Would you invest in lithium?

Right now many out there wouldn’t.

“Too speculative…”

And many in the market are running for cover right now.

But when there’s blood in the water – that’s the time to invest.

Fear has ripped through markets over the last month.

For example, the Fear & Greed Index has swung to extreme fear territory:

Source: CNN

And for good reason. The US market is caught in a genuine reckoning. As I said last week, concentrations are at levels unseen since the early 1980s. Nvidia alone sits at nearly 8% of the S&P 500.

Back here in Australia, the ASX Emerging Companies Index (XEC) has been demolished over the last month or so.

Down 13% in just three weeks.

Source: TradingView

Corrections are often healthy for bull markets.

And if you’ve been paying attention to what happened on Friday, you’ll know something important is stirring beneath the surface.

(See that highlighted bit on the XEC chart above?)

Shakeouts and opportunities

Bull markets can scare people half to death.

Then, surprise, surprise they keep running.

Some microcaps and small-caps got absolutely blasted last week.

Friday’s close saw most of the small-cap and micro-cap space finish strongly in the green.

I see that as an accumulation play as smart investors get set for the next leg up.

I think this week is going to be strong for markets.

There’s plenty of room for small-caps and micro-caps to run after they ran out of steam.

Here’s what I’m watching.

HODL the GODL

Gold hit record highs this year.

Up around 40% through 2025.

Then it pulled back from the US$4,380 peak and has settled around US$4,000:

I don’t think the run is over for gold.

Not yet, at least.

This is just a pause for breath.

Good gold miners can still print bulk cash with prices at these levels.

There could be some short-term shocks, but the debasement trade is still alive in the medium-term.

My big thesis for 2026 is lithium

Here’s what most investors miss.

They look at lithium spot prices and think the market is stuffed with supply.

It isn’t. Not where it matters.

Battery storage demand exploded ~50% this year.

And the offtake landscape in Australia tells a very different story than headlines suggest.

Australia is the leading lithium producer with ~30-40% of supply in 2025.

But after some digging, it looks like ~90% of supply goes to China.

Much of this supply is locked up in long-term offtakes.

Now here’s the critical part.

The US government isn’t messing around anymore.

I’m certain that the Thacker Pass equity stake was just the beginning.

And it signals that when the US gets serious about lithium supply, they need to move fast on a very small group of developers who have world-class projects and don’t have offtake locked up yet.

ASX lithium developers with world-class assets are the play in my book.

If the US moves seriously on supply security, they need these projects built. Fast.

And they’ll have to negotiate with a very small group of companies holding the cards.

Offtake, then financing, then Final Investment Decisions and all of this will happen WAY faster than people expect.

If these lithium companies start to move, it should properly reawaken the animal spirits on the ASX for the second leg of the bull run too.

And anyway, what’s a raging ASX bull market without a lithium craze?

If this resonates with you, check out my lithium thesis in full here.