To The Moon

$Albemarle(ALB)$

Today, we’re going to revisit Albemarle, ticker symbol ALB. I’ve had a ton of questions on this one lately, especially with the recent selloff, so I figured it was time to take another look and share my current thinking.

Now, just a quick disclaimer: this isn’t individual investing advice. I’m not telling you to buy, sell, or hold anything. What I’m doing here is just walking you through how I personally analyze stocks, how I think about portfolio construction, and how I interpret risk. Always do your own research or talk to a financial advisor if you’re making investment decisions.

Why We're Talking About ALB Again

Over the past four trading days, I've posted four buy videos in a row. This one, however, is not going to be a buy video.

What triggered this revisit was that I noticed Albemarle showed up today as one of the worst performers in the entire S&P 500, down almost 13% at one point—more than what most of us would consider a “normal” down day. That stood out.

Now, just to give you some context: Albemarle was actually one of the very first stocks I analyzed when I relaunched this channel back in late 2023. That’s about a year and a half ago now. And ever since then, I’ve continued to get questions about it—what I’m doing with the position, whether I still like the company, and if I’m planning to buy more.

So let’s dig into what’s changed, what hasn’t, and what I’m watching going forward.

Revisiting the Original Thesis

The framework I used back then—the way I approached Albemarle as a cyclical play—still holds up really well.

That said, the reasons underneath the framework have evolved, and the current macro environment is very different from what it was in late 2023.

When I first bought ALB, we were coming off the COVID stimulus boom. Rates were low, liquidity was everywhere, and consumers were out spending, especially on durable goods. That surge in demand drove lithium prices way up, which made Albemarle’s earnings skyrocket temporarily.

Of course, when you have that kind of boom in a commodity-related business, a bust usually follows. And I said exactly that in the original video—this was a classic supercycle situation, and a bust was inevitable. The question wasn’t if earnings would fall, but how far and how fast.

The Tesla Signal & Lithium Weakness

In fact, last summer I made a separate video where I said that Tesla shareholders should be worried about Albemarle’s decline. Why? Because if lithium prices are collapsing, that usually means EV demand is weakening. And if demand for EVs is going down, Tesla is going to feel it—sooner or later.

That video was more focused on Tesla, but the point was this: Albemarle can be an early warning signal for the broader EV industry. And now, a few quarters later, we’re seeing that play out.

EV sales are softening, and lithium prices have fallen off a cliff. That’s hitting Albemarle hard.

Earnings Expectations: Then vs. Now

When I made that first video, I mentioned that Wall Street analysts were still way too bullish. They expected Albemarle to continue posting earnings way above historical norms. I pushed back on that—I said that earnings could easily revert to pre-2020 levels.

Well… it turns out I was too optimistic myself. Analysts were predicting something like $20+ in EPS. I figured maybe we'd fall back to around $6. But what actually happened? They lost money. Nearly $2 a share in losses. That’s far below even my conservative scenario.

My Position: Still Holding (But Here’s Why)

Now, here's the part most people have been asking about: am I still in the position?

Yes—I’m still holding the original Albemarle position I opened in late 2023. But I haven’t added to it, and I’m not planning to until we get some clearer signals.

That position was sized very intentionally. I knew there was elevated risk, so I took a 0.1% portfolio position—not 5%, not 10%. So even though the stock is down around 60%, the overall portfolio impact is around -0.06%.

And this is where position sizing really matters. You have to plan for downside scenarios, especially in commodity and cyclical plays. If you get the timing wrong—and with cycles, everyone gets the timing wrong at some point—you don’t want it to wreck your portfolio.

What Changed in the Macro

So what changed between then and now?

One big factor is the political and macroeconomic shift. Back in 2023, a lot of recession risks were being papered over by government support. That support is now gone.

The administration has changed, and now instead of cushioning economic risks, they’ve leaned into a more aggressive stance on trade. And that brings us to what I think is the real elephant in the room: tariffs.

We’re potentially on the brink of a full-scale trade war with China. There’s talk of 104% tariffs being slapped on certain imports by midnight tonight. That’s a big deal.

China is one of the largest buyers and processors of lithium. If their economy slows down—and it already is—and now they’re dealing with even more trade restrictions, that impacts the global lithium supply chain, demand forecasts, and ultimately Albemarle’s business.

When Would I Add More?

Here’s the key: I’m not buying more yet. I’m not even close.

In a situation like this—when you’re deep into a supercycle bust—you don’t want to try to pick the bottom. That’s not a smart game to play. Instead, I’m waiting for a technical signal that the bottom is in.

Something like:

• A double bottom pattern

• A breakout above the 200-day moving average

• Stabilization in lithium prices

• Macro clarity around trade policy or EV demand

We haven’t seen any of those yet. If anything, we’re still seeing more deterioration.

And sure, if ALB goes to $50 and it is the bottom, and I didn’t add—so what? If I wait and the stock stabilizes at $65 and then I add a second position there, that’s still fine. My average cost might be $80. And if the stock returns to $160, that’s a 100% return.

