Trader Ferg, a full-time trader and author of the Trader Ferg Substack, shares his insights on undervalued commodities like platinum, gold, and uranium. He identifies a significant supply deficit in platinum and sees the rising demand, especially from Asia, as a crucial investment opportunity. Ferg emphasizes the importance of early positioning in tight supply-demand dynamics and balancing risk with potential rewards in portfolio management. He discusses the evolving energy needs in developing countries and their implications for long-term commodity investments.
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insights INSIGHT
Platinum's Long-Term Potential
Platinum has been in a sideways trading range for nearly a decade with terrible relative performance.
The supply deficit and declining recycling create a strong fundamental case for a long-term multi-year uptrend.
volunteer_activism ADVICE
Managing Risk and Volatility
Be willing to tolerate volatility and drawdowns when entering early-stage, high-conviction investments.
Use position sizing carefully to manage risk while allowing for meaningful upside.
volunteer_activism ADVICE
Balancing Risk and Regret
Start investing with about a 3% position size to balance risk and regret minimization.
Increase to 4-5% on strong conviction to capture potential multi-bagger gains.
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In this podcast interview, Trader Ferd discusses his investment strategy focusing on undervalued and overlooked sectors, with particular emphasis on commodities like platinum, gold, and uranium. He highlights the importance of positioning early in sectors with tight supply-demand dynamics and understanding long-term fundamental trends. Regarding platinum, Ferd sees significant potential driven by multiple demand factors, including catalytic converters, industrial applications, jewelry, and investment demand. He notes the metal's supply deficit and believes the current price movement is just the beginning of a potentially multi-year trend. The primary supply is down 6% year-on-year, with recycling also declining, creating a compelling investment narrative. Ferd discusses his investment philosophy of balancing risk minimization and regret minimization, typically starting positions at 3% and potentially scaling up to 5% for high-conviction investments. He emphasizes the importance of portfolio management and being willing to tolerate some volatility to capture significant upside. The conversation explores broader macroeconomic trends, particularly focusing on Asian energy demand. Ferd argues that developing countries, especially in Asia, are at the early stages of increasing energy consumption, which could drive significant demand for commodities like coal and oil. He highlights that 6.5 billion people are seeking to improve their standard of living, which will require substantial energy infrastructure and consumption. On the gold market, Ferd believes central banks and institutional investors are still underallocated, and he sees potential for continued appreciation, especially as Asian countries seek alternatives to US dollar-denominated trade. He suggests that while gold might continue to outperform other commodities, individual commodity sectors will experience periodic strong performance. Ultimately, Ferd's approach centers on patience, fundamental analysis, and identifying sectors with compelling long-term growth potential, particularly in the commodities space. He advises investors to think in multi-year timeframes and focus on sectors with tight supply dynamics and emerging demand trends.
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