📖 Global Mining Investing (eBook)

Download

Global Mining Investing (eBook)
By:Andrew Sheldon
Published on 2014-03-25 by Andrew Sheldon

There are few sectors in the global market where passive investors are able to sustain high earnings in the current market. Among the most alluring opportunities are emerging market property, and both IT and resource equities (i.e. exposure to commodities through mining). In the commodity market, one is exposed to substantial volatility; a dangerous leveraged exposure for the untrained eye. We argue that you don’t need to expose yourself to leverage in order to achieve high yields or asset growth. We will argue that in the mining sector, it’s not our capacity to take risks that differentiates yourself as an investor, it’s your capacity to conceptualise (and plausibly to quantify) the risks that will differentiate yourself from other investors. Warren Buffet consistently makes huge returns for his investors. He does so by making use of others money, and by making ‘sure bets’. The consistency of his investment performance lies in the systematic nature or discipline of his investment strategy. His strategy however rests on using other people’s money. Our alternative strategy is to differentiate yourself in terms of knowledge rather than leverage. We outline a strategy for non-leveraged high returns. The reason why these investments are so lucrative is because few investors take the opportunity to develop their analytical skills to place themselves in a position to identify these opportunities. The government’s tax concessions for superannuation only reinforce the tread towards ‘centralized planning’ for personal savings; in the process disempowering the investor. Just as middle class investors are now discouraged from investing in mining, so are the fund managers (mostly accountants) who don’t readily grasp geological and mining concepts. Their investment criteria are intended to serve them (with large pools of money); not your modest needs. They cannot invest in small companies that you can, because of their need for liquidity. You are therefore compromising your interests by investing with them. Most investors find investment overwhelming and associate it with a great deal of apprehension. This is an entirely negative perspective of finance that we want to address. Making money should be a source of efficacy and pride. The reason people find it overwhelming is because they have not had sufficient or systematic exposure to the topic. This is indeed very tragic because the implication is that there are a great many people who are allowing their lives to be motivated by fear. Worse still is that they are enabling others to use fear to solicit certain outcomes. They sanction politicians to sensitize your fears; they pay commissions to fund managers and their associated ‘sales spruikers’ to placate your fears. The contemporary wisdom of fund managers, affirmed by academics who have never traded investments, is that risk needs to be avoided through diversification. This is their modus operandi. We accept that risks exist; but these people convey that you should accept this ‘passive’ as an inevitable market condition.