Thought of the day: Fighting #commodity price tops will just result in 75% plus stockprice retracements, #cyclicality music always stops, grab a chair early to avoid serious regrets and portfolio destruction. Easy clue to follow, is 65-80% margins above cost curves are peakish.
Those #commodities that are currently near bottoming (0-20%) for the next up cycle 2H2023-2025....
A deep recession would see industrial metals decline to costs curves or into negativity for high cost producers, this is often around 75% down from 2021 peak levels.
Note we need to take into account those with historic low inventory levels currently. #Commodities #cyclicality
Generally zero or negative margins (supply shut down incoming) with low global inventories (lack of dumping overhang) offset with immediate recession demand destruction = #commodity bottoming 1st Quartile entry points
Demand destruction can offset low global inventories in S/T.
Thought of the day: When in the eye of the bear market storm, ask yourself, 4-7 yrs out, is the asset price then 8x + of today's value? Will cashflows be materially higher? Will price drivers be materially higher? Will demand be materially higher? Will negativity have flipped?
Scaling in is the best option to secure one's future returns near a cycle bottom, our 8x threshold often can go to 20x, the avg deployed return being around 14x.
The difference between -96% and -97.5% scaled in entry points washes out when up 15-20x.
As several #uranium stock fall through 24 month lows, many on twitter will have turned negative on the whole thesis. Whereas a few of these will provide us line of sight for 8x returns, we would be remiss not to deploy. These will triple over 18 months & those who sold at lows...
....will reenter and believe in life changing returns again with <3x upside.
The fool and their money are easily separated in high volatility sectors where longer term (> 24 months) sitting is required.
$AEE using only 20% of the old resource in the NPV (without #vanadium credits) = 600% increase in the NPV = $800m at $75 pricing Vs current cap $140m (excluding Swedish battery metals project) #uranium