And $160 isn’t even the peak—it’s just the last cycle high. The supercycle high was over $300.

Why I’m Not Buying More Albemarle Yet — And What’s Changed Since the Last Article

There’s one thing I didn’t really touch on in the last article, and that’s because the market hadn’t officially entered a bearish phase yet. But as I’m recording this—after the close on April 8th—we actually did dip into bear market territory. That’s a significant shift.

And here’s the thing: during the past year, it’s been extremely difficult to find good opportunities in the broader market. I mean, I scan hundreds of stocks a week, and for the last 12 months, I could count the S&P 500 stocks worth seriously considering on one hand. Maybe one or two names popped up that had a reasonable margin of safety.

That’s exactly why, even though I’ve produced hundreds of videos, you haven’t seen many buy videos from me over the past year. But now, just in the last four days, we’ve had four new buys. Why? Because prices are finally starting to reflect reality—valuations are coming down, and a few select companies are starting to look reasonably priced again.

Now to be clear, they’re not “screaming buys” yet—most of them aren’t super cheap—but you rarely get to buy the absolute bottom. If we get some clarity on the trade front, say, over the next month, some of the worst-case scenarios might not play out. And that means the market could recover a lot faster than people expect. So starting to layer into quality names—ones with visibility, strong balance sheets, or structural tailwinds—makes sense here.

But Albemarle? This isn’t one of those situations for me.

Why I’m Not Adding Right Now

Albemarle is a company that’s:

• Losing money

• Operating in a heavily cyclical industry

• Facing major uncertainty around supply chains and end-user demand

When you layer all that together, it’s not something you want to double down on until you can see some sort of light at the end of the tunnel.

Could the stock go from $50 to $25? Yeah, absolutely. That’s the nature of cyclical businesses in downturns—especially commodity-driven ones. And with the lithium supply chain under pressure from both macroeconomic weakness and geopolitical friction, there’s just a lot that could still go wrong.

If, on the other hand, it collapses to $10—which isn’t impossible in a drawn-out global slowdown—then we might have a situation where you’re buying extreme pessimism. And if you already took your first position back when the stock was at $120, and your next one is at $10 or $20, and the stock recovers even modestly to $60 or $100, you can still generate a solid return.

But to get there, you have to survive the volatility. You have to avoid throwing good money after bad until you have some confirmation of a bottom—whether that’s technical, fundamental, or macro-driven.

Positioning Cyclicals in the Portfolio

And look, even though this is the Cyclical Investors Club and I specialize in these kinds of businesses, they’re not always the best choice—especially not for most investors, and especially not in uncertain macro conditions.

Cyclicals are great when you’re trying to add alpha at the margin. They offer those sharp dislocations where, if you time it right and understand the cycle, you can get multi-bagger returns in a short window. But they’re also volatile, unpredictable, and prone to long drawdowns.

That’s why I often say: cyclicals are there to complement your portfolio, not anchor it.

When a broader recession hits, your best bet is actually to buy secular growth companies—those rare businesses that can grow through the cycle, that you can hold for a decade or more. The challenge is: we haven’t had one of those once-in-a-generation recessions since 2008. So we haven’t had many opportunities to buy elite compounders at great prices in over 16 years.

But if we do get one of those generational pullbacks—and if that’s what we’re walking into now—then that’s where you want to focus first. Prioritize rare, high-quality opportunities over high-risk turnarounds. Cyclicals like Albemarle? They can wait.

Where ALB Fits In—Eventually

I’m not saying I’ll never add to Albemarle. I still have plenty of cash on the sidelines. If we hit a clear bottom, and things start to stabilize—maybe there’s a double bottom, or lithium prices start recovering, or trade relations with China settle down—I’m absolutely open to averaging down. But that has to be the right setup.

The goal here isn’t to be a hero and catch the exact low. The goal is to be strategic, disciplined, and make sure that each dollar of capital is going where it has the highest risk-adjusted return.

If ALB is trading at $20 and we have a clearer technical bottom forming, that’s the kind of moment I’d look at using some of that 25% cash position. But today? With the macro and technical picture this weak? It’s a hard pass.

Conclusion

So here’s the summary:

• I’m still long ALB, but it’s a small position, and I’m not adding right now.

• Earnings have fallen harder than expected, but that risk was always part of the thesis.

• The real risk now is macro: slowing global demand, rising tariffs, and a possible trade war.

• Bottom-picking is dangerous in a down cycle. I’m waiting for a clear signal before averaging in.

• If the technicals turn, the macro outlook improves, and lithium prices stabilize—then it’ll be time to consider adding.

Until then, patience is the play.

Let me know what you’re doing in your portfolio—are you starting to dip into cyclicals again?Are you watching lithium prices or the EV space more broadly? Or are you still waiting for confirmation from the broader market? Drop your thoughts in the comments.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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