Iron ore price, page-3076

Fozza,

This of course makes a lot of sense.

People do tend to miss the savage swings in resources, I think being counter-cyclical is key to being a good resources investor (the resource houses say they are, but they don't do this). Knowing (or at least estimating) when to sell is even more important than a good entry.

Picking the commodity is clearly key (ignoring the spec bubbles that weren't fundamentally driven such as uranium, rare earths and now lithium ). Then picking the right company with value upside but some downside protection comes next.

Betas for mining stocks tend to be higher than 1, often 1.3-1.8. Unlike low PE industrials as their earnings don't move that much (relatively speaking) under different economies mix conditions.

For mine being able to understand NPV as well as operating margin is important. Using industrial stock techniques doesn't fly when most assets have high initial capex (high replacement capex and closure) , short lives (not the iron ore majors) and can experience low - or high - short term prices.

Demand is always hard to pick so understanding the supply side and asset competiveness on a margin basis is critical.

In a world of strong balance sheets, history tells us the good single asset companies in base metals and probably the much maligned coal are the most likely to be gobbled up when the larger companies that have exhausted growth options tire of shareholder returns

The ASX is full of mature resource stocks and spec plays. Not much in between.