Rick Rule: Mathematics of A Resource Portfolio
May 08 2015, 8:33am
In this discussion, Tekoa and Rick get into the ‘nuts and bolts’ of
speculating in exploration stocks. What’s the right amount to have in
these stocks? What should a resource portfolio look like in different market cycles?
You need to be careful as an investor, but you don’t always have to be right, said Rick. In one of his greatest investment successes, owners of the stock turned out to be wrong about the merits of the company’s project.
It wasn’t an economic discovery after all, even after years of
exploration. But it still made investors money along the way because the
potential value creation was high.
TD: Hi. I’m Tekoa Da Silva with Sprott Global
Resource Investments and I’m sitting down here again today with Rick
Rule, Chairman of Sprott US Holdings. Rick, good to see you.
RR: Thanks for the opportunity Tekoa.
TD: What are the ‘mathematics’ of a resource
portfolio starting with the math behind discovery probabilities? How
would you define a discovery and what are a few of the most significant
discoveries that you have participated in throughout your career?
RR: Well, there are different definitions of discovery depending on whether you’re an investor
or a speculator. There are some traders as an example who can make
money on one drill hole, which of course does not make a mine.
Read the rest of the interview online here: Rick Rule: Mathematics of A Resource Portfolio