EDITOR: | February 3rd, 2014 | 4 Comments

Hoffman, the “Wolf of Wall Street” & Star Gazing

| February 03, 2014 | 4 Comments
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HoffmanSorry to hear that Philip Seymour Hoffman (46) passed away yesterday from an overdose at such a young age. The stock market is full of addicts, so the personality traits reflected in this genetic predisposition is often seen in our sector. Concurrently, I see that “The Wolf of Wall Street”, which highlighted this addictive behavior prevalent in the finance sector has broken $100 million. The market makes the rock and roll industry from which I started pale in comparison.

Speaking of star talent — selecting a star in the market is no easy feat, but doing the research on what trends may increase your odds is only as reliable as the source providing it. For instance, in the last couple of weeks, we have had 3 sources make efforts to correct a WSJ article on the rare earth market and the issues surrounding sustainability in the U.S. and here’s what I concluded — everyone disagrees with the WSJ but the conclusions on why — differ greatly.

CNN was discussing how the U.S. market had yet to have a ‘meaningful correction’ in the last year and a half, while delivering the news that February futures were down, after a 5.3% drop in January. A well-known industry player who asked that I not disclose his name (yet) told me 2 weeks ago in Vancouver that he was noticing very high margin debt in brokerage firms and told me that he was forecasting a 10-15% correction that may provide the catalyst for more attrition for those struggling, namely the TSXV junior exploration companies in the resource sector. This said, he did see recovery for the resource sector once this larger market correction had occurred. Timeline for his forecast was 3-4 weeks and he made this forecast 2 weeks ago…

At InvestorIntel we had record lows for client memberships in December, but in January we experienced an all-time record high. So I would agree with my dry cleaner, who also happens to be an investment banker that I spoke to this morning that the markets have indeed been volatile. Bottom-line, we never have any idea what is going to happen and as a new trader who has been sending me updates wrote me last week: trade on what you know, not on what you anticipate.

This last week I tried to get Molycorp (again) to go on the record with their position on the WSJ article and provide InvestorIntel audience with an update, and well; I did receive a phone call and email, but as per usual Molycorp updates these days – or as Mick Jagger said it best “I can’t get no satisfaction” as both requested that their communications be private.

January numbers were very insightful and I will publish my month-in-review commentary tomorrow, but thought I would leave you with my top tweets from Superbowl Sunday that should whet your appetite as we attempt to satisfy our thirst for Investment Intelligence:

  • TSXV: GMA up 190% for January — @Geomega Resources is averaging up the rare earths or technology & critical materials for 2014
  • #Triton Minerals ASX: TON up +114.29% for Jan 2014 helping pull the technology & critical material sector up +9.95% for the month #graphite
  • IC Potash OTCQX:ICPTF up +31.07% & TSX:ICP +18.52% for Jan 2014 – ‘the dark clouds over #potash market are thinning?’ http://shar.es/Qpgxc
  • #Arafura Resources ASX: ARU moved up +26.92% for January, helping drive #technologymetals up +9.95% as #rareearths turn a corner
  • #Alkane Resources ASX: ALK up +26.47% & OTCQX: ANLKY up +20.99% for Jan 2014 – Alkane will be producing #gold this quarter
  • #Allana #Potash up TSX:AAA +25.68% & OTCQX:ALLRF +16.01% for Jan 2014 — helping drive @Investor_Intel potash clients average up +7% for Jan
  • #Lomiko Metals TSXV: LMR up +19.05% and OTCQX: LMRMF up +8.26% in Jan 2014 with leading news on #3DPrinting deal #graphite #graphene
  • #Tasman Metals TSXV: TSM up +18.52% and NYSE MKT: TAS up +12.87% for Jan 2014 – #HREE green light #rareearths http://shar.es/Qf7j6
  • @Ucore Rare Metals TSXV: UCU up +17.02% & OTCQX: UURAF up +6.67% for Jan 2014 – Ucore addresses HREE Supply Concerns http://shar.es/Qpoja

Here’s to a great week on InvestorIntel and think about a future where you order your outfit for the day online, download it – and then print it out of your 3D printer….and here’s to a cure for addiction.


