The following below are quotes from Rick Rule; a global resource...

The following below are quotes from Rick Rule; a global resource investor of unparalleled dimensions. I have personally met him a couple of times and have attended numerous conferences with him as guest speaker....he truly is an individual who is conversant in both the mining and energy industry and as such has made his shareholders tons of money.

Have a read through and keep those principles in mind.

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Volatility ≠ Risk

"Understand that volatility is not the same as risk".

"It isn?t a catastrophe if a company with $100 million in market cap that?s in reality worth $150 million experiences a drop to $50 million in market cap. It?s an opportunity. Pay attention to the underlying value of the assets, and use that underlying value to put the price of the stock into context. It?s absolutely critical if you?re going to maintain yourself in these markets that you pay attention to that liquidity."

As he sees it, whether cyclical downturns affect investors unduly is not a function of the market but of the investor. "Cyclical downturns are periodic sales; that?s not a bad thing." If you understand the companies you?re investing in and confine yourself to viable companies, downturns will be opportunities. "They will certainly test your character, but you are going to experience them so get ready for them and in fact welcome them."

If you are the type of investor who considers volatility itself a risk, Rick has three words of advice: "Get out now." But if you appreciate sales, understand that you have to buy companies based on VALUE, not on PRICE.

Rick thinks this is a pretty good time to be able to find those $100 million market cap companies that should be worth $150 million. "As a consequence of the deterioration in markets that we?ve already seen, some values are starting to appear," he says. "If you own one of these companies and expect its prospects to improve over time, don?t worry that the market marks it down in a period of volatility." If you have the psychological fortitude and financial wherewithal to take advantage of it, and if you like the idea of periodic half-off sales in a secular bull market, the volatility on the horizon will bring "unparalleled opportunities."

Rick indicates that we are going to see opportunities across the board in resources.

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A Lesson on Steroids

Rick is quick to remind investors that in the vehicles his company really made a reputation with, most of the big returns came from less than 10% of the positions. "The portfolio performance occurs in a fairly small number of names," he explains. It?s the "nature of speculation, sadly, that most positions make only a little bit of money or lose some."

Almost without fail, he recalls clearly, the portfolio stocks that made 20 or 30 fold gains had handed in 30% or 40% losses before they went higher.

In an "extravagant example" to illustrate the point, he talks about a stock he bought in intervals at $0.10, $0.12 and then $0.015. "A 85% decline before the stock ran up to $10;" Rick says, "a really instructive lesson. A lesson on steroids."

But, he adds, "It?s important that people understand that VALUE is more important than PRICE and that volatility is an OPPORTUNITY rather than a RISK."

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Enjoy your weekend and remember to understand the difference between Price and Value.