lo price boating...

The lower the better. That 's what helps me sleep at night. I think the recent price action of Lynas is great. Why? Look at it this way, unless you need to cash out LYC for a new house or vacation, the rock bottom share price really doesn't matter. In fact it is good, the lower the better. Let me explain.

There is a highflier stock in the US that trades by the name of NetFlix. This was truly a "wonder" company that provides movies by mail for a very reasonable price. Then they began realtime streaming and the stock went ballistic. The stock continued to go up rather quickly and no-one (even Cramer) thought it could go down.

Then one morning I woke up to find that NetFlix fell off a cliff. The drop was due to the fact that the NetFlix investors finally realized they were facing stiff competition from a plethora of companies who realized mailing CD's and streaming videos on the internet has very little competitive advantage. Blockbuster, Amazon, Red Box and many more large companies had realized there was money to be made in this space. NetFlix was well past the "first mover" status in on-line movie space and their future gets bleaker by the day.

I speculated this would happen and while I did not short NFLX I stayed far away. The stock was cut in half in a few days but the thing is, there is nothing to drive the price back up.

Moving along, today Lynas released guidance that basically everything is status quo. They lost $57m ($50m currency adjusted) which was forecasted and indicated there was no material reason for the share price or volume to behave the way it is. Lynas has tremendous potential and will be the "first mover" in the REE space. Additionally this is a space that requires IP and experience that poses a significant "barrier of entry" to any potential players.

OK, so why do I like low share prices. There are two reasons. The first is that I still have dry powder and every time we see a new low I use it a buying opportunity. I know that ChiHawk is doing the same thing, he shares the same vision. When I finally go to bed (out here in Colorado (US) the Oz market has closed. It is then that I relish a substantial drop in the ASX and in particular LYC. To me, it means I get to shoot more fish in the barrel as the US markets open in lockstep with OZ. I have been buying all the way down and I have accumulated quite a bit.

The second reason I like the ASX and world markets to drop is that I hate competition to Lynas. Yes, many juniors are running out of cash quickly and their share prices are dropping faster than their cash burn. Now, pretend for a second that you are a potential "take off" partner of even a JV. With the perceived uncertainty in the world and more importantly shrinking share prices in the REE sector would you drop all sorts of cash in an unproven junior? This global correction is going to put a lot of these guys on notice that it will be sink or swim. They have to raise cash and it getting to be more and more difficult. IMO those without operating capital (not even considering capital for projects) are in a world of hurt.

Now, let's see, what's happening at LAMP. The commissioning process is continuing faster than ever. Construction is nearing a point where production is around the corner. The guys doing the construction probably don't look at the equity markets, they mostly look at their paycheck and those keep coming and they will keep coming for a long time.

Sojitz is on board with committed capital. It is in the bank in Lynas' account. Also, Lynas has many other commitments in place and the great thing is that they are not dependent on anyone of them. The working capital is secure and will remain that way. I'm not sure when the end of the world floods will are scheduled, but one thing is for sure, I will have a lot of paper in the form of stock certificates. Maybe I can build a boat.

At the end of the day, IMO don't loose any sleep or even feel bad about the low price of Lynas shares. I am buying. ChiHawk is buying. I know some seniors investors in hedge funds that are buying. Remember, for every share sold, one is bought. Lynas below $2 is a bargain. Lynas below $1 is a gift. I will welcome $1 with open arms. I guess it will be more material for my boat... jMHO...