Tracy Weslosky

Editor:

An accomplished entrepreneur and corporate finance professional, Tracy Weslosky is the CEO for InvestorIntel Corp. and the VP of Business Development for Bellotti Capital Partners ... <Read more about Tracy Weslosky>


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Comments

  • vacuum

    The problem with saying the Resource Sector will have a shakeout be-cause of the correction in the larger indices, is that much of the resource sector has been trading oppositely to the indices since mid2011 .. As far as I know, penny stocks, aka currently Venture-listed-resource-companies, are not marginable (rather, large caps are marginable)–saying this just to dispel any delusion that the comment about high margin debt is directly related to the resource sector (rather than indirectly). And, the long term DJIA chart shows the possibility of a correction to 5000, the lower trendline. This is a lot more than a measly 10-15% that the well-known industry player suggested. There are more reasons, including an SP500 chart correlation with 1929, to say the DJIA will collapse rather than the strategic metals will collapse–sheez! they be already collapsed. But people sell low (and buy high).

    In graphite, watch the $1.20 gap on the chart of former bellwether ZEN. This is possibly the last opportunity to get this sector cheap. A few months ago I had posted to watch a gap on Mason. Later, after the gap filled, Mason, Focus and Lomiko rocketed upward. The graphite sector in particular cues off members within the sector much more so than anything else. (intra-market rather than inter-market correlation) … Perhaps, there is going to be a lot of fresh hype about graphene and water desalination, purification soon. Lockheed Martin has a patent and protype which was in the press last March. We are now coming closer to the time frame where they thought would have more development of it. And most importantly, California has NO water.

    In REEs, I would caution anyone who counts so-called current supply of LREEs as something terminal for the REE sector. Just take a look at natural gas futures puhleeze! Remember during the presidential election how we were told about the superabundance of natural gas in the USA. And the facts seemed to back that up. But then this winter natural gas skyrockets; you can say it is simply about distribution during winter, or a short squeeze, but the fact is there are higher prices. … Last years the world had large wheat crops; this year maybe not with lower precip in Washington and looks to be floods coming to snow laden midWest. … Coffee futures are up now, but they had been falling all the while Colombia and much of Latin America suffered huge problems with plant pathogens to the point of having to remove plants. & etc. ……… Point being that in commodities, there tends to be a thinking-there’s-an-abundance as a lead into higher prices (and vice versa). …. I know it may sound c-r-a-z-y but I have a funny feeling to buy companies that only have LREEs, esp if they produce them–esp. one of them would do a r/split of its bloated share count.

    Some of the companies discussed on this site their shares present fantastic opportunities at this time, and perhaps on a dollar-cost-average basis those of others. And maybe some or more than some turn out to be pigs. That’s life in the grownup world. …. One should have an overall strategy for existence. This includes something as simple as buying canned fruit, olive oil and almonds and anything else California grows. It also includes that in which the rudder David Morgan is interested. If one hasn’t taken actions along these lines, then perhaps one ought not be deciding which REE. Owners of these resource shares: pray, if sincerely, to St. Jude, patron of the hopeless and the despaired.

    February 4, 2014 - 12:10 AM

    • Tracy Weslosky

      Great points Vacuum — some strong points and we are swinging back with a piece on how some of the emerging markets may buck the trend when a correction on the S&P occurs.

      February 4, 2014 - 3:31 PM

    • Tim Ainsworth

      BTW Vacuum, have you noticed that the bloated one has a gap just under the current action that stretches all the way back to the end of April 2009?
      Interesting one to watch methinks.

      February 5, 2014 - 10:11 AM

  • Tim Ainsworth

    Cheers vacuum, classic contrarian.
    LRE’s are certainly at the volume end of the business by a huge margin, broad end use base, including the segments with the highest CAGR’s and the two ROW still control.
    In simple terms Ce & La may trade closer to notional “FOB” prices, into the ROW catalyst markets, and the balance of the suite to China domestic. The declared $15kg La pricing is an indicator.
    A r/split is an interesting notion, particularly if it’s the one that probably needs to renegotiate its debt profile shortly.

    February 4, 2014 - 8:06 AM

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