Bottom of the Cycle Leverage Prospects

John Robertson

PortfolioDirect

After a median share price fall through the cycle of around 80%, hundreds of early stage mining companies can show very strong bottom of the cycle capital gains even without recovering a material part of their earlier losses. Investors should be cautious about inferring a market recovery from such performance. The flow of new investors is not sufficiently strong presently to maintain the share price momentum. More often than not gains peak quickly and prices revert to earlier levels. Chasing these rises remains premature in a still cyclically weak market. Remaining examples of exploration or development endeavours still trapped within cyclical low price ranges suggest better investment opportunities can be found. Companies falling into this category include Australian Vanadium, Bannerman Resources, Crusader Resources, Deep Yellow, Heemskirk Consolidated, Kasbah Resources, Mineral Deposits, MZI Resources, Potash West and Thundelarra. There are others, too. In most cases, at this stage of the cycle, seller exhaustion is a pre-requisite for market re-pricing which may not be the result of a specific event or a so-called ‘investment catalyst’.


MORE ON



John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

Expertise

No areas of expertise

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.