Types of investor

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For those interested in my stock research - by all means check out my posts on my new Global Mining Investing forum. The purpose of this forum is to assist people become professional or 'active' investors. There are basically two choices in life:
1. Passive 'outsourcing' strategy - whereby you pay someone to invest, or even just take their advise without processing the information through your own mind. This strategy entails trusting that the government regulatory system works (which was invalidated by a litany of finance company collapses and the global financial crisis), or you could consider..... Funds are making 12-16%, sometimes as much as 18-20%.
2. Active 'personal responsibility' strategy - whereby you decide that you are surrounded by sharks and that you are going to have to fend for yourself. The benefit is that you might learn something, you might make more or less money, but you will be in control, and ultimately responsible, as opposed to thinking or hoping that someone else is responsible. There is huge volatility in this end of the market. Ultimately it depends how well-researched, how disciplined, how analytical, how aspirational you are, and also how 'psychologically' validated you are. You might struggle to make money if you need validation from the market. It won't stop you; its simply an obstacle to overcome. Its a different game to passive investing where you have a relationship with a brand name fund manager who has millions to spend on advertising. For active investors, you can research stocks that others talk about, and/or you can seek your own buys, and your own community. I hope I'm part of it. This is a way of living and more importantly, 'a way of thinking'.

Clearly I'm invested in encouraging people to participate in my community who:
1. Are invested in being active investors - who have a specific interesting in making mining their primary 'specialised' channel for investing.
2. Are interested in helping or guiding their children to become efficacious investors. I started at age 11yo, when my father brought me shares in Abrolhos Oil in the late 1970s.

You might wonder - why mining? There are several reasons why - however I will answer this question on a different post.

Asian property markets outperforming Japan Foreclosed Guide Philippines Property Guide
Profit from mining with Global Mining Investing eBook   Global Mining Investing Community.

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

New eBook - Global Mining Investment

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A 2-volume e-book set

I am pleased to release our latest book to help people discover the benefits of investing in mining stocks. Global Mining Investing is for everyone who is looking for those higher returns without taking on the intangibility of leveraged securities. Our belief is this:
1. That there is sufficient depth in the mining industry to specialise in 'mining equities'
2. The returns in the 'spec' end of the market are superior to the larger stocks, with the flexibility giving investors the capacity to greatly expand those returns
3. The diversify of commodities and market access giving people the capacity to find many appealing opportunities
4. The opportunity to set up a bank account in large mining equity markets like Australia and Canada, so people anywhere in the world can benefit from such opportunities.

The purpose of this eBook is to provide the reader with all the resources to learn how to profit from mining stocks. The book encapsulates all the pertinent knowledge that I learned & developed in the course of being a mining analyst. You never stop learning; so ultimately this eBook is intended to bring the reader up to speak. From herein I would expect the reader to be reviewing charts, researching stocks and analysing companies and commodity markets to arrive at investment decisions. We will continue to help you through this process. I have written the book, and I have already established a Google Plus Forum where readers can ask questions.

This is actually a very good time to start learning these topics, to raise your financial literacy because we are looking at an outlook of 2-decades of buoyant commodity markets. That strength will arise from the global over-supply of labour in the world, underpin by cheap emerging market labour which will serve as a sustained constraint on wage demands. There is of course strong innovation as well, however it is the over-supply of labour which prevents a blow-out in inflation, which ultimately prevents investors being spooked by inflation. The fact that media newscasters continuously make 'cautious' inflationary predictions is a testament to the fact that they don't understand inflation. There is not going to be wage demands for some time. There will however be real declines in product prices, so even though your wages might not be rising, product prices can still fall, delivering real rises in income.

The other area we like is Japanese foreclosed property for yields and lifestyle (if you are so inclined), as well as Philippines property. Japan is a great place to live if you are still young; however the Philippines, with its stronger population growth and 'emerging market' characteristics, make this a more appealing market for property investment. So its Asian property or mining equities for investment a this time. Clearly the outlook for precious metal stocks is more appealing in the shore term; but there are still plenty of opportunities in other commodities.

Japan Foreclosed Guide Profiting from the Gold Boom Mining Fundamentals eBook

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Opportunistic take expropriation by Rudd fascism

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Mining stocks have been hit by plans by Kevin Rudd to adopt a resource rent tax on mining company profits. This is huge because basically its going to drive a lot of exploration offshore - at least in non-strategic mining industries like base metals. Even iron ore might suffer. Its not simply a case of taxing, its the lack of warning. Kevin is really going to get punished for this STUPID decision. I have written more about this on my taxation blog.

