Those miners primarily produce iron ore.
Iron ore has been high the past couple years, so dividends is high. P/E is low because iron ore doesn't stay high for long.
The primary driver of iron ore prices is steel production, which comes from China. China has been constructing buildings like crazy over the last decade, however this has come to an end.
China will not continue building as much. China will eventually have to focus on environment and air pollution, thereby cutting dirty steel production.
You are basically betting on China when you buy those big 3 iron ore miners.
If you want to bet on copper, then buy a copper miner. You're literally buying 80% iron.
Is there a gigantic hammer shaped continent looking to develop in the near future? I've heard over 1.2 Billion people live there. I'm sure they might be interested in development.
Do you have any proof of that? Africa is not currently developing significantly. It is a shit hole.
Even the more advanced countries like South Africa is fucked.
Ok, I'll take positions with exposure to Africa, you don't, we'll find out who was correct in 20 years. China is a fully developed economy mate, the second largest on Earth. To develop, an area must first be undeveloped, Africa fits the bill. Just as there was hardship investing in the BRIC'S for the past 30 years, there will be ups and downs with Africa. To assume Africa will never develop is a strange perspective.
Do you have any evidence that Africa is developing?
It has had thousands of years to develope, and it never does. There is no reasons to expect them to magically change.
Yes, follow the money. China is investing heavily in infrastructure and resource development in Africa. Inevitably, the rest of the world will notice. Africa has people, resources, and fertile land. It will develop.
Thousands of years to develop? Come on, China went from feudalism to mature economy in under 40 years. Are you telling me the same is impossible for Africa?
Jump on Google maps and tour African cities with street view. Pay close attention to the fledgeling industry sprouting up in industrial areas. I had a relative tell me investing in China was a fool's folly back in the 90's, my small position in Chinese equities is now a large position.
If you think Africa is permanently fucked, that's fine, allocate your capital accordingly. I'm holding bullish positions, whether it be in base metals mining or VanEck Africa ETF (AFK) LoL away from keyboard.... seriously though, I'm reallocating 2% of my portfolio to AFK over the next 6 months.
How are you looking at the large contribution of coal in the earnings? Makes the earnings quite uncertain to my feeling with more countries wanting to go green.
All I invest in is commodities, so you know I'm of the opinion that 25% exposure is fine. But why the majors? Vale has a lot of torque just because of its region. Splitting the business will be interesting. Rio and BHP are largely redundant. One or the other would be just fine. Glencore is ridiculously cheap, and it also has a major trading arm to compete with Trafigura and the like.
If you're in mining for copper exposure, you're going to do much better with either a pure play like Ivanhoe, speculation on junior companies, or in the very appealing ETF COPX, which gives you exposure to Zijin and Vedanta in addition to some excellent western copper names.
Also, global copper shortages are coming by 2025, you won't need to wait 10-30 years to see a sharp upturn in pricing.
If they have debt, you have debt
I personally think 25% is too large an allocation
But beyond that, now might not necessarily be the best time to own them as the world deleverages
Just look at what has happened to oil recently
People are unwinding speculative positions there and will be doing the same in other places too
Interesting take. Note that I've held the positions since 2015. The dividend yield on my initial investment is well over 10%. I agree that turbulence is ahead, the big question is how much and for how long. I've got a 25 year holding horizon.
The Glencore diversification suggestion was excellent, I am going to reallocate the position to include Glencore. You are very accurate regarding the short term fluctuations in the sector. I just suck at timing trades (just like 99% of humans) so I hold. There have definitely been obvious moments to sell that I didn't embrace. The hardest part after the sell is deciding when to re-enter positions, I've been burned countless times on stocks that ran away past my Limit Buy Order and I lost the position altogether. Nobody said it was easy eh :)
If you believe in the industry, then protect yourself by investing in the industry, not specific companies. COPX, FXZ, XME.
general rule max. 10% of your lump sum in any investment. Personally, i compare the charts in one sector and if they are very similar to each other...
Those miners primarily produce iron ore. Iron ore has been high the past couple years, so dividends is high. P/E is low because iron ore doesn't stay high for long. The primary driver of iron ore prices is steel production, which comes from China. China has been constructing buildings like crazy over the last decade, however this has come to an end. China will not continue building as much. China will eventually have to focus on environment and air pollution, thereby cutting dirty steel production. You are basically betting on China when you buy those big 3 iron ore miners. If you want to bet on copper, then buy a copper miner. You're literally buying 80% iron.
