I saw a presentation by Curtis Hesler yesterday, who has boiled down his strategy to the "Three R's". Those are:
- the right asset class
- the right investments
- the right price
In his model, there are really only two asset classes, financial or paper assets and tangible or hard assets. Getting the asset class allocation right will account for 85% of your success, he maintains. He says that historically, you only need to switch from one to the other about every 15-20 years. He has a proprietary indicator but says you can use the Dow:gold ratio too. When it's over 30, sell financial assets and buy tangible assets. When it's under 5 (he does not know if it will go to 1:1 and suggests you may not want to wait for that), then you begin to transition back into financial assets.
This approach is consistent with the camp that contends that we are in a commodity super-cycle. As for uranium, I view that as a special case in that demand is highly inflexible, there is no substitute, short of putting a chimney and fireplace on your power plant. Just looking at the price of uranium and how it has behaved over the past five years vs. any other commodity and that tends to support my contention. I think it's too early to start looking for the exit, but I also don't intend to overstay my welcome as I did (to some extent) in the tech bust.
Cheers,
tsl
p.s. Just saw in USA Today that the Senate approved supplying nuclear fuel to India. That won't hurt the sector. |
