Macro Hive Conversations With Bilal Hafeez

Episode 305: James van Geelen on 'Haves vs Have Nots' Theme, AI and Tariffs
Date: April 25, 2025
Host: Bilal Hafeez
Guest: James van Geelen (Founder, Citrini Research)

Episode Overview

In this episode, Bilal Hafeez is joined by James van Geelen, founder of Citrini Research, to explore structural changes in markets, the “Haves vs Have Nots” theme, megatrends like AI, and the impact of political volatility and tariffs on investing. The conversation focuses deeply on investment frameworks, the risks and opportunities stemming from shifting consumer bases, and the evolving interplay between macro and micro trends.

Key Discussion Points & Insights

James van Geelen’s Unconventional Path to Finance

[01:27 – 03:48]

• Studied pre-med, became an EMT and paramedic, but burned out before medical school.
• Transitioned to business, then learned macro trading from a neighbor.
• Unconventional backgrounds often foster better investors, bringing a "beginner’s mindset" and adaptability.

“I definitely don’t think it was inevitable, but it’s definitely where I ended up.” — James [03:40]

• Skills from emergency response (structured frameworks, calm under pressure) translate well to investing, particularly in volatile markets.

“If you are prepared for a wide variety of scenarios…having a strong framework for any set of probabilities is the most helpful thing.” — James [04:32]

Equity Performance & The Power Law of Winners

[05:52 – 08:29]

• Only about 1% of companies drive most equity index performance.
• These “mega-winners” are identifiable in hindsight by aligning with observable long-cycle trends (industrialization, smartphones, AI, etc.).
• Differentiates between macro (short-to-medium term, uncertain) and equities (long-term inflection points).

“The best way to outperform in markets is to have a really well thought out view of what the world looks like in 18 months or 36 months…” — James [07:21]

Trend Investing vs. Earnings Season

[08:29 – 12:23]

• When tracking megatrends, separate trend effects from cyclical noise like earnings.
• Case Study: AI’s market hype is currently embodied by Nvidia; investors should watch for points of disillusionment while maintaining conviction in the overarching theme.
• Sentiment can swing wildly, but staying grounded in long-term themes with a macro overlay allows exploitation of market overreactions.

“Keeping yourself one step removed and still maintaining this top-down view where you can say, okay, what’s priced into these earnings estimates for Nvidia? Pretty unrealistic…” — James [10:34]

The "Haves vs Have Nots" Theme in Equities

[12:23 – 14:52]

• Over the past 10 years, the top 10% of households (by net worth or income) have disproportionately benefited from fiscal and monetary policy.
• Companies winning in this regime target premiumization and high-end consumers.
• AI and tech shifts may start to disrupt higher-earning white-collar jobs, changing the risk profile for the “haves.”

“There’s just been an overwhelming targeting of the wealth accumulating in the top 10%.” — James [15:29]

• In recession, conventional wisdom is top 10% remain resilient. But AI-driven job disruptions could make this group more vulnerable than expected.
• The market may be underappreciating the risk that a downturn led by a wealth effect contraction will hit these “haves” first.

Investing in the Haves vs Have Nots Theme

[17:40 – 24:40]

• Explains the portfolio construction approach: Instead of standard long staples/short discretionary, James and team build baskets that are exposure-differentiated.
• Developed screening/basket methodology reading stock performance through a lens of which income cohort is most affected.
• Example baskets and sub-themes:
  • Long: Accessible recreation, digital banking, mass-market autos, “sticky” subscription businesses (e.g., Netflix).
  • Short: Luxury goods, high-end travel, wealth management exposed to shrinking AUM, “cancelable” premium services (e.g., Clear Secure).
  • Blue collar vs White collar employment services as another axis for trend capture.

