Bob Thompson: The Case for the Next Leg in the Bull Market

Tom welcomes a new guest, Bob Thompson, to the program. Bob is Senior Portfolio Manager at Thompson Investment Partners of Raymond James Ltd. Bob discusses the importance of having a good macro view on the mining sector. Resources are very cyclical, and the times when people are most positive is the time of maximum risk. He sees a tremendous similarity between now and markets of the late 90s. The S&P either needs to go down a lot or gold needs to rise significantly. It seems likely they will meet somewhere in the middle. Input costs squeeze most companies, and this is why resource companies do better for a period. Bull markets tend to end a speculative blow-off. Afterwards, there is usually a different sector that takes the lead. We seem to be at the beginning of a new run in commodities, and perhaps we will have a decade long-run. He doesn't believe that tightening by the Fed will curb inflation because the Fed can't raise rates to a meaningful level. Bob quotes Alexander Tytler, a Scottish Historian, "A democracy can't exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result that democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy." The west has been living beyond its means, and creating more money, this eventually stops working. The system can't support our wants indefinitely, even if everyone wants their promised piece of the unfunded liability pie. Bob outlines each hour of his 'The Mining Clock' which can determine where we are in the cycle. The access to credit is what makes the great discoveries possible. He likes to consider investing in any market that has moved down eighty percent. ESG is providing an opportunity for investors that understand how negatively it is affecting energy markets. It's denying of capital investment into the sector. Energy demand is fairly stable, but supply is shrinking. Time Stamp References:0:00 - Introduction0:36 - Resource & Equity Cycles6:35 - Printing & Growth Stocks7:58 - S&P Vs. Gold Ratios11:00 - Commodity Structures14:45 - Margin Compression16:17 - Pandemic & Inflation20:34 - Tightening Policies23:08 - Fed Recession/Inflation25:09 - Alexander Tytler Quote28:25 - Canadian Bubbles32:18 - Strategic Allocation35:27 - Market Strategies40:18 - The Mining Clock53:45 - Uranium Cycle1:01:09 - ESG & Opportunity1:06:13 - Copper & Silver1:12:15 - Wrap Up Talking Points From This Episode * The macro perspective on the mining sector.* Bull markets and cautionary tips for investors* His Mining Clock, and it's importance in determining where you're at in the mining cycle.* Uranium and energy and why ESG is creating opportunity for keen investors. Guest Links:Twitter: https://twitter.com/bobthompsonrjWebsite: https://www.raymondjames.ca/Website: https://bobthompson.ca When Bob Thompson started university, he thought he was headed towards a career in medicine. He graduated from Simon Fraser University with a Bachelor of Science (B.Sc.), but with his family facing financial adversity, achieving financial security became first an interest and then a passion. Bob is now a Certified Investment Manager and Accredited Investment Fiduciary professional with more t...