First and foremost, we are traders. We play the odds. Sometimes the odds aren’t good, but even poor odds at a fair price can be profitable. And at the end of the day, that’s what matters to us: making money. But in order to do that, one must preserve one’s independence. That means being willing to hold an unpopular opinion and to not be beholden. Being beholden to peers or to the management of the companies in which one invests, unduly colors judgement to the extent that the odds are no longer perceived in the cold, calculating light in which they must be regarded.
Someday, the odds for long trades in uranium stocks will improve. We look forward to that day. In the meantime, we are happy to hold the unpopular opinion that the bear lives and breathes, even if it costs us ‘friendships.’
Probabilities are a sport for me and for my business partner, my beautiful wife Tina. We have developed rigorous buy and sell standards that leverage probabilities, but there is one sector on which we broke every rule and subverted every standard, buying against all odds, when all indicators pointed to trades with an exceptionally low probability of success: uranium.
Every last one of our uranium holdings represents a bad bet. We were suckers. Bad bets at good prices are forgivable, but we can’t even claim to have bought any uranium names, save for Forsys, at a good price.
My mantra has always been ‘lower for longer,’ but I never imagined that I’d still be saying lower for longer 3 years after taking our initial stake in Goviex. I’m still, gulp, saying it.
We have never participated in a sector with bleaker prospects — prospects that grow dimmer daily. Yet we plan to hold our uranium book in spite of the odds against it, as we are allocated in a way that guarantees that we can not be annihilated in the worst of downturns.
However, this may not be the case for all of you. Are you allocated in a way that will enable you to weather a fierce acceleration of the uranium bear market? Will you live to fight another day if your portfolio’s uranium constituents drop by 50%? 75%? Are you hedged?
So here it is: I can’t think of a single thing about the sector to which one may look forward and consequently, I am officially a bear, albeit a long/hedged bear. I see uranium oozing out of every sewer drain and sidewalk crack. Every dish is served with a side of it. I find it behind my son’s ears when he’s taking a bath. There’s just too goddamn much of it. And until there isn’t, the high probability setups belong to the shorts.