Bitcoin, so you can own it in a normal brokerage account. To him Bitcoin is mainly a "liquidity trade" — it rises and falls with how much easy money is sloshing through the system (he ties it to the Treasury's cash balance), and only secondarily a hedge against currency debasement.

His specific call: the Bitcoin-to-gold ratio has fallen from 38 into the 20s (Bitcoin got cheap relative to gold), so he'd rotate some gold profits into Bitcoin while that ratio is in the high-teens/low-20s.

EWU is a basket of UK stocks — a way to own cheap "international value." His point: foreign value stocks have doubled the S&P's return this year, and over 50 years that has never been a one-year fluke — it has always kicked off a 6–7-year stretch of outperformance. UK stocks lagged the U.S. every year from 2010–20, so he thinks it's their turn.

ARGT is a basket of Argentine stocks. He bought the dip when Argentina sold off on worries about President Milei's election odds. It fits his broader theme of cheap, commodity-rich, center-right-governed Latin American markets.

Petrobras is Brazil's state oil company, which pays a very large dividend. His bet has two parts: an October election where left-leaning President Lula could be voted out (market-friendly), and very high interest rates after inflation (~15% "real" rates) that give Brazil's central bank lots of room to cut — both tailwinds for Brazilian stocks.

EWZ is the broad basket of Brazilian stocks. Same thesis as Petrobras — a commodity-producing country with an election catalyst and big room for rate cuts, fitting his 2026 hard-asset/international-value theme.

Alibaba is China's big e-commerce and cloud company. He had trimmed it near the highs and bought some back on the dip — a cheap emerging-market/value addition rather than a deep new thesis.

Goldman Sachs is the Wall Street investment bank. He mentions it as the strong side of a split in finance: traditional big banks like Goldman are rallying, while private-credit lenders are sinking. It's an illustration of the divergence, not a buy recommendation.

Eaton makes electrical equipment for the power grid — exactly the kind of "infrastructure to support the chips" he likes. The catch: it's "really rich right now" (expensive). So it's a wishlist name to buy on a pullback, not at today's price.

GE Vernova builds power-generation and grid equipment. Same as Eaton: a business he wants to own for the electrification theme, but too expensive now. He'd wait for the inevitable project delays (permitting fights, power shortages) to create a cheaper entry.

Exxon is a major integrated oil company. He's fine on it but would "rather own Schlumberger than Exxon or Chevron" this cycle — he prefers the oil-services firms doing the drilling work over the giant producers.

Chevron is another oil major. Same view as Exxon: acceptable, but he'd rather own Schlumberger and the service companies than the majors right now.

Oracle is the database/cloud giant now spending heavily on AI data centers. His warning isn't about the stock price — it's the bonds. After Oracle hiked its AI spending plans, lenders demanded higher returns to hold its debt (the debt "repriced"). He reads that as the credit market flashing caution about the AI buildout before the stock market does.

Blue Owl is a private-credit firm — it makes private loans to companies outside the banking system. The stock is down sharply. He thinks private credit is "the subprime of this cycle": loans that look safe on paper but could blow up, the way subprime mortgages did in 2008.

Jefferies is an investment bank with exposure to the private-credit and leveraged-lending world. It's the weak side of his finance divergence — sinking while Goldman rallies — because of that riskier credit exposure.

CoreWeave rents out AI computing power and is building data centers. He points to its bonds: they fell from 104 to the low-90s, pushing the yield to about 12% — the kind of return investors demand only from very risky borrowers — even though it's officially a higher-rated credit. On top of that it's projected to burn ~$15 billion of cash next year. To him it's a poster child of the credit crisis already starting.

First Brands is a private auto-parts maker that went bankrupt. The alarming detail: its "DIP loan" — a loan made to a bankrupt company against its best assets, which almost always trades near full value because it's first in line to be repaid — traded down in the 30s (cents on the dollar). That signals "atrocious" underwriting, and he believes there are 10–20 more hidden cases like it.

Nvidia is the AI chip leader and the symbol of a stock market now roughly 30% tied to AI. His issue isn't the company — it's the crowding: everyone owns it, it's enormous (about 34 Rio Tintos fit inside it), and it's the over-owned growth side of the rotation he expects money to leave.

Vistra is a power producer that has become a "hot money" AI-power favorite. He thinks these crowded momentum names "get really hammered" first in any pullback — so he'd wait for that washout rather than chase it here.

Constellation Energy is a nuclear-heavy power company, another crowded data-center-power trade. Same caution as Vistra: likely to drop hard in a selloff before it becomes a wishlist buy.

GM is the carmaker. On the surface it looks cheap (about 3.4 times a common cash-earnings measure). But it carries roughly $130 billion of debt, and he's "not comfortable" with that load. If interest rates stay high, that debt makes it a potential "value trap" — a stock that looks cheap but stays cheap (or worse) because of its balance sheet.