I got the two lists by simply listing all the companies I could think of, and then reducing the larger (cobalt) to the lesser (lithium) to make them even (I have discovered more since). The idea is that there is no ranking criteria, to see how that performs against typical selection systems. The problem with selection, for instance the top 10 performers approach, is that you will grab those that have peaked recently, and they may all fall subsequently. With the more random approach you may benefit from massive rises that weren't foreseeable, as a booming sector is full of enthusiasm for new discoveries.
Graphite or any other commodity/service that is predicted to grow would be a good candidate for sector investing.
A typical sector portfolio would allocate a certain proportion to established, establishing, and speculative companies, depending on your appetite for risk. Take $30K:
$10K on near producers, say 2 x $5K (market cap 300M-1B roughly)
$10K on developers, 3 x $3K (50M-300M)
$10K on explorers: 5 x $2K (5M-50M)
You want opportunity for growth, market cap offers some indication, and a measure of risk. Perhaps you find a near-producer that is trading under 100M - is it undervalued? Read the feasibility studies and broker research, then see what the forums are saying.
(Some would say $2K is too small a parcel. That's up to the individual to decide, and how much money they have to risk. With selection you also need to do a lot more research, there are 50+ cobalt interested companies on the ASX now by my count.)
The greatest returns are in speculation, but it's not easy and, given that it is largely based on crowd psychology, requires some luck in selection and timing. There are a great many companies which temporarily boom on hype, but were never any good to begin with. To benefit from this price action you need to be adept at FA, TA, and what I think of as PA, psychological analysis of the market. Personally if my FA tells me it is bad, I stay out of it, as tempting as the chart may seem (I have missed lots of opportunities for gain, but also a lot of pump and dumps). Again, the random approach can pick these up, but the "investor" needs to be vigilant in their timing to benefit from the short-lived peaks. Many beginners buy the peak, thinking it is a strong performer, and then are left "holding the bag".
Developers can be a good blend of opportunity for growth and risk. Patience is required however. Study the "life cycle of a mining company" diagram that people often share. Speculation may take an explorer from 5M to 50M in a couple of months, but then developing a mine might take them from 25M to 1B and beyond, over several years. Other lower risk opportunities are companies that are restarting already established mines, or companies with ongoing profitable concerns expanding into a booming commodity like cobalt. This way the "orphan period" can be avoided.
Hope that helps yourself and other beginners, I watched MUS unfold and was surprised to see how many people tipped their whole lives into one speculative explorer...
