Market Mayhem
it’s clear the resource markets across the board are having a very tough time.
According to some, it’s the worst they have ever seen.
For example, one of the biggest investment bankers in the resource sector, whom I talk to daily, has lost over $100M of his own money in the last 3 years. Don’t feel too bad for him; he still has a private plane and is worth over $50M. But he is shaken.
I specifically sat this banker down many months ago, showed him my models and the compelling thesis on the Alterra investment. He knew I had personally bought millions of shares, and he has known Ross Beaty for years. Yet, he didn’t buy a single share of Alterra.
Why?
He’s like many others in the resource sector who are shellshocked over how much money they have lost. And it’s not just money evaporating; people in the sector are losing jobs. The stress is accumulating and building to a level that many have never experienced before. This banker, who is one of the sharpest guys in the business, shared with me that in the last 2 months he’s lost 3 colleagues—all to heart attacks. I don’t think that’s coincidence.
The markets are starting to take a psychophysical toll on even the most successful in the business.
Sadly, I also know of two money managers who have committed suicide. And a young Vancouver entrepreneur who focussed on the junior exploration sector jumped off a bridge at the end of July. This type of despair is characteristic of crashing markets and, for me, always puts things into perspective.
I firmly believe it is not the end of the world.
However, in the past, market bottoms have often been associated with market players taking their own lives. So, given that we’re experiencing this level of desperation, are we at a bottom?
Many of the talking heads in the resource sector think so. They tend to see every major move down as the bottoming. Now personally, I still believe the resource markets are going lower. But I have no better idea than anyone else where the true bottom lies, and I’ll never try to call it. That’s a fool’s errand.
My Vision
Instead, I am sticking to my overall investment philosophy, which I began to detail in last month’s issue of the Katusa Report (( click here to read about it)). I will have more to say about it here and in the months to come.
For practical purposes, I do plan to eat my own cooking and to position my funds to capitalize on the ongoing market weakness. So I am still active. As I stated publicly at the Sprott Conference at the end of July, I am open for business and my funds are cashed up. The crucial thing is that the valuations and terms of financing must make sense. |