I think he will be forced to reverse this idea, or severely back down. I don't even think he understands the tax, because if he thinks a company making the same return on investment as a bond investor is fair he doesn't understand mining risks. Ok, there are huge resources of iron ore, oil & gas in WA, and the exploration risks are relatively small. But thats not true for most other mining.

My suggestion to investors is abandon mining companies with projects in Australia. I am curious - is this a project-related tax or a corporate tax, because if its a corporate tax, he is destined to push all mining companies offshore. Is this a project tax? Then it pushes investment offshore, so I can still invest in mining companies with projects overseas.

I think this is not going to last. Australia Minerals Council CEO is currently hyperventilating, but will be on the next flight to Canberra, to talk Rudd down out of the trees, where he is truly lost. He will understand the full force of the mining industry in the next election if he does this. Twiggy Forester of Fortescue Mining fame will I suspect be spending $20mil on campaigning in the next election if I am not mistaken.

P.S. Please don't tell me I don't know what fascism is....I have yet to meet anyone who knows. But its the only word you might understand since too few people are politically correct. Read my taxation and politics blogs and you will understand.

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Andrew Sheldon www.sheldonthinks.com

Glengarry Resources (GGY.ASX)

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Glengarry Resources (GGY.ASX) is perhaps one of the best stocks I have some across at an exploration stage for some time. They are delineating what looks like a very attractive orebody. There are a number of attractive features:

1. The width & consistency of copper grades

2. The high grade intersections they are making - makes me think the original inferred resource will be upgraded - by 40 to 60% - but thats a guesstimate based on the drilling results.

3. Mineralisation close to the service - This will make it easy for them to mine this orebody by openpit, and later sink a decline to chase the main ore zone

4. The occurrence of moderate grade molybdenum at depth, with the positive news that the grades are increasing. One of the deepest holes recorded 35m at 2.09% copper so the mineralisation shows no sign of abating at a depth of 200m. Given the nature of the orebody the company should be able to mine to a depth of 300-350m using open cut techniques.
This is a very attractive orebody, and I suspect this company is going to be taken over. The question is whom by? Well given the open-endedness of the orebody at depth, might Xstrata be interested? But my best guess would be Kagara Zinc, whose Balcoona operations are nearby and they aready have a 19% (blocking?) stake in the company.
The company is not short of cash since they have $5.3mil in the bank, plus $1.5mil in investments so no need to worry about an issue this year. The company has 286mil shares on issue at 10c thats $28.6mil market capitalisation. I think thats very cheap, though I wouldn't necessarily expect the market to get excited just yet. I would suggest though now could be exactly the time to buy with a resource upgrade expected in March, and I suggest there will be financial backers lurking around wanting to put some money into it.
Most importantly this stock is cheap, they are supported by a major backer (Kagara Zinc) and they have cash resources. I suspect the next capital raising will be a convertible note issue, likely to Kagara, and finally an equity issue after feasibility (early 2009). Its the wait that gives me reason to pause. Although 10c is a support, the 8-8.2c level is a far stronger support, so I would be waiting for that level to be reached. This is a company for traders and investors since I believe this mine will have a life in excess of 10-15 years based on the geometry of the deposit and the prospectivity of the region. The open-cut will help fund underground development access, thus avoiding the burden of additional capital raisings down the track.
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Andrew Sheldon www.sheldonthinks.com

A1 Minerals (AAM.ASX)

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A1 Minerals (AAM.ASX) would have to be one of the better buys around at current prices. Quite apart from the trading opportunity, it makes a lot of sense to sit on this one to realise the benefits of this strategic gold resource. You could be forgiven for thinking this company is slow to develop its resource - true enough - but I suggest the reason is they are attempting to lease, buy or toll treat their ore through a processing plant rather than having to finance plant construction. I think the plans to build a plant are really 'fluff' or just a backstop. There are several existing plants in the area that could process the ore, so it seems much more likely that 'a deal will be done' that will offer so much more value to shareholders. Very quickly AAM could be in production. Given that gold is going to $2400/oz by my thinking, there is no reason to hurry. This stock makes a lovely passive investment. Fortuitously the stock has fallen back to an important support as investors loose patience. The problem of course is that plant operators also see the strategic value of their plant and are likely holding out for a higher gold price. I however dont see how waiting longer is helping AAM's cause. A higher price means A1 Minerals has to pay more for a new plant, or the existing plant operators can extract more value from A1. It makes me think I should be investing in the plant owner. I think the plant owners know more about the outlook for gold than the A1 board. The company has a number of interesting exploration targets that add speculative upside to the stock. They have $5.9mil in cash, so with a market capitalisation of just $16mil, thats valuing the gold resource at roughly just $10mil, but it has a conservative 0.7mil oz x $A300/oz profit margin = $US200mil. Looks very cheap. You of course would have to discount those cashflows likely to be extracted over 5-7 years, so lets say $120mil. With a strong $A likely, I will suggest $A100mil. And there are these other projects that are at an early stage of assessment.
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Andrew Sheldon www.sheldonthinks.com

