Episode 30: Rick Rule – The Contrarian Investor

investing show Feb 23, 2018

Rick discusses how Sprott is a Canadian company that manages 11 billion in assets. They focus exclusively on natural resource investments. He has been in the business for forty years and experienced four market cycles.

The resource business is very cyclical, and you have to be a contrarian investor if you are in this space. The recent bear market has been spectacular in which prices fell on average by sixty percent. The resource index for equities declined by 88%. We are currently coming out of that bear market.

The more risk you take, the more reward you can gain, but you have to put there time and effort into it. Early bull market gains can be obtained by just buying the best companies. There is a difference between investment and speculation, and you need to figure out where you are as an investor.

You should invest in yourself before you invest in markets. You should start by reading the intelligent investor by Ben Graham, and Rick feels its the best investment book he has ever read. The Sprott website has 200 hours of educational material that is available for free.

Money is made in speculative investing by answering a series of unanswered questions. It’s an intellectual capital business. There are 30 investment company teams worldwide that have generated 90% of the performance in the industry. Speculators have to figure out who the best people are and align with them in bear markets when no one else cares.

Mr. Rule holds physical gold because it’s functioned for thousands of years as a store of value and because it works like insurance. One should start with that and then work on acquiring stocks in the best of the best companies.

Talking Points From This Week’s Episode
• Resource space is very cyclical.
• Dividends should be an essential part of any investment strategy.
• One should hold gold and then the best of the best companies.
• He invests in resource markets when they are essentially in liquidation.

About Our Guest

Rick Rule began his career in the securities business in 1974. He is a leading investor specializing in mining, energy, water, forest products and agriculture. Rick founded California-based Global Resource Investments, Ltd., which grew into a much larger organization with significant affiliated companies. As Director, President, and Chief Executive Officer of Sprott US Holdings, Inc., Mr. Rule leads a highly skilled team of earth science and finance professionals who enjoy a worldwide reputation for resource investment management.