Two steps you can take to ensure your resource investments are a success
Fsp Invest, 28 Jun. 2013
Tags: natural resources, natural resource sector, investing in resource stocks, investing in commodity stocks, resource stocks, investing in resource shares
Many investors believe making money in natural resource stocks is extremely difficult, if not impossible. I can’t blame them; after all, the resource sector is one of the most volatile areas of the market. But what most people don’t know is that there’s an easy, safe method to making money in natural resource stocks,” says Francois Joubert, Chief Investment Strategist behind The Resource And Scarcity Report. Here’s what you need to do to successfully invest in resource stocks
“During the 2008 credit crisis, many of the world’s best resource stocks fell more than 80%. The not so best resource stocks fell by 90%, even 99%. With such extreme volatility it’s easy to write off the natural resource sector,” says Joubert.
Before you write off investing in natural resources, you need to know that there’s a safe method to invest in this sector.
Joubert believes it all comes down to buying “trophies”. These are the world’s biggest and best resource sources, like mines, farms and factories. However, you first need to find safe, dependable and steadfast natural resources companies that qualify as trophies to start investing.
Two steps you can use before you start investing in natural resources to discover if a company qualifies as a “trophy”
1. Look for companies with natural resources that are in demand. “ For a company to qualify as a trophy, that can make you money even when the world’s going to pot it needs to sell stuff the world needs and wants. Things like oil, grain, corn, coal and gold that have almost unlimited demand,” says Joubert.
2. The world's most renowned investor Warren Buffett says: “Invest in companies with a competitive moat” and Joubert shares his sentiments. “This means finding companies that dominate their market in some way, by being the lowest cost producer [and] owning the largest assets or controlling market supply and demand,” says Joubert.
By buying trophy shares in companies with these traits, you’ll be protected when paper currencies like the rand lose value and you’ll make profits from investing in natural resources without the volatility.
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