Continuing the Shark Tank / Junior Resource Discussion

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Continuing the Shark Tank / Junior Resource Discussion

  • Toby Rice

    Rick

    Thank you for the incredible Shark Tank series you did. I had no idea this level of access to your great mind was available. The detail and insight you provided is truly wonderful for an upstart like me.  It’s what brought me to Liberty.Me and as a result has earned them my subscription.

    I couldn’t find any further information on the Almaden interview. Is that still in the works? And what about future parts of the series. Will you do more? I couldn’t find many comments about your offer to continue if people grow the user base. I’m yet to find a really good junior mining community and would love to help support one.

    Best Wishes

    Toby

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  • Rick Rule

    We are hoping to complete the Almaden interrogation live vat Freedom est. If we can manage it technically, we will webcast it live over liberty.me

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    Toby Rice

    Great – thanks!

    Do you anticipate doing further sessions before/after that?

    Separate question: I’ve always wondered how closely the Sprott Gold and Precious Minerals Fund relfects your personal portfolio?

     

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      Rick Rule

      I’m long SGDM against a corresponding short GDX position, to capture the performance arbitrage. My own portfolio is very different, and much more aggressive

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    Toby Rice

    Interesting. Do you have a target level of out-performance for SGDM vs GDX? I’m long SGDM btw.

    Can you talk about when the Sprott Junior Index comes out and the selection criteria? Is it likely to include prospect generators like Eurasian, Riverside Res, Reservoir, Lara etc? It would be great to see these in an ETF besides the likes Kaminak & Pretium.

     

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      Rick Rule

      we are in a statutory quiet period concerning out junior product.

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    Toby Rice

    I thought so 🙂

     

    RE: Long SGDM short GDX. Is part of your strategy, such that: If both go down, you are hedged so have a way to profit and if both go up SGDM will out perform so you profit. So a risk mitigation play?

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      Rick Rule

      simply an arbitrage. I believe factors based indexing will out perform market cap based indexing in most markets, irrespective of market direction. I want to own the delta.

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    Toby Rice

    In a rising market is that more profitable than simply being long SGDM? What’s the advantage?

     

    BTW – THANKS for taking all these questions!

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      Rick Rule

      I like the margin of safety generated by a performance delta

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    Toby Rice

    Rick, you talk about the portfolio pyramid; Insurance, Core, Growth and Speculation components of your portfolio, and the expected returns and attributes of each component. Do you have a similar structure  specifically for managing the speculative group? If so what does that look like?

     

     

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      Rick Rule

      I have not. My rule of thumb would be to layer om risk, relative to your ability to assume it. f you seek a 50% annualized internal rate of return, use capital you could afford to lose 75% of in a viscous bear market. I always assume risk of 150% of desired internal rates of return. Nothing empirical about this, but it makes me and those I advise acknowledge risk in making speculative decisions.

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        Adem Tumerkan

        If everyone doesn’t mind me chiming in, but back in the bottom of the bear market in US equities during 09 I put my life savings from busing tables the past year (a whopping 4k) when I was 17 (if you remember the story I had told you Rick when I met you).

        I bought a variety of bioetch stocks that I had no idea what I was looking at fundamentally except two things: 1. do they have debt? and if yes, 2. can it cause a solvency issue.
        These were the only things I looked at.

        In 2012 thanks to QE and speculators coming in, I had two 30 baggers, two ten bagger, and one twenty bagger. To this day I am aware that I had no idea what I was doing and I made sure I did not confuse cheap money and a bull market with my knowldeg; it was pure luck.

        But the point fo what Im getting at is I see the exact same similarities in the mining sector right now and know worlds of knowledge more than what I did then and those two criterias I look at are still my most important: how much debt, and the return on invested capital (ROIC).

        Rick focuses more on exploration stage companies, I myself find my forte in buying cash flow positive producers at discounts which is easier to determine my ROIC yardstick.

        If you have the courage, the will power, and determination to put in the research – you can find companies that will survive.

        This is how I look at it: we know what a bull market can do, so there is no point in saying how high something can go. But we must ask: in a bull market all prices rise, so in this current bear market can my company survive until the bull market returns? Buy with a margin of safety and patiently wait.