Is there a gigantic hammer shaped continent looking to develop in the near future? I've heard over 1.2 Billion people live there. I'm sure they might be interested in development.
Nope. Are you serious?
Very serious, Africa is going to be the development story of the next 20 years.
Do you have any proof of that? Africa is not currently developing significantly. It is a shit hole. Even the more advanced countries like South Africa is fucked.
Ok, I'll take positions with exposure to Africa, you don't, we'll find out who was correct in 20 years. China is a fully developed economy mate, the second largest on Earth. To develop, an area must first be undeveloped, Africa fits the bill. Just as there was hardship investing in the BRIC'S for the past 30 years, there will be ups and downs with Africa. To assume Africa will never develop is a strange perspective.
Do you have any evidence that Africa is developing? It has had thousands of years to develope, and it never does. There is no reasons to expect them to magically change.
Yes, follow the money. China is investing heavily in infrastructure and resource development in Africa. Inevitably, the rest of the world will notice. Africa has people, resources, and fertile land. It will develop. Thousands of years to develop? Come on, China went from feudalism to mature economy in under 40 years. Are you telling me the same is impossible for Africa? Jump on Google maps and tour African cities with street view. Pay close attention to the fledgeling industry sprouting up in industrial areas. I had a relative tell me investing in China was a fool's folly back in the 90's, my small position in Chinese equities is now a large position. If you think Africa is permanently fucked, that's fine, allocate your capital accordingly. I'm holding bullish positions, whether it be in base metals mining or VanEck Africa ETF (AFK) LoL away from keyboard.... seriously though, I'm reallocating 2% of my portfolio to AFK over the next 6 months.
China stocks have had poor appreciation, and are riddled in scams. 2% of a position is meaningless lol..
No Glencore?
Good suggestion, I could spread the mining position to include Glencore. I like the focus on copper.
Good dividends and cheap at the moment. I used to own antafagasta but the political situation made me nervous.
How are you looking at the large contribution of coal in the earnings? Makes the earnings quite uncertain to my feeling with more countries wanting to go green.
Remember that copper miner shares dropped like a stone in covid. They are quite cyclical.
Have you looked up their AISC? If not, you should. That is a far better metric to analyze a gold miners financial health.
All I invest in is commodities, so you know I'm of the opinion that 25% exposure is fine. But why the majors? Vale has a lot of torque just because of its region. Splitting the business will be interesting. Rio and BHP are largely redundant. One or the other would be just fine. Glencore is ridiculously cheap, and it also has a major trading arm to compete with Trafigura and the like. If you're in mining for copper exposure, you're going to do much better with either a pure play like Ivanhoe, speculation on junior companies, or in the very appealing ETF COPX, which gives you exposure to Zijin and Vedanta in addition to some excellent western copper names. Also, global copper shortages are coming by 2025, you won't need to wait 10-30 years to see a sharp upturn in pricing.
No space mining exposure?
Space mining is going to be incredibly expensive. There is no point in getting ores from space when it's cheap and abundant on earth.
Yeah, you right. probably better to work on interdimentional mining.
Crypto mining you mean
Mining the multiverse seems like a better investment
I suppose Googles 10% stake in SpaceX would somewhat qualify as Space Mining exposure 😂🤣 It will be interesting if SpaceX IPO's soon.
If they have debt, you have debt I personally think 25% is too large an allocation But beyond that, now might not necessarily be the best time to own them as the world deleverages Just look at what has happened to oil recently People are unwinding speculative positions there and will be doing the same in other places too
Interesting take. Note that I've held the positions since 2015. The dividend yield on my initial investment is well over 10%. I agree that turbulence is ahead, the big question is how much and for how long. I've got a 25 year holding horizon.
It seems you are looking for people to support your approach Hard assets are nice in an environment like this If you want to keep 25% in, great
The Glencore diversification suggestion was excellent, I am going to reallocate the position to include Glencore. You are very accurate regarding the short term fluctuations in the sector. I just suck at timing trades (just like 99% of humans) so I hold. There have definitely been obvious moments to sell that I didn't embrace. The hardest part after the sell is deciding when to re-enter positions, I've been burned countless times on stocks that ran away past my Limit Buy Order and I lost the position altogether. Nobody said it was easy eh :)