It takes M&A activity to spice up the very two sectors that still excites- Lithium and Gold. Lithium stocks behaved differently after the Albemarle proposed acquisition of LTR and soon followed by the merger of AKE and Livent USA and today Newcrest finally yielded to Newmont in the biggest mining deal ever in Australian history , generating value for lithium and gold stocks. The question is always going to be who is next. M&A helps underpin market participant interest , both lithium and gold sectors likely to disproportionately take up higher transaction volumes over the coming months even in a subdued market - its like you want to own a house in suburbs with sustained buying interest. I have now divided my equity exposure equally between lithium and gold stocks (actually more gold if I include ETF) as I believe they would continue to thrive moving forwards; lithium prices have about bottomed , not that I really care as I have already shown you a lithium explorer (FBM) has doubled its price nonetheless while Gold may consolidate for a short period and bound to rise as soon as the Fed declares formally it would pause and looks towards cutting in the quarters ahead- if the cut happens sooner, it’s recession and gold would rally strongly, otherwise range bound. The way I see it, hoping for the best ie no recession although more unlikely (question is when) but if we get one, we have Gold to fall back on, so it’s insurance. If and when the mania starts, then we would of course want to have the ample reserve cash available to jump right in when the iron starts getting hot. So for me, it’s using minimal capital in equity exposure with high prospective returns while the rest stays safely generating bank returns. Personally I don’t like holding stocks that go nowhere for too long because when adversity comes they fall and fall hard, the capital held up could IMO be better deployed to generate bigger and faster returns in stocks where the opportunities lie. It’s called Opportunity Cost. Funnily I wrote once on the BUD forum illustrating that if the average BUD investor had cut their 50pc losses on the stock ie bail out completely and redeployed into a stock like CHN then, they would have fully recovered their losses, but alas the diehards had to stick to the poor convictions after even acknowledging and express contempt for management failures /misrepresentations.
