Dear Reader,
In one line of text, I’m going to attempt to explain how the rich use recessionary trends to get richer, and how retail investors make it all possible at their own expense.
Here it is…
Successful investors create upside potential by buying from panicking, unsuccessful investors.
It’s a rule as old as investing itself and, over the centuries, has been articulated in different ways.
Two hundred years ago, Baron Rothschild delivered probably the most famous wording of all: “Buy when there is blood in the streets, even if the blood is your own.”
The problem is that few people, even among those who understand these concepts academically, actually live by these words — and it’s not hard to understand why.
To fully embrace this ideology, one needs to go against the current, especially in moments when that current is strongest.
It sounds completely counterintuitive to Joe Six-pack with an E-Trade account, yet to anybody who’s lived by the rule and seen the fruits of the cold sweats, heart flutters, and sleepless nights, the word “recession” brings pangs of excitement.
Low points are when successful investors get ready to feed.
Bad Times Coming? The Smart Money Is Already Banking on It
Right now we’re in such a moment. Recession now looks all but certain as a number of bear-provoking catalysts drive investors deeper and deeper into hiding.
Record inflation. Ideological civil war on the streets of the world’s (still) most important economy. A KGB-indoctrinated psychopath with his finger on the ignition switches of 1500 ICBMs.
None of this looks good. In most cases, it makes casual investors run for the hills.
The thing is, panic has nothing to do with fundamentals. Panic fades. The news cycle moves on. Crises find resolutions. That means that today’s prices have no basis in reality. You either understand this fact and exploit it, or become a cog in the machine making it all possible.
You get the point.
So what sorts of plays are these supposed geniuses looking for? Well, that’s the best part of it. Nothing fancy.
With the low tide of looming recession lowering all ships, one needs only to find something that’s always in demand regardless of economic outlook, sift through the options, isolate the best bargain, buy, and forget about it for a year or two.
It’s that sort of cool-headed, calculated style of investing that pays off — the polar opposite of the approach requiring you to sit at a computer all day every day, clicking refresh on the last executed share price, scared stiff, always wondering if today is the day to unload it all.
Right now, my colleague Luke Burgess has zeroed in on an all-but-guaranteed win by targeting an asset class whose chief product never drops in demand, so long as the human population is growing.
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As Recession-Proof as Unprotected Intercourse
The product is phosphate — a precursor to phosphorus, one of the three critical elements of modern synthetic fertilizers.
This may not sound exciting, but more than 3 billion people rely on synthetic fertilizers for their daily caloric intake. Faster, more effective, and, most important of all, cheaper than their organic alternatives (think manure and compost), synthetic fertilizers will feed a growing proportion of the human race as we move toward the middle of the century.
For the moment, however, the market seems to have forgotten all that. It seems to have forgotten that the human population is growing at a rate that is itself accelerating, which means more and more of our farmland will have to be optimized to increase total global carrying capacity.
The company Luke has been researching for the last several months represents one of the most aggressive pure plays currently operating in the phosphate mining sector.
Down 35% since hitting five-year highs less than a month ago, this is a classic case of investor panic opening the door to mid- and long-term gains for the smart money.
There’s too much to say about it here, so I’ll let Luke do the explaining.
He’s got a presentation out right now that profiles this company down to the last detail.
It’s free to view and accessible immediately, with no registration required.
At the beginning of this article I proposed a simple explanation as to how two different groups of investors respond to market turmoil:
Successful investors create upside potential by buying from panicking, unsuccessful investors.
The categories “successful” and “unsuccessful” were chosen for a reason. Because at the end of the day, the only goal is to buy low and sell high, and that’s what separates the successful from the unsuccessful… the rich from the poor.
Which one will you be?
Get instant access right here.
Fortune favors the bold,
Alex Koyfman
Check us out on YouTube!His flagship service, Microcap Insider, provides market-beating insights into some of the fastest moving, highest profit-potential companies available for public trading on the U.S. and Canadian exchanges. With more than 5 years of track record to back it up, Microcap Insider is the choice for the growth-minded investor. Alex contributes his thoughts and insights regularly to Energy and Capital. To learn more about Alex, click here.
