What makes a successful speculator, and how did they become that way? Was it talent, luck, timing, or simply being around long enough to understand that in a commodity cycle there is always a time and a place to buy, and a time and a place to sell?
When we look at certain speculators within the resource space - when we try to analyse the ones who have been able to succeed and still stay in the game - perhaps what we need to understand is that the cyclical nature of the resource industry is what they have all taken advantage of.
After all, you can try to buy at the exact bottom and sell at the exact top, but if the greatest investors and speculators in the world can’t do that, if what they mainly aim for is being positioned before a big move up (or down if they are shorting) and then taking profits as late comers get too excited and continue to bid up valuations of that particular asset class - exceeding the fair value by many fold and therefor making it ‘expensive’ (however brief that expense lasts) - then perhaps that’s telling us something about the nature of the speculation game.
And how we can try and get better at it.
The greatest skill in nearly all our guests is in finding the right asset class - that is currently cheap and unloved or simply forgotten about - but that also has the right set of future catalysts to eventually create a major turn around in price appreciation for the underlying commodity and in turn - the related equities.
Mike Alkin has given us many insights regarding the uranium market and the many reasons as to why a new bull market is now beginning.
Our two part special with Mike during our uranium series late last year was a big highlight for us and for many contrarian investors within the uranium sector. His research and analysis could be claimed to be the most in-depth within the uranium space.
But at the same time - we would assume that Mike doesn’t want to invest in uranium forever.
If we look at a chart of the last major bull run in the mid 2000’s, it’s clear to see that investing forever is not a smart strategy going forward.
There is always a time and a place to buy, and a time and a place to sell.
Throughout our two part interview Mike guided us through the current picture for the uranium market that included the fuel cycle, reactors, underfeeding, and the new demands going forward globally.
So to conclude, we need to understand when is a good time to buy, and when is a good time to sell. We don’t need to buy the exact bottom, because if we are correct in the underlying trend, then the upside will take care of itself.
And ultimately, we want to find value when others don’t want to take the time to research or fail to see the probabilities of a new future demand on a particular asset class. And because of that, it means you have an edge.
And over time, that edge will become more and more profitable.
Until next time, happy contrarian investing.
The Palisade team
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