Bendigo Mining (BDG)

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There are times when you know you are just about to make some money because all the charts you look at some positive signs. Its like an alignment of the moons, something that doesn't happen enough, but it gives you the confidence to throw all your money at the market and say 'Yes'. On those occasions I can make $35-50K in a matter of a month. In actual fact these are the moments when I make 90% of my income, so you need to fight the tendency to overtrade and 'seize these moments'. Picking the right stocks is key. I am currently working on a report to help you do that.

Bendigo Mining is an emerging gold producer. Based on the nuggetty nature of its gold, it is difficult for the company to establish the veracity of its grade control system without proceeding to trial mining. This will occur from mid-2008. I dont see a great deal of price movement before then, but the stock should gain some support from a strong gold price. Currently the stock is trading at a strong technical support.
Nuggetty gold results in considerable statistical variance that can skew ore reserve calculations. The only way to ultimately determine how much gold is in the lode structures is to mine them. Historically these reefs produced an average of 10-11g/t of gold. The company has an operational gold treatment plant on-site and $58mil in cash. This places a value on the mining operation of just $110mil. Given the implied resource, this is a very low value. There is however the prospect of difficulties at the start of operations because its not the easiest operating conditions. ie. Narrow, often variable, discontinuous reef structures. See my Google Finance forum.
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Andrew Sheldon www.sheldonthinks.com

McMahon Holdings (MAH.ASX)

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McMahon Holdings is an Australian mining services provider, and as such is greatly benefiting from the strength of the resources sector. The flipside is that service providers too are having a challenge managing costs and completing projects because of labour shortages.
McMahon appear to have reached a support level at $1.30 per share. Though given the poor earnings & dividend yield of 6.2% and 2.2% respectively, might we expect them to fall back to $0.97-1.00, as its a far stronger support level. These are historical figures mind you, so you might want to wait to see the latest earnings growth figures. For more information on McMahon see Google Finance and my discussion forum. -----------------------------------------
Andrew Sheldon www.sheldonthinks.com

Metals X Limited (MLX.ASX)

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Metals X Limited is a stock that can easily be compared to Minara Resources, which is capitalised at $A2.6 billion. The difference is that Metals X has some tin projects in Tasmania, but they have world-class nickel resources, its just that Minara is already in production. MLX is capitalised around 10% of Minara, but is just 2 years out from nickel production. The MLX nickel project can be expected to have a similar scale of production. In the short term it seems destined to range trade between 25-45c, but nickel stockpiles are showing signs of flattening, so might we expect to see some interest in them. I dont see them falling to the 13c support in this climate. This is a good long term stock. Read more at Google Finance and see my discussion forum.
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Andrew Sheldon www.sheldonthinks.com

Philex Mining Corporation (PSE.PX)

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Philex Mining Corporation is a Philippines listed gold-copper producer that has drifted lower despite recent strength in the market copper & gold prices. The company I understand has a JV with a major international mining company in Mindanao. The project is a large-scale, long life mine that will generate healthy earnings, which is already evident in the income statement - see Google Finance or my discussion on this stock.

The attraction of this stock is that appears to be getting support at $9.00, and that it has a stake in a major gold-copper mining project, and thus a nice flow of inflation-adjusted earnings. We should be cautious however if this stock falls below $8.00, as the next support level is $6.00. I dont see any reason for this happening in the short term, though copper prices are close to a peak. It remains to be seen just how robust copper demand will remain. For this reason I prefer a pure gold producer. But I would look for support above $9.00.
Another alternative to Philex is its listed parent company Manila Mining (PSE.MA) - see Google Finance or my discussion of this stock.
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Andrew Sheldon www.sheldonthinks.com

Jabiru Metals (JML.ASX)

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JML has been one of my better performers since I recommended them in the 18-22c area. They rose to a peak of $1.70, but have since fallen back to $0.72 in recent times, along with other base metal miners. The attraction was always their high grade volcanogenic base metal deposit in Western Australia. Such deposits also hold the potential for a cluster of deposits, so there was always alot of upside. So reading now the latest report.....there seems little appeal with the Benambra-Stockman project in Victoria, but too early to write-off the exploration potential around the Jaguar-Tectonic Bore project areas.

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Andrew Sheldon www.sheldonthinks.com