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Commodities

Uranium: A Second Look Coming

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By Callum Newman, Wednesday, 04 October 2023

It feels so wrong to step against the herd. The human brain is from the Stone Age. It wants safety more than anything else. Now’s your chance to overcome your brain, and think of your future self (and family). You don’t think of today. You think of 2024 or 2025 — or even further out. Here’s a forward-looking trend for you…

Geoff Wilson is a man who turned a half million-dollar business investment into a $500 million fortune over 30 years.

We can assume he knows a bit about the investment world!

What is the ‘one’ thing he suggests you do when markets are down, the outlook ugly and everyone is quaking at their knees?

This week The Australian quoted him as saying…

‘ “I’d seen instances previously, whether it’s the 1987 crash or various other times where money would flow out of markets.

‘“And that’s when you want to be buying. When people are withdrawing their money, that’s when you want to be invested,” he says.’

In other words, go shopping, of course!

If only it were that easy. It just feels so wrong to step against the herd.

The human brain is from the Stone Age. It wants safety more than anything else.

Now’s your chance to overcome your brain, and think of your future self (and family).

You don’t think of today. You think of 2024 or 2025 — or even further out.

Right now, everyone is preoccupied with the yield on long-term government bonds marching up.

There are two things we can say about this.

One is that interest rates, historically, follow growth. If rates are rising, growth is strong.

That can’t be anything but a good thing over the medium term.

The second is that nobody — and I mean nobody — has any prescient track record predicting interest rates.

Economist Robert Shiller makes this point in his book Narrative Economics.

While rising rates might be giving everyone a headache now, who’s to say we won’t have completely forgotten about it in 12 months?

It was only six months ago we were all in a squirm about the regional US banks that collapsed.

Now, tell me…when was the last time you thought about Silicon Valley Bank?

Exactly.

The market’s volatility — to the downside — makes everything seem very urgent in the now.

I’m currently reading a book. A very successful music producer called Rick Rubin wrote it.

In part, it’s a mediation on creating art, and the ingredients you need to transcend your own inhibitions.

But there are quotes and themes that speak to the business of creating wealth too.

What we need, in large doses, is patience and perspective.

Yes — the market is selling down. That’s what stock markets do. It goes with the territory.

What if we think about it like Rubin suggests, instead?

‘When we obsessively focus on these events, they appear catastrophic.

‘But they’re just a small aspect of a larger life, and the further you zoom back, the smaller each experience becomes.

‘Zoom in and obsess. Zoom out and observe. We get to choose.’

I have been writing about markets for over a decade.

I can give you an endless list of macro concerns that washed through the market with acute urgency over the years. I expect I’ll see many more.

But none of these stopped, not topped Apple from marching to a $3 trillion company. Or prevented Elon Musk from becoming the richest man in the world.

Admittedly, these two examples are extreme. But the principle, I think, is a good one.

The current market environment is a chance to accumulate stocks that you like for the long term.

It may be, for example, that debt yields have little to no bearing on its business.

It may be, conversely, that higher interest rates are a benefit to the business.

We can only know by understanding each individual business — which, by the way, is about the only thing you can control in the market.

Uranium, for example, currently has the eye of the market. And for good reason.

There’s every chance that the industry is going to see too much demand relative to immediate available supply.

Perhaps you missed the recent run in these stocks. Well, the market is knocking them down right now.

Government debt yields will hold little bearing over the uranium market over the next five years.

It’s either going into a bull run, or it is not. Yields don’t factor into it.

My take is that the uranium bull is here to stay.

And if we go back to the 1970s, we can say that commodities generally went on a massive bull run despite inflation, economic weakness and high interest rates.

Now, are you learning about uranium…or focusing on an issue nobody can predict?

I know what I’m doing.

Best wishes,

Callum Newman Signature

Callum Newman,
Editor, Money Morning

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Callum Newman

Callum Newman is a real student of the markets. He’s been studying, writing about, and investing for more than 15 years. Between 2014 and 2016, he was mentored by the preeminent economist and author Phillip J Anderson. In 2015, he created The Newman Show Podcast, tapping into his network of contacts, including investing legend Jim Rogers, plus best-selling authors Jim Rickards, George Friedman, and Richard Maybury. He also launched Money Morning Trader, the popular service profiling the hottest stocks on the ASX each trading day.

Today, he helms the ultra-fast-paced stock trading service Small-Cap Systems and small-cap advisory Australian Small-Cap Investigator.

Callum’s Premium Subscriptions

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

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