As we head into the new year, we can now turn our attention towards the opportunities that we - as contrarian investors - will need to seek out, research, and profit from.
We need to remind ourselves that our focus needs to be on the commodities and companies that have been mis-priced, misunderstood, and have been greatly discounted. The goal, as all legendary contrarian investors know, is to be in position before the rest of the market starts to see the value that we see today.
And as our editor-in-chief at Palisade Research, Adem Tumerkan, always reminds his readers - we need to seek asymmetric opportunities in the markets - to become successful and profitable.
In our last blog post we went over a few of the highlights from our interviews throughout 2018.
One highlight was the story of John Borshoff and how he took his last company, Paladin, from 10 cents to around 10 dollars during the last uranium bull market.
We like to mention this story because it is just one example of the possible returns available when having a contrarian mindset.
And because we feel that these types of returns could happen again in a new uranium bull market - within the next few years - it is worth focusing on a few key essential points from our recent uranium series that may have been missed.
When we started our uranium series, we had former fund manager Mike Alkin guide us in a two part special.
Packed with statistical knowledge and specific insights on the current supply and demand issues for uranium, Mike provided an essential guide for all contrarian investors. His in-depth analysis and research told him that uranium was a market that needed to be on every investors radar.
Another highlight from our uranium series was from Lobo Tiggre - a speculator for many years in the resource space - and his assessment on why the uranium market is the perfect market for many potential 10 baggers.
Perfect that is - for investors brave enough to buy at the bottom of a new bull market. View the entire interview here.
And finally, another key highlight from the series was to understand how famous resource investor, Rick Rule, was getting ready to position himself for a new uranium bull market.
As a key investor and speculator who participated in the last uranium bull market, his understanding of where we are in the current uranium cycle and what may occur next is essential listening. View the entire interview here.
So as we finish 2018, let's wrap up and focus on where 2019 might take us as contrarian investors - and where the greatest gains might come from.
Let’s get Adem Tumerkan’s thoughts on where he sees opportunities in 2019 and how he views the current uranium market. Let’s see below for his current thoughts.
Many thanks for joining us on the Palisade Blog Adem - lets begin with uranium.
Uranium is a sector you have written about extensively in 2018, with your prediction of a higher spot price towards the end of 2018 coming true. How do you feel the uranium stocks and spot price will perform during 2019?
I like Uranium. Besides nickel it’s my favorite commodity. I think uranium’s lows are behind us - I know this has been said many times before, but we’ve finally seen the huge global uranium output cuts (outputs down 16% from 2016 peak production).
Not to mention on the demand side - Japan has restarted several of their reactors and major producers such as Cameco are buying uranium on the open market instead of producing it (a classic sign the bear market is ending).
Remember - major South Africa palladium producers in 2015/2016 announced they would be buying palladium instead of producing more because of low prices. And since then we’ve seen palladium soar to multi decade highs (just look at palladium over the last few weeks).
Also don’t forget the USD put pressure on commodities this year - limiting uranium’s potential. I think Uranium has a great future that’s built on strong supply side fundamentals - which historically lead to the best kinds of bull markets. You can play it with select juniors or major uranium equities. However, I like buying the long dated, out of money Call options on things like Cameco.
And lets briefly talk about the main lessons you learnt as a contrarian investor during 2018 - and how will you be applying this going forward for 2019?
I learned not to underestimate currencies and the pressure they play on all assets. I also learned how Fed policy can last longer than previously anticipated.
And most importantly - how Mr. Market can seriously misprice assets - sometimes to levels that make me think it’s too good to be true (my TUR play from earlier in the year for example).
In 2019 I expect the economic data globally to sour. And for the Fed’s tightening cycle to be at its near end. Thus it will be time to be long commodities, especially gold, and foreign currencies (basically anti dollar) plays. But again - as always: be humble, hope for the best, but position for the worst.
Many thanks Adem.
So as we head into 2019, let’s continue to keep searching for the opportunities and scenarios that provide the most asymmetric returns.
Let’s continue to become better contrarians - and make 2019 a year to remember.
Until next time, happy new year, and happy contrarian investing.
The Palisade team
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