“It’s not something that just outperforms on any hint of economic slowdown, but it does perform pretty well with how various income brackets have done versus one another.” — James [22:43]

The New Geopolitical & Policy Volatility: Tariffs and Trump

[28:24 – 35:57]

• Discusses the challenges of investing during Trump’s volatile policy pronouncements—sudden tariffs, interest rate jawboning, reversals.
  • Treats the spectrum of outcomes, from stagflation to rapid policy U-turns.
  • Importance of adapting frameworks rapidly, and stress-testing for the “one guy variable.”

“You have a generational inflection point that is predicated on one dude and that’s super uncomfortable.” — James [31:38]

• Markets have become adept at rapid recalibration, often pricing in worst-case scenarios quickly, then walking them back as policy shifts.

“It never fails to amaze me how quickly crazy things can just become the status quo…then the bullish case is stuff’s not that crazy.” — James [36:02]

• Macro shocks that change system “plumbing” (e.g., ending gold convertibility, major trade structure shifts) have lasting returns impact, unlike short-term geopolitics which markets bounce back from.

Micro Megatrends: Weight Loss & Mental Health Tech

[37:07 – 42:13]

• Differentiates “trends” from “megatrends” by timescale and depth.
• Mental health tech is an emerging area, with US small/mid cap companies potentially more insulated from global supply chain tariffs.
• Fiscal spending regimes now driving different stock winners: formerly US (stimulus, consumer support), now shifting to Europe (industrial/fiscal focus, e.g., following Mario Draghi’s competitive drive).

“Fiscal spending is one of the primary driving factors behind equity returns, [but has] shifted from the US to Europe and to a certain degree China.” — James [41:38]

Market Wisdom & Personal Influences

[42:13 – 47:05]

• Advocates for a constant “beginner’s mindset” (Zen/Buddhist influence), humility, and openness—always assume you can learn from anyone.

• Macro/micro are not separate, but a feedback loop. Watch for correlation breakdowns as clues for extraordinary opportunities.

• Love for markets is indispensable: “If you don’t love doing this, don’t do it because you’re going to be competing against people that absolutely love it…” — James [45:46]

• Advice for young professionals: Find what you love, pursue it relentlessly, and you’ll outperform in adapting to shifts (AI, geopolitics, etc.).

Book Recommendation

[47:09]

• Alchemy of Finance by George Soros
  • Especially relevant for learning frameworks during “interesting times” and periods of uncertainty.
  • “Read the part on the Plaza Accord.”

“Reading accounts of traders that have lived through interesting times and created frameworks for how to deal with interesting times is invaluable right now.” — James [47:27]

How to Follow James van Geelen

[48:09]

• Citrini Research: citriniresearch.com
  • Newsletter, active equity baskets, community chat for insights and discussion.

Notable Quotes

• On Market Frameworks:
  “Having a strong framework for any set of probabilities is kind of the most helpful thing that I’ve found…” — James [04:42]

• On AI and Market Hype:
  “As Nvidia consistently beats earnings, Nvidia in investor perception becomes AI.” — James [10:54]

• On Policy and Uncertainty:
  “You have a generational inflection point that is predicated on one dude and that’s super uncomfortable.” — James [31:38]

• On Adaptability:
  “It never fails to amaze me…how quickly crazy things can just become the status quo.” — James [36:02]

Timestamps for Important Segments

• [01:27] James’s background and journey to finance
• [05:52] Discussion on frameworks and key alpha principles
• [08:29] Megatrends vs. quarterly earnings and theme investing
• [12:23] Intro to “Haves vs Have Nots” theme
• [14:52] Corporate beneficiaries of top 10% consumer focus
• [17:40] Recession dynamics and building baskets to play divergence
• [24:40] Basket structure: sectors and company examples
• [28:24] Navigating policy volatility and trade environment under Trump
• [37:07] Weight loss/mental health tech trends and fiscal drivers
• [42:13] Best investment advice and market wisdom
• [47:09] Key book recommendation (Alchemy of Finance)
• [48:09] Where to follow James’s work

This summary distills the key frameworks, actionable themes, and market mindset discussions from episode 305, allowing non-listeners to grasp both the technical content and the tone of this in-depth conversation.