Tuesday, 10 September 2013


If you look at the successful investors of our time, the Warren Buffets, Donald Trumps and others you will notice a number of common attributes. The most obvious of which is that they are able to find investments that are under-priced.

Some people describe that as the “Contrarian Principle” of investment. That is that they invest in what the popular opinion says is not a good investment.

But if you think that through you will come to the conclusion that that is not a good strategy for making money because there are plenty of investments that are not good investments today and will still not be good investments in the future. Just as there are investment that we could have made 10 years ago that are still not good investments today.

I don’t think that what successful investors do is “contrarian” at all. What they have is the ability to recognise change before it happens and have the self confidence in their ability to back themselves and to make a move before others and before the situation starts to improve.

That ability to recognise change comes from keeping themselves informed and thinking through what is a likely outcome from the information they are receiving.

One thing I find interesting about the investments that successful investors make is that if you look at their decisions objectively and with the benefit of hindsight, they seem quite obvious.

On that basis what do you think is the likely outcome of this information?
What that says to me is that the mining boom is likely to be “on again” sometime in the next few years. The follow on from that is likely to be that property prices in towns that are benefiting from any such mining boom might increase and perhaps substantially.
But then mining towns are high risk because they are too dependent on one industry for their long term viability. If the mine closes then the town dies. However there are towns that are benefiting from substantial infrastructure spending to allow for the processing and export of the various resources that are being mined.
These towns are likely to survive the ups and downs of a “Boom or bust” industry because the infrastructure that has been put in place like hospitals, schools, shopping centres, roads and housing subdivisions will remain. Other businesses will grow and thrive within the town because of the infrastructure that has been provided.
Food for thought…
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