We went to Toronto to visit an old friend who made a lot of money in the mining business but now works in bio-tech. Why did you get out of mining, we wanted to know?
“It just got too crowded. You know what they say about the ‘crowded trade’. Get out. Well, I guess it was the big run-up in commodities a couple of years ago that caused it. Suddenly, everyone was starting up a mining company. And they were getting a lot of investment money. Everybody thought he’d get rich in resources.
“But it doesn’t work that way. The mining business is extremely cyclical. Prices go up. It draws in the marginal players. And the good deals disappear. Everything is too expensive. “There’s too much production. Too many projects. Too many promoters. And then prices collapse.
“We’ve already had a good pullback. I’m starting to see some good deals again. But I’m waiting a little longer. I think we’ll get some better deals before this is over.”
Our guess, here at Markets and Money, is that Facebook’s IPO represented some kind of high water market for the virtual economy. It was like Blackstone’s IPO in June 2007, which marked the top in the financial economy.
But heck, we’re not in any hurry either.
for Markets and Money
From the Archives…
The Physical Gold Market – From the Weak to the Strong
2012-05-18 – Greg Canavan
Why JP Morgan is Playing the Same Old Rigged Game
2012-05-17 – Eric Fry
Why Greece Can’t Afford to Stay in the Euro
2012-05-16 – Dan Denning
A Big Oops at JP Morgan!
2012-05-15 – Dan Amoss
Preparing For China’s Growth Slowdown With The ‘Energy Hub’ Portfolio
2012-04-14 – Dan Denning