We all know this: 'Buy Low and Sell High.' Sounds obvious, right? But it's harder than it sounds.
It is difficult if you have a short-term approach like day-traders do. But if you have the patience of a real investor, then I can give you some tips on how to make some money in the stock market.
We are lucky to be alive today. If you look back in history, there haven't been many times where multiple young industries are growing (booming in this case) at the same time. If you are smart and have some disposable savings, my top three industries where I would invest are: (1) Energy-storage materials; (2) legal and medical cannabis products; and (3) artificial intelligence applications.
This post focuses on the first one, energy-storage materials. Even when we don't really know who will dominate the batteries or electric vehicles markets, what is pretty clear is that the world is embarking on a massive shift towards electric vehicles (EV), and in a lesser degree, industrial energy storage. So, if you look at the supply chain and go to the very first link, you will see that the world will need a lot of the materials that make up batteries. These are lithium, cobalt, and nickel amongst others. it doesn't matter if Tesla goes bankrupt. It doesn't matter if GM has the best EV. The only thing that matters is that the demand for those minerals will continue to explode in the next 5-10, and probably more, years.
So, what am I doing? I am buying stocks in mining companies focused on extracting those energy-storage materials.
WARNING: What follows is not financial advice, but my personal take on this.
But now any companies. I am buying penny-stocks. Why? Well, because I am targetting big wins. I am betting that the industry as a whole will push most of those penny stocks higher. Those with better management teams and better resources will do better, of course. And those that make bad decisions will go bankrupt, yes. But by the end of the day, I believe a lot of those companies will do great. And because they are small companies, their gains will tend to be (much) bigger than their larger counterparts.
Read these articles to get a better sense of the situation, and to learn about some participants in the industry.
https://seekingalpha.com/article/4115507-high-risk-high-reward-lithium-mining-companies-invest
https://seekingalpha.com/article/4128449-lithium-junior-miner-news-month-november-2017
The risk is significant, of course. And that is why I am only investing a portion of my disposable cash. Depending on your risk profile, I wouldn't recommend you to do the same.
The main risks I see? Two: first, a significant research breakthrough where lithium and cobalt are no longer needed to store energy, for example. The current batteries are far from ideal, and engineers all over the world are trying to increase the ratio of energy-stored-per-battery-weight, and that can mean a change in the required materials. Second, the world not wanting batteries anymore. This one is less likely, as massive pollution and oil supply problems will keep pushing the EV drive, especially in big countries like China and India.
I still believe that we are in a great point in time to invest in this industry. Many junior miners are still in the exploration phases and will only go into production later in 2018, even 2019/20. I expect their stock prices to rise by then.
What do you think? Do you think there is a better industry to bet on at this time?
