Have you bought them because they went up after the Kayelekara buy-in? It looks to be on care and maintenance. Is it going to ramp up again? I would be interested if I knew that mine was going to restart, for whatever reason. Is that your reason to buy?
What you've described is a fundamental investor. And there's nothing wrong with that. But it's a limited definition. You can also have long-term investors who are technical, not fundamental. I looked up a definition, and sure enough, it a broader definition than what you're proposing.
Many thanks for your insight. I've done a bit of research into this company and there cobalt site in Western NSW seems to have big potential based on drilling samples, they have also recently acquired another site in Malawi that is a going concern. I'm thinking i'll see how it goes for 5yrs or so.
Hi kennas, The research i've done seems to point to a re start in production but the exciting possibilitiy is in Western NSW where samples are showing excellent results for cobalt which is used in batteries (solar, and battery cars) that are becoming more popular by the week.
Hi Smurf1976, I'm definitely in it long term and have done some research into this company and the exploration results in Western NSW is very promising.Firstly, welcome to ASF!
Where to start?
The first concept to grasp is that people buying shares can broadly be divided into a few categories. In all cases the transaction itself is exactly the same, what differs is the reasoning behind the decision to buy and what they expect to do next.
1. Investors who consider that they are buying a share in a business. They've done their research into the company and it's activities and concluded that it ought to be a wise investment. Such people are generally not worried about short term movements in the value of their shares, expecting to profit from dividends and/or growth in the value of their shares over an extended period.
2. Traders who are using some sort of system based purely on the price of the shares and volumes being sold without considering the company's actual business, indeed they may not even know what the company does so far as its actual business is concerned unless it's an extremely well known one. They're looking at charts or numbers in some other form, applying some sort of systematic approach which has been tested and proven, and that's the basis for the decision. Profit comes from an expected increase in the share price then selling to someone else which, depending on the trader's approach, could be anything from a year or two through to selling on the same day they bought.
3. Passive investors who simply buy into the top 10, 20 or however many companies or invest in a fund which does. There's no attempt to do further research but the thinking is that the likes of the big 4 banks, BHP, Telstra, Woolworths, Wesfarmers etc aren't going to go broke so it's a safe but unexciting investment which will plod along slowly but surely. Some may modify this slightly by excluding specific companies for ideological reasons, that is they won't invest in company x because they disagree with its business activities but that's an ideological decision not a financial one. If two of the top 20 companies are out for such reasons then they just invest in the 21st and 22nd largest instead. etc.
4. Those who are focused on a sector far more than any particular company. Eg their research tells them to invest in oil companies and so they buy shares in every company they can find which produces oil. Or they conclude that Japan's going to perform better than elsewhere so they buy into the top 50 companies listed in Japan. They've done far more research into oil or countries than into any of the companies, the thinking being that if oil or Japan is going up then most of the companies should also do well.
5. Those who intentionally gamble buying shares in things like highly speculative mineral exploration companies on the chance that the company's exploration does find something major or medical research companies who might make a breakthrough. The chance of losing their entire investment is high, many such companies fail and the shares become worthless or close to it, but the potential profit is huge in the event that the company does succeed at whatever they're trying to do. Remember in that context that the reason the company has issued shares is to fund, with investors money, whatever they're trying to do be that finding gold or curing cancer or whatever.
6. Those who are gambling due to randomly throwing money at the market with no systematic approach. Whether or not they make a profit comes down to pure luck although the odds could be somewhat skewed in your favour by at least sticking to companies with an actual, profitable business or which are in the top 200 (but that's by no means any guarantee).
Personally I've primarily done (1) and (4) in the past but am taking more interest in the (2) approach since very clearly there are many others doing that successfully. Like most I have superannuation in a fund which relies largely on the (3) approach. I have no interest in gambling.
Note that all companies, countries, commodities etc I've mentioned here are purely examples to illustrate the point being made and are not a recommendation to invest in that company, country or commodity.
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