The Gold Sector Can Turn Quickly 11-3-2021
Killian Connolly: The Gold Sector can Turn Quickly
Palisades Gold Radio: Nov 3, 2021
Tom welcomes a new guest Killian Connolly from Price Value Partners to the show. Killian explains his views on growth versus value investing.
Most investors aren't paying much attention to value investments and are all focused on growth stocks. There is still compelling value out there and eventually, the value stocks will outperform. This is likely to occur once people realize that margin issues and inflation are not transitory.
He makes some comparisons of today's monetary problems with those of the past in Europe. The government of France chose to demonetize silver which resulted in periods of high inflation. Eventually, they reverted to the standard.
This seems like the inevitable outcome of today's monetary system. Killian describes the risks and cycles of inflation that are coming and why this may result in a new monetary system.
It's hard to know when such a new system will be built. What you can do however is stay away from economic assets that won't be revalued in the new system.
Investing is born out of mistakes and he explains their method of diversifying. They look for a well-operated business with little debt and work to fully understand these companies. In the short term the market is often a voting machine but in the medium to long value companies will show a profit on the chart. They prefer to invest in companies with a lot of cash flow.
If you're not in a rush and not focused on share prices you can make good returns. This requires patience and more patience. Killian explains how easy value investing can be and why it is overlooked by most investors.
He discusses some of the metrics they utilize from the public accounting data that companies release. Jurisdiction is key when it comes to investing in the mining sector. Currently, there is a lot of value in this sector.
He isn't overly concerned about the energy markets affecting the miners. He notes it's important to not chase the prevailing narrative for too long as often media attention signals a coming shift.
Time Stamp References:
0:00 - Introduction
0:31 - Growth Vs. Value
4:41 - Value Investing
8:44 - Macro History & Inflation
13:55 - Cycles of Inflation
19:20 - Confidence & Questioning
24:30 - Four Categories
28:24 - Seabord Value Example
35:07 - Simpler Investing
39:58 - Mining Sector & Value
44:00 - Energy Risks & Miners?
48:55 - Commodity Prices & Cycle
55:24 - Wrap Up
Talking Points From This Episode
- Value Investing compared with Growth Stocks
- Historical monetary parallels with today.
- Inflation and deflation cycles and a new monetary system.
- The Commodity Supercycle - Miners and Energy.