In a recent episode of the Market Bull Podcast, esteemed President and CEO of Rule Investment Media, Rick Rule, joined host Ben Kostrich to discuss unfolding market dynamics across a range of commodities from gold, nickel, natural gas to uranium, while sharing his investment strategies for 2024.
With over 50 years of investment experience across various market cycles, Rule’s insights shed light on navigating the complexities of today’s investment landscape.
You can listen to the podcast here, or read the short recap below of the key points discussed during the episode.
The Contrarian Advantage
Rule believes that in capital-intensive, cyclical industries, the key to profitability lies in adopting a contrarian investment approach.
“One truism in investing in capital intensive, cyclical, businesses like natural resources, is to make a lot of money – you either have to be a contrarian, or you’re going to be a victim,” he says.
A contrarian investing style in when investors purposefully go against prevailing market trends by selling when others are buying and buying when most investors are selling.
This requires a lot of courage and is evidently a riskier investment strategy.
Rule goes on to explain that many investors require psychological gratification from their investments.
“Most people understand the narrative that a price has to go up, but until the price goes up, they don’t have the courage of their convictions,” he says.
Seeking Value in Overlooked Commodities
Rule’s personal investment philosophy centres on uncovering value in under-appreciated sectors, advising against following fleeting trends and emphasising the importance of undervalued assets.
Despite the allure of popular commodities like uranium, Rule sees greater potential in overlooked sectors such as coal, oil, and natural gas.
He discusses the paradox where oil and gas companies, despite their current profitability, are seen as politically incorrect, leading to a decline in institutional holdings and subsequently cheaper stock prices.
“Don’t look for what’s hot, look for what’s not,” he says.
Navigating Political Risks
In his discussion on geopolitical considerations, Rule challenges the idea of “safe jurisdictions,” emphasising that all governments carry inherent risks for investors.
Drawing from personal experiences, he highlights the fallacy of assuming certain jurisdictions are immune to political upheavals.
Rather than fixating on jurisdictional safety, Rule prioritises technical merit, preferring deposits worth acquiring despite political risks.
“There are no good jurisdictions… I take political risk rather than taking technical risk, which is to say, have a deposit worth stealing and have a lousy deposit in a so called good jurisdiction,” he explains.
“The consequence of that is that I take political risk and I’ve been punished.”
Rick Rule’s insights on the Market Bull Podcast, hosted by Ben Kosterich, offer a valuable perspective on navigating today’s investment landscape.
By embodying contrarianism, seeking value in overlooked sectors, and embracing political risk, investors can position themselves for success in 2024 and beyond.
“Don’t follow the herd, seek value where others aren’t looking, and have the courage to act on your convictions,” he concludes.
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