Discover and read the best of Twitter Threads about #cyclicalinvesting101
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Thought of the day: Recency bias from #commodity peak when everything in the rear vision mirror looks "solid" is an optical illusion, around the bend a cliff is coming into sight a "recession", often stockprices drop 75% plus. Demand can get slaughtered at the margin.
#lithium & #coal are great case studies for those of our followers who don't understand nothing is rare at 80% cash margins and 20% cost.
#cyclicalinvesting101
#cyclicalinvesting101
While balance sheets are materially improved on 2020 levels, so few 95% corrections, but 50-65% are still reality with 75% spot falls from peaks.
#cyclicals we have sent 35 years refining our technique, buy when on low price to book ranges, with low spot price near cost curve outcomes.
Spent 35yrs ...
Sell when on high price to book ranges and 60-80% cash margins above cost curves.
Hence #lithium and #coal peaks were easy....
Remember the rule, there is no rarity at 80% margins.
#cyclicalinvesting101
Hence #lithium and #coal peaks were easy....
Remember the rule, there is no rarity at 80% margins.
#cyclicalinvesting101
Cycle emotional considerations:
Bottom: actually the best point for maximum greed, often though the point of maximum fear (point of maximum loss)
Top: actually the best point for maximum fear, often though the point of maximum greed (the point of maximum gain)
In sink?
Bottom: actually the best point for maximum greed, often though the point of maximum fear (point of maximum loss)
Top: actually the best point for maximum fear, often though the point of maximum greed (the point of maximum gain)
In sink?
We had our first attack for discussing the concept that our fear gage is gaining momentum, the attack is a further contrarian indicator that we are on the correct track. Denial is a response most have to their greed thesis being questioned, 90% don't handle well this reality.
Wishing and hoping are not rational mechanisms for wealth building.
Understanding the risk one is taking at a given point of the cycle allows one to control and manage the wealth building process.
How many of you have compounded your wealth at 25% pa + over the last 10yrs?
Understanding the risk one is taking at a given point of the cycle allows one to control and manage the wealth building process.
How many of you have compounded your wealth at 25% pa + over the last 10yrs?
Perspective in those stating #uranium is going to $2000/lb
At $200 sustained spot for 12 months = our investments would be worth $700m, cashflow margins would be 80%, improbable
At $1000 = $2.8bn = 0.0001% Probability
At $2000 = $7bn = 0.0000000000000001% Probability
At $200 sustained spot for 12 months = our investments would be worth $700m, cashflow margins would be 80%, improbable
At $1000 = $2.8bn = 0.0001% Probability
At $2000 = $7bn = 0.0000000000000001% Probability
What is probable in the #uranium space....
$65-85/lb average contracting
$140-200/lb very short term spot spike
Top 5 Nano caps achieving 8-10x from current levels
Average sector stock returns 3-4x from current levels
$65-85/lb average contracting
$140-200/lb very short term spot spike
Top 5 Nano caps achieving 8-10x from current levels
Average sector stock returns 3-4x from current levels
Stimulating greed in cyclicals post the mid way point, can be destabilising to rational thought and action as the cliff is approaching....anchor oneself in reality, scale down post $70 spot for 70% of investors is the best action.
#cyclicalinvesting101
#uranium
#cyclicalinvesting101
#uranium