        Because I assure you if those biotech stocks that didn’t even has real assets besides clinical trials (relative to an exploration companies resources in the ground) went through the roof, there is no doubt that the mining sector will reach new highs in the future (mostly because of more liquidity now).

        You decide the kind of man and investor you are. A follower or iconoclast. The choice is yours Toby.

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    Rick Rule

    Thanks Adam

    These discussions are meant to be just that, multi party discussions. There is a lot of expertise here, and many people eager to learn, as well.

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    Toby Rice

    Hey Adam, thanks for joining the discussion.

    Whatever floats your boat I guess. I know nothing about bio-stocks but I’m glad your speculations in 08/09 worked out so well. I took a similar approach in general equities. Had some 3, 4 and 5 baggers. One was a 30 bagger but I sold it after it trippled so I missed most of the upside. One doubled then went bankrupt… it was a fun time.

    To your comments, I’m not a follower, I’ve always been the exception to rule. In school the teacher would always write “You were the only on in class who..” and I like it that way. Since 2012 I’ve doubled down on a lot of my resource stock that are down 50% or more (A couple are bankrupt). I’ve taken profits too on a number of doubles (they are now at new all times lows)

    I think what I’ve learned most recently is something Rick bangs on about which is owning too many stocks. I currently have 28 resource stocks and am eying another 10 – 15. I spend a few hours a day (often more) doing some sort of study on the sector but I might be getting over stretched.

    I probably only own 5 or 6 stocks that aren’t in either the Sprott Gold and Precious Minerals Fund or presented at the Sprott Symposium, and I do a decent amount of study on all of them, so I’m very comfortable, even thought I stand at -34% overall for my mining portfolio.

    My problem, or challenge, is resisting my temptation. I find so many opportunities I want to own and the lower they go, the more I want. For example, Riverside Resources is down 50% since I brought it and so I ‘panic buy’ thinking I’m going to miss out when it suddenly reserves. I’ve now averaged down on so many stock and there are so many new stock stocks I want to buy that I think I need to slow down before I end up with more than I can manage. But I think it’s a good problem to have.

     

     

     

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      Rick Rule

      own as many stocks as you are prepared to spend one hour per month ( each) studying.

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      Gary Bendall

      Quick question: What are baggers?

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        Anonymous

        Its investment jargon, the most common usage would be a 10 bagger, a stock that goes up in price ten fold. If your an excellent speculator you may realize a 100 bagger.

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    Maurice Jackson

    Rick, I will bring my equipment to ‘Freedom Fest’ and assist in any capacity that you may need me to facilitate the interview with Almaden.  I can’t wait to see it!

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      Rick Rule

      Maurice ( I got your message!), I’ll get you lots of material.

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    Maurice Jackson

    Thank you. I have sent several messages, so I shall await your response to see what you are  forwarding.

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      Rick Rule

      simply to call you Maurice. The answer re insitu and optionality is long, and better suited to direct discussion

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        Maurice Jackson

        I welcome the direct discussion.

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    Anonymous

    Rick, how favorably do you look at west africa (particularly mali) from an agricultural investment perspective?

    There is an abundance of arable land but a lack of affordable fertilizer (mainly due to import costs). How do you see investment in the area playing out, given the growth predictions?

    At the moment there are hardly any local fertilizer producers (Morocco excluded) so there is certainly the opportunity to grab a large market share and capitalize on the ability to sell directly to consumers without passing on huge transport costs, if one was to develop a deposit in the area.

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    Andrew Dittman

    Rick:

    Someone (who may have misunderstood you) told me that at an Oxford Club meeting in March of 2017, you thought there will never be a mine on Northern Dynasty Minerals (NAK) properties in your lifetime.  Has anything changed in your estimation to give us hope that there could be a mine within the next five years on NAK properties?  What are the positive developments and when is the soonest you think there is a possibility for a mine?

    The permitting process is being trimmed down considerably by our new EPA Director, Scott Pruitt.  https://thefern.org/ag_insider/pruitt-promises-no-six-month-wait-new-permits/

    Thank you Rick.

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    Rick Rule

    I am very encouraged by  Northern Dynasty’s recent decision to refocus on community relations. Viewing this as a legal or regulatory issue misses the point, if the aboriginal community comes on side, the regulators could be brought to heel

    The next point is that at current capital and commodity prices, the project is marginally economic, at best. This is one of the best exploration targets on the planet, however.

     

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