The world is coming to an end isn't it? Will it be the case for lithium companies? Will my target be met? Let's discuss.
We are having a clean out that we all needed (orchestrated by BEOT) to create a reset and once again transfer wealth from the poor and uniformed to the manipulative wealthy.
Too much paper wealth has been orchestrated in pyramid style long term asset increased valuations. Way beyond fundamentals. Let's look at crypto (with news stories coming though with little old retail investors putting 98% of their savings into the coins and now in total financial ruin because they were buying at the top, thanks to the constant pumping across social media and main stream media); shares in the US and parts of the world (shares plunging in companies that had a PE ratio of a trillion, again thanks to the constant pumping across social media and main stream media); and something that we may see a little more of in Australia, negative equity in house prices (yes, in a short time scale even property can go down). The BEOT help create this pump and pump and slowly but shorly, those uneducated, those with gambling instincts (with undertaking research) come on board pumping and pumping and pumping. When the pyramid reaches the peak it is time for an orchestrated reset. The wealthy make all the right moves, everyone falls in the crash.
Look at the good old Nasdaq, thanks to Gareth78. Going through some tough times with flow on consequences across the board.
On a side note, regarding house prices in Australia. How can the reserve bank board even have kept their jobs? Every intelligent analyst (and nobodies like me) at the end of last year were almost certain that interest rates were going to start climbing soon. Dec/Jan the RBA board kept pumping retail, no no rates won't rise until 2024 sometime, encouraging the last of the greedy or uninformed FOMO contenders to come on board and buy to let the smart and wealth sell out in time. From 2024 to 2022 in the space of a couple of months? If they didn't know, and some guy on the street knew, isn't that saying something? But that's how life works. People in power doing their thing. Middle finger up to the little guy at the end. It's all their fault anyway, they should have done their research and known better, yeah? (sarcasm, just in case not obvious).
Anyway, back on track.......
With this reset we have people losing their savings, people getting caught on margin calls, people scared and taking what profit they can, people that need to sell quality holdings to cover their bad mistakes. The weight of this across the board selling comes through ETF and Managed Funds who need to sell across the index with the outflows. This brings on the short sellers who see the forced selling of being money and add to the weight of selling. More the market goes down, more the big funds need to sell forcing the baby out with the bath water.
This process may play out for some time. There may be many impacts and counter weights based on reactions from governments, outside heavy weights etc. Be prepared to expect the unexpected, the big boys are having fun.
However, at some point reality will set in. At some point, someone is going to look around and see, yes the baby has been thrown out with the bath water and it is time to pick the baby up and start nutouring it again.
Lithium space -> AKE, PLS and others have a product in high demand and selling at huge margins. In an inflationary environment the cost of the raw material starts first. They pass on the inflation first. Demand, which EV maker has a car that you can buy any time soon? None of them! Tesla reportedly about to close their order books because they can't deliver you a car in 12months time soon of nany model. Europe and the major parts of the world have suddenly been forced to reconsider oil/gas. What's the alternative? EVs, how you going to cope? Accelerate the transition. German government has been pretty much pointing the figure at German OEMs and telling them start moving and transitioning as fast as Telsa, what's wrong with you? Demand, demand, demand, demand.
The world is going to crap, but the price of spod is increasing. No freefall. Carb, some slight movement at the top so what? Carb went from $10k TO 70k spot and this was hardly reflected in share prices. So it never moved up, but because it moves from 70 to 65 we should have big moves down? Games, games, games! There is so much demand prices are going to stay hot. What does hot demand, translate to? So much money for companies like AKE and PLS, remind yourself of the figures I produced early in the thread here:
https://hotcopper.com.au/threads/20-in-2022-party-thread.6515290/page-42?post_id=60621977. AKE is going to be throwing one dollar bills in the streets of Argentina soon, as an act of celebration to the money printing machine it is becoming.
Lithium is in this perfect space of having so much demand. AKE is producing and growing and has the cashflow to move forward. As interest rates rise, this will only slow down the rise of explorers as they face larger struggles to get the financing they need. The metrics get harder for them to pull things off. This will slow momentum more, and make it ever so more powerful for the producers. As the mayhem grows larger, the benefits for AKE grow. How many companies can say that at the moment?
If we look at GCars most recent log graph from a day or so ago, we can see in all the carnage of the markets, AKE is doing just fine. Behaving how it should be.
Can we break the lower bounds, of course we can, mayhem is ruling the world. It will be short lived. I for one will be reopening my wallets to accumulation should the shorters decide to help make me even wealthier into the future. They play their game, we need to take advantage of the opportunities they provide for us. I am in it for the long game (SDV + JB built and running), so cheaper prices today makes greater opportunity ahead. If it was not for the shorts, I would not have been able to accumulate such wonderful positions in GXY and PLS as I did.
When retail, tech and other sectors get smashed due to the realisation of the impact of inflation on profits, they will start to look at sectors where profit will be king. We are in that sector with a company that produces and is expanding and has the funds to do what it likes. The sector rotation will be brilliant. The lower the price I can buy, the better the gain equation is at $20+
Anyway, that is my thought for the week. I have written this in a rush, I have not read back or checked my sentences, so there is probably many mistakes and what the. If so, your smart enough to read between the lines and work out what I was trying to say.
Good luck all, stay smart and play the game that is right for you. Don't be that person the BEOT wants you to be. Think it all through. If it sounds like I am ranting, I am not, just trying to be passionate about the world and the way it is.
