Getting a bit of your usual Friday File commentary out on the early side this week, since I made a personal purchase that I thought might interest my favorite Irregulars.
And by purchase I mean “dumb speculation,” really — I picked up some shares of a junior miner that’s way too small to take seriously, and which owns an asset that isn’t worth that much at the moment… all because I think we might hit a wave of speculative bubbliciousness for electric cars and batteries over the next few months.
I know, I know, I’ve pooh-poohed the lithium bubble a little bit in past articles — or, at least, I’ve been a bit skeptical of early-stage lithium exploration plays. And I wouldn’t consider any early-stage lithium exploration company to be a real investment. But sometimes a guy’s got to speculate with small amounts of money, even if it’s only to give himself some lottery-ticket daydreaming or a gambling outlet and help him avoid doing something stupid and aggressive with a large chunk of his actual retirement savings.
So, with that said, what did I do?
Well, as I mentioned in some recent articles about teased lithium stocks, I essentially tried to predict the next bubble — and I think the next bubble won’t be lithium, which has already enjoyed a nice run and has huge and accessible reserves, I think it might be cobalt.
Probably not the actual metal, you understand — but the stocks. And it is important to separate the two, otherwise you’ll turn a “greater fool” speculation idea (“someone is going to get excited and pay a lot more for this story stock in the future, even if the fundamentals are weak”) into a “fundamental” strategy where you buy in as a long-term investor and start to believe the hype… that’s when you might become the “greater fool.”
Cobalt does have real fundamental promise, to be sure, but it’s extremely hard to suss it out. About half of cobalt demand is for batteries, and the vast majority of cobalt production comes from nickel-copper mines in Russia and the Democratic Republic of Congo (DRC). The former is politically challenging, perhaps, but the latter is a potential boycott away from becoming a crisis because of the extent to which “artisanal” cobalt mining with child slave labor reaches public attention that might equal the distaste for “conflict diamonds” ...