Medium term investors buying the dip should act with serious caution, bear market dipping becomes a serious capital loss exercise. Understand the wider liquidity flow issues at play, avoid becoming the victim. Most inexperienced investors will struggle with the losses.
Decoupling from contagion takes time, the period of time will be shorter assuming the #uranium spot moves above $65 while equities price in $45 or longer if the spot contages lower as well.
50-70% down from recent 7 month highs continues to be a compelling accummulation zone
Fools buy the 15 dips in a bear market and self destruct 80% of their capital.
Those of us who built up 25-45% dry powder over the last 9 months have the resources to deploy into the next cycle bottoms that will multiply our capital by 10x plus. #uranium #commodities #cyclicals
Definition of a #cyclical fool:
A) sold very little to nothing over the last 9 months
B) buys the dips from the top in a bear market
C) has no alignment with the equity markets cycle
D) has no understanding of correlations
E) has no understanding of the cyclical cycle
Definition of an experienced #cyclical investor:
A) has scaled down positions over the last 9 months to build dry powder
B) understands cycle positioning given multiply super normal margins in commodity spots
C) understands the contagion aspects of an equity markets correction
Which are you?
Be honest to yourself
87, 97, 00, 07, 20 are experiences which dry powder then goes into making 10x plus returns
22/23 is shaping up to resemble these previous contagious market periods
• • •
Missing some Tweet in this thread? You can try to
force a refresh
Are you the speculator running to #oil stocks post the 15x rise post $125 spot?
Or are you the investor running to a #countrycyclebottom post 95% plus falls?
Over a 5 year time horizon where do you think the smart money went? The deflated expectations theme or the inflated?
Stupid capital flows have commenced arrival into #Commodities, particularly #oil, consistent with a blow off top, run after the shiny object formation. This can continue for a while prior to the peak occurring, we are in scale down mode as this unfolds. +50% = sell 70%.
#oil services stocks will run this week they have further torque.
Perspective of adding #Russianstock theme this week:
A) some of the cheapest valuations for large caps in our 40yr history investing, largest bank traded well below 1x PE, dividend yields hit 40% levels
B) throw the baby out with the bath water mentality generally is a buy
1/3
C) understanding in max risk situations, with plentiful unknowns, what is priced in and what is not.
D) ability to look through the clouds and assess the picture 2-3 years out.
E) realizing suspensions, may occur, locking ones investment up for a few years (this is ok for us)
2/3
F) dividends maybe cut for sanction countries
G) risks moderate over time and rerating occurs (sometimes quickly)
H) asymmetric trade on Thursday near lows was 3-4x upside and 30-50% downside
I) theme weighting max 20%, we managed to deploy 5%, 25% of max position
3/3
Undersupply stimulates rising prices as inventories are depleted
Oversupply stimulates falling prices as inventories build
Demand growth depleted inventories and stimulates rising prices
Demand reduction builds inventories and prices fall
Great #commodity investors focus on returns, overweight commodities near cycle bottoms (recently that was 2nd and 3rd quarter 2020), now in 1st half 2022 there are may signs (use cycle prices and sector margins as a guide) of a maturing cycle (65%+ cash margins above cost curves)
Maturing = 4th quartile of the cycle
#oil recently moved into that club with the likes of #coal, #lithium and several other commodities.
What does this mean? Elevated risks vs returns, death of asymmetric trades, scaling down positions, harvesting early entry 5-15x gains.
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?