I took a lot of flak from uranium über-bulls last month for daring to say that no price can go vertical forever.
I was criticized for raining on the uranium parade during the Vancouver Resource Investment Conference uranium panel.
Like it or not, I call ‘em as I see ‘em.
It was entirely reasonable for me to say that uranium was likely to take a breather in the January 13 edition of this letter:
[J]ust look at that spot uranium chart… I don’t see how any experienced investor can see a price go vertical like that and say, “Sure, that looks sustainable.” Beware of irrational exuberance.
And I was right, of course…
This took no clairvoyance to call—only resistance to hype.
Granted, a roughly 6% retreat is not an official correction. But let’s not quibble over semantics; uranium did not go straight to the moon as the angry über-bulls were saying. That’s significant.
A key point here is that I remained bullish and said that a correction should be seen as a buying opportunity:
If it corrects soon—which would be perfectly normal—those late to this party might just get a shot at better entry points.
I would urge anyone who doesn’t have any uranium picks in their portfolio to go for a first stake in any of the better ones they like—on the next dip, of course.
That’s because the case for uranium has only gotten better.
- Kazatomprom, the world’s largest and lowest-cost producer missed production last year and slashed its forward guidance.
- Canada’s big uranium producer, Cameco, is producing more, but has run into difficulties doing so—and is still buying on the spot market to meet its contractual sales obligations.
- The EU throwing its weight behind the push for small modular reactors (SMRs). This is a big deal. SMRs are only relatively small. Their widespread adoption would add a huge new source of demand not in anyone’s current supply–demand models.
I said all along that developments like this make any significant dip we get in this multi-decade bull market for uranium a buying opportunity.
But this wasn’t good enough for the angry über-bulls.
I was told (not always so politely) that:
- Respected source X says uranium is going straight up from here, so I must be ignorant/an idiot/lying, etc.
- Me “talking uranium down” was unnecessary and bad for the sector.
- I was wrong to say that a correction was likely weeks ago, as the price is much higher now.
- I jinxed the market.
- I shouldn’t be talking about selling when this uranium bull is just getting going.
- I’m a bear and I’m wrong.
- “It’s just a flesh wound!”
I’m sure some of the “jinx” remarks were kidding. But anyone who actually believes in such things… should probably turn their funds over to a wealth manager with a proven track record.
One person even said they sold all their uranium stocks weeks ago because of my bearishness and missed out on the rally to triple digits. I’m sorry for this person, but I do not accept responsibility for an individual’s emotional overreaction in contradiction of what I actually said.
And no one goes broke taking profits.
For the record:
- I’ve never said to sell everything in this space.
- My outlook for uranium has been, is, and remains bullish for years, if not decades to come.
- Pointing out the probability of corrections along the way does not change this.
- I’ve never claimed I could time market corrections.
- I’ve been saying since last November that despite the market being ripe for correction, there’s potential for uranium to become the flavor of the day (FOTD) and for spot prices to go much higher than the fundamentals justify.
- In recent interviews, I’ve said that either for geopolitical reasons or a FOTD mania, uranium could go to $150 or higher by this summer.
- I have taken some profits, but that doesn’t make me a traitor to some sacred cause; it makes me a rational actor in a market where prices can crash without warning (if there’s a major nuclear incident).
- I own more uranium stocks than I ever have in the past.
- I am nowhere near influential enough to affect uranium prices and have little impact on company share prices.
- The main thrust of my remarks has not been to encourage those long to sell, but to discourage those looking to go long from chasing stocks near 52-week or multi-year highs.
My reason for writing about this, however, is not to defend my wounded pride.
The value here is in looking at the psychology at play.
I understand that having a lot of money riding on a speculation makes it difficult to read “negative press” with equanimity.
That doesn’t make it reasonable for über-bulls to get angry at me for saying that a normal, healthy correction was likely—especially when I was saying it would be an opportunity.
Some felt a need to disparage my character and my work. In my view, this says more about them than me.
The important thing is that this sort of emotional response is not conducive to positive investment outcomes for them.
It’s fine to be a bull, but dangerous to be one blinded by rage: there’s a sword behind the red cape.
If one heaps hate on anyone who disagrees with a favored investment thesis—or just tunes them out—one increases the chances of being blindsided by the unexpected. Bulls in echo chambers don’t see the butcher coming.
Simply understanding this—and the value of thoughtful challenges to one’s investment ideas—can help one achieve more positive investment outcomes… or at least avoid some wipeouts.
I don’t mean to sound insulting or condescending, but there’s a great deal of literature and help out there for anyone who struggles with anger management, blame-shifting, and other such issues. We’re not all born with nerves of steel and the discipline to seek truth over confirmation, but it’s possible to train ourselves in that direction.
I speak from personal experience.
And I sincerely hope these remarks will motivate some folks to introspect and embrace change—for the sake of their portfolios, not mine… and perhaps even more important things in Life.
P.S. If you missed this guidance before uranium corrected, be sure to sign up for my free, weekly, no-hype, no-spam Speculator’s Digest.
