The World Resource Investment conference in Vancouver each summer, is usually a pretty rollicking show. That’s the case even though it’s in early June, after so many investors have presumably “sold in May and gone away.”
As you could have predicted from the behaviour of the markets in recent months, however, the mood at last week’s conference was not exactly upbeat. The crowd was considerably thinner than last year or 2010, and the mood among companies — many of which have been unable to raise money in the turbulent markets and have seen their stock prices shrink to under 25¢ — could be described as jittery.
One investor relations pro noted that the worse the sentiment is and the more equities are punished in the markets, the closer we are to a bottom. While she noted the mood at the show didn’t feel quite as bad as it did in early 2009, when the markets were just starting to rally from their late 2008 low points, sentiment is getting there.
Investment pundits foresee a rough time for markets ahead, with Brent Cook of Exploration Insights and others predicting that things will get worse before they get better.
But amid the negativity, many speakers at the conference pointed to the coming buying opportunities the beaten-up junior mining equities will be serving up for those who haven’t lost their appetite for investing.
Frank Holmes, CEO of U.S. Global Investors noted that although this year will be difficult for gold stocks — in part owing to the U.S. presidential election in November — 2013 will likely be an explosive year for the equities.
Rick Rule, founder of Global Resource Investments (now part of the Sprott family of investment companies), predicted a “mergers and acquisitions boom the likes of which you haven’t seen since the early 1980s” will occur in the next 18 to 24 months.
Rule wryly noted that while “everyone likes to be a contrarian when it’s popular,” buying with gusto in rising markets, many don’t have the nerve to buy low — when there are few other buyers for quality companies.
According to Cook, there is lots of money to be made if you’re very selective with your buys, because the good companies will be (and have been) dragged down with the bad in the ongoing market turmoil.
However, not to be missed in the messages of the investment experts is the importance of selling the dogs in your portfolio.
Cook advises investors to “sell everything you don’t know why you own,” companies that don’t have the cash to see them through the next couple of years, and those without any projects of merit.
For more from the conference, watch TNM TV for interviews with Frank Holmes and Brent Cook, to be posted starting this Friday.