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  • Writer's pictureSmallCapInvestor

Lessons from the Lithium Boom and Bust

I will keep this short and sweet.

 

This is a brief reminder to everyone to resist giving into FOMO and buying things at the top but more importantly, to take some profits along the way up. Don’t get greedy.

 

How exactly do you know we are the top? You can’t know for sure. But there are definitely signs.

 

Take lithium for example.

 

Last year, lithium was the talk of the town. When I attended the Prospectors & Developers Association of Canada (PDAC) Conference in Toronto last March, every single person in the room would not shut up about lithium. There was a mad scramble for area plays that had land next to Patriot Battery Metals. Lithium explorers and developers were hitting new highs every day. Everyone seemed to be a self-proclaimed expert on pegmatites.

 

These were the warning bells of a market heating up perhaps a bit too much.

 

Fast forward to 2024, and let's examine how some lithium stocks have fared.



If you had listened to the herd, you would have taken one on the chin pretty good.

 

Meanwhile, the one sector that was not getting any love at all was…. Uranium. Uranium was the underdog no one seemed to care about. But look how quickly things can change.

 

Here is how Uranium stocks have performed over the last 12 months...



If you had went against the grain and bought up uranium stocks while everyone was paying attention to lithium, you would have made a fortune.

 

Skate to where the puck is going, not to where it has been.

 

Is it too late to buy Uranium stocks?

 

The market dynamics for Uranium are definitely different than Lithium and I do think there may still be some gas left in the tank for uranium stocks, but it is important to understand where we are at in the cycle. Personally, I think the big money in the uranium market has already been made.

 

There is currently a mad scramble amongst deal guys to secure land packages near high-flying uranium companies and the juniors seem to be hitting new highs everyday.


We are even starting to see some of the nearology plays that tried to capitalize on the James Bay lithium boom, start rotating into Uranium. Here is an example...



We are also seeing a lot more mentions of Uranium in the mainstream media.

 

Regardless of how you feel about the future of uranium, if you were in on the trade early, it is important to protect your downside risk and start taking some chips off the table. I have started to do so lightly, but will continue to hold partial positions in the case that these stocks do continue to go higher.

 

So, where is the puck going next?

 

Will more post thoughts on this in the coming weeks. Stay tuned.




Disclosure

The author did not receive any compensation for publishing this article. While the author has made reasonable efforts to ensure the accuracy and reliability of the content, readers should conduct their own research and analysis and seek independent financial advice before making any investment decisions.

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