Rick Rule Talks Investment Opportunities: Good Value and Bad Ideas

“I think the industry prefers dumb money. So, the generalist investors are busy trying to lose money in blockchain and pot (because) they’ve been tired of losing money in mining for a while. That’ll change…It’s useful to note that over the last 12 months on the TSX and on the ASX, among the companies we (Sprott) follow, 60% of the equity cap contributions to the companies have been by major mining companies. So what you’re seeing is the return of the smart money and the exit of the dumb money.”

Rick Rule, President and CEO of Sprott US Holdings Inc.

For nearly 40 years, Rick Rule has been one the natural resource sector’s true iconic names – founder of Global Resource Investments and Sprott Asset Management USA Inc. As well, Rick is a General Partner on the Exploration Capital partnerships – a series of successful investment partnerships that have been in operation for more than 10 years. Rick has dedicated his entire life to all aspects of the natural resource industry and is considered a leading North American retail broker in this resource sector investment field. Today, his contacts and knowledge of the market are unmatched.

Stockhouse Media recently sat down with him to get his insights and opinions on a wide variety of topics: the mining industry’s current market conditions, how to find real value in a mineral exploration investment, and even his thoughts on the explosion of the retail cannabis sector.

 

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Rick Rule on buying on scale:

“Most people, I think, go into junior resource speculation as a lifestyle exercise. I think many geologists go in because they want to be in the north and fish all summer. And they get involved in a property because they can raise money to it. Their idea of a success is jitneying a 12-cent stock to 27 and making sure they get paid for the next 18 months.”

 

…on cannabis legalization:

“I’m amused to see the proliferation of marijuana companies in Vancouver. I think that’s good for two reasons – it clears the ranks of failed mining companies, which the industry needs in the worst way…these promoters are cockroaches…you can’t kill them. And the fact that rather than kill them we’ve diverted them to something else is good.”

 

…on cannabis distribution in Canada:

“In the early stages of a bull market, stocks move on narrative. In the later stages of a bull market or an industry reality takes over. And the reality is that the Canadians will never be able to compete with California in a consumer goods (Cannabis) marketplace, particularly one that requires growing technology.”

 

…on the power of people:

 “It’s important for investors to understand how the business really works. Too often, investors focus on the share price, which is easy to obtain but useless information. It’s value that drives investment performance. And it’s people that drive value.”

 

…on investment value:

 “5% percent of the management teams, in the junior sector, deliver 100% of the value. The first thing you have to do as investor is segregate against the lame, the halt, and the blind and send them back to selling cars…Adding value in exploration is answering a series of unanswered questions.”